How did SKF evolve from ad hoc to a more sustained view on pricing?

We listened to Christian Jonsson, Operational Pricing Manager with SKF on his experience going through the Certified Pricing Manager course.

Q - How was the situation - on pricing issues - at your company before you joined the Certified Pricing Manager Program? What were the challenges?
     We had an ad-hoc approach to pricing activities. No long-term view on how to develop it in a sustainable way.

Q - What triggered you to join the CPM® programme? 
      When I read the white paper from EPP on a “pricing maturity model” (editor's note www.pricingmaturity.eu),  I felt that this was the type of approach we needed for lasting improvements

Q - How did the CPM® programme help you to develop the pricing maturity in your organisation? 
      The CPM program offers a very structured approach. It shows that for lasting improvements, pricing activities need to be seen as a continuous process with different levels of “maturity”, not as ad-hoc projects.

Q - Give a short description of the project you delivered for the certification project. What was the challenge and what were the concrete results in €.
      I created, based on industry best practice, my own experiences and feedback from internal stakeholders, a process for improved efficiency in reference price list changes. All other things equal, this should give minimum 400 TEURO annually in increased revenues. Additional bottom line improvements should come from reduced price administration.

Q - What was the impact on the profit margin? Will the training result in other concrete projects on pricing?
       Learning about best practices in the CPM programme makes it easier – and faster – to define your own pricing activities and priorities. It enables the creation of an internal continuous process for follow-up, analysis   and improvements.

Q - How do you feel now after completing this programme? What has changed, like in more visibility, more top level support in pricing in your company, better stakeholder relationships, more involvement in innovation, clear KPI’s,… 
      Pricing has definitely come much further up on the corporate agenda. In today´s economic climate it is realized that sustainable pricing performance requires a lot of hard work, it is not a matter of just increasing prices.

Mounib Jaballah, Pricing Manager at LFB explains his instant gains in 10 months, thanks to pricing governance and pricing policies

 

How was the situation - on pricing issues - at your company before you joined the Certified Pricing Manager Program? What were the challenges? In the pharma industry, knowledge of Market Access and Pricing is critical to ensure growth on profitability. Therefore, the main challenge for a company like LFB is to increase the level of pricing knowledge and spread it to the operational teams and affiliates. The pricing function has been created in the access dept only mid-2015. We basically start from scratch in pricing which was really challenging when we have to launch products. Therefore, many projects have been conducted at the same time including pricing governance, pricing policies, pricing strategy for new products, tender management, change management…

 

What triggered you to join the CPM® programme? The pricing position in the LFB is new and the challenge is high. I wanted to know more about pricing and how I have to move forward to succeed in my new position. What are the different stages of pricing? What are the mistakes to avoid? How can I improve the margin and the value of our products?... many questions to solve before building pricing in the LFB. What was interesting is the broader vision of the subject, not limited to our business specificities.

How did the CPM ® programme help you to develop the pricing maturity in your organisation?  

I appreciated the CPM®_level2 programme as, it was oriented on “how we can sell and avoid margin leakage?”. Really result and profit oriented.  Today, I noticed that a wrong pricing leads to “leave money on the table”. So, how can we define a price in a country for a product and who can decide a price? The CPM®_level2 programme helps me to find answer to these 2 questions and I succeed to set up a methodology for each pricing strategies, going into deeper analyses of prices in a country to find the right price leading to revenue maximization. The right price is not a price based on cost!

Give a short description of the project you delivered for the certification project. What was the challenge and what were the concrete results in €. To avoid pricing leakage, a right pricing governance and pricing policies have to be set up. Level up operation teams and change the mentality is critical for the LFB. Our goal through this project is to reach a maturity in this field and train the International operational teams to be more efficient during tendering and contracting situation.
è Think Revenue Maximization. Important Instant gains

What was the impact on the profit margin? Will the training result in other concrete projects on pricing?  Significant number of K€ in 10 months, but also a start of change in the company on how to approach prices (more robust business case, higher starting points…). Other pricing projects are ongoing. We are focusing today on a launch of a new product with a new pricing approach (value based pricing). Tender project is ongoing we expect through this project a better approach in tendering avoiding pressure on the supply chain and maximizing revenue.

How do you feel now after completing this programme? What has changed, like in more visibility, more top level support in pricing in your company, better stakeholder relationships, more involvement in innovation, clear KPI’s,… Such results allow to have a better support from the management and the top management. It helps a lot to spread the pricing knowledge in the company and bring new opportunities to start new projects linked to pricing. Mostly, it comforts us in the choice we have made in the company to strengthen the function. Moreover, it also helps building the pricing plan for the coming year

You have been a pricing manager since several years now. How has the function of ‘pricing manager’ evolved during the years? Pricing role in the pharma is strongly linked to market access. Theses 2 functions have to involved earlier in launches to well define the profitability expected from the management. Pricing is also dynamic and specific to each country. As a price in a country can affect a price in another country a pricing manager has then an operational and global role. As long as price will impact the bottom line of a P&L – it means always – a pricing manager will be involved in strategic projects having always a vision of revenue maximization.

 

Got interested in the Certified Pricing Manager programme, developed by the European Pricing Platform?  Find all the information on content and calendar here. If you need more information, do not hesitate to contact britt.dejager@pricingplatform.eu.

 

'Is pricing the new CFO topic?' by Nikolas Beutin - Price Waterhouse Coopers

- The big & global challenges for the pricing directors in companies, worldwide: what are they?

