Price increases are effective in the short-term but have great potential risks. Pharmaceutical companies need to be used with caution.

While many large and medium-sized pharmaceutical companies have been “impaired” because of the frequent price reduction of pharmaceuticals, some pharmaceutical companies, especially Chinese medicine production companies, have turned against the tide and implemented competitive strategies for continuous price increase, and they are pleased to see quick results. Benefit from abundance. Some other companies are also tempted to follow suit, and despite their short-term effectiveness, they have great potential risks.

The starting point for the implementation of product price hikes in the pharmaceutical industry is Dong Ejiao. Since the arrival of China Resources, Dong-E E-Jiao has taken the lead in elevating the price of non-return. Since last year, it has carried out price increases four times. At the beginning of 2011, it raised the price by 60% again. The 2011 mid-year report released by Dong'e Ejiao recently showed that net profit increased by 47% in the first half of the year, but operating income grew by less than 3% year-on-year. Compared with the 30% growth rate of the Ejiao market in recent years, the 3% revenue growth is obviously too slow, which means that its market share is being eroded.

Although it is the first medical circle to eat crabs, it is known to all that Dongying donkey-hide gelatin competes in high-end liquor such as Maotai and Wuliangye. However, are the competitive strategies such as limited-production price increases for high-end liquor such as Maotai and Wuliangye and price increase for control of goods? In just a few years, when the retail price of Moutai jumped from a few hundred dollars to several thousand dollars, the ceiling of Chinese liquor prices was also broken. The gross profit margin of Moutai, especially for dealers, was unprecedented. Increased, but it also left sufficient room for development for the secondary high-end market, bringing significant market opportunities to many unknown second-tier liquors. For example, Jiannanchun, Luzhou Laojiao, Langjiu, etc., have thus obtained superior market opportunities. opportunity. It can be said that the biggest beneficiaries of the high-end liquor price increase strategy are not high-end liquors, but rather seized the opportunity for the second-highest liquor.

Anti-market trend price increase strategy is actually a sales model of hunger and thirst marketing (or control marketing). The hunger and thirst marketing has improved the economic efficiency, product quality and market positioning of the company, but due to its inherent drawbacks, that is, it will inevitably hurt itself in the short-term gains, especially in the pressure of increasing the maintenance of the channel construction, the end-consumer The loss of interests and loyalty leads to a decline in market share, etc. Therefore, it should be used with caution, especially in the light of the actual situation of the company and its stage of development. As a different form of price-raising strategy, channel-controlled price increases are used to fish and not worth taking; brand value-added prices may be tried, but at present, the vast majority of pharmaceutical companies in China are not yet at this level.

Even if they consider this strategy to be applicable, Dong'e Ejiao, which has product and brand advantages, has also encountered growth bottlenecks. According to the report of the "First Financial Daily" in April this year, the sales volume of the Happy People's Landlord's e-Jiao from January to October decreased from 30% to 10%, and that of the rival Tongrentang accounted for 10%. The high accounted for 80%. Due to the fact that the actual average selling price of Dong'e donkey-hide gelatin products increased by 85.5% in the first half of the year, while the donkey-hide gelatin and donkey-hide gelatin products accounted for 77.5% of the revenue weight, compared with the growth rate of less than 3%, it is believed that the sales of donkey-hide donkey-hide gelatin have appeared. Obviously sharp decline. The income of Fukui Ejiao here has doubled. This also should be the famous marketing master Philip Kotler's famous quote: "No two cents can not change the loyalty."

The price increase is a double-edged sword. If it is implemented well, it will bring about leap-forward development. Unfortunately, failure may compress its own living space and give opponents the opportunity to catch up. Before implementation, it is necessary to weigh carefully. (