Developing a Competitive Edge: The Case for Early Commercialization

The Pressure’s On To Bring Products To Market Faster and More Cost-Effectively

By Chris Clevenger, PhD

It’s no secret that the biotechnology and pharmaceutical industries face a number of growing challenges, such as:

• Declining R&D productivity
• Late-stage product failures
• Significant revenue losses from patent expirations
• Greater demands from the FDA
• Increasing pressure from payers to reduce prescription drug expenditures

As the healthcare environment continues to change, the pressure to bring products to market faster and in a more cost-effective manner remains high. It’s clear that companies must adapt in order to thrive in crowded markets that demand increased differentiation, lower prices, and stronger assurances of long-term safety. Incorporating commercial input early in the development process increases focus on projects that have a higher likelihood of success and creates products that effectively address the unmet needs of key customers in the value chain.

Early Commercialization Successes
While a perfect model for early commercialization has yet to be created, a few companies have succeeded in reducing their product’s time-to-market while creating a source of competitive advantage.

According to a study by the Tufts Center for the Study of Drug Development, Bayer, AstraZeneca, Allergan, Boehringer-Ingelheim, and Merck are the leaders in their ability to get drugs to market. These five companies deliver as much as a 17-month speed advantage compared to average performers, and almost a 3-year advantage when compared to the slowest 10 companies. The speed with which these companies performed equated to a difference of $1.1 billion in incremental revenue and $30 million in out-of-pocket cost savings (Tufts Center for the Study of Drug Development Impact Report, Vol. 8, No. 5; September/October 2006). Working together through early commercialization can help to close the gap between phases, reducing time in development and increasing revenues as a result of increased time on the market.

Internal Stakeholders Recognize Need for Cross-Functional Early Commercialization Guidance The old operating model, where products are shepherded along a one-way street from Discovery through to Development and on to Commercial, is changing. Now more than ever, commercial input is critical at the earliest stages of development in order to ensure the product delivers value to all stakeholders and can sustain its competitive advantage. In a Platform Advisorstm survey of industry executives from R&D, Medical Affairs, and Marketing, 91% believed there should be more commercial input at Phase 1 and Phase 2 than seen currently.

However, there are inherent challenges to building successful early commercial integration across functions. There are the perceived issues, such as “the culture gap” between medical and marketing, the stifling of innovation if focus is placed solely on commercially viable markets, and the fear that incorrect market evaluations may lead to lost opportunities. To meet these challenges, a number of leading companies have formed dedicated early commercialization teams to help facilitate this transition from R & D to Commercial. The composition of the teams is fairly consistent, with members of R & D, Marketing, Medical Affairs, Market Analytics, Regulatory, and Health Economics comprising the core and driving the strategy across their respective areas. While the exact timing of when cross-functional early commercialization teams should become involved may vary, there is a trend across the industry to initiate these teams earlier than in the past.

Key Stages in Early Commercialization
The integrated early commercialization team should follow a systematic approach to commercializing their product. Platform Advisors believes there are three key stages when approaching commercialization; the first two are considered to be “early commercialization” stages:

1) Assess and Evaluate the Market

2) Develop the Value Proposition and Lifecycle Plan

3) Integrate Early Commercialization into Organizational Launch Readiness

While every pharmaceutical company follows a version of these stages, it is commonplace that the timing of the stages, as well as the stakeholders involved, is suboptimal. Often, stage 1 is initially at a very high level, and therefore lacks the robustness required for success. Furthermore, stages 2 and 3 tend to occur too late in the development cycle and are carried out in silos by the Medical and Marketing teams.

Stage 1: Assess and Evaluate the Market
The primary objective of this stage is to fully understand the market. Together, R & D and Commercial should share a common understanding of the market potential, key competitors, the disease state and how it is treated, and which key stakeholders can influence the commercial success of the brand. They should also determine an initial Target Product Profile (TPP) for the compound. It is important to gain robust insights from key customer groups, such as key opinion leaders, community thought leaders, payers, and possibly practice managers or nurses, depending on the product profile. In gaining insights, organizations can focus their efforts on commercially viable products and indications. This process will also help companies to prioritize investment decisions from a portfolio or therapeutic-area perspective.

Stage 2: Develop the Value Proposition and Lifecycle Plan
The primary objective of this stage is to build the brand, which means to develop a differentiated brand that can sustain its differentiation throughout its lifecycle. The key to a clinically differentiated product is an optimized TPP. The TPP can be optimized by analyzing existing and potential competitor claims and also working with key opinion leaders to gauge the importance of key product attributes. The trend in the industry has been to create the TPP at an earlier stage than ever before, with most company executives surveyed claiming they have one in place before Phase 1. The TPP should be reevaluated frequently and adjusted as market dynamics change. Once the TPP is developed, the teams should work in concert to develop or refine a clinical trial strategy that will meet the regulatory, technical, and commercial success requirements. The TPP and clinical trial strategy serve as the foundation for a lifecycle plan that will ensure continued differentiation for the product.

Stage 3: Integrate Early Commercialization into Launch Readiness
The primary objective of this stage is to ready the product for launch. The TPP should be used to guide development of the product vision and launch strategy as well as answer key questions such as how the product should be positioned relative to competitors. Once the vision and overall strategy are formalized, they can be distilled into the critical success factors for the product to succeed in the marketplace. These critical success factors can then form the basis for the granular functional objectives that functional teams can align around.

Once all stakeholders are aligned around the strategy, then key tasks, timing, and responsibility should be clearly defined well ahead of the expected launch (2 to 3 years prelaunch) to ensure flawless execution. The risk of missing key deadlines and delaying launch is high, so it’s imperative that the organization works to define how the product will be introduced to the market and to identify any potential challenges or roadblocks. This ensures that the right people within the organization are held accountable for their respective tasks and can orchestrate a successful launch.

Summary
Current market conditions necessitate pharmaceutical and biotech companies to employ strategies that reduce the time and cost spent on development and commercialization. By employing an integrated approach to early commercialization, companies can show tangible results that hit the bottom line. Companies that institutionalize an integrated and efficient early commercialization process are increasingly likely to develop a competitive advantage.

Dr. Clevenger is Senior Vice President, Managing Director, Medical Strategy Platform Advisors, a Division of Cline Davis Mann LLC.