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An upward course

With marketers under pressure to attain peak sales for new products as rapidly as possible, a smooth takeoff is key in executing a successful campaign

We all share a common commercial objective within pharmaceutical marketing: maximising peak sales for our brands. However, can we and should we improve on the current new product-to-market processes and management approach adopted in many companies?

With the current costs of developing a new chemical entity (NCE) estimated to be between $850m-$1.2bn, everyone in the industry recognises the importance of achieving optimal peak sales as early as possible, to maximise the return on that huge investment. Yet, the number of new product launches has fallen in recent years as big drug companies suffer an innovation drought. There were only 30 new medicines launched in key markets in 2005 - far from the peak of the 1990s. With fewer drugs to launch, organisations must focus on ensuring they do everything possible to get the launch right.Another key issue for big pharma is that there are lots of $1bn products, but few 'mega-blockbusters' which will generate the kind of income that has been achieved by some in recent times.

The second-biggest selling drug generates half as much revenue as Lipitor's $10bn level, while the tenth top-selling drug, Wyeth's anti-depressant Effexor, generates a 'mere' $3.8bn.

Given the cost to develop these NCEs, we need to ensure more products become mega-blockbusters through more effective pre- and post-launch marketing.We are also witnessing the fallout from big pharma companies losing, or approaching the loss of, patent exclusivity on products that generate significant profits. Pfizer, for example, has restructured its workforce and cut up to 10,000 jobs worldwide (10 per cent of the workforce) in an attempt to reduce its costs by more than $2bn annually.

Facing these challenges, many companies have developed extensive new product-to-market commercialisation processes which usually become effective 12-24 months prior to launch, ensuring the product reaches peak sales rapidly. These processes can be seen in many new product team offices as a visual display covering a substantial part of one wall: different activities and the types of research that have to be completed, deadlines, plus information regarding packaging, pricing, market landscaping, positioning, etc, are all presented clearly (see figure 1, top).

However, often the end result can be compromised by several factors, as outlined in figure 2 (right).

Part of the problem is the sheer scale of the task of launching a new product. Many firms have made the sensible decision to divide responsibility for particular elements of the process between different business disciplines within the company. For example, business information/analytics is the core function for information provision. So the company usually forms a multidisciplinary new product launch team staffed mainly by global function representatives with, in the best cases, representation from local operating countries through international marketing. However, this model is usually focused more on process and communication needs rather than developing the commercial intelligence, insight and challenge within the process that is required to develop winning strategies.

Once the team is put in place, if time is limited, a 'tick-box' information provision approach often becomes implemented, instead of asking questions such as, 'are we getting the insight we need in order to make the right decisions in determining marketing strategy, positioning etc?'

The tick-box approach can lead to very generic strategies for the product, such as positioning it as:

  • the first choice in the treatment of X
  • the gold standard, to be used for all patients suffering from Y
  • the medicine for use once Z fails.

    Such messaging is based purely around entry-level functional attributes of the product; sometimes the top-line clinical benefits are not even made clear. Why does this happen? One senior marketer in the pharmaceutical industry commented: 'it is vital to focus your efforts and resources on the two or three critical success factors as you prepare for launch and not get sucked into a box-ticking exercise. Ticking boxes is a behaviour prevelant in organisations where employees are concerned about 'blame' if a launch does not achieve expectations - ie, 'if you do all the tasks and tick all the boxes, you cover your back'. Yet, in my view it is better to do a few things well, rather than everything just okay and this, in turn, takes both individual and organisational courage.'

    The problem is that there is little discussion of the effectiveness of the current process. The perception is that by following a sequential process the answers will be found. Yet, the need is for more cycles of modelling 'what if' scenarios, with commercial exploration and experimentation built into the process to maximise the value at each stage and ensure every vital question is answered.
    Above all, the aim must be smart insight management within the new product process. The word 'insight', according to the Random House dictionary, means: 'Penetrating mental vision or discernment; faculty of seeing into inner character or underlying truth'. In other words, a sense for why things happen the way they do and how we can take commercial advantage of the situation.
    If we get it wrong the cost can be considerable. There are plenty of examples where expectations for a new product were too high, sometimes caused by looking at epidemiology alone and not understanding

    what was really happening in the market, what the inhibitors were and what was needed to overcome them.In other cases, the problem was relying purely on an internal view of what the market needed, resulting in an inflated view of the differentiation
    between the product and its competitors.

    In fact, to achieve real progression, there should be:
    1. A robust core/base process - most companies have this in place, but there is great value in ensuring that the process covers every element needed to ensure a truly robust competitive strategy. Sometimes companies spend too much time on the brand without considering the likely response of competitors and the impact that will have on their own strategy.

    2. Appropriate interpretation, challenge, insight, and iteration - specifically to drive out commercial insight of where and how you are going to compete. This has to include:
  • segmentation
  • prescribing triggers (by segment)
  • the key levers of growth and how we act on them
  • truly differentiated and motivating positioning
  • competitive marketing strategy, branding etc.
    The focus here is the quality of insight. Often strategies are based on very top-line knowledge; instead what is needed is iterative review and interrogation of the information/market to gain real insight into what will make your brand successful.

    3. Further research and analytical processes - are often required, rather than a one-off pass at any particular stage, in order to:
  • Source the (additional) fuel needed to gain the right level of insight at each stage
  • Model and interpret that information.

    4. Good decision making - appropriate and objective, based on what it takes to be competitive, what is critical to success and an implementation plan that ensures all key levers are exploited.
    Figure 3 (above) gives a useful checklist to gauge the process and quality of decisions made with regard to the view of market, positioning and branding.
    Good process in terms of what is done key, but also required is the right culture plus space to enable managers to apply a more iterative process, thereby driving the right level of insight and understanding, and delivering excellent marketing.Often we have to get it right straight out of the gate, to ensure the shortest time to peak sales. Sheer marketing muscle might generate a good result, but there is no doubt that the best return on investment is going to depend on ensuring we have the strongest marketing strategy possible at launch.

2nd May 2007


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