Pharmaceutical Product Life Cycle Management Strategies
Summary
TLDRThis video explores the lifecycle management strategies of pharmaceutical products, detailing the four stages of the product life cycle: introduction, growth, maturity, and decline. It highlights three distinct stages in drug lifecycles: R&D, market exclusivity, and post-exclusivity. The video delves into strategies like evergreening, flanking, and Rx-to-OTC switching, which pharmaceutical companies use to extend a drug's life cycle and combat generic competition, using AstraZeneca's successful transition from Prilosec to Nexium as a case study.
Takeaways
- 💊 The product life cycle for pharmaceuticals consists of three distinctive stages: research and development, market exclusivity, and post-market exclusivity when generics can enter the market.
- 📈 The typical pharmaceutical product life cycle curve differs from other products, with stages including introduction, growth, maturity, and decline, each reflecting different market dynamics and company strategies.
- 🧪 During the research and development stage, companies invest heavily in testing and development without generating immediate sales, as the drug is not yet launched.
- 💼 Market exclusivity is the period between a drug's market launch and the introduction of its first generic competitor, during which the company can capitalize on patent protection.
- 📉 Post-market exclusivity is marked by the entry of generic competitors, leading to a decline in the innovator drug's market share and revenue.
- 🌳 'Evergreening' is a strategy where companies extend the life cycle of a drug by introducing a next-generation version before the original patent expires, aiming to switch patients to the new drug.
- 🛡 Flanking involves a branded drug company entering the generics market by offering its own generic version of the drug to retain market share post-patent expiry.
- 💡 Rx-to-OTC switching is a strategy where a prescription drug is approved for over-the-counter sale, making the market less attractive for generic competition.
- 💰 The ultimate goal for pharmaceutical companies is to extend the life cycle of their drugs to maximize profits, using strategies like evergreening, flanking, and Rx-to-OTC switching.
- 🔄 Successful implementation of these strategies requires careful planning and execution, as seen with AstraZeneca's transition from Prilosec to Nexium, which helped maintain market share and revenue.
Q & A
What is the product life cycle and how does it relate to pharmaceutical products?
-The product life cycle is defined as the pathway of a product from its birth to the end of its life, typically divided into four stages: introduction, growth, maturity, and decline. For pharmaceutical products, the life cycle includes three distinctive stages: research and development, market exclusivity, and the period after the loss of market exclusivity when generics can enter the market.
What are the three stages in the lifecycle of a new drug according to the video?
-The three stages in the lifecycle of a new drug are the research and development stage, the market exclusivity period, and the period after the loss of market exclusivity when generics can enter the market.
What is the average market exclusivity period for new drugs according to the research by Duke University economist Henry Grabovsky?
-According to the research conducted by Henry Grabovsky, the average market exclusivity period for new drugs is 13.5 years.
What are the strategies pharmaceutical companies use to extend the life cycle of an innovator drug?
-Pharmaceutical companies use strategies such as evergreening, flanking, and Rx-to-OTC switching to extend the life cycle of an innovator drug.
Can you explain the evergreening strategy used by pharmaceutical companies?
-Evergreening is a strategy where a company either extends the product line or launches a next-generation version of the current drug before the patent on the original drug expires. This strategy aims to switch patients to the new drug, minimizing market share loss and making it less attractive for generic competitors to enter the market.
How did AstraZeneca implement the evergreening strategy with Prilosec and Nexium?
-AstraZeneca implemented the evergreening strategy by developing Nexium, a next-generation drug derived from Prilosec. They submitted Nexium to the FDA early enough to ensure its approval before Prilosec's patent expired, and successfully transferred 40% of Prilosec patients to Nexium, managing a 9% growth in its gastrointestinal franchise in 2001 alone.
What is the flanking strategy and how does it help pharmaceutical companies maintain market share?
-The flanking strategy involves a branded drug company developing its own generic version of the drug and marketing it through its own subsidiary or another company with permission. By launching a generic version at a competitive price, the company can maintain patients who will not switch and take as much share as possible from those who choose generic products.
How can a pharmaceutical company execute the flanking strategy?
-A pharmaceutical company can execute the flanking strategy in three ways: by selling the generic drug by itself or through its generic arm, selling the drug to a third party to market under that company's brand, or authorizing a generic company to manufacture and market its own version of the drug.
What is Rx-to-OTC switching and how does it benefit a pharmaceutical company facing patent expiration?
-Rx-to-OTC switching is a strategy where a branded drug, whose patent is about to expire, gains FDA approval for over-the-counter (OTC) sale. This switch makes the market less attractive for generics, as the brand can maintain a competitive advantage and high brand awareness among current users and pharmacists.
Why is it important for a pharmaceutical company to shift patients to a new drug before the launch of the generic version of the first-generation product?
-Shifting patients to a new drug before the launch of the generic version is important to maintain market share and revenue. The new drug must offer a new and better benefit than the current drug and maintain a certain degree of commonality with the original brand to ensure a smooth transition.
What happened when Schering-Plough failed to implement the evergreening strategy properly with Claritin and Clarinex?
