Return management in Pharma and the difficulty to find the right price
How to price returned products is not an easy task in life science, mainly because there are some returns that are mandatory for example their acceptance when products are expired or remaining SLED (Shelf-life) is less than the one determined by law. Law is different by country as well as it is depending on the typology of the product.
Laboratories, in this case, should accept returns regardless the sales were made through the indirect channel and this overcomplicates the process. In many cases, laboratories have a 3rd party who is managing the return process (pick up, stocking and destruction where relevant).
The ideal situation is to find the original sales order/billing document where the returned product was sold so that they can create the return order in reference to the original document and therefore the return price can be retrieved from the original document. But if you have ever worked in the pharma industry you will most probably know that this is a mission impossible. Very often in the same return order, you receive all types of products that have been delivered in different periods and will involve tremendous manual work to find out all relevant invoices. Sometimes sales were not made directly to the partner from which you are receiving the return…so as you can see, it´s a mission impossible to find out the right price that needs to be credited. Very often laboratories decide to apply the last price when crediting these returns with the cost that represents to the company…
But are there other options for applying the right return price and avoiding tedious manual work?
With SAP Solution extensions by Vistex laboratories can manage their return price in different ways.
- Apply the price (including or not discounts like statutory discounts) so that this product/batch was sent to the customer or to a sales channel. Vistex Pool functionality has been developed to keep track of prices during sell-in and provide claims process on a FIFO basis for example. The Vistex pool functionality, as well as claim, incorporates the serial nº, which can be automatized. This allows you to find out the price at this product, batch and serial nº was sold and use it when you credit the return order.
- In some cases, laboratories decided to go for a more simplified process where the return price is based on the average price (from the last 18 months for example). Vistex pool functionality not only keeps track of prices but also calculates average price so you can use it when crediting your return.
- Last but not least, in some cases the return price is the gross price minus a percentage discount which is defined by local law or by the commercial policy of the company (by BU/ country / Channel). SAP Data maintenance Pricing by Vistex helps laboratories not only to calculate return price but also to manage and end-to-end flow including simulation, markups, mass changes, price policies, workflow approval and communication to your customers of prices.
In addition, there is a tendency in laboratories to include a part of the rebate program to their customers an incentive for “non-returns”. This means that if the customer doesn´t execute any return to the laboratory within a period, the customer (for example the distributor) will benefit from an additional incentive. This cannot be applied to those products where the return acceptance from the laboratory is mandatory by law but it can be done for excluded products. SAP Solution extensions by Vistex supports a complete end-to-end contract management with complex criteria allowing you to define non-returns incentives programs for your customers.
In all these cases, SAP Solution extensions by Vistex solution can help you to manage not only the return price calculation but also to set up all validations and approvals in order to have an auditable and traceable process.
About Vistex: If you haven’t heard of us, then you might be surprised to learn that using our SAP embedded software; we help some of the largest laboratories and wholesalers companies in Life Sciences generate a much higher return on revenue management .
In last Gartner report in revenue management in Pharma and Biotech, Vistex was selected as the most complete solution natively embedded in SAP and highlighted his ability to deploy in large-scale and high-transactions environments with real-time view of financials.
Do you want to know more? Visit us at https://www.vistex.com/industries/life-sciences/ or contact SAP and ask for SAP solution extensions by Vistex