Big Pharma Increasingly 'Underpricing' Drug Launches in Europe & Weakening Long-term Growth, Reports Cambridge Pharma.

Health & Medical Writers

CAMBRIDGE, United Kingdom--(BW HealthWire)--April 25, 2001

-- Exclusive Benchmark Report Reveals Lax Drug Marketing in Pursuit of

Quick, Lower Returns --

Cambridge Pharma Consultancy, a leading international pharmaceutical consulting firm, today announced in an exclusive new report that most major pharmaceutical companies are eroding their long-term earnings by sacrificing launch prices in Europe.

Management seeks speedy access-to-market and immediate sales at the expense of establishing adequate pricing for the product's lifespan. U.S. drug giant Merck was reported as standing out from the crowd with its performance on Vioxx.

The findings are revealed in Cambridge Pharma's "European Pricing & Reimbursement Review 2000," which analyzed pricing and other drug launch practices in Europe for major pharmaceutical launches in 2000. The report is the first of a planned annual analysis comparing individual company performance to Cambridge's 10-year industry benchmark study of European pricing and reimbursement performance.

The study finds that, in 2000, pharmaceutical companies tended to make significant price concessions in reaction to cost-containment measures, competitive pressure and investor demands for quick returns.

"There seems to be a troubling trend to hastily concede price in order to access markets more rapidly," says Ron Baynes, Executive Vice-President, who leads Cambridge's European pricing and reimbursement practices. "But once products are locked-in at prices that do not reflect their true value, it significantly limits the drug's total returns, as well as the company's overall growth."

Cambridge also concludes that pharma companies' capabilities to create and communicate the value of their products to price regulators are lagging behind the increasing sophistication of the regulatory bodies themselves.

The report also finds that, in 2000, the number of new products accessing European markets was the lowest since 1992 (only 10 from the top 20 companies), further highlighting the need to ensure that maximum economic value is gained from every launch product.

The report says that a culture of "concession and compromise" is growing within pharmaceutical companies. "Senior management can easily see the time delay in achieving reimbursement," says Dr. Joseph Zammit-Lucia, President and CEO of Cambridge Pharma Consultancy. "However, it is more difficult to make the call as to whether a product has been adequately priced. The pressures within companies are always to concede price and start getting sales. In 2000, these pressures have largely won out in the market."

Cambridge Pharma Consultancy (website: www.cambridge-pharma.com), with corporate offices in New York City and Cambridge, England, is a leading international firm specializing in the pharmaceutical and health care industries. Cambridge Pharma Consultancy is known for tackling clients' business issues by providing innovative, practical solutions that yield real-world competitive advantage. Clients include the leading pharmaceutical corporations such as GlaxoSmithKline, Pfizer, Merck, Bristol-Myers Squibb, Eli Lilly and prominent biotechnology companies such as Genentech, Gilead and Cephalon.