-When Schering-Plough failed to implement the evergreening strategy properly for Claritin, delays in FDA approval for Clarinex allowed generics to enter the market before they could switch Claritin patients to Clarinex. As a result, Clarinex failed to reach blockbuster status, and sales of Claritin dropped dramatically from three billion dollars to only three hundred million dollars within a short time.
Outlines
💊 Pharmaceutical Product Life Cycle Overview
This paragraph introduces the concept of the product life cycle, particularly in the pharmaceutical industry. It explains the four stages of the life cycle: introduction, growth, maturity, and decline. The video script outlines the unique stages of a new drug's lifecycle, including research and development, the market exclusivity period, and the post-market exclusivity phase. It emphasizes the importance of plotting the life cycle curve with revenue on the y-axis and time on the x-axis to visualize the product's journey. The script also delves into the strategies companies use to extend the life cycle of a drug, such as evergreening, flanking, and Rx2OTC switching, and mentions a study by Duke University economist Henry Grabovsky on the average market exclusivity period of new drugs, which is 13.5 years.
🌱 Strategies for Extending Drug Life Cycle: Evergreening and Flanking
This paragraph discusses two strategies used by pharmaceutical companies to extend the life cycle of their drugs. The first strategy, evergreening, involves launching a next-generation version of a drug before the original patent expires, as exemplified by AstraZeneca's transition from Prilosec to Nexium. The paragraph details the successful implementation of this strategy, including the timing of patent filing, market launch, and the transfer of patients to the new drug. The second strategy, flanking, involves a branded company entering the generics market by developing and marketing its own generic version of the drug. This can be done through the company itself, a third party, or by authorizing another company to manufacture and market the generic version. The paragraph cites Fiser's use of the flanking strategy through its subsidiary Greenstone as an example.
🛒 Rx2OTC Switching and Conclusion
The final paragraph focuses on the third strategy for extending a drug's life cycle: switching from prescription to over-the-counter (OTC) status. This strategy is effective when a drug with an expiring patent gains FDA approval for OTC sale, making the market less attractive for generic competitors. The paragraph highlights AstraZeneca's success in maintaining its market share by introducing Nexium and later gaining OTC status for Prilosec. To successfully implement the Rx2OTC strategy, a drug must have a competitive advantage and high brand awareness. The paragraph concludes by thanking viewers for watching and directing them to the website for more resources on pharmaceutical marketing.
Mindmap
Keywords
💡Product Life Cycle
💡Market Exclusivity
💡Evergreening
💡Flanking
💡Rx to OTC Switching
💡Generic Drugs
💡Research and Development (R&D)
💡Patent Expiration
💡Market Share
💡Profit Maximization
💡Life Cycle Management
Highlights
The product life cycle of pharmaceuticals is divided into four stages: introduction, growth, maturity, and decline.
Pharmaceutical products have a unique lifecycle with three distinctive stages: R&D, market exclusivity, and post-exclusivity.
The R&D phase involves intensive clinical and preclinical tests and pre-launch activities without initial sales.
Market exclusivity lasts on average 13.5 years, as calculated by Duke University economist Henry Grabovsky.
During the middle stage, companies aim to maximize market share and turnover as the drug is launched.
In the maturity stage, the focus shifts to maintaining market share when growth is no longer possible.
The decline stage involves consolidating market segments and minimizing expenses as profits start to decline.
Companies seek offensive strategies to combat generic competition and retain market share post-patent expiration.
Evergreening, flanking, and Rx2OTC switching are major strategies used by pharmaceutical companies to extend a drug's lifecycle.
Evergreening involves switching patients to a next-generation drug before the original patent expires.
AstraZeneca successfully implemented evergreening by transitioning from Prilosec to Nexium.
Flanking involves a branded drug company entering the generics market with its own generic version.
Fiser executed the flanking strategy by launching authorized generic versions through its subsidiary Greenstone.
Rx2OTC switching makes the market unattractive for generics when a branded drug gains OTC approval.
AstraZeneca kept 40% of Prilosec patients by introducing Nexium and later gaining OTC status for Prilosec.
For successful evergreening, the next-generation drug must offer a new benefit and maintain brand commonality.
Shearling Plow failed to implement evergreening properly, leading to a dramatic drop in Claritin sales.
The video concludes by summarizing the strategies and inviting viewers to visit the website for more resources.
