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1.5-10% improvement in 'revenue capture' is possible
Revitas Inc. (Philadelphia, PA) has been providing software for years that is used by pharma manufacturers and wholesalers to plan for, and manage the terms of pricing contracts among trading partners. Revitas used to call this activity “enterprise revenue dynamics;” now it is using the term “revenue acceleration.” One of its competitors, Model N, uses the term “revenue management.” Regardless of the terminology, the goal is to keep better track of contracts and government pricing schedules, and to do modeling in order to predict the impact of pricing decisions on US and international contract negotiations.
Now, Revitas is partnering with the consulting firm, Alliance Life Sciences (Somerset, NJ), to incorporate the latter’s PriceRight IT solution into Revitas’ Flex platform, a software suite that includes contract and revenue management tools. The end result, says Jon Smith, VP of alliances and business development at Revitas, is a single solution for global pricing, beginning with tender response and through to rebate administration. By managing these processes carefully, manufacturers can improve margins by 1.5 percentage points, or capture 10% more revenue in the bid-and-tender process.
Major manufacturers go through dozens of price changes, in dozens of markets around the world, every year; a complication is that some countries (especially in Europe) have a “reference model” for their own pricing decisions based on prices in other countries. And within the US, there is a complex interplay between pricing in commercial markets as compared to government programs, with rebates to federal and state governments based on price timing.
“More and more, we see pharmaceutical manufacturers seeking to further optimize prices impacted by the complex interdependencies of global product pricing decisions,” said Mark Costa, an SVP at Alliance Life Sciences, in a statement. “Many global pharmaceutical companies rely on Alliance Life Science’s PriceRight solution to conduct data-intensive analysis in order to develop global pricing strategies.”