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The inclusion of pharmacoeconomic endpoints in Phase III clinical trials presents a stronger package in support of a US product launch.
Imagine a couch. It's available in just about any department store, is always in stock, and has a long shelf life. If the couch is not sold today, it can be sold tomorrow. Management of this sort of product is mostly a matter of the product offering—just ensure the brand promise is strong and the product is available.
Now imagine an airline seat. The seat is available only on a specific flight, the number of seats available is limited by the size of the plane, and its shelf life is highly limited. If the seat is not sold by the time the departure gate closes, the revenue is permanently lost and cannot be recovered. Managing an airline seat is profoundly different from managing a couch: It's not a matter of product offering but of a comprehensive service offering—one that requires specialized resources (ticketing agents, baggage claim, etc.) and complex time-based optimization and pricing.
Pharmaceutical products today are more like airline seats than couches. The parallels may not be precise. But when one considers the challenges of the pharmaceutical market—the urgency and timing of the patient need, especially for progressively debilitating diseases, the increasing importance of information as part of the service bundle, the increasing competitiveness in therapeutic areas and the accompanying reduction in exclusivity times, and the separation of decision and acquisition points (doctor's office versus pharmacy)—the general similarity becomes clear.
Two areas seem particularly relevant:
(1) The pharmaceutical market is increasingly global and complex. Industry-wide we see growth in licensing, mergers/acquisitions, and co-promotion across national boundaries. While these deals make sense as ways of generating operational cost savings and achieving growth expectations, they have created new complexities in synchronizing product launches, managing global brands, and deploying and incentivizing global resources.
(2) The industry's "clock speed" is accelerating. Today, a new drug can replace an existing drug in just a few months, and a market leader can be toppled almost overnight. Time to peak sales has decreased: Eli Lilly's Prozac (fluoxetine), launched in 1988, reached peak sales about 10 years later. Aventis' Allegra (fexofenadine) peaked less than four years after its 1996 launch. It took Pfizer's Viagra (sildenafil), also launched in 1996, about two years to become a blockbuster, and Pfizer's Celebrex (celecoxib) less than one.
Not surprisingly, the shift from a couch to an airplane-seat model of marketing throws new emphasis on the product launch phase. For many companies, a quicker, smoother launch is the key to enhancing lifecycle revenue. And launch is one of the most important areas where global coordination can pay off.
Product Manager Recommendations
This article will look at how pharma can speed up the execution of pre-launch and launch activities and how companies can better manage the kinds of parallel processes typical of today's global market. These are crucial points for pharma—the choice today is get on board or get left at the gate.
To achieve faster global launches, companies need to focus on a few key issues.
Simultaneous global launches and global brands. Pressed with ever shorter exclusivity periods and declining time to peak sales, companies are being forced to abandon the old strategy of launching a drug first in the United States, then Europe, Japan, and so on. While the role of the US market has increased in importance—in 1990, the top five European pharma markets together were the same size as the US market, by 2003 they were 37 percent its size—Europe still provides incremental margins for global products. Simultaneous product launches across the globe maximize the value of the exclusivity window and drive synergies in planning, marketing, and distribution. When Eli Lilly launched Zyprexa (olanzapine) in 1997 it managed to submit in the United States and the EU on the same day and launch in 20 countries in the first 12 months of FDA approval. Today Wyeth and others are targeting some 30 countries for a simultaneous submission of their multinational drug applications.
Empowered by the internet, consumers are now aware not only of drugs available in their own country, but those available outside. There's been a recent surge in consumers who read about foreign treatments, purchase and import their own medication, and get access to products unavailable in their markets through participation in clinical trials or grey markets. As consumers and physicians go "global," it becomes increasingly important to develop truly global brands and drive consistent brand messaging.
Early and appropriate planning and integration of key opinion leaders. On average, pharma companies spend as much on marketing in the three years preceding a launch as they do during the first year post-launch. One-fifth of pre-launch spending goes to develop and integrate key opinion leaders (KOLs). To ensure that funds are spent effectively, companies need to focus on early preparation. They should establish an appropriate communications strategy, develop relationships with KOLs who will shape the market, align resources globally, and ensure target countries have resources devoted to the launch.
KOLs can play a significant role in preparing the market for the launch. When Parke-Davis and Pfizer launched Lipitor (atorvastatin), they built relationships with important spokespeople and key physician communities shortly before the drug's launch. By combining their efforts, the companies managed to reach out to more than 85,000 physicians before the drug hit the market.
Executive Management Recommendations
Pharmacoeconomics. It is becoming increasingly important to develop drugs that improve outcomes and demonstrate value. The price-versus-value discussion that began in Australia in 1992, and has been hotly debated in European countries where pharma companies are facing increasingly cost-conscious government healthcare systems (e.g., NICE in the UK since the late 1990s), is making inroads in the United States. Including health economic endpoints in Phase III trials presents a stronger package supporting a product's launch.
Affiliate scorecards. The ability to drive growth depends on having appropriate and effective incentives for affiliate general managers. When incentives are not aligned with marketing and sales goals, the disconnect will often lead to lost sales—an empty seat in our analogy. Consider the case of a manufacturer of an injectable drug. As part of its global product strategy the company gave away reusable "pens" that dispensed the drug, from a disposable cartridge held within. The logic was the pens would be distributed for free but would drive sales of replacement cartridges and create brand awareness by virtue of the logo printed on the side of each pen. What actually happened was general managers in several regions realized that the sales boost created by the pens would not be realized for one to two years and opted for alternative sales techniques with more immediate results. The result? Lower long-term sales.
The company may have achieved better results if it had included the affiliate marketing directors in the development of the global product strategy to begin with. Aligning the general managers on the strategy and incenting them on the product objectives would have helped. In some cases, it may even be appropriate to include early local launch spend in the global product team budget and relieve affiliates of current P&L considerations.
Functional alignment. Decisions made in one functional area, such as marketing, can significantly affect others. So open decision making is critical, particularly during late stage development. In one instance, the marketing team for one drug manufacturer's COX-2 inhibitor decided to change the tablet's size close to launch. The team made the decision from a branding perspective. The idea was to make the name printed on the tablet more visible for target customers. To modify the size, excipients were added. These additional components affected the medication's absorption rate and altered its pharmacokinetic properties. Although the impact was realized before registration, the decision put timelines at risk. Open communication between the marketing and clinical teams could have prevented unnecessary delays in the drug's registration or launch.
As pharma reflects on its changing environment and the actions required for continued success, the example of the airlines may provide some welcome guidance.
In the 1970s and 1980s, the airline industry grappled with its own particular challenges by coming up with three business innovations that helped it persevere:
As the pharmaceutical industry prepares for the challenges ahead, it may want to consider developing:
In today's increasingly complex pharma environment, timing—while not yet everything—continues to count for more. Pharma is no longer in the business of selling hard goods like couches. Its products are far more like perishable airline seats. What's more, consumers are often asking for—even demanding—more comprehensive "airline seat"-like healthcare solutions. A 57-year-old man recently diagnosed with Alzheimer's and a 12-year-old girl diagnosed with retinitis pigmentosa are seeking solutions now, not promises.
Changing times provide executives with an opportunity to rethink their businesses, in particular their product launch processes. Those who do will take off. The rest will watch them fly away.
Kashif Chaudhry is a principal and Jaime Cyr is a managing consultant at Clarescent LLC, which brings insights and value around complex business issues to clients in the healthcare industry. They can be reached at firstname.lastname@example.org and email@example.com, respectively.