To fill gaps in product lines or move quicker to market, Big Pharma companies often look to acquire emerging pharma companies that may be nimbler or more focused on niche therapies. This is especially true when it comes to treatments for patients diagnosed with rare conditions, including advanced CAR T-cell therapies that target aggressive cancers.
Such an acquisition solves one problem—quickly getting a new drug without spending many years in R&D—but it creates another: How to commercially weave the new therapy into an existing product portfolio. Effectively integrating the current product portfolio will be crucial to the new product’s launch success, and it is critical to the continued success of the existing products.
Consider this theoretical example, based on real-world experience: EmergoPharma, a relatively new manufacturer, is about to launch a revolutionary lymphoma treatment called LymphoAid. It has received FDA approval, and the company’s lean commercial team is preparing its launch plan.
Meanwhile, GigoPharma—a large, established company—has several successful products, but nothing significant or imminent in the pipeline. One of its blockbuster drugs will go off patent in two years, its R&D efforts have experienced a series of unfortunate setbacks, and its future looks rather dim. To fill the new product void, it decides to acquire EmergoPharma, integrate LymphoAid into its portfolio of life-saving therapies, provide commercial operations support, and take over its product launch.
Doing so, however, will be easier said than done. To avoid squandering an opportunity that appears made in pharma heaven, commercial operations executives from GigoPharma and EmergoPharma must answer five questions:
1. What’s the product’s true value?
Forecasting is the backbone of a newly acquired product’s launch strategy—but it’s complicated. GigoPharma had already developed a forecast for LymphoAid during the acquisition phase. Now, the commercial team must test the forecast’s key assumptions—estimated market potential, market share uptake, peak share, dosing, compliance, price, and planned allocation and effectiveness of sales and marketing resources. Analysts will compare these assumptions with those of their new EmergoPharma colleagues, who have likely focused all their energy and research on this one product for years. This process ensures that the commercial team will assign the newly acquired asset a proper commercial value, and helps determine the level of sales and marketing support that the product will need at launch and throughout its lifecycle to capture the full product value.
2. How do we integrate our data sources together?
Whether it’s patient-level claims or physician-prescribing behavior, accurate data is the fuel powering every product launch strategy. The right data equips a commercial team to create an accurate forecast, design and compensate the sales force, and measure the product’s performance.
Data is a costly investment, though, and a resource that emerging pharma companies may be hesitant to purchase. EmergoPharma selects and buys only what it absolutely needs. GigoPharma, on the other hand, buys all the appropriate data available—and then merges that data with relevant analytics from its previous product launches. Problems often arise when such different companies try to merge the disparate sets of data from a myriad of in-house sources and vendors.
To successfully merge this data, both companies should work together to consolidate existing contracts. This process will involve multiple transfers of records and probably a few subscription cancellations. GigoPharma must take the lead here. It must integrate two CRM platforms, develop an integrated customer master process and database, add EmergoPharma’s data (specialty pharmacy, wholesaler, etc.) to its own reporting system, and then use this information to inform effective commercial strategies.
3. How do we do no harm?
GigoPharma must waste no time developing a product launch strategy for its newly acquired asset—and give it every chance to bust out of the blocks. But it also must take care to avoid disrupting the commercial strategies of its other products that already are on the market.
If the newly acquired asset is in the same disease category as an existing product, GigoPharma must thoughtfully plan its promotional activities in accordance with the patient journey to maximize opportunity with each therapy. Pharma companies need to use caution with products meant to be used in succession, in particular. For example, a blockbuster cancer therapy may successfully treat patients as a first-line therapy. But patients who experience recurring cancers or who can’t tolerate the first-line therapy may require a second- or third-line treatment. Pharma companies that promote all three lines of therapies must appropriately describe each product’s unique selling propositions and carefully balance any promotional activities.
A pharma company may also acquire a new asset that competes with one of its existing products in the same line of therapy. The new asset may be considered a substitute for an existing product or belong to a different drug class. When drafting new product messages, the commercial team must be sure to include each product’s unique benefits to help physicians understand the best product for a particular patient.
4. What’s our optimal sales force strategy?
The pharma sales force and its challenges surrounding size, structure, territory design, segmentation, targeting, and incentive compensation are complex under normal circumstances. But it’s even more difficult when launching a newly acquired asset—and in this case, one that comes with its own sales force.
