In this article, the author examines several high-profile, strategic pricing movements and strategies implemented by companies in Q3-Q4 2017. Tim J. Smith, PhD is the founder and CEO of Wiglaf Pricing, adjunct professor at DePaul University, and Academic Advisor for the Certified Pricing Professional designation. His most recent book is Pricing Done Right:  The Pricing Framework Proven Successful by the World’s Most Profitable Companies (Bloomberg Financial, 2016). He can be reached at tsmith@wiglafpricing.com.

The Pricing Advisor, December 2017

Hurrah to AbbVie. For the U.S. Citizen, not so much.

AbbVie was facing a fiscal cliff with the expiring patent on Humira, potentially wiping out $16 billion out of $27 billion total revenue. What do you do when competition threatens to end your monopoly power? Create bigger barriers to entry to keep them out. Amgen received FDA approval for a biosimilar treatment as the basic Humira patent expired. But AbbVie was preparing for this day. They had created more than 100 more patents covering how the drug is prepped. Fortunately for AbbVie, the lawyers did the trick. After taking Amgen to court, AbbVie settled. Result: no competition anticipated till 2023. Another 6 years of $57,000 / year prescriptions. Good job Richard A. Gonzalez, CEO of AbbVie, and lawyers. Good for AbbVie employees and Chicago overall. But perhaps not so good for the U.S. economy where healthcare costs 18% of our GDP, or roughly $10,000 on average for every man, woman and child. Health costs and insurance are such hot topics – how big is the political risk in this move?

GoPro is Acting Mature

Nick Woodman, CEO of GoPro, is launching the GoPro 6 Black at $499. Compared to last year’s price, this is reasonable. No more unforced errors of trying to use low prices to capture market share unprofitably. And, as it matures, it is facing the reality that smartphones can do the basics but fail for active sports recording. Adding the Fusion to its product lineup, a 360-degree spherical camera, GoPro is aiming to be a strong, if niche, business. Go GoPro.

That’s right H&M, Low Prices are Insufficient to Drive Demand

H&M profit declined 20% as discounted prices failed to generate many shoppers. In fact, store traffic declined. When will executives get it? (Perhaps advertising an empty store isn’t a good idea – just a thought.)

Sonos Joins what it can’t Beat

Sonos Inc. felt the heat of Amazon’s Alexa in the in-home wireless sound movement. What to do? If you can’t beat them, join them. Working with Amazon, Alphabet, and Apple, Sonos is planning to make smart speakers for all of them. Smart move Sonos for the increasing Smart Home. Strange question: do we really want a company snooping on every sound you make? If it was the government, we would quickly say no. But Amazon, Alphabet, and Apple? Apparently, we are ok with them.

Pfizer Tries Again

Mylotarg, a drug treating a form of acute myeloid leukemia, is back on the market. Earlier experience showed that Mylotarg wasn’t effect. Rather than walk away, Pfizer did more studies. After new clinical trials demonstrating efficacy and economic benefits, it has been returned to the market. Old 2000 price tag: $15,522. New 2017 price tag: $24,600. How to explain the price difference: inflation and evidence of efficacy. If the economics make sense, it will stick.