Rethinking Product Lifecycle Management - Pharmaceutical Executive


Rethinking Product Lifecycle Management

Pharmaceutical Executive

More life than you think

DLO is a disruptive innovation because it requires a transformational change in the mindset of every pharmaceutical professional. In contrast to LCM, DLO:

Incorporates early-stage development planning. The early period is a way to showcase not only the clinical but also the commercial market potential of a new product. During this foundational period, pharmaceutical planners are tasked with making crucial business planning decisions that will determine the ultimate sales, profitability, and therapeutic impact of the new agent, over a period of decades. The early period also requires a forward looking accounting of the full range of investments to position the drug for market success.

Includes the late generic period. Unlike the LCM curve, the DLO curve does not end with product patent expiration but includes the late period beginning with the loss of market exclusivity and initial generic competition. DLO recognizes that patent expiry is not necessarily the demarcation line for an abandonment of product support, since generic competitors are now entering the market to grab brand share prior to patent expiration. Moreover, there is no longer a single, primary patent or patent expiration date, even in the same market. Innovators utilize various types of patents (e.g., composition of matter, method, formulation, etc.), which generic companies can challenge in different markets.

Realizes cumulative product sales. DLO focuses on maximizing product sales throughout the entire life of the product, including the post-marketing exclusivity period. Consequently, the DLO approach assumes there is real business opportunity even for products facing generic competition, in contrast to the historical practice of withdrawing support from products as LOE approaches. A 2011 Leerink-Swann investor analysis reveals that innovative companies can capture as much as 20 to 30 percent of the total value of an innovative product after patent expiration and the onset of generic competition, by considering a wide range of cost-effective actions.

Encourages a holistic business approach. LCM is preoccupied with winning during the middle years of the LCM curve; it relies on traditional marketing and sales promotion channel strategies to compete. However, DLO offers many other ways to win, involving the application of regulatory and legal tools; manufacturing, distribution, and formulation changes; partnerships, mergers and acquisitions; public policy, public relations, and stakeholder reputation advocacy; portfolio management; and other actions. Execution of DLO strategies thus demands an integrated, multi-disciplinary and cross-functional team approach to manage things through the entire life of the drug.

Like LCM, DLO has several limitations. Different types of products, such as acute care products or vaccines, will have different life curve "shapes." Because there are so many pharmaceutical stakeholders and market influences, the shape and duration of the life curve for any given product is highly unpredictable. For example, new clinical data, regulatory requirements, or market access can dramatically alter the drug's life. While the LCM and DLO curves are typically used cumulatively to reflect total sales across geographies, the curves for a particular drug can be applied to a specific market. Unlike LCM, the DLO curve includes the drug's pre-launch clinical and commercial investment, which represents only a relative estimation of actual costs.


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