Why first-mover advantage is being eroded by disruptive pricing and the consequences for pharma
Although pharmaceutical companies are no strangers to price competition, this has traditionally been around legacy products, not new, first-to-market offerings. As this paper illustrates, however, the pricing environment for new products is being reshaped by intensified competition from fast followers who are bringing rival offers to market more rapidly and, in many cases, at heavily discounted rates. Our analysis of market activity suggests that the rate of discount is related to the goals of new entrants in any given case, be it to overcome inferior clinical value propositions, gain market share quickly, or exploit the potential to be used in multiple follow-on or orphan applications.
Whatever the reasons, the threat to incumbents is real – not just in curbing first-mover advantage, but via the possibility of future regulatory changes in some markets to enforce discounting where there is competition. In such an evolving and dynamic environment, the onus is on incumbents to revisit launch and post-launch pricing strategies in order to optimise ROI and profits in future.
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