Preparing for Patent Expiry

Neal Hansen, managing director of Hansen Strategy, talks about key challenges in product lifecycle management.
Nov 02, 2013
By Pharmaceutical Technology Editors
Volume 37, Issue 11

The importance of solid planning when it comes to product lifecycle management is gaining more attention among specialty pharma, biotech, drug-delivery companies and even generic players. Big Pharma has long recognized that new drug development is a long, costly and risky process with a low success rate. Branded drug-makers now see it a necessity to protect their market position long before their products come off patent. Pharmaceutical Technology spoke to Neal Hansen, managing director of the consulting firm Hansen Strategy, about key considerations in product lifecycle management (LCM).


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PharmTech: What challenges do pharmaceutical companies face in managing the lifecycles of their products?

Hansen: Pharmaceutical companies classically face three core challenges:

  • Short-term focus. The competitive pressure within the pharmaceutical industry and the challenges of maintaining success in a rapidly changing
    environment often lead to a single-minded focus on the short-term outlook (i.e., one to two years), with
    limited real effort on the mid- to long-term outlook. As such, effective and early-enough planning remains one of the most challenging aspects of LCM.
  • Market diversity. Pharmaceutical companies have to deal with a widely diverse therapeutic landscape and stakeholder environment. This diversity is exemplified at patent expiry when the stakeholder balance of power varies hugely between countries, creating a complex matrix of different tactical needs that must be explored to maximize potential. At this stage, you will also see a bifurcation in strategy in core Western markets while emerging markets now take center stage for growth.
  • Lack of innovation. Pharma is always seeking the ‘magic bullet’ from LCM, the one tactic that will drive growth for the next 10 years or enable them to differentiate so well from generics that patent expiry will pass with barely a whisper. This is obviously not the case, and innovation in LCM is not about putting all the eggs in one basket but about effective coordination of a portfolio of tactics that will synergize to maintain competitiveness.

PharmTech: What steps must a company take to optimize product lifecycles, especially in a market where generic drug competition is strong and payers are driving for wider adoption of generics due to financial constraints?

Hansen: Preparing for and surviving through patent expiry is a key challenge for pharma given that generic drugs are a necessary reality. Branded players must accept that generics are a valuable tool to support healthcare budget management in a constrained financial environment. Without a healthy generics market, there would be no budget room for innovation, which would lead to an even greater challenge than is already faced by new drug launches.

The real impact on LCM strategies has been to make the pharmaceutical industry more ‘honest’ and patient centric. Today, if a LCM strategy does not bring real tangible benefits to patients, it will not succeed. For example, it is not sufficient to bring novelty with a formulation or combination and expect a premium price or a high switch rate. In countries such as Germany with an aggressive pricing and reimbursement environment, this approach could actually lead to a fall in sales as the novel launch could trigger an overall price review. If a new formulation is brought to market, it must meet an unmet need, whether in a broad or niche population, and must be supported by data to prove value. Such innovations can then support brand success through patent expiry and beyond.

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