Novartis master minds 2009 final

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Business plan competition for market entry of a new pharmaceutical.

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Novartis master minds 2009 final

  1. 1. Novartis Masterminds Competition Entry
  2. 2. Agenda <ul><li>Novartis Spain hypertension portfolio strategy </li></ul><ul><li>Marketing plan </li></ul>
  3. 3. Novartis’ drug Valsartan is dominant drug in hypertension market with €93M annual sales Note: Assumes that Exhibit 3 data represents all sales for ARB drugs in Spain. Uses ratios from Exhibit 5 to build out broader market view. Source: Case competition materials Novartis category profit heavily dependent on Valsartan
  4. 4. Valsartan patent expiration in 2012 could put up to €28M of sales at risk Note: Germany, UK, France actual data for time period 1987-1998. Sources: Business Insights; IMS data via “Dynamic Competition in Pharmaceuticals: Patent Expiry, Generic Penetration and Industry Structure” sourced from JSTOR Expiry of patents reduces branded drug revenues on average 30%... … suggesting up to €28M of Novartis sales could be at risk <ul><li>Annual Valsartan sales: €93M </li></ul><ul><li>Benchmark average decline: 30% </li></ul><ul><li>Estimated Valsartan sales decline: €28M </li></ul>
  5. 5. There are three potential approaches to plugging revenue hole Grow size of hypertension drug market Steal market share from competitor drugs Shift Valsartan volume to Zelisar by 2012 <ul><li>Work to identify Spanish citizens with undiagnosed or untreated hypertension </li></ul><ul><li>Work with medical professionals to find appropriate medication </li></ul>How should Novartis plug €28M revenue hole in its hypertension portfolio? <ul><li>Choose most vulnerable competitor drugs; target messages to steal share </li></ul><ul><li>Active marketing campaign in support </li></ul><ul><li>Leverage market-leading position of Valsartan to transition market leadership to Zelisar </li></ul>a b c Should Novartis follow one, two, or all of these strategies?
  6. 6. € 15M potential from increasing hypertension drug penetration in Spain Grow market Steal share Shift volume Market Potential for New HTN Drug in Spain is worth 52M Euro Limited white space for new drugs to increase market size & spend per HTN patient Incremental patients unlikely to differentially be prescribed Zelisar (28% share for Novartis) Novartis Zelisar opportunity not greater than 15M Euro from increasing treatment of HTN patients * Based on figures from Frost & Sullivan “European Drugs Market Analysis”, published October 2006 Market Potential for New Drug Novartis Share of Opportunity Max Sales Opportunity by increasing HTN penetration 52M € 28% 15M €
  7. 7. Historical case studies suggest stealing market share from competitors is challenging <ul><li>Iizuka and Jin, Journal of Industrial Economics December 2007 </li></ul><ul><li>Pfizer, Bayer, Onyx and GlaxoSmithKline 2007 Annual Reports </li></ul>Grow market Steal share Shift volume Incumbent Challenger Situation Results <ul><li>Drug: Antihistamine </li></ul><ul><li>Claritin first to market (1994) </li></ul><ul><li>Zyrtex (launched 1996) and Allegra (launched 1997) entered market </li></ul><ul><li>Drug: Oncology (Veg-F) </li></ul><ul><li>Nexavar entered in 2005 </li></ul><ul><li>Sutent second to market (2006) with clinical data showing better tolerability </li></ul><ul><li>Drug: Erectile disfunction </li></ul><ul><li>Viagra first to market (1998) </li></ul><ul><li>Levitra 2nd to market in 2003 with similar efficacy </li></ul><ul><li>Cialis approved in 2003 with 36 vs 3 hour effective dose </li></ul><ul><li>Claritin retained 64% in 1999, 3 years after launch of competitors </li></ul><ul><li>Nexavar maintained 48% market share </li></ul><ul><li>Viagra maintained 53% market share </li></ul>Without dramatically superior drug, difficult to steal competitor share
  8. 8. € 18M/year in volume is accessible by stealing share from competitors Source: Interview with IMS Health analyst (2 December 2009) Grow market Steal share Shift volume “ Shifting share from competitors is the most difficult thing to do, especially if the new drug is not revolutionary.” Interview with IMS Health Analyst Assumed share gain (of ARB market) of 10 points by 2014, shifted to Zelisar 10% of €188M ARB market = €18M opportunity
  9. 9. Companies have successfully used existing strong positions to launch new drugs <ul><li>Wallstreet Journal June 6, 2002 </li></ul><ul><li>Wallstreet Journal March 22, 2002 </li></ul><ul><li>GlaxoSmithKline 2007 annual report </li></ul>Grow market Steal share Shift volume Drug losing patent New drug Situation Results With active effort, companies can shift volume to next-generation drugs Even Product Line Extensions Properly Planned shield Branded Drugs from Generic Competition <ul><li>Drug: Gastrointestinal reflux </li></ul><ul><li>Prilosec 1st to market </li></ul><ul><li>Prilosec patent expired in 2002 </li></ul><ul><li>AstraZeneca planned to shift volume to Nexium in advance; major campaign to support this goal </li></ul><ul><li>Drug : Congestive Heart Failuire </li></ul><ul><li>Patent expired in 2007 </li></ul><ul><li>GSK shifted volume from Coreg to the product line extension CoregCR </li></ul><ul><li>AstraZeneca Moved 100% of revenue to Nexium before patent expiry 1 </li></ul><ul><li>The CoregCR franchise protected 83% generic loss </li></ul>
