Designing a dynamic tool for detailed gross to net revenue modelling

All major pharmaceutical and biotech companies require an adaptive platform which would provide a clear view of flow of company’s Gross-to-Net financials. The “Gross to Net” (GTN), in its essence captures droppage accounted via promotional discounts and rebates

Viscadia has developed a GTN calculation platform to analyse the demand and pricing KPIs in an all–encompassing interactive GTN dashboard. It is designed to address all nuances related to federal rebates per US government policies.

Specialized platform to calculate and aggregate commercial and federal discounts to understand revenue droppage

CHALLENGES

Federal channels

  • Accommodating inputs around varying federal discounts across different channels

Inventory consideration

  • Effectively incorporating inventory dynamics across channels and understanding demand distribution across channels

Average selling price (ASP)

  • Formulating relationship between Wholesaler Acquisition Cost (WAC) and various rebates and chargebacks to estimate Average Selling Price (ASP) across channels

APPROACH

Channel segmentation

Accommodated various  channels across nodes of distribution network during the flow of drug from manufacturer to the patient

Discount calculations

Incorporated operational nuances in the tool for different federal and non-federal channels to derive respective rebates/ discounts

Standardization route

Created a robust methodology  to enable the user to function at Stock Keeping Unit (SKU) as well as Standard Unit (SU) level across various channels

Forward looking tool

Ensured tool is equipped to forecast GTN for forthcoming years thus enabling user to devise well-informed strategies

Central repository

Created a one stop repository for all the KPIs, related to GTN, for downstream usage by finance and forecast teams

Scenario modelling

Provided functionality that provides user the flexibility to  configure and compare different what-if scenarios on the fly

OUTCOMES

End deliverables

  • A comprehensive tool with insights and outputs enabling  analysis of GTN evolution over time.
  • Accounting summary to help visualize the flow of discounts from top-line to bottom-line across each indication & channel as well as at overall level
  • User manual providing extensive documentation of model design and operation to facilitate easy knowledge transfer

Key highlights

  • Formulated ASP calculation and contractual relationship between Clinics & Group Purchasing Organizations (GPOs)
  • Provided functionality to define custom drug distribution network, input pricing and SKU assumptions as required to understand discount impacts on Net revenue

Impact

  • Immediate impact: GTN would serve as an end-to-end tool to understand revenue droppage across various ends and channels and shape commercial strategy
  • Long Term Impact: GTN optimization would enable company leadership to make informed decisions, not only to drive the bottom-line growth but also to enhance competitive market positioning
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