Pricing Strategy and Discount Mechanisms in Dermatology Market
Client Background
The client is a leading pharmaceutical manufacturer competing in the dermatology market. The objective was to study pricing strategies, discount mechanisms, and substitution trends to enable the client to align its pricing and distribution strategies more effectively against competition.
Business Challenge
1) In contrast to other therapies where direct dispensing by doctors occurs in less than 30% of cases, the dermatology segment shows a notably higher rate of direct dispensing.
2) This unique distribution pattern, combined with the practice of substitution — influenced by margins — and disparate discount strategies by companies, made it challenging for the client to effectively position its products in the market.
Approach
To address these challenges, a detailed competitive industry analysis was conducted with the following key components:
Interviewed stakeholders, including dermatologists, stockists, and industry experts, to gather first-hand information on pricing, discount practices, and distribution mechanisms.
Analysed pricing schemes, discount charts, and rollout mechanisms of key companies to benchmark practices across the industry.
Classified companies based on their discount strategies, substitution practices, and distribution models to enable a comparative view.
Identify key drivers for substitution and discount mechanisms — noting a direct relation between margins and substitution — and how companies leverage specialized programs and stockists to implement their pricing strategies.
Outcome and Impact
Comprehensive Market View
The study provided a clear understanding of industry practices, pricing strategies, and distribution mechanisms — valuable for designing a competitive pricing and distribution policy.
Decision Support
With these insights, the client can implement tailored strategies to control substitution, maximize margins, and match or outperform competing companies’ pricing and discount practices.
Business Impact
This study provided insights on pricing policy, discount structures, and rollout mechanisms, helping the client to be more competitive and profitable in the dermatology segment.