First-in-Class vs. Me-Too Budgets

From previous experience, the team knew where to hit its target—at niche sales levels, because several brands were already competing for a limited patient population. Even if Brand 2 secured a few years of steady revenue flow, it was a me-too product that already had a short and difficult life cycle.

The Strategy: Brand 2 invested tens of millions of dollars more than Brand 1. At the start of launch, Brand 2 had niche-level goals and blockbuster-level budgets. The company had to make a splash because it was entering a saturated market, so it invested tens of millions of dollars more than Brand 1.

Here's where deeper pockets and marketing experience pushed Brand 2 forward. To remedy the lag in promotional activity, the company lavished marketing resources on Brand 2: The brand team spent nearly $45 million between FDA submission and the end of the drug's first year on the market. It may seem like Brand 2 was putting all of its eggs in one basket, but the team knew aggressive marketing efforts would pay off.

With so little time, the company concentrated funding to help the product catch up to where it needed to be.

Although Brand 2's commercial development could have benefited from earlier preparation, the company was able to create a profile that highlighted an unmet medical need in its patient population. Brand 2's promising clinical profile proved essential to the brand's success; its positive attributes helped win patient loyalty and a share of the market from well-known brands.

The Result: Between the close of Phase III trials and product launch in the United States, marketing spend increased by a whopping 1,000 percent. The most significant allocations went to developing a product promise, competitive strategy, positioning, and basic branding. During this time, the developer invested $400,000 in market research to understand the market and craft the brand's message for its small target audience.

To make up for lost time, aggressive funding continued in the brand's first year on the market. In the end, marketing allocations jumped from only $2.2 million in Phase III, to more than $20 million in Brand 2's first year (see "Brand 2 Makes a Push,").

The brand team continues to invest heavily in advertising and promotion to drive awareness of Brand 2's advantages, and it has fielded a substantial sales force to carry the message into doctors' offices. If the drug climbs toward its revenue goals, the company will have the flurry of late-marketing activity to thank.

Innovators and Me-Toos

Brand 1 and Brand 2 highlight another telling fact about US launches: It is far more expensive to enter an occupied US market as a me-too product than to launch as a first-in-class drug (see "First-in-Class vs. Me-Too Budgets," left).

The study concluded that me-too blockbuster brands—launching against well-armed competitors in highly lucrative markets—wielded budgets nearly 400 percent larger than their first-in-class counterparts. Even the relatively low-spending niche brands show a sharp divide. Follow-on products spent twice as much as first-in-class drugs.