In the “good old days” pricing directors could easily helpt to sell what their company produced: the customers very often had a low price sensitivity.  Pressure of competition was low and only few substitutes and imitations were there. The customer was brand loyal and rational and pricing took place in microcosm marketing between product, place & promotion.
Nowadays, pricing directors face large and global challenges such as much more professional purchasing (central purchasing, price trainings, eProcurement), higher market price transparency (M&As, complex, international distribution), unclear and changing demand (weak economy / recession / crises, weak financial position of customers, stronger price-focus from end-customers) and lastly tremendously higher competitive intensity (high price transparency in internet, aggressive pricing of new competitors, discount wars, price erosion, grey markets etc.).
 
- Can an event like the Profit Leaders Summit contribute to these challenges?

Yes of course! the Profit Leaders Summit will provide answers to many of the most pressing questions.
Two interactive days with leading experts, experienced speakers and leaders in pricing and margin management give thought-provoking impulses and completes participant’s experiences with new innovative approaches and thinking.
 
- What should be the outcome of the summit, what’s in it for all participants?

This event is designed to bring real experts on C-level together.
-> To work together during interactive workshop sessions with actionable outcomes and take home best practices to implement.
-> To expand the personal network and get inspired with new ways of thinking discussions amongst leading decision makers.
-> To take away ideas, thoughts and specific actions that impact your daily pricing approach as well as your long-term pricing strategy.

- What can you give away about your topic?

My topic “Is Pricing the New CFO Topic?” identifies the new role of pricing within an organization.
Due to the above mentioned challenges and developments, pricing tasks shifted over the last years into the area of the CFO.  In addition to the “new days of pricing” further developments like globalization, digital disruption, diversification in marketing and sales as well as internationalization and a lack of qualified sales staff are drivers for this shift.
I am looking forward to talking about these developments in the key note closing session!

Do you want to join? Click here and find out all there is to know about the EPP Profit Leaders Summit. Or contact Els, Summit Manager at els.landuyt@pricingplatform.eu.

The 6th EPP Life Sciences Pricing forum reviewed

We asked our moderator Mike Herepath to give us his feedback and take-aways on the 2 days of networking, sharing, learning and discussing in Montreux.

 

'It was a privilege and a pleasure for me to moderate this year’s EPP Life Science forum, and my sincere thanks to EPP and their partners, to our first class presenters and to all our engaged and enthusiastic participants for making this 6^th forum such a great success. This year’s theme ‘Pricing under Pressure’ obviously resonated very strongly with all who attended, and stimulated lots of high quality discussion, debate and ideas sharing among the participants from both pharma and MedTech.
 

The quality of the plenary presentations, the panel discussions and the breakout sessions this year was consistently excellent, with industry leaders from across the globe tackling some of the most fundamental pricing issues facing life sciences today. These ranged from the growing sophistication and demands of payer systems, through the challenges of pricing innovative technologies and the most effective ways to manage tendering, innovative contracting and using data analytics, right through to optimizing pricing around loss of exclusivity and the usefulness of brain scanning technology in determining perceived value and willingness to pay.

Having been challenged to make the most of this learning opportunity that had been developed by pricing specialists for pricing specialists, it was so rewarding to see how actively everyone got engaged throughout the event, with lots of great probing questions and challengers for the presenters, many thought-provoking comments and points of discussion in the panel discussions and breakout groups, and loads of sharing of information, ideas and experiences during the coffee and lunch breaks and during the very enjoyable evening cruise on lake Geneva. It was also great to see how the forum provided a golden opportunity for old colleagues and professional acquaintances to catch up, and for all the participants to make new contacts and grow their networks.

We began the forum by everyone making a note of what he or she wanted to take away from the event. As we reviewed these towards the end of the two days, it became clear that the vast majority of the participants’ learning needs and expectations for the event had been met and, in many cases, surpassed. Some of those key learning points included:

• The growing need for life sciences companies to be able to demonstrate and communicate the relevant value of their products as solutions to meeting payers’ needs, in order to negotiate optimal prices.
• The limitations of the revenue potential of ‘emerging markets’ and the difficulties of optimizing pricing with systems that are sometimes not transparent or consistent
• The appropriateness and potential usefulness of ‘innovative’ pricing strategies as alternatives to traditional approaches, and how best to price different types of innovation in pharma and MedTech
• The importance of well designed price guidelines and indices in effective payer negotiations
• The usefulness and the limitations of different types of analytics in effective pricing
• The evolving role of the strategic pricing function and how to meet both global and local needs with an effective tendering management system.
• The commercial importance of effectively managing pricing around loss of exclusivity
• The development and potential of neurophysiology and brain scanning techniques in determining optimal prices and willingness to pay.
  
  

At the end of the forum, and in subsequent emails and feedback, the majority of participants declared that the forum had met their needs and been a great success, with many adding that they were looking forward to coming again next year. I share their views, and can’t wait to join them!'

 

 

Tendering: the Life Science Industry’s 1st Global Benchmarking Study coming up!

The Life Science Industry’s 1st Global Benchmarking Study on Tendering Conducted by HighPoint Solutions and supported by the European Pricing Platform (EPP) Pharmaceutical and MD&D manufacturers are looking for answers to what defines a mature and effective Tendering function in the areas of organanisation, policy, process, and technology.  Currently, no widely available benchmark information exists as to what defines a mature Tendering function in each of the previous categories mentioned. Please take a moment to fill out this important survey and study. All answers will be anonymous regarding the person and company. Results will be shared as aggregate by HighPoint Solutions in a report and presented in various forums with the first being the 6th EPP Life Sciences Pricing Forum on September 20-21 in Montreux. Findings will also be provided via mail for all participants. If you want to take the survey, please contact Britt (britt.dejager@pricingplatform.eu). He'll send you the necessary link.