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The Revenue Impact of a Global Outbreak on the Life Sciences Industry

February 28, 2020

By Melonie Warfel, VP & General Manager, Life Sciences

Since word of the coronavirus (COVID-19) outbreak first emerged in late 2019, tens of thousands of people have been affected, with cases growing daily. Along with the devastating impact it’s having on lives throughout the world, the virus is leaving its mark on countless industries and the global economy.

Already we’ve seen the effects on numerous industries. For tourism, that meant airlines cancelling flights, cruise ships quarantining passengers, and state departments across the globe issuing travel warnings. Retailers shuttered stores, and manufacturers suspended production. Supply chains and transport routes around the world have been severely disrupted.

However, for the life sciences industry, the impact of the virus could be mixed. Demand for surgical masks, respirators, and infection prevention products has skyrocketed, and in some cases, is exceeding supply. As a result, many medtech companies are ramping up production and paying close attention to inventory levels.

On the pharmaceutical side, clinical trials are launching to test possible antiviral treatments. Based on results, demand for certain drugs could increase significantly as governments race to stockpile adequate supplies and pharma manufacturers generate additional inventory.

Then there’s the other side of the coin. China is considered a major growth market for pharma and medtech. With sales reps cancelling in-person customer calls and patients avoiding trips to healthcare facilities for fear of contagion, sales figures and growth for numerous drugs and equipment could be drastically impacted. Recently, leading companies have announced these expected negative impacts on first quarter sales could range from $10 million to $40 million. This could result in sudden shifts in the overall market and those that are the quickest to respond to demand or first to market will take the leading edge.

Many medtech and pharma manufacturers are bracing for expected supply chain problems. While the FDA does not license any vaccines, gene therapies, or blood derivatives that are manufactured in China, some raw materials do come from China and other Asian locations. This could cause supply concerns, as companies stockpile or search for other suppliers. Disruptions could prove beneficial to some though, if competitors are sidelined, companies may be able to raise prices.

The U.S. Food and Drug Administration also fears the coronavirus outbreak will cause drug and medical supply shortages. In a statement released on February 14, the FDA stated, “We are not waiting for drug and device manufacturers to report shortages to us—we are proactively reaching out to manufacturers as part of our vigilant and forward-leaning approach to identifying potential disruptions or shortages.”

In this dynamic environment, all facets of your organization must have real-time visibility into revenue impact, inventory, pricing and contract commitments, and regulatory requirements. With accurate and timely insight into all aspects of into revenue execution, you can take make informed decisions and take a strategic approach to capitalizing on opportunities to eliminate revenue leakage and grow market share.

How can Model N help you improve visibility?

To ensure your organization has real-time and consistent insights, you need to automate your revenue management processes. With Model N Revenue Cloud, your organization can:

  1. Gain real-time visibility into pricing, contract commitments, and contract performance
  2. Improve contract and regulatory compliance
  3. Receive timely regulatory guidance to help ensure compliance with changing regulations
  4. Accurately process rebates, chargebacks, and tiered pricing discounts
  5. Eliminate silos across people, processes, and technologies

To learn more about how Model N can help your organization adapt to, and thrive in, an ever-changing environment, go here.

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