  10. 10. Through 2012, Novartis should shift Valsartan volume to Zelisar, then focus on share gains Grow size of hypertension drug market Steal market share from competitor drugs Shift Valsartan volume to Zelisar by 2012 <ul><li>Regulations make it difficult to channel new patients directly to Zelisar </li></ul><ul><li>Likely to be very costly (need to find remaining undiagnosed patients) </li></ul><ul><li>Generates incremental revenues for Novartis </li></ul><ul><li>Swap can be done before drug goes generic </li></ul><ul><li>Allows Novartis to leverage existing salesforce relationships </li></ul>a b c Est. revenue impact Positives +€15M +€18M +€22M Focus, 2010-12 Proceed, post-2012 Do not proceed Negatives <ul><li>Difficult due to lack of revolutionary new drug by Novartis </li></ul><ul><li>May be difficult due to restrictions claims vs. competitive drugs; need to wait for trials to be completed </li></ul><ul><li>Not truly incremental volume </li></ul>
  11. 11. Swapping Valsartan volume and growing share raises 2014 revenue ~€42M vs. base case Note: Assumes universal 5% organic growth for all years Base case: do nothing Move & Grow Strategy Valsartan base business Zelisar organic growth Zelisar Valsartan swap- out volume Steal competitor share
  12. 12. Agenda <ul><li>Novartis Spain hypertension portfolio strategy </li></ul><ul><li>Marketing plan </li></ul>
  13. 13. Focus of different marketing vehicles should shift over time, matching evolving strategy 2010 2011 2012 onwards Prepare Valsartan swapping effort Major Valsartan swapping campaign Identify top doctors who promote Zel. Send doctors to major conferences; key messaging around Zelisar as latest drug Lay out benefits of swap to Zelisar Benefits of Zelisar against competitor drugs Prepare for phase 2: In-depth trial, Zelisar vs. non-Novartis competitor drugs Steal competitor share Lay out benefits of moving to “next generation” Zelisar from Valsartan Aspirational campaign Vehicle Strategic focus: Shift Valsartan volume to Zelisar by 2012 Steal market share from competitor drugs Clinical trials Communication to medical prof. Branded communications Sales force Medical conferences
  14. 14. Action plan – 2010 to 2012 - Shift volume from Valsartan to Zelisar Strategic objective Timing Key levers <ul><li>Shift Valsartan volume to Zelisar before 2012 patent expiry </li></ul><ul><li>Build case for why Zelisar is dramatically superior to Valsartan </li></ul><ul><li>Leverage sales force to shift prescription behaviour to Zelisar </li></ul><ul><li>2010-2012 </li></ul>Clinical trials Communication to medical professionals Branded communications Sales force Medical conferences <ul><li>Work to get Zelisar into more drug combination guides </li></ul><ul><li>Urgently develop compelling evidence of safety and efficacy of Zelisar </li></ul><ul><li>Launch print material campaign focusing on “newness” of Zelisar, with slogan “Zelisar – the latest proven drug from the hypertension market leaders” </li></ul><ul><li>Focus on benefits: safety, convenience, cost, efficicacy </li></ul><ul><li>Lower priority for phase 1 </li></ul><ul><li>Continue to build credibility by working with medical institutions and key specialists (Instituto Cardiovascular Novartis </li></ul><ul><li>Minimal advertising to general public </li></ul><ul><li>Intensive training of sales force in “swapping best practices” learned from competitors </li></ul><ul><li>Implement sales incentives for swapping Valsartan to Zelisar </li></ul><ul><li>Active swapping effort in-field by mid-2010 </li></ul><ul><li>Identify early adopters of large-scale Zelisar switching from Valsartan </li></ul><ul><li>Work to support these physicians with additional research </li></ul><ul><li>Arrange to have doctors speak on benefits of Zelisar to major medical conferences </li></ul>
  15. 15. Action plan – 2012 and beyond – Steal share from competitors Strategic objective Timing Key levers <ul><li>Actively move share from competitive drugs to Zelisar </li></ul><ul><li>Convince doctors that increasing numbers of patients would benefit from using branded Zelisar product vs. other generics </li></ul><ul><li>2012 and beyond </li></ul>Clinical trials Communication to medical professionals Branded communications Sales force Medical conferences <ul><li>From 2010, begin preparing clinical trials comparing Zelisar with suite of competitive drugs (across all classes) </li></ul><ul><li>2012: Launch results (ideally) showing dramatic gains with Zelisar use </li></ul><ul><li>From 2012, highlight benefit of switching patients from generic ARBs and drugs in other classes to Zelisar </li></ul><ul><li>Key messaging around Novartis commitment to hypertension research: Instituto Communicacion en Biomedicina </li></ul><ul><li>Broad-based communication effort highlighting branded offering Zelisar against generic competitors – “why not go with the newest drug for your hypertension?” </li></ul><ul><li>Leverage Novartis’ “Aspire Higher” global campaign </li></ul><ul><li>Develop key messaging around why doctors should switch patients to Zelisar as “first choice” hypertension option </li></ul><ul><li>Continue to drive messaging on Novartis being source of innovation for patients (vs. generics) </li></ul><ul><li>Continue to leverage physician promoters to convey benefits of switching patients to Zelisar </li></ul>

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