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The Importance of Pricing and Reimbursement in Commercial Due Diligence

As a specific type of commercial due diligence (CDD), pricing and reimbursement (P&R) due diligence provides the in-depth market understanding required for successful commercialization, forecasting the potential P&R conditions for a product launch.

Articles
Published on:
April 9, 2024
The Importance of P&R Due Diligence

P&R due diligence is often important to two types of industry players: business development executives at a biopharma company and investment managers at venture capital or private equity firms. But anyone interested in understanding the commercial potential of a target asset or a portfolio of assets as it relates to an acquisition or licensing deal will need this information, particularly if their main interest—or concern—is that asset’s future P&R potential.

How Industry Players Approach P&R Due Diligence

Pricing is a vital component in the overall CDD. Buy-side counterparts in a transaction or potential licensees in a licensing agreement who want to quantify the fair market value of the target asset (or portfolio of assets) need a sound P&R assessment that evaluates the business potential to deliver a well-supported financial offer to the sell-side.

Sell-side companies often need support evaluating their asset’s potential and using the results to leverage accelerated agreements with their buy-side counterparts.

While the more standard parts of CDD like target patient population/quantity forecasting, business model analysis, and quantification of required sales force investment are often performed in-house, companies may bring in additional market access and pricing expertise to deliver the P&R due diligence.

Outsourcing P&R Due Diligence

Any provider of P&R due diligence must have specific capabilities, including:

  • in-depth knowledge and expertise in designing P&R strategies for biopharmaceutical products in multiple markets.
  • experience conducting P&R submissions.

Companies with these essential elements are better prepared to make more realistic assumptions, as market conditions and timelines usually differ by therapeutic area or indication and by country from the official or standard assumptions.

Additionally, if a generalist provider has a strong focus on corporate strategy but lacks market access and pricing expertise at a global and local level for the biopharmaceutical industry, bringing in a P&R due diligence expert as a specialty vendor would be essential to the overall CDD success.

How We Can Help

Specific P&R due diligence is relevant and necessary to assess the commercial potential of the target asset accurately and realistically. Our in-house experts work closely with our clients to assess the current state and deliver P&R forecasts.

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