Pricing and revenue management is centric to an organisation’s profitability.  Processes flow across functional silos, across geographies via multiple technologies creating disconnects, revenue leakage and margin erosion and lack of visibility Reporting lines are varied but profitability needs a board level owner to ensure consistent strategic focus and reporting. Pricing and revenue management done well are data, accuracy and time dependent.  Technology is a successful enabler to achieve end to end process and data integration.  To move from operational pricing to strategic & proactive pricing and revenue management change management is required to achieve increased productivity.

1. European Survey
Pricing, Profit & Revenue lifecycle
management in
Life Sciences
2

2. Pricing Organisation & maturity …..….…4
Pricing strategy & Performance
Management ………………………..………….9
Pricing Execution & the role of value in
Pricing………...……………………………..…..15
Conclusions, Lessons learnt &
recommendations ………………….….…….24
TABLE OF CONTENTS:
3
European survey pricing, profit & Revenue lifecycle management- June 2013

3. Survey participants: Life sciences companies from all segments
took part …
CHAPTER 1:
Pricing Organisation & Maturity
but…48% indicated their pricing team was
still very reactive and lacked clarity in roles &
objectives. See Page 6
….and agree on the need for a structured organisation that owns
pricing and revenue management processes.
4

4. Leaders..18% have pricing &
revenue management as part of
their strategic planning process,
reporting lines make
coordination tricky.”
Price & Revenue Management are intrinsically “matrix-ed” in nature,
but who owns profitability?
Direct Reporting lines are important but so is the accountability for
pricing and margins across geographies:
A key part of re-aligning the organisation around revenue lifecycle
management is incentivising alignment down and across the
organisation from Pricing to marketing, sales operations, finance and
service.
European survey pricing, profit & Revenue lifecycle management –
Pricing Organisation & Maturity
5

5. Progressing..34% are in
the process of re-engineering
pricing & revenue
management processes and
have a clear goal in mind.”
All successful transformations have c-level sponsorship; Experience
suggests that sponsorship from the offices of the CFO together with
Regional General Management are the kingpins to pivotal change.
There is some way to go in terms of asserting Price, Profit & Revenue
Management as an integral part of strategic planning.
European survey pricing, profit & Revenue lifecycle management –
Pricing Organisation & Maturity
6

6. Beginners.. 87% of
respondents have only just
started to become more
proactive in pricing but lack
of data is making progress
difficult.
Timely access to data, but also qualitative market intelligence is
critical to forming fact- based and optimal commercial strategies.
The implications for many are that they are driving a type of
“commercial fog” and are with little time or capability to react when
events emerge out of the mire!
Organisations often overlook the information sources within their own
4 walls or that may be acquired directly from the channels waiting to
be discovered.
European survey pricing, profit & Revenue lifecycle management –
Pricing Organisation & Maturity
7

7. Time to decide what to do next on
Pricing Organisation & Maturity in your
business?
Madalina Preda,
European Pricing Director
“Building a pricing organisation to win
the pricing battle”
Download
I’m FREE
European survey pricing, profit & Revenue lifecycle management –
Pricing Organisation & Maturity
8

8. The continuation of austerity measures in Europe is affecting the
Life sciences industry in many ways: from the drugs made
available to patients, to the way in which manufacturers engage
with their customers, to the impact pricing strategies have across
geographies.
CHAPTER 2:
Pricing Strategy & Performance
Management
The new normal: Growth is slow, flat or down!
9

9. European survey pricing, profit & Revenue lifecycle management –
Pricing Strategy & Performance Management
Vast.. 87% see
International Reference Pricing
as pivotal to competitive
advantage; but only 12% have
suitable technology & processes
in place
Recent years have seen a very significant increase in the pressures
prices and revenues, IRP and other techniques like tendering and
rebating have fast become a primary vehicle for buyers and payers
to influence healthcare costs.
Today’s enterprise class technology solutions for IRP help tackle
inefficiencies and drive consistency in making optimized and
proactive decisions, for new product as well as both patent
protected and off-patent.
10

10. Tendering is fast becoming very pervasive, some organizations seeing
as much as 80% of their European business driving by tendered
opportunities.
Without the right competencies and skills in place, large complex
organizations will be inefficient in being consistently successful in
managing their tender business and win-rates also average values of
a tender business will suffer.
Market-share in some markets are driven primarily by tender success
and the revenue and profit value of the tender business.
Hungry .. 65% want more
training, more best practices &
more competitive info to
increase success rates and
effectiveness in tenders.
European survey pricing, profit & Revenue lifecycle management –
Pricing Strategy & Performance Management
11

11. Stressed.. 71% of the
respondents are either not
measuring performance or do so
sporadically based on business
context”
European survey pricing, profit & Revenue lifecycle management –
Pricing Strategy & Performance Management
Price, profit and revenue lifecycle optimization is often a poorly defined
operating process; it is often broken and disjointed, causing
performance reduction.
The mandate and remit of pricing often lacks clarity and is not very well
understood, consequently pricing performance definition with clear KPIs
is often lacking
“If you can’t measure it, you can’t improve it!”. Stakeholders in the
performance process will be unclear on desired outcomes and they will
be less effective in focus and collaboration efforts.
12

