Product launch & Life cycle management

Question 1

What are some assumptions and characteristics of the product life cycle?

Answer 1

1) Products have limited lifetime (e.g. markets change)
2) Sales pass through different stages, with each stage having different challenges, opportunities and problems. (sales do not develop in a linear fashion)
3) Profits rise and fall at different stages of the product life cycle
4) Products require different marketing, financial, manufacturing, purchasing and human resource strategies in each life cycle stage

see slide 6&7 lecture 5

Question 2

Give an example for excessive extension of product life

Answer 2

Boeing 736 –> different generations
iPhone –> different generations

Question 3

How does the cashflow curve look like fora pharma/biotech product?

Answer 3

Negative cashflow in the beginning during the period of investment, and usually even at the time of product launch. During the product uptake there is a breakeven point. After that we have periodic return which includes the point of peak-sales as well as the impact of competition.

Question 4

Does promotion expenditures correlate with higher average first year sales

Answer 4

No see slide 10 lecture 5

Question 5

Is early adoption important and why / why not?

Answer 5

• Only minority of launches make significant improvements their market share trajectory
  –> whilst it is possible to improve, MOST DO NOT–> it is EXTREMELY important to plan to get launch right the first time

Question 6

What are the different adopters over time, and in what order do they come?

Answer 6

Innovators
Early adopters
Early majority
Late majority
Laggards

According to some Rogers dude, adopters follow a standard distribution curve

Question 7

What is the difference between early vs late adopters?

Answer 7

Early adopters usually have a better technological/scientific understanding and can therefore faster see the merits of a new product. They have available income and a willingness to pay and are willing to take risks.

Key factor: references, early adopters do not rely on others opinion when deciding to buy. Majority group want to hear others opinion before buying. Userfriendliness is important for them since they dont want to use a lot of time to understand.

Question 8

Adoption is

Answer 8

an individuals decision to become a regular user of a product. Followed by the consumer-loyalty process.

Question 9

What are the goals of life cycle management strategies?

Answer 9

1. Provide meaningful improvement in a clinical profile of a drug
2. Increasing the revenue by augmenting the number of the patients –> the more patients, the more people can adopt the drug and the more revenue can be made
3. LCM should not be aim in iteself, but allow for additional profit. Additional investments are often needed, is the revenue high enough to allow for these? – > timing is critical - needs to employed in time, so the remaining patent duration allows for sufficiently long exclusivity
4. Enhancing market exclusivity

Question 10

An innovation is

Answer 10

any good, service or idea that someone PERCEIVES as new (no matter if it is or not).

Question 11

What are the possible LCM strategies?

Answer 11

• Indication expansion
• Reformulations, allowing for new dosages and routes of administration
• Fixed-dose combinations (FDC’s and co-packaging)
• Second-generation products
  Other: Geographical expansions, OTC switching

Question 12

Innovation diffusion process is

Answer 12

the spread of a new idea from its source of invention or creation, to its ultimate users or adopters.

Question 13

Consumer adoption process is

Answer 13

mental steps from hearing of a product to final adoption.

Question 14

The different stages are

Answer 14

Awareness
Interest
Evaluation
Trial
Adoption

Question 15

What should be considered when doing the initial assessment (prior to LCM strategizing)

Answer 15

The baseline situation determines what LCM strategies make sense and depends on the strengths and weaknesses of the drug.

• Who would benefit from a life-cycle development solution?
• What would be payer’s attitude?

Question 16

What are the characteristics of indication expansion?

Answer 16

• Effective where different diseases share similar mechanism.
• New indications should be pursued early in the life cycle (a new indication in itself does not allow for protecting brand against generic competition)
• Parallel development can be risky if problems in the lead indication emerge.
• Ideally, indication expansion should be combined with additional LCM measures (dosage regimes & administration)

Reflections:
- What is the value-add of having the label? (The benefits may not outweigh the extra costs)
- What is the size and growth of the target patient population?
- What are the unmet needs?
- What is the level of competition for this new indication?
- How does the pricing an reimbursements look like?

Question 17

What are the 5 innovation-related determinants of adoption and describe them?

Answer 17

1. Relative advantage: degree to which the innovation appears superior to existing products.
2. Compatability: degree to which the innovation matches consumer’s past values and experiences.
   - Can have a pshycological and a technical component
   -If the new product doesnt work with previous products customer can be hesitant to buy it
3. Complexity: degree to which the innovation is difficult to understand or use
4. Trialability: degree to which the benefits of use are observable or describable to others.
5. Observability: degree to which the results of an innovation are visible to others.
   - if a ‘valuable’ person gets a device, we can ask them about it and then maybe we buy it ourselves

Question 18

What are the characteristics of dosage reformulation?

Answer 18

• Physicians can offer more differentiated/customized treatment to patients (amplifying or reducing doses), –> may later reduce the competitive impact of generics – new formulations may allow for new patent protection.
• If dosage strength is patented by brand owner, generics cannot replicate the particular dosage regime –> physician may stay with brand
• New dosage regimens is usually the results of reformulations
• Introducing new dosages regiments may have an effect on cost effectiveness –> attractive for payers.
• May increase patient compliance or convenience

Question 19

What are the characteristics/options for different routes of administration?

Answer 19

• Oral dosage forms: tablet for swallowing, oral disintegrating tablet, capsule, liquids’
• Topicals: creams, gel, lotions, eye drops
• Injections: Intradermal, intramuscular, intravenous
• Respiratory inhalants: powder, aerosol, nebulizer, vapor
• Suppositiories
• Use of drug delivery devices: inhalers implants, injectors, infusion pumps

Question 20

What are the success drivers of drug reformulations, dosages and routes of administration?

