Pharmaceutical Product Life Cycle Management Strategies

The Pharma Marketer

12 Apr 202010:38

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

00:00

💊 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.

05:01

🌱 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.

10:02

🛒 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

The Product Life Cycle refers to the stages a product goes through from its introduction to the market until it is no longer available. In the context of the video, it's used to describe the typical trajectory of a pharmaceutical product, which includes introduction, growth, maturity, and decline. The video script explains that pharmaceutical products have a unique life cycle with distinct stages such as research and development, market exclusivity, and post-market exclusivity, which are crucial for understanding the strategies employed by pharmaceutical companies.

💡Market Exclusivity

Market Exclusivity is a period during which a pharmaceutical company has the sole right to market a new drug after it has been approved. The video script mentions that this period typically lasts for 20 years from the time the patent is filed, but due to the lengthy R&D phase, the effective market exclusivity period is often shorter, averaging 13.5 years according to a study by Duke University economist Henry Grabowski. This period is critical as it allows the company to recoup R&D investments and make profits before generic competitors enter the market.

💡Evergreening

Evergreening is a strategy used by pharmaceutical companies to extend the life cycle of a drug by introducing a new version or an improvement of the existing drug before the original patent expires. The video provides an example of AstraZeneca's successful implementation of this strategy by transitioning from Prilosec to Nexium, thereby maintaining market share and profitability. This strategy is significant as it allows companies to continue to generate revenue beyond the patent expiration of the original drug.

💡Flanking

Flanking is a strategy where a branded drug company enters the generics market by developing its own generic version of the drug or by authorizing another company to do so. The video script explains that this strategy can help the company maintain some market share and profits when the patent expires and generics enter the market. The example of Fiser using its subsidiary Greenstone to launch authorized generic versions of its products illustrates how this strategy can be effectively employed.

💡Rx to OTC Switching

Switching from Rx to OTC refers to the process of obtaining FDA approval to sell a prescription drug over-the-counter. The video mentions that this strategy can make the market less attractive for generic competitors as seen with AstraZeneca's Prilosec, which gained OTC status, thus protecting its market share. This strategy is effective when the drug has a competitive advantage and high brand awareness among users and pharmacists.

💡Generic Drugs

Generic Drugs are copies of brand-name drugs that have the same dosage, safety, strength, quality, performance, and intended use. The video script discusses how the entry of generic drugs into the market after the loss of market exclusivity can significantly impact the sales and market share of the original branded drug. Generics are typically less expensive, which makes them attractive to consumers and healthcare providers, thus posing a challenge for branded pharmaceutical companies.

💡Research and Development (R&D)

Research and Development (R&D) in the pharmaceutical industry refers to the process of bringing a new drug to market, which includes drug discovery, preclinical and clinical testing, and regulatory approval. The video script highlights that this phase is both time-consuming and costly, often taking several years, which is a significant factor in the overall life cycle management of pharmaceutical products.

💡Patent Expiration

Patent Expiration is the end of the legal protection granted to an inventor for an invention, allowing other companies to produce and sell the drug without the inventor's permission. The video script emphasizes that patent expiration is a critical juncture in the life cycle of a drug, as it opens the market to generic competition, which can lead to a significant drop in sales and market share for the original drug.

💡Market Share

Market Share refers to the percentage of the total available market that is controlled by a particular company or product. In the video, market share is a key metric for pharmaceutical companies to measure the success of their products and strategies. The goal during the growth stage is to maximize market share, and during maturity, the focus shifts to maintaining it, as losing market share can lead to decreased profitability.

💡Profit Maximization

Profit Maximization is the strategy of producing and selling a product to achieve the highest possible profit. The video script discusses how pharmaceutical companies aim to maximize profits during the growth and maturity stages of the product life cycle by increasing market share and turnover. This is particularly important during the market exclusivity period when the company has no generic competition.

💡Life Cycle Management

Life Cycle Management is the strategy used by companies to manage the product life cycle to maximize profits and market share at each stage. The video script outlines various strategies such as evergreening, flanking, and Rx to OTC switching that pharmaceutical companies employ to extend the life cycle of their drugs. Effective life cycle management is crucial for the long-term success and profitability of pharmaceutical products.

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.