Win The Product Life Cycle Game
Imagine a good football team winning a hard game in difficult conditions, even going into overtime. And then imagine this same team having to face off against a different team-a fresh one-almost immediately afterwards. This scenario illustrates the position in which most pharmaceutical and biotech companies now find themselves after they have brought a drug to market.
Though companies are financially drained by years of research and development, clinical tests, and production by the time a drug hits the market, its patent life is already drawing to an end, paving the way for intense competition from cheaper generics that did not make the same demands on their manufacturers. And the rising costs of more stringent regulations and the world economy's current credit crunch only make the situation more precarious.
Until now, companies responded to generic competition by refocusing their attention and efforts on the next wave of drugs. Unfortunately, pipelines are not nearly as generous as they once were. Prohibitive expenses mean that drug companies must not only get their products on the market fast but must also make sure they stay there.
For nearly 10 years, the idea of product life cycle management (PLM) has gradually gained popularity. This advance is underscored by the findings of a global research report-"Customer Value Integration-How to Re-Tune Pharma's Commercial Model in Light of Changing Stake-holder Influence"-published in 2006 by Capgemini, a consulting and outsourcing firm headquartered in Paris. The report suggested that up to 90% of senior executives in pharmaceutical companies believed that PLM was important for the success of a product, and 60% believed it would become more important over the next five years.
According to many recent reports, the year 2011 will bring the end of patent protection for many existing block-buster drugs. The situation has become critical, and action is required.
THE STRATEGIC APPROACH
PLM is hardly a new concept. Companies in other industries, notably producers of foods such as breakfast cereals, have applied it to their products for decades. But pharmaceuticals are not consumables or consumer items. As necessities, their initial positioning is quite different. Pharmaceutical companies cannot just add a few daubs of color to a box or include a plastic whistle inside to draw new customers. Needless to say, pharma and biotech are serious businesses, in which the use of legal tricks to stretch patent life is considered counterproductive. Indeed, doctors, who tend to dislike such practices, will turn away from any company utilizing them.
In pharmaceuticals, however, the central question remains: How can a drug be reshaped and adapted to respond to the needs and constraints of the market? The answer is still being defined and refined. One of the simplest approaches is to open up to new, international markets, assuming this has not been done before. This method only requires additional validation and approval procedures, and it can make a difference. Another PLM concept involves finding a new application for a particular drug. There are numerous examples demonstrating the success of this practice, including a drug to combat cholesterol that was also found to reduce the risk of stroke; another drug, originally used to treat angina pectoris, was later approved for hypertension.
While this kind of adaptation occasionally happens by coincidence, a company can achieve results more safely by increasing its research and development. With proper planning and sufficient investments, or by keeping track of prescription patterns and independent studies that appear following a drug's release, a company can discover and market that drug's secondary indications.
Alternatively, a company with one drug might seek to build a series of new drugs-requiring new patents-in the same category. Though the profits resulting from this approach are high, the expenses are as well. Furthermore, this should not be confused with attempts to stymie the competition by bringing in aggressive patent lawyers, a strategy that may annoy the doctors often targeted by marketing departments.
A NEW SPIN
Reformulation, another fairly common way of addressing the PLM challenge, involves improving a drug's design in some way that makes it more attractive to the user. Examples of reformulation include color-coding tablets or coating a tablet with a film to make it easier to swallow. There is no guarantee that reformulation will be a success, as several companies discovered earlier this decade. But there are cases in which, given the right marketing and an imaginative concept, companies have kept a drug in the public eye in spite of stiff competition. One rather obvious reformulation success story is aspirin, of course, which comes in all sorts of shapes and sizes. The unwritten law governing the success of a reformulation is that it must make a significant contribution towards treating a medical condition in order to be commercially viable.
Parenteral drugs have their own special category, of course. They make up approximately 25% of medications sold and are just as subject to the ebb and flow of the market as tablets, drops, creams, salves, or sprays. Any one of the approaches listed above can be used to extend the life cycle of an injectable. Let's look at the example of drugs manufactured using biotechnology. Because the active substances in these drugs are generally very sensitive, they are good candidates for lyophilization, which can extend shelf life considerably. Reformulation would release the drug in a liquid or sustained-release formula and then package it in a pre-filled syringe for greater convenience.
Another PLM possibility for parenterals involves a drug's delivery system. The manufacturer performs a careful analysis of the drug's markets to find out-among other things-who is using it and in what setting, factors that have a definite effect on subsequent dosage forms. For example, a drug might be repackaged using any number of safety features that make it more user-friendly for administering personnel and patients alike.
Keeping up with trends is of paramount importance. Currently, for instance, a combination of demographics and pressure from insurance companies is fostering the growth of the home-care segment. The demand for convenient injection systems-pen injectors or pre-filled syringes for visiting nurses-is rising alongside this movement. What does this mean for a company producing such drugs? A first release might be in a vial, which is fairly simple to produce. Vials, however, require skilled personnel, and the need for overfilling leads to a certain amount of wasted drug. So, in a second step, the company might choose a more user-friendly packaging system, such as a cartridge for an auto-injector, a pre-filled syringe, or even a dual-chamber cartridge or syringe.
Dual-chamber systems are extremely convenient: Not only do they permit nearly complete and easy reconstitution of the drug, but they also deliver highly accurate dosages and can be kept for a fairly long time. Additionally, the increased yield exploitation translates into real savings. And pre-filled syringes, whether single- or dual-chamber, are constantly being improved. In addition to anti-needle stick devices, a syringe can be equipped with a number of state-of-the-art systems to increase safety. These include anti-counterfeiting systems that ensure the integrity of the substance from the manufacturing plant to the end user.
PLAN YOUR STRATEGY
Whatever the drug, the packaging, or the situation, early planning is a crucial part of PLM. In fact, PLM should be integrated into the very development of the drug. This is especially important for parenteral drugs, whose delivery systems can be quite complex. Early planning means easier transfer to commercial manufacturing and, when the time comes, to the new administration system. A drug that has no competition, for example, can be produced in a vial to speed its time to market, a good way to keep costs in check. When other drugs begin competing for position, a more sophisticated system such as a pre-filled syringe can be used. If the drug will have competitors as soon as it's out of the gate, the more advanced system should be deployed immediately (see Table 1, p. 16).
Pharma and biotech companies that need to concentrate time and money on their core competence may decide to use the services of a contract manufacturing organization. In this case, it is imperative to discuss all the possibilities available to contribute to the drug's survival even after its patents run out. Interestingly, Capgemini's 2008 report discusses this from a general strategic standpoint. The consultancy's buzz phrase is customer value integration. The authors of the report argue that pharmaceutical companies must look at all the stakeholders and "weigh the relative importance of these stakeholders and consider their individual needs. Similarly, they need to find smarter ways to segment their respective markets and fine-tune their approaches to different market segments."
Needless to say, pharma and biotech are serious businesses, in which the use of legal tricks to stretch patent life is considered counterproductive. Indeed, doctors, who tend to dislike such practices, will turn away from any company utilizing them.
Drug manufacturers using PLM must be completely in tune with the direction the markets are moving in. They must have in place a broad-based strategy aimed at honing a product's competitiveness using all means possible, including marketing. A drug that is put on the market can't just be the best; it must also be the most user-friendly and the most identifiable and attractive from all points of view. Accomplishing this goal requires a profound and intelligent analysis of markets and their needs. The best medication in the world will be entirely useless if it is a wallflower. Yes, the current market is stormy, but a skilled and bold approach to the present challenges holds the key to winning the game. ¦