Title: Tendering and decision-making: a case on pharmaceutical products

Authors: Sven Dankers; Rui Vieira

Addresses: Nordakademie, Köllner Chaussee 11, 25337 Elmshorn, Germany. ' Amsterdam Business School, University of Amsterdam, Plantage Muidergracht 12, 1018 TV Amsterdam, The Netherlands

Abstract: In order to contain expenditures for pharmaceuticals, the latest healthcare reforms have focused on decentralising German pharmaceutical market. Health insurance funds are now able to tender the products and subsequently conclude rebate contracts with one or more companies. Considering the enormous bargaining power of health insurance funds, pharmaceutical manufacturers, in particular companies in the generics industry, are facing an immense pressure to decrease their prices in order to win bids in these tenders. This empirical-based research study focus on a decision model that transforms basic information input into a decision tree is presented to offer practical support for decision-making in tendering procedures. The use of decision modelling tools (http://www.treeplan.com) such as objective hierarchies, influence diagrams, decision trees and sensitivity analysis can improve the quality of pricing decisions by forcing decision makers to base their decisions on clear thinking, appropriate assumptions and careful investigation of all alternatives.

Keywords: decision-making; pharmaceutical industry; generics; tenders; Germany; tendering; expenditure containment; pharmaceuticals; healthcare reforms; market decentralisation; pharmaceutical markets; health insurance; insurance funds; rebate contracts; bargaining powers; pharmaceutical manufacturers; generic products; prices; price decreases; bids; decision models; information inputs; decision trees; decision modelling; TreePlan; objective hierarchies; influence diagrams; sensitivity analysis; pricing decisions; decision makers; clear thinking; appropriate assumptions; careful investigations; generic drugs; entrepreneurship; entrepreneurs; entrepreneurialism; management; healthcare; marketing.

DOI: 10.1504/WREMSD.2012.046123

World Review of Entrepreneurship, Management and Sustainable Development, 2012 Vol.8 No.2, pp.236 - 263

Published online: 29 Mar 2012 *

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