Strategies and corresponding actions for managing top-line revenue growth and margins in the life sciences industry appear to be undergoing a sea change. Numerous market drivers — including increased regulatory scrutiny, patent expirations/aggressive generic substitution, depleted pipelines, price pressures and controls, and emerging global markets — are dramatically impacting the overall top-line growth and margins of many life sciences companies. Nowhere is this more apparent than in the rapidly evolving relationships between pharmaceutical manufacturers and the companies that distribute their products.

Now that the shift to fee-for-service (FFS) agreements between pharmaceutical manufacturers and the “Big Three” wholesalers is essentially complete, we have seen many manufacturers begin efforts to improve these contracts in the areas of pricing, payment terms and performance measurements. With the second generation of FFS agreements looming on the horizon, we anticipate that a new, activity-based FFS pricing model could emerge. This model could shift the focus from price-driven growth to manufacturer-valued services. Additionally, as distribution services and fees become more transparent, we expect manufacturers to start looking at distribution as a continuum of options, rather than a binary decision.

“Smoother Sailing in the Distribution Channel,” which was featured in Future Pharmaceuticals (Q4 2007 edition), discusses FFS models and includes three case studies.

To learn more, download the point of view and case study documents below.

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