Transcripts
in this video we will discuss the
lifecycle manager
strategies of pharmaceutical products
the product life cycle is defined as the
pathway of a product from the beginning
of its birth to the last phase of its
dead from sales revenue insight the
stages of the product life cycle are
similar to these of humans as time
passes the product move from infancy
grow and reach maturity eventually it
will decline and die there are four
stages in the product lifecycle
introduction growth maturity and decline
by plotting the revenue on the y-axis
and the time on the x-axis the product
life cycle curve is as shown on the
screen this curve is further divided
into four phases introduction growth
maturity and finally decline when it
comes to pharmaceutical products the
curve is a bit different there are three
distinctive stages in the lifecycle of a
new drug the research and development
stage from the drug discovery up to its
launch to the market the period of time
between its launch and the loss of
market exclusivity the period after the
loss of market exclusivity when generics
can enter the market we will explore the
three stages early middle and late in
more detail during the early stage the
new drug is submitted to certain
intensive clinical and preclinical tests
at this stage the company invests money
without generating sales as the drug is
not launched yet in the market the
company starts the pre-launch activities
market exclusivity period is the time
period between the market launch of an
innovator drug and the launch of its
first generic the company files for a
patent soon after the discovery of the
drug from that point the company has a
20 year patent for the product the R&D
phase takes several years so by the time
the product is approved and available on
the market the patent can be close to
running out a research was done by Duke
University economist Henry grabovsky in
2016
calculated the average market
exclusivity period of new drugs
according to this report the average
market exclusivity period is 13.5 years
during the middle stage the drug is
launched to the market and the company
starts making profit as soon as the
product is introduced to the market the
company starts activities like creating
awareness and informing current and
potential customers on the product once
it enters the growth stage the goal is
to achieve the largest possible share of
the market and maximize turnover when
growth is no longer possible the product
matures and the company focuses on
maintaining its market share when market
share and profits start to decline the
company consolidate on the market
segments gained and try to minimize the
expenses
when the patent expires companies seek
offensive strategies to combat generic
competitors and retain market share
the ultimate objective of any company is
to extend the life cycle over a longer
period of time the question is what are
the majors strategy assualt by
pharmaceutical companies to extend the
life cycle of an innovator drug an
interesting paper published in the
Journal of generic medicine explored the
branded drug companies strategies to
overcome generic competition
these strategies are evergreening
flanking and rx2 OTC switching we will
speak about each strategy in detail
evergreening is a strategy involving
either line extensions or launching a
next-generation version of the current
drug within the evergreening strategy
brand teams attempt to switch patients
to the newly patented drug before the
patent on the original drug expires
switching patients to the new drug
minimizes market share loss and makes it
less attractive for generics competitors
to enter the market evergreening is the
most successful strategy employed by
branded companies to maintain market
share
AstraZeneca switch from prilosec to
next-generation nexium is a successful
implementation of the evergreening
strategy
the first patent of omeprazole was filed
in 1979 nine years later
prilosec was launched for the market by
1996 prilosec became the world's
best-selling drug in 2006 point three
billion u.s. dollars its patent see
should have expired in late 2002 nexium
the next generation drug developed from
prilosec proved more effective in
treating patients Astra Zeneca submitted
the drug to the FDA early enough to
assure its approval before the patent
expiration of prilosec in 2000 Astra
Zeneca launched nexium before the patent
expiration of prilosec the company
transferred 40% of prilosec patients to
next-generation nexium as well as
managing a 9% growth in its
gastrointestinal franchise in 2001 alone
the patent protection for nexium which
was an improvement over prilosec expired
in 2014
this means 35 years after the original
patent for prilosec was taken out in
order to implement the evergreening
strategy successfully the company should
shift patients to use the new drug
before the launch of the generic version
of the first generation product the next
generation drug must offer a new and
better benefit than the current drug a
certain degree of commonality with the
popular and trusted original brand is
also important
AstraZeneca made nexium purple and very
similar looking to the original prilosec
shearling plow failed to implement the
evergreening strategy properly claritin
achieved very good sales figures to
maintain these figures the company
planned to replace it with the next
generation clare in x delays in u.s. FDA
approval for Claire and X enabled
generics to enter the market before
switching claritin patients to clarinets
as a result Claire and X failed to reach
blockbuster status and sales of claritin
dropped dramatically from three billion
dollars to only three hundred million
dollars within a short time
the second strategy is flanking generics
flanking strategy involves entry into
the generics market in this strategy the
Brandon's drug company develops its own
generic and marketed through its own
subsidiary or through another company
with permission as soon as the patency
of an innovator drug expires generics
enter the market generics attract some
new patients and the branded company
loses a considerable number of patients
to the generic market by launching a
generic version of the brand at a
competitive price the company can
maintain those patients who will not be
switched and take as much share as
possible from those patients who chose
generic products the company can execute
the flanking strategy in one of three
ways
the first option is to sell the generic
drug by the company itself or through
its generic arm the second option is to
sell the drug on to a third party
usually a generic player to market it
under that company's brand the third
option is to authorize a generic company
to manufacture and market its own
version of the drug
Fiser led this strategy launching
authorized generic versions of its
products through its authorized generic
subsidiary greenstone the third strategy
is switching from rx to OTC this
strategy is appropriate when a branded
drug whose patent is about to expire
gains approval by the FDA for OTC sale
the switch will make the market
unattractive for generics AstraZeneca
succeeded in keeping 40% of prilosec
patients by introducing them to nexium
shortly afterward prilosec gained OTC
status keeping generics competition from
flooding the market to take AstraZeneca
's revenue and market share to
successfully switch a product from
prescription to a TC it should have a
competitive advantage over existing
available drugs and inherit a high level
of brand awareness among current users
and pharmacists
by this you have reached the end of the
video thank you for watching for more
resources on farmer marketing please
visit our website the farmer market
accom
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