Commercial launch is an expensive and risky endeavor, especially for small life science companies. According to a recent report, about half of all the drugs launched in the last fifteen years underperformed market expectations by more than 20%. In fact, over half failed to reach $250 million in peak U.S. sales.
As the pharmaceutical market shifts toward value-based pricing, gaining market access and sustaining profitability have become more significant challenges. To mitigate the risk for stagnant growth post launch, it’s critical to understand and address the challenges of a product’s mid-life cycle.
The life cycle for a pharmaceutical product consists of a series of stages that begin at the drug’s conception and end when the brand is withdrawn from the market. There are three distinct stages of a pharmaceutical drug’s lifecycle:
The early or pre-marketing stage involves a pre-clinical discovery phase and three clinical trial phases required for FDA approval. It takes an average of ten years and over $2.6 billion for a manufacturer to move a drug from initial discovery into the marketplace.
The middle or commercialization stage is when a manufacturer can recoup the costs incurred during the early stage and start making a profit. Revenue generation for this stage is typically represented as a bell curve beginning with a product’s introduction to the market (launch) and moving through growth, maturity, and decline phases. This stage lasts about twelve to sixteen years for most brand-name drug manufacturers.
The late stage commences with a brand’s loss of market exclusivity as its patent expires and generic competition hits the market.
The commercialization stage is fraught with risks that can negatively impact sales and market share growth, including increased competition, shrinking timeframe to hit peak sales, declining reimbursement, cost pressures, value-based pricing, and expiring patents.
Small life science companies are playing a larger role in the market. The share of drug launches by emerging companies more than tripled between 2006 and 2018, and in 2020, small biopharma companies originated and launched 40% of all new drugs.
While small companies shine when it comes to innovating and developing novel treatments, they face more hurdles when it comes to commercializing their products. Unquestionably, the growing influence of payers, intense competition, and limited access to prescribers can make it difficult for life sciences companies with fewer resources to compete against big pharma.
Recent findings from L.E.K. reveal that large companies have the advantages of size and scale when commercializing new products:
Average peak revenues are 50% higher for large pharma companies
Smaller biopharma companies are more likely to underperform market expectations
An even greater proportion of small manufacturers underperform in diseases driven by primary care channels
According to a Deloitte analysis, the top reasons product launches falter include limited market access, inadequate or incomplete understanding of the market and customer needs, poor product differentiation, and low prioritization and resource allocation. The report also notes that “if a product fails to meet launch year expectations, its probability of recovering revenue in subsequent years declines sharply.”
Ensuring your product reaches its full commercialization potential requires innovative approaches to market intelligence and customer engagement to address the factors that lead to poor performance:
Seek early input to clarify the priorities and decision-making processes of payer drug formularies
Use post-launch data and services to differentiate your product from the competition
Invest in analytical tools to help you better understand key stakeholders and identify new market opportunities
Tap into real-world data insights to demonstrate value to payers
Leverage data analytics to boost market access
Employing data-driven, technology-based interventions to improve medication adherence
Consider the value of a commercialization partner
Superior clinical trial results do not guarantee commercial success. A robust clinical profile is no longer enough – you need a value proposition supported by real-time data and a go-to-market strategy that optimizes market access and patient and provider engagement. Read this case study to discover how a specialty brand overcame the mid-cycle challenge by adopting Phil’s commercialization platform.