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The Pharma Career Ladder · The country manager · Step 3: Money, pricing and forecast · Lesson 3

Gross margin is a strategy

Volume without margin destroys a plan

By Ahmed El Menshawy · 20 years in pharma, from medical rep to country manager in the UAE. Founder of RepPharma. LinkedIn
Published

In the Gulf, a country manager does not set the public price of a medicine. The health authority does.

So where does margin get decided?

In the choices we do control. Discounts. Rebates. Bonus goods. Tender bids. Each one is a pricing decision, even when it does not feel like one.

In markets I have worked in, I have seen two ways of running those choices.

The first chases volume at any price. Extra discounts in the last week of the month. Stock pushed into the distributor to close the number. Tender bids a little lower every year to keep the business. It looks like growth. Next year you have a bigger base, a thinner margin and the same costs, and you have to buy the volume all over again.

The second treats margin as part of the strategy. Bonus goods are agreed in the trade terms, not improvised at month end. The lowest acceptable net price is known before the tender opens. Field time goes to products where patient need and margin meet.

It is slower to show. It is also the only version that still works in year three.

Every discount is a decision about margin, not only about volume.

“Volume you have to buy every month is not growth.”
Gross margin is a strategy: Volume without margin destroys a plan

Lesson 3 of 17 in Step 3: Money, pricing and forecast, with the full guide and a checklist for this week.

More lessons in step 3: Money, pricing and forecast

Lesson 1Sales, profit and cashThree different questions about one businessLesson 2Reading a P&L as a commercial leaderThe five lines that matterLesson 4Working capital in pharmaStock, receivables and the cost of slow moneyLesson 5Forecasting you can defendAssumptions written down, not numbers inventedLesson 6Sell-in, sell-out, inventoryThe three numbers leaders confuseLesson 7Price is a decision, not a reactionHolding your net price under pressureLesson 8Bonus versus discountProtecting the price while moving volumeLesson 9Trade terms that do not leakRebates that stay under controlLesson 10Return on promotionWhat a call, a meeting and a sample really costLesson 11Cost per callThe number that reframes coverage decisionsLesson 12Budgeting without guessingZero-based thinking for A&PLesson 13The month that was boughtRecognising a number that was loadedLesson 14IQVIA data used properlyWhat it can tell you, and what it cannotLesson 15Market share versus growthWinning ground in a shrinking marketLesson 16The cost of complexityToo many SKUs, too many promisesLesson 17When to invest in a losing brandDecide on what is ahead, not what is spent

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