Pricing strategies are set as per company objective, market sensitivity, product category,

competition etc. There are selective successful pricing strategies in pharmaceutical industry
such as-

1. Marginal Cost Pricing:

In simple terms “marginal cost pricing is the cost of producing one more unit as fixed cost
already been covered with existing sales volume”. It means company utilizes its capacity for
additional production where profit on small sales remains same but chances of additional
margin may increase. Marginal cost pricing is helpful when company gets a bulk order from
any institution tender or hospital supply to supply where quoting lowest price is more produc-
tive.

Torrent pharmaceutical Ltd has their brand Hexidol well settled in market. Hexidol has been
used as an anti-psychotic drug containing Halo- peridol molecule. In open market its price
per strip of 10 tablets is Rs 30.

But for the sake of bulk purchase order by any hospital or institute they keep their marginal
cost per strip up to Rs 12 per strip of 10 tablets when order of supply is more then 10000
strips at a time.

Such types of marginal cost pricing quantity at lowest rate prove to be the best for the
company to maintain its leadership position in anti-psychotic market and also for full
utilization of production capacity.

2. Penetration Strategy:
Penetration strategy aims at deeper end of market pricing strategy. This strategy is profitable
only at high sales volume and is helpful in the growth and maturity phase of product life
cycle. Basically, the customer base is very high and profitability is marginal or very low. In
long run, if life span of a product is very short then chances of loss are very high.

3. Skimming Pricing Strategy:

The strategy aims at capitalizing the pricing advantages at the introduction of the product
itself. This method is successful at the introductory stage of product life cycle and helps to
recover the R&D expenses on the new product.

The major disadvantage of this strategy is that it increases the vulnerability of competition
and high pricing may lead to low per unit sale furthermore that affects the per unit resource
utilization capacity.
A suitable example of this strategy is of ‘Deplatt-75’ made by Torrent Pharmaceutical Ltd
which contains Clopidogrel, a superior molecule as an Anti-platelet agent in cardiovascular
therapy. The company introduced the drug at the rate of Rs 299 per strip of 10 tablets in June
2001 and sale had reached up to Rs. 3 Crore within six months.

But suddenly they dropped to Rs 199 per strip of 10 tablets and within six months near about
30 to 40 brand of different companies were entered into market. Then after they had dropped
their prices up Rs 39 per strip of 10 tablets that would results into loss of their number one
position and landed on sixth position in March 2002 as per ORG-MARG report.

In addition to this it is very important to mention here that offering bonus offer is commonly
seen practice in Indian pharmaceutical marketing especially for seasonal products like cold
and cough preparation, general antibiotics etc.

For a sudden price change in the drug, the particular company needs to communicate the
exact reason for a price hike, like change in packaging, color and flavor, technological up
gradation etc. otherwise it would badly affect the image of product and the company too.