Study reveals that global pricing teams outsource 50% of activities

On average, global pricing teams outsource 50% of activities that they budget for, according to study of pharmaceutical pricing teams by Cutting Edge Information.

The analysis in, "Pharmaceutical Pricing Strategy: Developing Teams to Calculate and Communicate Product Value," shows that individual companies vary widely in the amount that they farm out to vendors. Additionally, no global pricing team that holds any tasks in-house outsources more than 50% of its budget.

US-based pricing teams differ from global pricing teams in that most outsource the majority of their budgets. The study revealed that an average of 70% of US pricing team funding goes to vendors. Of the surveyed pharmaceutical companies with European pricing teams, only two small companies outsource all pricing funds. The remaining European pricing teams outsource only 20% to 30% of their activities. Only one small drug manufacturer interviewed for the study, works solely in emerging markets. This company outsources only 5% of its pricing budget, most likely due to a lack of effective local partners in developing countries.

"The most commonly outsourced activities among global pricing teams are market research and pricing studies," said Jacob Presson, research analyst at Cutting Edge Information. "More than half of surveyed global pricing teams also outsource data modeling. A significant, though lower, percentage of companies outsource market sizing."

National pricing teams outsource the same tasks at similar rates: 92% outsource market research and 75% outsource pricing studies. The least commonly outsourced activities — market sizing and data modeling — however both are more likely to stay within the national-level teams than global ones.

"Pharmaceutical Pricing Strategy: Developing Teams to Calculate and Communicate Product Value" (http://www.cuttingedgeinfo.com/research/market-access/pricing-reimbursement/) features product pricing support data covering key stages of development, ranging from the pre-clinical stage through a product's second year following launch.

Use this report to:

• Benchmark pricing teams' budgets, headcounts and structures.
• Provide the best and most accurate information — through pricing studies and outcomes research — to payers and stakeholders.
• Assess pricing team priorities, as well as health economics and comparative effectiveness research's involvement in pricing decisions.
• Mitigate challenges including reference pricing, healthcare reforms, austerity measures and government cost cuts.

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