EmergoPharma was preparing to launch LymphoAid prior to the acquisition. Its lean commercial operations team designed territories and had just hired sales representatives to market the product to HCPs.
Faced with whether to keep LymphoAid’s stand-alone sales force or integrate the product into one of its own sales forces, GigoPharma’s commercial team must consider the trade-offs associated with alternative sales force structures by asking the following:
- Do any of our products on the market treat lymphoma, or a similar or related condition?
- Do any of our products have similar HCP targets?
- Might some of LymphoAid’s new sales reps have relevant and unique relationships with physicians, based on therapies they detailed at their previous employers?
- Are the target geographical areas for the lymphoma product in areas that our sales force does not cover?
- How many products do GigoPharma’s reps currently detail?
- Does GigoPharma have appropriate non-selling teams (e.g., field reimbursement teams, nurse educators, key account managers) to support the launch product?
When GigoPharma adds LymphoAid to its product portfolio, it may decide to take advantage of efficiencies by integrating the new product’s existing sales force into its teams. At the same time, GigoPharma may see the benefits of a dedicated sales force to detail LymphoAid during its launch. GigoPharma must review each of these scenarios and compare any efficiencies from a sales force integration with potential for increased sales using a dedicated product team.
A new, expanded team would include some reps assigned to promote a mixture of all assets, including LymphoAid. Importantly, the commercial operations team must ensure reps assigned to detail LymphoAid understand the product’s unique selling proposition, potential side effects, and any additional relevant information. GigoPharma also must confirm those sales reps can prioritize introducing LymphoAid to HCPs during the critical launch period.
5. How can we appropriately compensate our sales force?
It’s challenging for established companies to properly motivate a pharma sales force to perform a complex task to the best of its ability. That’s why incentive compensation plans matter. A thoughtful, balanced incentive compensation plan considers a mix of factors—a product’s projected success, expected lifecycle, and appropriate rewards for the sales force—and helps sales reps perform to their full potential and precipitate a successful product launch. The incentive compensation plan should be fair to reps promoting the new product and those promoting the legacy products.
If a company’s territories have balanced market potential, compensation plans for new products may begin as flat commission plans, then transition into goal-based plans. If territories for the new asset are based heavily on existing assets, the commercial operations team needs to address these unbalanced territories with a more complex launch plan. An effective launch plan asks questions such as:
- Are the territories balanced based on the new product’s market potential?
- How much weight should the plan place across existing products and the new product?
- What type of pay-performance relationship works best for the sales force to promote the new product?
For any sales reps uninvolved in the new product launch, the pharma company should implement extra incentives, such as contests or kickers, to ensure these teams remain motivated to detail their other assigned products.
M&A Only Works When…
Pharma company M&A shows no signs of slowing down. Last year, Swiss-based pharma giant Novartis purchased Endocyte, an emerging pharma company that focused on therapies to treat prostate cancer, for $2.1 billion. In 2017, Gilead acquired Kite Pharma—a manufacturer of advanced, targeted CAR T-cell therapies—for $12 billion. In January 2019, Bristol-Myers Squibb announced its impending acquisition of Celgene for $74 billion, a record-setting deal in the pharma industry that would combine two of the world’s largest manufacturers of cancer immunotherapies. And we’ll certainly see more. Large pharma companies facing diminishing pipelines will continue to acquire emerging pharma companies with promising therapies.
That should be good news for all: HCPs access new, innovative products, faster; emerging pharma gains resources to support their therapies; and Big Pharma can relatively easily and quickly solve issues related to an evaporating pipeline of new products. But this M&A activity only succeeds if companies properly commercialize the opportunity. And that happens only if Big Pharma takes inventory of the emerging pharma company’s strengths and takes advantage of any efficiencies to get the full value from the acquisition. They must also avoid redundancies and excessive disruption to commercial activities to maximize return on investment.
At the end of a merger, the biggest winner of all is the reason why the pharma industry develops products in the first place: The patients. They benefit most from the combination of an emerging pharma company’s specialized therapy research and an established pharma company’s plentiful resources to bring the new therapy to market.
