Actual Transaction Pricing in Independent Pharmacy

A major frustration for all brand owners is clear information on brand performance especially with respect to your competitors. Pricing information is critical but all too often a recommended retail price is just that, a recommendation with little connection to what really happens in a pharmacy. With PHARMAscope from pharmacyEXTRA you can gain a deep insight into actual transaction pricing of your products in independently owned community pharmacies and see how much variation there really is in what your brand sells for.

PHARMAscope is the latest addition to pharmacyEXTRA, a unique way to market to independently owned pharmacies and their customers. Utilising Toniq POS transaction data we can provide you with deep insights into your brand performance in channel - everything from real pricing, stock weight, basket analysis and so much more.

Let's take a look at a real example.

This product is in the top 10 of both the Cough & Cold and Natural Health categories in New Zealand pharmacy. Take a look at the chart below. It shows several interesting things. Firstly it shows that the average retail price was $22.13 over the previous 24 months. Yet the range of pricing goes all the way from one pharmacy selling as high as $29.56 to another selling as low as $8.69! Sure these are the extremes and the Average sales item price plot shows that on average pricing has ranged from $18.91 in April 2022 to a high of $23.74 in October 2023.

Retail Pricing of a Top 10 Cough & Cold Product in New Zealand Pharmacy

What’s going on?

Pricing for the most part is steadily on the rise if you look at the monthly average, perhaps just our current inflationary environment in action. What’s of more interest is the distinct lowering of retail pricing during the winter cough / cold season in 2022 and how this same pattern was not seen in 2023. This is a great natural experiment. What happened to volumes in 2022? Did product sales soar by enough to make up for the distinctly lower average price? Or is it better to maintain a higher price and rely simply on the natural increased demand pharmacists receive for the category products in winter?

Price vs Volume

To learn more we need to look at a Price vs Volume chart to see how the number of units sold is influenced by the retail pricing which is what the chart below shows. You can clearly see that volume increases in winter as you would expect in both 2022 and 2023 but the volume rises much higher in 2022. Why?

Pricing is much lower in 2022 so that is clearly a factor and it looks like the ~$3 per pack lower unit pricing is resulting in about double the sales volume. PHARMAscope data can actually be used to calculate for sure which approach (discounting vs holding the course) results in the best margin for both a pharmacist and the supplier.

We’d like to know more. For example was the product promoted in 2022 differently from 2023? Was there a sales promotion that led to a lower buy price for pharmacy in 2022? Did that lower buy price and resulting higher orders from pharmacy (yes PHARMAscope can look at that too) mean the supplier made more money in 2022 than 2023? What about how much inventory remained after the promotion and did this mean later sales were lower?

We will take a look at what other insights PHARMAscope can deliver for brand owners staying using this example in a future post. Stay tuned!

Price vs Volume in a Top 10 Cough & Cold Product in New Zealand Pharmacy