The Golden Years: Achieving Excellence Late in a Product’s Lifecycle
By Robert C. Harold
Pharmaceutical companies can identify significant growth opportunities for their late-lifecycle products by following a systematic approach and tapping new information and analytical tools. Playwright Tom Stoppard’s observation that “age is a very high price to pay for maturity” can be translated for the pharmaceutical industry thus: “A sales plateau after eight years on the market is a very high price to pay for hundreds of millions of dollars in development.” Yet pharmaceutical products in the late stage of their lifecycle are typically allowed to ride out their market exclusivity, producing significant revenue, to be sure, but not actually growing.
Often, companies have little expectation that late-lifecycle products can do anything more but coast to the finish line—and that becomes a self-fulfilling prophecy. But, as retailer Sam Walton has said, “High expectations are the key to everything.” Companies determined to find avenues of growth for their mature products usually do.

The Typical Product Lifecycle
Sales for most pharmaceutical products typically start to plateau around eight years after launch, when they have saturated their patient and prescriber base. By this point, a product has usually established a stable base of prescribers, and its position within the prescriber base and target patient population has been clearly defined. The number of new physicians adopting the product starts to slow, patient numbers follow, and prescription units start to plateau. It is at this juncture that the growth curve begins to flatten out until it nosedives upon the introduction of a generic version. (See Figure 1 in TOOLS.) Currently, product lifecycle curves are based on sales dollar growth, but in time, once anonymized patient-level databases have accumulated sufficient history, fresh insights will be gained by looking at the entire lifecycle curves related to treated patients and the numbers related to new, switch, add-on, and continuing therapy.

Typically, manufacturers look to brands in the last part of their lifecycle as steady-as-she-goes, revenue-producing engines. Indeed, products more than eight years old contribute almost 50 percent of all revenue within the top 20 global manufacturers. (See Figure 2 in TOOLS.) This revenue stream is more important to companies now than ever before because of constraints on growth elsewhere: The number of new chemical entities is declining; new products are less likely to fit the blockbuster model and more likely to be niche products, and companies have been faced with safety issues and other commercial challenges with their portfolios. So why not find ways for established products to do more than merely “chug along”?

Raising the Bar
It is entirely possible to nurture growth in late-lifecycle brands. Figure 3 illustrates the annual sales and volume growth for 10 products across a variety of classes in 2008: All have been on the market for at least 10 years and are achieving a minimum of 10% sales growth and at least 5% volume growth. One standout is maintaining 22% sales growth based on 17% volume growth. To achieve such gains, one must make growth a continuous quest and apply new tools, information, and approaches to the challenge. Maintaining a brand’s vigor requires ongoing development work, product profiling, and commercial excellence—much the same as with a brand launch.

Considering the Options
The key is to start early and work systematically to develop a growth strategy. Just as with a launch, plans to invigorate a mature brand should be started years in advance—and, in fact, immediately following the product’s launch. The options, or levers, that a company can explore fall into seven categories:

Geographic Expansion. Registering the product in key global markets, including pharmerging markets (defined by IMS as including Brazil, Russia, India, China, Turkey, Mexico, and South Korea).

Product Profile Extension. Seeking additional indications, labeling, trials, analyses, extending the patent.

Product Form and Delivery Development. Developing a new formulation or creating a new delivery mechanism or new packaging.

Marketing and Sales Efficiency. Conducting a segmentation and stakeholder analysis; optimizing the promotional mix and allocation of resources.

Patient Retention. Improving patient compliance and persistency; employing customer relationship marketing (CRM).

Price Optimization. Setting a price that optimizes revenue.

Payer Relations. Changing formulary access and patient co-pay levels.

The trick, of course, is figuring out which levers to use, when, and then to develop a supporting commercial strategy. There is no rule of thumb from which to draw guidance; the best direction depends on the product’s characteristics, the goals for the rest of the company’s portfolio, and the timing of various market dynamics. The best course of action for a given brand, for instance, could depend on what other molecules are in development, what the future competitive environment will be, what unmet needs exist within key patient segments, and which countries are most receptive to late-lifecycle brands —to name but a few of the considerations.
Companies that work through this list of options are sure to find an approach that will either increase their top-line or bottom-line results. Experience shows that applying the Marketing and Sales Efficiency lever can deliver significant returns (as listed in Figure 4). Improving the allocation of promotional resources across a region, for instance, can improve a portfolio’s contribution from 8% to 22%, and this is an opportunity that exists in the majority of therapeutic areas. The range of impact for each driver shown was calculated in isolation, but it may be possible to realize multiple benefits (although likely not strictly cumulative) from employing more than one tactic at a time.

A Systematic Approach
Evaluating the possible levers for improving the performance of a mature brand is a complicated task that needs to be tackled methodically and with the benefit of a base of evidence that includes sales data, promotional measures, longitudinal, patient-level data, and primary research with prescribers, patients, and payers. The analytical process entails:

• Identifying analogs in historical data that parallel the characteristics of, and situation facing, the product under study. Analog screening criteria can include: therapeutic class, order of entry, formulation, launch period, prescriber/patient/payer focus, line of therapy, and so on
• Developing statistical models (based on the performance of the analogs) to quantify the commercial impact of various factors (sales efforts, marketing approaches, access issues, and market events)
• Running an interactive spreadsheet model that calculates future cash flow expectations
• Developing commercial investment scenarios based on brand objectives and strategies
• Profiling each alternative based on key outcomes and measurement metrics
• Quantifying both the magnitude and likelihood of risks and upside potential for each alternative
• Identifying opportunities to mitigate risks and increase exposure to upside potential through timing, research, and staged investments

A Multi-Country, Cross-Portfolio Challenge
One of the world’s largest pharma companies recognized the need to increase its focus across Europe on the mature brands in its portfolio. They represented a significant portion of the portfolio but were losing value faster than the European market on average. The company believed there were opportunities around line extensions and optimizing costs. By working through an analysis following the steps above for each country, the company identified $175 million in realizable opportunity. It translated that opportunity into specific tactical implementation plans in each country.

Individual Product Case Study
One U.S. manufacturer was looking for ways to increase revenues, but short of adding products to the portfolio (its default strategy), it didn’t know where to start. By testing the ideas of experts in clinical differentiation, competitive intelligence, pricing and reimbursement, statistics/ data analysis, resource optimization, and commercial strategy, the company evaluated various alternatives from the seven levers described previously. In the end, the company adopted a game-changing approach that promised to deliver an incremental $40 million to $50 million in annual revenue from its mature brands.

Conclusion
Companies can devise successful growth strategies for brands that are languishing in the last part of their lifecycle. The secret is to begin planning early in the product’s lifecycle and to continue looking for growth throughout the brand journey. Using analogs from thousands of products, it is possible to estimate the value of each strategic option and to select the most appropriate and advantageous. The results yield sound ROI ratios and much-needed revenue at a time when every contribution counts.
Robert C. Harold is a Senior Principal of Thought Leadership at IMS Healthcare Insights. He can be reached at rharold@us.imshealth.com.