The need for lifecycle management

As competitive pressure from the post-patent-expiry entry of generics and new brands onto the market mounts, drug product lifecycles are becoming shorter and shorter with lower peak sales - a double edged sword for pharmaceutical companies. In fact, products worth more than $100 billion in sales (1) will be going off-patent and subject to generic incursion between 2008 and 2012.

Thus, effective lifecycle management is becoming a must for pharma companies looking to maximise the return on their considerable investment. However, it is becoming increasingly difficult for pharma companies to do so with their current lifecycle management strategies.

According to Datamonitor senior pharmaceutical analyst Dr Tijana Ignjatovic: “With the growing pressures of cost containment, only those strategies that satisfy payers, physicians and patients by meeting a true unmet therapeutic need will ultimately be successful in the future. Consequently, the development of reformulation and fixed dose combination products will become less and less popular strategies as success becomes more difficult to achieve.”

Drug lifecycles are evolving for the worst

Product lifecycles are becoming shorter for a number of reasons, a situation that is compounded by a dearth of new products needed to replace lost revenues. Thus lifecycle management strategies that prolong the patent-protected life of a drug have been propelled to the top of the agenda for many brand managers.

In 2008 alone, $16.8 billion worth of branded revenues will be exposed to generic competition, with products responsible for an aggregate of $102 billion in sales going off-patent and thus subject to generic incursion between 2008 and 2012 (based on 2007 sales of the 50 top pharma companies in the US)(1), Dr. Ignjatovic says. “With many products' sales still growing at the time of patent expiry, every additional day of protected revenues can bring significant revenues to the company.”

Furthermore, payers like the National Health Service (NHS) in the UK have introduced a range of cost-containment measures aimed at stimulating use of generics as a means of cutting healthcare costs. This fact, compounded by changes in the generics marketplace dynamics, has led to faster brand sales erosion in the period immediately after patent expiry and entry of generics than in the past.

Payer satisfaction is important for success of lifecycle management strategies

With increasing cost-containment pressures and scrutiny of the pharma industry's response to dealing with patent expiry, lifecycle management requires early consideration, a thorough understanding of each market, and strategic planning involving many different functions within a company, Dr. Ignjatovic says. “Payer behaviour is especially important and will determine which strategies companies decide to implement in specific markets. While launching a reformulation product in one market may prove to be successful, it may be a complete failure in another one.”

While strategies such as the development of reformulation products have been successful in the past, growing payer scrutiny is limiting their success under current market dynamics. Only those products offering significant improvement over the original therapy in terms of not only patient compliance and convenience, but also therapeutic outcomes are likely to receive desired pricing and reimbursement terms. The same is true for fixed dose combinations, Dr. Ignjatovic says. “In countries with the strongest cost-containment pressures those drugs are unlikely to have a high uptake based on an improvement in patient compliance alone, when cheaper generic combinations are preferred. Instead, improved outcomes will be necessary with strong proof of better efficacy,” she says.

Not all markets the same

In addition, with generics companies becoming more aggressive in challenging pharma's patents it is more difficult to protect fixed dose combination drugs, a situation which is compounded by the raised bar for obviousness in both European and US courts. Furthermore, generics companies are becoming technologically more advanced and are now able to develop their own non-patent infringing reformulation products, thus shortening the market life of branded reformulations.

However, not all markets are the same. In countries with less mature generics markets, such as France, Italy and Spain, there is a greater opportunity for traditional developmental lifecycle management strategies to succeed: with lower generic erosion post-patent expiry and general physician and patient distrust of generics, reformulations and fixed dose combination drugs are much more likely to achieve high uptake than in the UK and Germany.

While the US has generally been the prime market for the launch of reformulated products, payers are increasingly looking to cut costs and physicians are becoming more cynical regarding the advantages such line extensions bring to patients. Consequently, reformulated products are finding it harder to achieve higher uptake, and with the drop after cheaper generics enter the market resulting from patients being switched onto generics, the impact they have on protecting brand franchise sales is diminishing.

Instead, lifecycle management strategies employed earlier in the lifecycle are more likely to be successful, making indication expansion a popular strategy, Dr. Ignjatovic says. “However, with limited funds prohibiting development in a range of indications from the very start, manufacturers will focus on those indications that have the greatest level of unmet need in order to gain better reimbursement through preferred formulary placement, rather than launching in bigger mass markets that are becoming very crowded.

“With $100 billion worth of product sales becoming subject to generic competition from now until 2012, pharma simply must adapt to the changing market climate,” she says.

Notes

Related Research: Generic Series: Optimising Brand Lifecycle Management Winning Strategies to Maximise Revenue in the Face of Growing Generic Competition

References:

1. Based on 2007 sales of the 50 top pharma companies in the US. Datamonitor, PharmaVitae: Company Comparator Tool, February 2008, IMHC0080

Datamonitor's report Generic Series: Optimising Brand Lifecycle Management Winning Strategies to Maximise Revenue in the Face of Growing Generic Competition provides analysis of current trends in pharmaceutical brand lifecycle management with recommendations for creating the optimal brand lifecycle management plan and discussion of commonly used lifecycle management strategies with case studies.