Launch on a Budget

Drugs don't need blockbuster budgets to achieve blockbuster status. In fact, companies may want to reconsider the big dollars being spent on me-too launches.
Oct 01, 2006

Spending Range
No company wants to underfund new brands. But it's important to be realistic. The industry is in a period of sluggish pipelines and major patent expirations, and that means slower growth for branded drug makers. Increasingly, companies are looking hard at what they spend to commercialize and launch new drugs. What's the right number? It depends: The optimal launch spend is not just a matter of company and sales forecasts, but of the unique advantages and challenges of that particular product. Teams can no longer count on an embarrassment of riches to ensure a successful launch.

A Cutting Edge Information (CEI) study of 18 recent launches in the United States found that the biggest spender ponied up $267 million for marketing a blockbuster. The smallest budget? A mere $1.7 million for a niche brand. Unsurprisingly, that disparity can be largely attributed to revenue projections. Drugs pegged for blockbuster status can justify larger expenditures than smaller specialty brands.

Common Trends in Launch Spending
But this is not always the case. In fact, the study concluded there is no color-by-numbers approach to launch budgeting. A niche drug could have $50 million allocated for launch, a middle-tier brand $20 million, and a blockbuster only $10 million (see "Spending Range," left).

The trick is to know what problems you're trying to solve—and where your product can carry its own weight without extra spending.

It would be an exaggeration to say there are no common threads in drug launches. For example, the CEI study found that:

  • Teams spent 10 to 15 percent of their total commercialization budgets during Phase III, and another 25 percent in the months between submission and launch (see "Common Trends in Launch Spending,")
  • Companies launching me-too drugs spent more than those launching first-in-class products
  • The main differentiator between big and small budgets was the amount spent on advertising and promotion

But similarities ended there. To make the most of resources, companies have to know what they want out of their products, identify unique challenges, and budget accordingly.

Let's take a close look at two very different product launches. In each case, the company clearly understood the unique strengths and shortcomings of its product—and used that understanding to launch and commercialize.

Brand 1: Innovative Science and Inexperienced Marketing

To achieve blockbuster status, a drug needs at least two things: great science and even better marketing. What happens when one piece is missing? The team behind Brand 1 knows from first-hand experience.

Market Research in Phase III
The Issue: At launch, Brand 1 aimed for peak annual global sales of $700 to $900 million. Although the drug offered only slightly improved efficacy, its safety record and overall tolerability were superior to its competitors. Enthusiastic patient groups and physicians heralded Brand 1's first-in-class status in a market hungry for new options—additional approvals promised to give the drug a shot at blockbuster returns.

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