Do you correctly understand Price Elasticity and its implications for pharma marketing?

While Price Sensitivity is a qualitative term and refers to how important price is for customers in a given market, Price Elasticity is a quantitative term with a very specific mathematical meaning. A low Price Elasticity (ep < 1) means that an increase in price will result in more revenues, whereas a high Price Elasticity (ep > 1) means that a further price increase would result in lower revenues.

Many confuse Price Elasticity with the gradient of the line in a linear price-demand curve. In fact, whether the price-demand curve is linear or not, the Price Elasticity is different at each price point. The challenge for strategic marketing is to find the price point that maximizes revenues. For this, price-demand curves need to be determined in each market. The final price, or price range within which local marketing organizations can negotiate with local pricing & reimbursement authorities, will also need to factor-in other market dynamics such as parallel trade, price referencing, etc.

“ Gary is able to articulate his broad knowledge and experience to different levels of participants. This is an exceptionally well planned, delivered and managed course that gave me great insight into the area but also gave practical applications of the theory.”

Lewis Pearson, Pricing Manager, Pfizer - UK