How understanding demand and margin can improve brand performance
Impact of COVID-19 on the Pharmaceutical Industry
At the time the “Battling the Big Squeeze” whitepaper was moving through the final stages of editing, news of COVID-19 was just beginning. The impact on our daily lives has been, at least in the short-term, significant to say the least. With the increase of social distancing becoming reality, there will also be an impact on nearly every aspect of the pharmaceutical industry.
IQVIA is closely watching market, brand, payer, prescriber, and patient trends amongst many others. News of nearly every manufacturer moving to a work from home environment, healthcare professionals limiting visitors to the office to only those in immediate medical need, and many people deciding to stay home will impact demand and manifest itself in both top- and bottom-line revenue pressures. The longer the disruption lasts, the more pressure we will see. At the core of the “Big Squeeze” is the combination of demand and margin pressures. Specifically called out is the impact on eroding market size as one of the factors that contributes to the challenges. As such, the impacts of
COVID-19 could include:
- Fewer treatment naïve patients seeking care – at least in the short term
- Declines in rep access impacting the ability to detail prescribers which will make it harder for brands to move market share
» This may be a benefit to incumbent products as market share erosion from competitive switching slows
» Prolonged declines of rep access could also necessitate a shift in promotional mix
- Launch products being adversely affected as both patient inflow and prescriber access are simultaneously curtailed
- Patient, payer, and pharmacy pushing to mail order and increasing 90-Day utilization
- Distribution challenges threatening supply chain management and active ingredient availability
- Patient care disruption driven by economic rationalization impacting patient adherence, and subsequently, patient value
- An increase in the use of telemedicine as patients and providers seek to limit in-person interaction
- Many others…
- Top-line pressures escalating the need to tighten access spend
- Shifting patient demand from Commercial channels into Medicaid could impact the total cost of access as patients
move to more costly payer channels
- Revenue leakage through contract management, 340B de-duplication, and copay spend will take increased focus as
manufacturers work to preserve revenue
- Downstream impacts on SG&A being driven by both top- and bottom-line challenges
- Many others…
- Policymakers are already called upon to address healthcare reform and patient affordability, which could could be exacerbated by an economic downturn, vulnerability in the supply chain, and calls for pricing regulation
With uncertainty on the duration or magnitude of the COVID-19 impact, the entire world is moving into unchartered waters. We must collectively deal with a rapidly evolving social, economic, and political landscape.
Globally and within the US, IQVIA is well positioned to help clients strategically identify how, where, why, and when challenges in demand and margin will impact business, operations, and strategic decision-making. Through gaining a better understanding of demand and margin forces, our clients are better informed and prepared for dealing with both known and unknown challenges as they emerge from this situation.
VP Market Access Center of Excellence
Brands everywhere are under pressure, as both demand and margin challenges converge. Symptoms of the “Big Squeeze” can be seen in cut budgets, restricted and/or misallocated sales resources, incorrect financial accruals, investment uncertainty, and more missed forecasts than can easily be counted. Manufacturers across the industry – large and small – struggle to diagnose and adjust to market and margin dynamics in time to to be effective in developing and implementing mitigation strategies. Just a few of the end results are the year-over-year continued downward pressure on net sales, the turnover of brand and market access teams, the cutting of SG&A expenses, the inability to invest and innovate, and the kicking of the proverbial can down the road by burdening future launches with unrealistic sales expectations. The Life Sciences industry is under more pressure today than at anytime in its history. In this whitepaper, we will look at several demand and margin factors that impact brand performance as well as strategies and tactics that manufacturers can explore to help battle the “Big Squeeze”.
ValueCentric is the leading data aggregation, analytics, and reporting platform for healthcare manufacturers and their delivery partners. Its innovative technologies cleanse, normalize, and integrate data to provide a complete picture of the product and patient journey for a variety of manufacturers, including Specialty, Branded, Generic, and Medical Products companies. Their cloud-based platform, ValueTrak, enables dynamic data sharing to achieve operational efficiencies, improve market access, and optimize the ability to serve patient needs.