most of the other countries in Europe, in Asia, even in developing markets have a
healthcare system that say we're not going to pay that much money for this.
So, there's no way, so it's imposed. So, here you look at the demand analysis,
you look at prescribing preferences. So, obviously, you want to create demand.
So how do you create demand? You go and you have your sales force go
talk to the physicians. You start advertising in the newspaper.
You start going online. And we'll talk a bit more about this.
So, it's what I call, you know, you basically want to build the demand.
and you start forecasting your revenue and profits, it's another thing when
you're in new product planning. And you're CFO, and you have to present
to your board and you have to present to your senior manager, they often, they
will ask you. So based on that product profile that you
have as a phase one drug, what's your NPV?
What's your net percent value three years out when the drug is being launched,
knowing that we are going to invest $500 million?
When are you going to reach, break even? But more importantly, when are you going
make money? And very often, those strategies in
pharma, what is being pulled from research, is based on those commercial
strategies. And, I will be honest with you, in a
market where you, where there is already president, i.e., there's already other
therapies that have been treated that are already available, so you are a, let's
say, a better [UNKNOWN] product, okay? It's fairly easy to develop a forecast.
If you are a best in class and you are first in class, it's also fairly
straightforward because you can say, well, we're going to get, nobody treats
those patients, so we should get a pretty decent size of the market.
We're not going to get 100% because that never happens but we should make money.
There is no questions. The issues when you are somewhere in the
middle and you have an average product in a market that's already crowded and you
are scratching your head and you are going like, wow, you know, but that's all
we've got. So, are we going to invest in that or
should we just can it and then should we just send everybody go home and go play
and do something else? So that's where, you know, I mean, that's
where you really have and you get a lot of pressure on you, probably planning on
the side, because you have to put these forecast revenue and profits which, by
the way, I'll tell you another thing, they're always wrong.
Okay. They're always wrong.
segmentation, another thing you have to think about, we talked about this, when
you are thinking on your pricing strategy, private insurance, national
payer. Who is drive- drivers of therapy uptake?
Health outcomes, again, from microeconomics.
what kind of physicians? You know, opinion leaders used to be the
key things to launch a drug. I remember when I used, when I was in big
pharma, this was ages ago. we had to develop really, really strong
opinion leader network. Well, they are still important today, but
they are nowhere near, even though they'd like to think so, as important as they
were. And the reason is, because they are not
the one paying it, okay? And, if there are pharmacy benefit or
they are insurance companies, saying, sorry, you know that new drug, that new
antibiotic that you have to treat basic bronchitis that costs $10,000 a month.
Well, Penicillin is cheap, why do I need that?
So, you have all these issue now that are very important and you need to really
inderstand this when you are doing pricing strategy.
And then the other thing, which is very interesting that, we're not as, as
efficient as they are today, is this whole parallel trade.
And I'm sure you guys, you know, you all are in the internet.
The internet is a fantastic tool as far as I'm concerned.
But it's what I call the great equalizer. Okay?
Everybody can have the knowledge of your physician, whether or not you understand
it or I understand it, is different question.
But you can all go to PubMed and pull up the, the the, the papers are published.
Well, you can do the same thing with pricing if I work for the government, or
if I work for, even better, a private half insurance company, I am going to go
and I'm going to pull price in Portugal, price in France, price in, and I'm
going to find somebody, even if I don't speak Portuguese or I don't speak
Japanese or I don't speak, you know, Thai or what have you.
I'm going to find somebody in my organization who does and tell me what
the price of the drug is, because those drugs are launched internationally as you
have seen. And then, when my you know, great account
manager comes and say, hey, we'd like to get your drug approved on the insurance
on, on the [UNKNOWN] and it's going to cost you, you know, per pill, I'm just
going to make [UNKNOWN] numbers up, $100 a pill.
And here I have my data, and I have a big smile on my face, and I go, oh, by the
way, the average price in all developed countries is $5 a pill.
Our neighbors in Canada is 4, our neighbors in Mexico is 3, and you want to
charge me how much again? 100 bucks a pill?
I don't think so. All right?
So, I mean, that's one of the things that you have to think about, and one other
thing that's happening, that pharma is really upset about is a lot of parallel
importing, which is very dangerous. And the FDA is very worried about this.
Where people buy, basically, over in che-, over in countries where the drugs
are cheaper the drug and then sell it here.
And that's a really, really big issues especially for drugs that sometimes are
physician-controlled. Because if I'm a physician, I have a
practice, I have a business, and I can get an oncology drug, for example, that I
can get ten time cheaper coming from China that supposedly is the same thing
that I have, that I would buy here locally.
Well, I'm going to make more profit because I'm still going to charge the
same amount. So that's some of things and it's not
just for, you know, physician tool but it's also for anything.
Pharmacy as well, if you have a unique phar-, I mean if you have your own
pharmacy. Well, I'm going to be better off if I
can, if I can, if I can have a 10% profit, 10% margin profit versus a 100%
profit margin. So, that's some of the things also that's
becoming very, very important actually, and a number of both pharma and
government organization are looking at that parallel trade.
Another thing that's very important in pricing especially when you have a new
drug is which country are you going to launch first.
And this is a great graph because it really gives you a sense as to, you know,
percentage of where you know companies should launch first, first.
You are really not going to launch first in Portugal or in France.
And I know this for a fact because, you know I, as I said I'm very familiar with
the pricing in Europe which is Portugal I believe now from the of the developed
countries has the lowest pricing in the world.
Well, if you have a new drug and you first launch in Portugal and you get set
at a very low, basically, what I call the floor.