Volume 3, Issue 7


Pricing strategies in pharmaceutical marketing

Author: Imamuddin Khoso, Rizwan Raheem Ahmed, Jamshaid Ahmed

Pharmaceutical products can be classified under two main categories: Prescription products and OTC products. The criterion for division is whether a product is marketed to the medical profession or directly to the consumers. Price is one of the most interesting and controversial topics in pharmaceutical marketing. The responsibility of allowing a particular price lays with the regulatory bodies, as in case of Pakistan, The Ministry of Health. In view of the peculiar characteristics of pharmaceutical industry, the different approaches actually applicable and practiced in the industry as Cost-Plus Pricing, Break-Even Pricing, Value Based Pricing, Competition Based Pricing, & Economy Pricing. This attempt made to come up with possible pricing approaches and strategies for pharmaceutical products. The amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service. Internal factors affecting pricing include the company’s marketing objectives, marketing mix strategy, costs, and organizational considerations. External factors that affect pricing decisions include the nature of the market and demand, competition, and other environmental elements. Besides that, a company may amortize its R&D cost over a period of time, which becomes an additional cost component. Generally, a 60% and above gross margin is considered to be reasonably good in pharmaceutical industry. However, in case of a new research molecule, the margin may be as high as 500-1000%.


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