Pharmaceutical Product Life Cycle Management Strategies

Summary

This 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.