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LIFECYCLE MANAGEMENT

Base jumping for pharma - a slower descent from the patent cliff?


If there is one fact that even the most casual observer of the pharma industry is aware of, it is that there is a patent cliff, and many companies in the process of falling off it! The latest numbers suggest that brands generating more than $150 billion in global sales in 2010 will lose primary patent protection in at least one major market by 2015.


While this obviously represents a significant amount of money for the pharma industry, it is the concurrent challenges in R&D; both in terms of productivity (replacement revenues) and costs (increasing investment needs) that brings the patent cliff to the fore. At a time when pharma needs its R&D more than ever, funding is threatened by the sometimes massive drops in cash flow that follow major patent expiries.

Moving forward, pharma will become ever more dependent on the successful management of its older products before, through and after patent expiry to maximise the profit flow to the rest of the business. Call them mature, established or heritage brands, one thing is common: they cannot be left on the shelf to wither and die as they have in the past!

But what is the problem? Brands have always faced patent expiry, so this should not come as a shock to anyone. Surely pharma’s approach to managing patent expiry is now well honed, with a strong organisational approach to managing the transition from exclusive brands to multisource markets? Sadly the reality is often far from the truth, with many companies historically focusing on doing all they can to delay the time to patent expiry, and then crossing their fingers and hoping that their local markets will pull off a minor miracle on their own.

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Love for the unloved – reinventing Foscavir


The tail end of the lifecycle does not have to be the closing chapter for pharmaceutical products. From its launch in the late 1980s until 2010, AstraZeneca marketed the antiviral Foscavir (foscarnet sodium) as a treatment for HIV/AIDS-related cytomegalovirus (CMV) infections and herpes.


Foscavir generated peak sales for AstraZeneca in the region of $60 million. It came off patent in 2000. Demand for Foscavir fell over time, in part because medical advances led to much better management of HIV/AIDS compared with when the product was first launched. In 2010, global Foscavir revenues were around $6 million, way below the $25 million-$50 million benchmark typically used by a big pharmaceutical company when assessing which products to keep in its portfolio.

In 2010, Clinigen Healthcare acquired the global rights for Foscavir from AstraZeneca. Since then, Clinigen has implemented three strategies aimed at driving growth from the product. One strategy was to review its price. At the time of the acquisition, Foscavir was the cheapest of the drugs available to clinicians treating CMV. Clinigen successfully secured a price review in the UK, bringing the price in that market in line with Foscavir’s competitor products. Clinigen then used the UK as the reference market to establish a new pricing structure for Foscavir in other countries.

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Lessons in lifecycle management


Here is an industry parable. A company and its chief executive have an admired record for groundbreaking innovation. The company produces a string of products in succession that change people’s lives.


Each product addresses a different, but adjacent, market – with a significant amount of overlap in some of the basic things they do to help people. And despite addressing different markets, the succession of new products is philosophically a stairstep progression of expansion upon the previous product.

In addition, it reveals a string of relaunches – including new capabilities and designs – for each individual product. The latest of these efforts is met with disappointment by industry pharisees. It is a significant reformulation which could change people’s lives as much, or more, than the original product. It could open new paths for helping people. What has happened here? Is it innovation, or is it lifecycle management? It does not matter. They are one and the same and create a product valued and welcomed by customers.

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