NEWS AND INSIGHTS
Discover Untapped Pharmaceutical Adherence Revenue Opportunities
At a recent industry conference two pharmaceutical marketing leaders discussed the daunting challenge of finding new growth opportunities. One lamented there were no “easy-wins” on the horizon and no blockbusters waiting in the wings. The other reminisced about the revenue “pop” of previous price increases before conceding that those days are mostly over. Current consumer and regulatory pressures are just too great to raise prices much more, he said. They both wondered: “How do pharmaceutical companies sustainably grow revenue in this environment?”
They didn’t even think about medication adherence.
In stark contrast to other revenue-generating options that are available to pharmaceutical companies, like raising prices and working to get more prescriptions written, medication adherence is the only approach that meets the “Pharmaceutical Triple Aim” of increased revenue, improved patient outcomes, and lower overall healthcare costs. In a regulatory and consumer climate that increasingly renders past strategies inadequate, getting patients to take more of their medication is a powerful option.
2019 presents a window into a future where pharmaceutical companies will be increasingly pressured to pursue this triple aim due to changing market dynamics. A dollar in revenue from increased drug utilization represents one of the highest-margin dollars the pharmaceutical industry can generate. Data from two recent studies detailed how increasing adherence can positively impact revenue and earnings per share (EPS).
Two recent studies conducted in 2018, one by Credit Suisse and the other by HealthPrize Technologies and CEEK Enterprises, found that improved medication adherence has the potential to be one of the pharmaceutical industry’s most important growth drivers.
Credit Suisse senior pharmaceutical research analyst Vamil Divan, M.D. and colleagues noted that “relatively modest increases in adherence could meaningfully increase … sales and earnings going forward, with the DCF valuations for some of our companies increasing by as much as 20 percent, depending on the product portfolio at a given company.”
“A dollar in revenue from increased drug utilization represents one of the highest-margin dollars the pharmaceutical industry can generate.”
Pharmaceutical companies that take a strategic, enterprise approach to patient support with a focus on medication adherence are uniquely positioned to grow revenue and increase earnings per share (EPS), all while improving outcomes and reducing the overall cost of healthcare.
Adherence’s ability to address the pharmaceutical triple aim is particularly important as the industry faces pressure to justify drug pricing with health outcomes data. And in today’s highly charged political environment, adherence programs become a powerful and non-controversial tool to drive business growth.
Bristol Myers Squibb
Johnson & Johnson