12. Mature.. 6% use integrated
revenue management solution
with global data source;
Challenged.. 58% use excel or
multiple point solutions .”
Until very recently, integrated revenue management operations have
been a must-have only in some industries – such as airlines, hotels,
consumer products; this is no longer the case: in life sciences, integrated
revenue management is fast becoming a matter of effectively addressing
increased commercial complexity.
Because price, profit and revenues are created and delivered by many
functionally, geographically and divisionally dispersed stakeholders. Non-
collaborative tools and point solutions will fail to deliver consistent
process and data collaboration for all stakeholders.
European survey pricing, profit & Revenue lifecycle management –
Pricing Strategy & Performance Management
13

13. Mark Hill,
Senior Director,
Market Access EAME
Time to decide what to do next on Pricing
Strategy & Performance Management in
your business?
“Dynamic IRP on Launch Sequencing &
price management”
Download
I’m FREE
European survey pricing, profit & Revenue lifecycle management –
Pricing Strategy & Performance Management
14

14. CHAPTER 3:
Pricing Execution & the role
of Value
61% indicated a stronger focus on pricing as a
means to deal with economic downturn and
protect profitability!
15

15. Discrepancies are caused by the considerable multi-layered complexity
which often exists in the gross-to-net price and margin process;
Discounts on-invoice, off invoice as well as rebate and incentive
allocation to products and customers are often managed in a non-
consistent manner.
Customer, product and market price and profit transparency is lost in
the mix which in turn cause difficulties in tracking and measuring the
effectiveness of commercial strategies in execution.
European survey pricing, profit & Revenue lifecycle management –
Pricing Execution & the role of Value
Leaking..59% face
discrepancies between order
& invoices; 65% do not have
regular exception reporting
16

16. Unified..71% agree that
sales teams are not well
educated on pricing to protect
margins”
European survey pricing, profit & Revenue lifecycle management –
Pricing Execution & the role of Value
Traditionally sales organizations are expected to deliver revenues and
have often not been measured on price and margin performance.
Value based selling, strategic selling and other value and margin
focused tactics have often not been prioritized.
Skillset and capability shortages are frequent and many companies are
looking to upgrade their sales organizations to reflect the new
commercial reality in the industry.
17

17. Dominant.. 82% have
not linked sales incentives to
margin performance.”
European survey pricing, profit & Revenue lifecycle management –
Pricing Execution & the role of Value
The past 3-4 years have seen a new commercial reality emerging in
the European life sciences industry. Few organizations have
traditionally had their sales organizations focused on value selling and
compensation schemes have been aligned with this.
The sales function is an integral component in the price, profit and
revenue achievement lifecycle: Innovative life sciences organizations
are realizing this and starting to create a better balance of incentives.
18

18. Price and profit pressures, driven by customers and competitors
chiefly, is promoting value based selling to the forefront.
Sales is starting to be seen as a core component in the value
creation and selling process, some times even seen as a leader:
Fundamental to the evolution of the sales teams is the balance of
incentives between price, margin and revenue performance.
European survey pricing, profit & Revenue lifecycle management –
Pricing Execution & the role of Value
Divided.. 54% find their
sales teams do not highlight
value systematically in sales
process
19

19. Value and unique selling points compared to the competition is
critical for commercial success.
Innovation in value is not just in product features, but can also be
in application of how products are used to exploit their full
benefits, for example dosage, diagnostics and other aspects offer
ways of enhancing value.
European survey pricing, profit & Revenue lifecycle management –
Pricing Execution & the role of Value
Positive.. 65%
believe customers see
value as an asset over
of pricing levels
20

20. Lack of pricing control and invoice transparency creates imbalance
between optimizing deal, local market and regional prices.
Commercial dynamics in multiple market environments create a reality
where any time lag for data to support pricing decisions for involved
stakeholders means they quickly become reactive as a consequence.
Unwanted price transactions can often cost millions in reduced
margins by the ripple effects that reference pricing has across
markets.
European survey pricing, profit & Revenue lifecycle management –
Pricing Execution & the role of Value
Invisible.. 71% lack
near real time visibility
of sales teams deviation
for target margin levels
21

21. Effective collaboration, process coordination and discounting
discipline requires ability to control and manage to defined
outcomes.
Improved visibility of discounts improves margins and improves
commercial strategy consistency and execution.
Discounting reduce profitability and impacts well beyond
individual deals or markets, with reduced net margins as a
consequence.
European survey pricing, profit & Revenue lifecycle management –
Pricing Execution & the role of Value
Proactive.. 82% are
working to gain visibility
of discounts across
geographies and
measure impact on
profitability.
22

22. European survey pricing, profit & Revenue lifecycle management –
Pricing Execution & the role of Value
Ray Almeida,
Vice President,
Global Sales & pricing analytics
Time to decide what to do next on Pricing
Execution & the role of value in your
business?
“Global Pricing: maximising effectiveness
with real time insights”
Download
I’m FREE
23

23. CHAPTER 4:
So What?
• Pricing and revenue management is centric to an
organisation’s profitability.
• Processes flow across functional silos, across geographies
via multiple technologies creating disconnects, revenue
leakage and margin erosions and lack of visibility
• Reporting lines are varied but profitability needs a board
level owner to ensure consistent strategic focus and
reporting.
• Pricing and revenue management done well are data,
accuracy and time dependent.
• Technology is a successful enabler to achieve end to
end process and data integration.
• To move from operational pricing to strategic &
proactive pricing and revenue management change
management is required to achieve increased
productivity. 24

24. Join our Linked-in group:
European Life Sciences, Price, Profit & Revenue lifecycle Management Forum
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Life Sciences organisations talk
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and strategies that add value: IRP
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