Health Economics in Emerging Markets: Shifting Focus From Haggling to Health Outcomes

Cutting Edge Information Explores Trends in Emerging Markets


RESEARCH TRIANGLE PARK, NC--(Marketwire - June 14, 2010) -  Life science companies that hope to succeed in Emerging Markets must change the dialogue of negotiations to focus on positive health outcomes ROI rather than getting mired in short-term pricing wars, according to research firm Cutting Edge Information.

As companies work to get their drugs and devices approved in new markets, they should set their top-level market access goal to be getting political and health leaders thinking in terms of health outcomes and long-term healthcare costs rather than bare-knuckle price wars.

Strategic drug pricing can be helpful in first- or second-round entries in many emerging markets by lowering barriers to entry. But according to Cutting Edge Information's research (http://www.cuttingedgeinfo.com), dropping prices is a deceptively easy step. Negotiating a deal based on a price cut requires little effort on the part of the healthcare payer. But the long-term effects of over relying on pricing appear to be negative for both sides of the negotiating table.

"Countries like Russia and the Philippines have demanded that companies lower their product prices to controls set by the government," said Jason Richardson, president of Cutting Edge Information. "As a first step to gain a seat at the table, this works. But it may be counterproductive long-term to a health economics- and outcomes-focused strategy in these crucial new markets."

Cutting Edge Information analysts recommend that market access and product management teams seek to start negotiations based on clinical and health economics data, not just price bargaining. The effectiveness of this strategy will ultimately depend on payer attitudes -- but the more often companies go to the negotiating table with this information in hand, the more all parties will become accustomed to negotiating on those terms.

This approach is just part of the evolution of Emerging Markets strategy. Until outcomes and economic data become standard talking points, teams must think carefully about the long-term strategic impact of pricing within each market.

Later this summer, Cutting Edge Information will launch a study that builds on the company's longitudinal analysis of companies' market access strategies, with a particular focus on geography (U.S., other developed markets, and emerging markets).

For more information, please contact research director Elio Evangelista at elio_evangelista@cuttingedgeinfo.com or 919-433-0214.

Contact Information:

Contact:
Elio Evangelista

919-433-0214