Answer 20

• Improved efficacy/ patient compliance
• Timing aspect important –> depends of level and length of exclusivity.
• Lower investments than new product development and launch.
• Beneficial if existing brand equity can be leveraged.

Question 21

What can influence the rate of adoption

Answer 21

Cost, risk, uncertainty, scientific credibility and social approval

Question 22

What are the success resistors of drug reformulations, dosages and routes of administration?

Answer 22

• Generic companies with capability to develop own non-infringing reformulations
• Use of tiered and / or restrictive drug plan formularies may limit uptake
• Reformulated drug being included in reference pricing schemes
• Physicians increasingly sceptical of reformulated drugs

Question 23

Adoption is associated with variables in:

Answer 23

Organization’s environment (community progressiveness, community income)
Organization itself (size, profits, pressure to change)
Administrators (education level, age, sophistication)

Question 24

Technology evolution:

Answer 24

• Describes how the performance technology evolves over time
• Most technologies reach natural boundries –> curves becomes flattened

Question 25

What is Fixed-Dose combinations and co-packaging?

Answer 25

• Putting two drugs together in one packaging makes it more convenient for the patients and may improve the compliance.

Question 26

Are technology development and technology adoption interrelated?

Answer 26

They are interrelated and follow S-curve patterns.

Technology adoption can stimulate technology development

Question 27

What are second-generation products?

Answer 27

• Drugs that are based on existing drugs involving modifying the chemistry of the active substance.
• They are new medical drugs, but seen as a continuation of product on the market.
  While the molecule is new, it does not present a radical deviation from the existing drug and second generation products are typically found in the same class as the OG drug.

Question 28

What are the approaches that can be used when developing second-generation products?

Answer 28

1) New class and same disease: new molecular entity for a currently served disease area –> serve a replacement or addition to a currently marketed drug

2) Same class and new diseases: Experience with one class allows for developing a new molecule of that class but for a new disease which is currently not addressed with the firm’s existing products

3) Same class and same disease: New molecule to replace the existing product, with the new drug being superior

Question 29

Do all follow products follow the standard product life cycle?

Answer 29

NO!!! There are also products that do not follow the standard product life cycle - especially the case when if products have a strong brand value with customers repeatedly buying the product.

• Also possible that the product follows to cycles or scallops.
• The patterns of a lifecycle are likely the outcome of a chosen strategy by the firms.

Question 30

What are the considerations of geographic expansion and optimization as LCM?

Answer 30

• Obvious strategy to access larger patient populations
• Launch market is typically US or Europe, depending on faster regulatory approval.
• Reimbursement practices and pricing strategies also contribute to prioritization/ de-prioritization before deciding on expanding.
• Emerging markets becoming increasingly attractive (BRIC countries), but IP and exclusivity environments less favorable
• Expansion: timing, growth potential, competition and geographic synergies are relevant dimension; potentially partnerships needed/ helpful.
• Harmonization of offerings desirable because each variation will introduce extra costs, hence harmonization offers increased profit margins

Question 31

What are the characteristics of OTC switching?

Answer 31

• Only possible for a small group of drugs as the patients are required to be able to self-diagnosed, self-treated and self-monitored, Therefore the drug must have a high safety margin.
• Mild painkillers, allergy drugs, gastrointestinal disorders (low dose)
• Out-of-pocket payments do not allow for high pricing. OTC drugs do not allow for high profits, but a broad spread making them relevant profits.
• Limited periods of market exclusivity possible (in US 3 years, 1 year in Europe)
  –> Consider what happens to related prescription-based drugs (is there any cannibalization (OTC cannabilized revenue from a related prescription drugs, will they be considered different enough by payers)

Question 32

What are the considerations of pricing from a life cycle perspective?

Answer 32

• How can the optimal return on investment (ROI) be achieved?
• Common: starting with niche indications (Orphan) that allow or high initial pricing, later reducing prices if larger patient populations are targeted.
• Steady price increases not uncommon, but drastically changing prices upward remains to be the exception in most markets.
• Price decreases in one country may lead to negative price pressures in other countries.
• Risk-sharing deals with payers in order to allow for high-launch prices. (c.f.pay-for-performance)

Question 33

What are the pricing considerations of a product that is close to patent expiration?

Answer 33

• Generic competition will introduce the same drug at a fraction of the original price
• In many cases, the price of the brand drug is not going to decline drastically: even if considerable market share is lost - it can still be economically viable to keep a high price tage
• Depends on product complexity, intensity of generic competition and country-specific stakeholder influence (in some countries, price cut is imposed, reference price systems) –> for instance, intensity of generic competition may differ on small vs. Large molecule drug context
• Simultaneous offering of brand and own generic: first-mover entry with first generic may lead to sustained advantage.

Question 34

What is the Bass Model?

Answer 34

• A forecasting model that deals with the adoption of a product into the market. Deals with first adoption - does not deal with repeated buys
• Bass is more flexible than the standard model, since it doesn’t assume that adopters size categorise follow a normal distribution. It acknowledges that for some products the group of early adopters is bigger than for others.
• The role of interactions among user groups and information diffusion. Innovator adopters are comfortable with adopting the product based on firms marketing (do not need word-of-mouth from others). Imitators value the opinions from others –> rely on word of mouth.
• Accurate long-range forecasting is difficult as little is known about the true length and sequence of life cycle phases.
• Products generally exist in different life cycles stages in different countries - a crucial point to take into account when developing a global marketing strategy
• Improvements in communications technology - the internet in particular - have led to more rapid diffusion and are at least partially responsible for shortening PLCS.
• When products or entire markets are new, there is little or no historical data and limited experience on which to base the forecasts.
• New products can be classified into four categories - dependent on if the product is new to the company or new to the world.
• Sometimes a lot of people want to go for the product in the beginning sometimes not <–note taken by Queen J, relevance is under debate but must have been important if I wrote it down