Industry Benchmarking Survey Reveals Weaknesses in Pharmaceutical Manufacturers' Contracting and Regulatory Compliance Processes

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Sixth annual Model N and CSC survey also shows increase in Revenue Management upgrade plans, growing interest in advanced analytics capabilities

Challenges in managing growing commercial contract volume and fragmented markets is likely to exacerbate the revenue leakage problems highlighted in this survey,

A majority of pharmaceutical manufacturers say they are leaking contracted revenue and almost half lack full confidence in their regulatory compliance controls. At the same time, manufacturers are faced with reduced headcount and often inefficient systems to deal with increasing contract complexity and volumes. These topics and others were explored in a recent Revenue Management Best Practices Survey of 58 leading pharmaceutical manufacturers sponsored by Model N and CSC Global Health Solutions (NYSE: CSC). Now in its sixth year, the unique survey provides pharmaceutical companies the opportunity to identify key market trends and benchmark their Revenue Management best practices while highlighting how they can improve regulatory and contract compliance, customer satisfaction, and overall margins by prioritizing process and systems improvements.

Survey Highlights

•Contract Management

oAverage headcount has decreased 21% from 2007 but the vast majority of respondents expect the volume and complexity of contracts to increase
oFor organizations with more than 500 contracts, average contracting headcount dropped 80% from 2007
oMany companies reported significant revenue loss (as high as 26% of contract value) from inaccurate rebate or other incentive payments
oThirty-five percent said their company has provided customers with discounted pricing on expired contracts or invalid price lists

•Regulatory Compliance

oForty-percent of survey respondents are not confident or unsure of their company's ability to meet the requirements of a government audit
oClose to 45% are not highly confident in their company's current government pricing calculations and models

•Analytics and Systems

oThe vast majority of survey participants do not use performance, deal, impact, or price analysis solutions
oMore than half stated that acquiring advanced analytics capabilities is an ongoing initiative or pressing concern
oMore than half of all respondents utilize manual or ERP systems to manage at least some aspects of the revenue life cycle
oNearly 40% of companies report having no tools in field to support profitable deals
oTwenty-percent more pharmaceutical companies are reporting plans to upgrade their Revenue Management capabilities in 2009 than in 2007
oPricing accuracy is a key driver: More than 35% of respondents report over 10% of their time is spent researching customer pricing requests from sales or resolving price discrepancies

Supporting Quote

"Challenges in managing growing commercial contract volume and fragmented markets is likely to exacerbate the revenue leakage problems highlighted in this survey, "said Gopkiran Rao, Senior Director of Industry Marketing at Model N. "Legacy revenue management practices in a manufacturer's commercial business directly increase the risk of costly compliance violations as government programs continue to account for an ever larger share of the revenue pie. With significant regulatory changes likely from the Obama administration, manufacturers are facing an increasingly narrow window to assess and address the inefficiencies in their Revenue Management processes before the compliance landscape shifts."

For a more in-depth look at the results from this survey, view this complimentary, on-demand Model and CSC Web Seminar.

Undertake a custom benchmark study with Model N and CSC
With minimal time investment, this valuable benchmarking exercise will provide pharmaceutical and biotech manufacturers with a deep understanding of how their organizations compare with world-class companies in their industries across more than 30 process and system metrics relating to pricing, contracting, and rebates. For more information on this unique offer, contact Gopkiran Rao at 650-610-4771.

Supporting Resources

AMR Research Report: How to Grow Revenue and Margins in a Downturn

Yankee Group Report: The Importance of Integrated Price and Revenue Management Processes

About Model N
Model N is the leader in Revenue Management solutions, offering an integrated suite of applications for pricing, contracts, compliance, rebates, fees, chargebacks, and analytics optimized for the industry practices of life sciences companies, with the only integrated government pricing and Medicaid claims processing capabilities in the industry. http://www.modeln.com.

Model N is a mark of Model N, Inc. All other company names mentioned are the property of their respective owners and are mentioned for identification purposes only.

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Sean Cassidy
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