The global pharmaceutical industry today has a worldwide revenue of 1.4 trillion USD in the year 2022. The pharmaceutical industry has experienced a remarkable growth on the back of advancement in the technology and increased investment in the field.
Although, in the recent years, inflation is indirectly affecting the pharmaceutical product costs because of the fluctuations in the exchange rates and witnessing devaluation of the currency in various countries. In this blog, we will throw light on the adverse impacts of inflation on pharmaceutical industry and how it can be managed in the long run.
Impact of Inflation in The Pharmaceutical Industry
The extreme inflation rates posed a serious challenge on the pharmaceutical industry. A research conducted by the Research Nester found out that the almost 4o.1% of the industry professionals stated that the inflation is the challenge for the pharmaceutical industry in the year 2023.
Earlier it was considered to be among the few industries which are recession resilient. Although, this industry is also not entirely immune to immune to the headwinds. Inflation is considered as number 1 obstacle in the year 2023. Subsequently, the impact of the inflation will be on the following parameters such as increasing operational costs and competition.
The reason for the cost increase is due to the following factors-
In order to combat these challenges, there are methodologies needs to be include. Further, in the blog let us understand how pharmaceutical companies are tackling to weather inflation and becoming resilient amidst the crisis.
Strategies to Manage and Sail Through Inflation
With the advent of the pandemic, the usage of the telehealth skyrocketed in the recent years. A study conducted by Research Nester found out that almost 71.2% of the recent telehealth users say that they are extremely satisfied by conducting the virtual visits. Some of the prominent benefits of the telehealth are as follows-
Inflation is causing the high costing of the prescribed drugs. Purchasing drugs is becoming out of pocket for the consumers. In such cases it is necessary to cut out on the unnecessary expenses and reduce the drug costs for the customers.
One of the ways to cut down the cost is by eradicating the middle man from between. By bypassing the middle man in the chains, companies will have to spend less time as well as capital. Cutting out on the middlemen offers so many cost reduction opportunities for the companies.
Companies are required to get more customers along retaining the current ones. Some of the strategies for the customer are as follows-
Whenever pharmaceutical manufacturers make a transition to direct to consumer model, they are able to raise the profit even without raising the prices. The situation is suitable for the consumers as well as the businessmen as the patients have to pay the same amount and business gets more customers. The strategy is helpful in offsetting the inflation.
Making the pharmaceutical brand is also one of the ways to fight the inflation. The manufacturers who are able to reach directly to customers make different connection with the customers. It helps in fabricating a good brand reputation in the market.
Other than these strategies, pharma companies can make methodological strategies have been applied-
Aggressive sourcing, Deepening supply relationships, bolstering the supply availability
Price risk management and supply chain optimisation
Product and portfolio optimisation
While the adverse effects of inflation may not be going any sooner but strategies can be applied to overcome them. The inculcation of strategies poses a promising future for the pharma industry. Strategies such as leveraging the indirect procurement as an internal crisis response can be applied. These impacts of the inflation can be mitigated with the strategies. Following these strategies, the company can remain ahead in the competition and perform even in the economic head winds.