Pharmaceuticals

International Price Corridor

How we establish an international price corridor

Our analyses and recommendations are not restricted only to the "classic" question, "What is the optimal price for a particular drug?" They also include international price strategies which reflect country specific situations while simultaneously keeping the price differences between the countries in a consistent framework.

Optimizing the prices of a new product in various countries might result in extreme price differentials between countries, which are due to the differences in customer behavior, medical school curricula, physicians' preferences, competition, costs and, most of all, legal regulations and taxes.

Pitfalls of large price differentials

If a company were to launch a product with large price differentials between countries, then the following factors:

• parallel trade
• international price referencing by authorities
• political pressure

would result in a rapid decrease in the prices in the high price countries. To avoid such a price erosion with dramatic consequences for profitability, a company must develop and implement a proactive international pricing strategy which avoids price differentials which are too large (see example “International Pricing Strategy for a New Anti-Psychotic Drug”).