Drug Companies Must Offset Lower New Product Approvals With Aggressive Blockbuster Commercialization

Main Category: Pharma Industry / Biotech Industry
Also Included In: Regulatory Affairs / Drug Approvals
Article Date: 14 Jan 2009 - 7:00 PDT

email to a friend   printer friendly   view / write opinions   rate article

While the uncertain economic environment has spared the pharmaceutical industry from its most devastating blows, low new drug application (NDA) approval rates in recent years have done substantial damage to drug makers' pipelines. The Pharmacy Technician's Letter has reported that just 25 new drugs and biologics won FDA approval in 2008, up from 18 in 2007 but substantially lower than 2004's 36. With new drug marketing approvals virtually guaranteed to shrink in 2009 unless the FDA picks up pace rapidly, the pharmaceutical industry will struggle to maintain, let alone increase, revenue streams.

One way to maintain revenue and profit levels is to maximize in-line brands' sales. An advantage to fewer drug approvals is reduced competition for existing brands. According to "Driving Successful Pharma Brands: Case Studies of Real Product Launches," (http://www.USPharmaLaunch.com) a new report from Cutting Edge Information, companies expecting multibillion-dollar sales for their drugs routinely spend more than $100 million to promote their products from Phase III through the launch window. A failure to invest heavily in a high-potential product during this time frame can cripple sales potential before the product hits the market.

And while companies spend money on many objectives when commercializing a product, advertising and promotion remains by far the largest expenditure, with nearly two-thirds of total commercialization dollars being allocated to both small and large companies.

"When drugs are approved, companies need to be prepared to invest heavily in these drugs regardless of their size or market position," says David Richardson, research team leader at Cutting Edge Information. "Even some small companies are reporting upwards of $100 million marketing budgets for potential blockbusters. Companies that spend too little or in the wrong areas likely will never recover the lost sales potential in their drugs' first years on the market."

Other promotional spending trends are detailed in the report, including:
-- Advertising and Promotion (detail aids, samples, journal ads, patient education programs, DTC ads, speaker programs)
-- Medical Affairs (thought leader development, thought leader programs, medical education, medical information)
-- Decision Support (market research, competitive intelligence)
-- Market Access (pricing strategy and analysis, pharmacoeconomics, reimbursement)

http://www.USPharmaLaunch.com