Do you know what Mark-up means, as opposed to Margin,
and its impact on international pharma pricing dynamics?

Many use the terms Margin and Mark-up interchangeably. However, they mean different things and especially in the context of the international pricing dynamics of a pharmaceutical it is important to use them correctly.

Both are expressed as a % but Mark-up = Profit / Cost, while Margin = Profit / Total Revenue = Profit / Cost + Profit. The below visual explains the difference:

Since the retail price of a pharmaceutical is composed of an ex-manufacturer price plus the mark-ups for wholesalers and pharmacies and/or hospitals, the mark-up differences between countries have implications on international pricing dynamics.

As shown in the graph below, mark-ups in Sweden are considerably smaller than, for instance, in Germany or in Italy. Most pricing authorities who use international reference pricing reference at the ex-manufacturer level.  However, not all do.  And this has important consequences, as you will learn at the C.E.L.forpharma pricing course.

(1) Pharmaceutical expenditure corresponds to item HC5.1 in the OECD International Health Accounts health care classification.  It includes Rx, OTC, medical non-durables, wholesale and retail markups, pharmacist fees and sales tax. It excludes hospital inpatient pharmaceuticals

(2) Unregulated – average values. Prescription drugs generally exempt from state sale tax (not Illinois).

“ I really appreciated this pricing training session with this brilliant trainer who is able to give you a 'helicopter' view of key strategic decisions related to pricing. Very useful for marketing people as well.”

Valérie Grange, Senior Brand Manager, GlaxoSmithKline - France