Our client, a leading international pharmaceutical company, planned a premium brand launch in India and wanted our help to achieve the best possible price specific to the Indian market. Companies are free to decide prices of drugs not on the Essential Drug List in India. However, healthcare costs are primarily out of pocket; consequently, affordability is a key factor that affects pricing decisions. Another consideration was that, while the product would have exclusivity at launch, generics were expected to hit the market shortly after.
We agreed with the client to use Discrete Choice Modeling (DCM), a trade-off technique used to understand customer decision-making. We also used an alternative method of pricing research to apply a more rigorous approach. Price Sensitivity Meter (PSM) was used in conjunction with DCM, and the two modeled against each other. DCM was a fairly new methodology for Indian pharmaceutical pricing research and brought with it a unique set of quality control and administrational challenges that are not common in Western markets. For example, due to infrastructural and compliance issues it could not be completed as an online exercise but was carried out with traditional pen and paper.
The two methods supported very different pricing strategies; PSM delivered a much lower price, but DCM delivered value-based pricing. The findings of the study challenged the client’s original perceptions and gave them valuable insight on the different pricing strategies that they could adopt to achieve optimum results in the market environment.
Our ability to immediately grasp the bigger picture and go beyond the brief enabled us to show the client that the right solution was not the most obvious one. We ran the two research models simultaneously to recommend an optimal price that would have a more profitable outcome and also respected the market conditions. Our solution was also sufficiently flexible to enable the client to react quickly to market change and still achieve a strong ROI.