Pricing is a challenging area for life science products, be they drug therapies, devices or a new test product. In all industries products are priced to account for market conditions and cost. In healthcare pricing has to be considered in many cases along with reimbursement rates of standard treatments, the economic conditions and healthcare funding in many countries.
Pricing for pharmaceutical products requires a long-term approach.
A pricing strategy may be valid given cost and market conditions, but when considers that the earning period of a given therapy may be a decade, this must be accounted for in pricing. Market conditions will also be a factor, in pharmaceuticals, a company must consider the role generics play after patent expiration, generic threats may be present. Some companies have reacted to generic threats with underpricing strategy to reduce the impact of the threat.