New Product Launch Spend Report Summary

New Product Launch Spend:
What It Takes to Win in the U.S. Market

Best Practices, LLC
Strategic Benchmarking Research

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Copyright © Best Practices, LLC BEST PRACTICES, ®
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Executive Summary

 Project Objectives & Methodology

 Key Findings & Insights

 Companies Participating in Study

 Participant/ Product Demographic Data

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Project Objectives & Methodology
Best Practices, LLC developed a customized survey tool to capture industry data and
deployed it to a representative sample of 27 brand & marketing leaders at 23 leading
biopharmaceutical companies.

Study Objective: Contents:
The objective of this
 Industry average cost for new
benchmarking study was to
pharmaceutical product launch
help biopharma leaders develop
competitive launch and pre-  Average cost for specialty and
launch activity budgets to primary product launches
ensure successful U.S. market  Percentage of budget allocated
entry for new products. to 12 key marketing, education and
market access activities during and
This data will serve as a
reference or comparison point prior to launch
for brand and marketing leaders  Timing for conducting 50+ activities
as they develop budgets and  Anticipated budget & activity trends
allocate funds for their new  Top 3 success factors
brands.

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Universe of Learning: Companies Participating in Study
Benchmark participants included 27 executives and managers at 23 leading
biopharmaceutical companies.

Survey Only
Participating Companies

Abbott, Amylin, Astellas, Bausch & Lomb, Baxter Healthcare, Bayer HealthCare, Bristol-Myers Squibb,
EMD Serono, Genzyme, GlaxoSmithKline, Inspire, Lundbeck, Merck & Co., Noven, Novo Nordisk, Onyx,
ProStrakan, Regeneron, Roche, sanofi-aventis, Shire, Teva, Xanodyne.

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Participants’ Job Titles & Functional Areas
Directors and Vice Presidents make up more than three-quarters of the benchmark
class. More than half the respondents work within marketing functions or departments.

Participant Job Titles Participant Departments/Functions

Other (Head, Leader)
Marketing 52%
Manager/ VP/EVP/
7% SVP
Sr. Manager
11% 22%
Commercial 11%

New Products 7%

Managed
7%
Markets
60%
* Other 19%

Director/Senior Director/ * Other= R&D, Medical Affairs, Regulatory Affairs,
Executive Director Product Launch, Market Analytics, Business
Development
(n=27) (n=27)

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Launch Investment
Benchmarks
Research Protocol for Participants
 Focus all responses on a single product launched recently into the
U.S. market.

 Provide total investment for launch activities during four budget
years leading up to launch.

 Total investment is defined as: The total U.S. investment for pre-
launch/launch activities in a given budget year. Includes all
resources invested in promotional (marketing), educational and
market access activities. Excludes only clinical trial costs.

 Launch Year: The budget year in which the product was launched.

 Launch Years -1, -2 and -3: The budget years one, two and three
years prior to the Launch Year.

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Launch Year Investment Averages $XXX Million
Launch year spending wins a lion’s share of investment resources. For the total
benchmark class Launch Year spend nearly equals the approximate sum of all
previous years commercialization investments on average.
Q. Indicate your total U.S. investment for pre-launch activities for your product in the three years
prior to the U.S. product launch. Include all resources invested in promotional, educational &
market-access activities. Exclude only clinical trial costs.

TOTAL BENCHMARK Launch Year Launch Year Launch Year
Launch Year
CLASS -1 -2 -3

High $XXX $XXX $XXX $XXX

Top Quartile $XXX $XXX $XXX $XXX

Average (Mean) $XXX $XXX $XXX $XXX

Median $XXX $XXX $XXX $XXX

Bottom Quartile $XXX $XXX $XXX $XXX

Low $XXX $XXX $XXX $XXX

n= 19 16 14 9

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Specialty Launch Year Investment Averages $XX Million
Specialty Care launches mirror the overall investment patterns reflected in the full
benchmark class with spend trending upward each year. However, investment levels
at launch are lower and more compressed around the median.


SPECIALTY Launch Year Launch Year Launch Year
Launch Year
SEGMENTATION -1 -2 -3







n= 12 8 8 4

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Primary Care Launch Year Investment Averages $XXX Million
Market entry for primary care product launches consumes far greater resources than
specialty launches. Correspondingly they receive two to three times greater budget
resources at Launch Year to reach the much larger population of primary care
physicians.

PRIMARY CARE Launch Year Launch Year Launch Year
Launch Year
SEGMENTATION -1 -2 -3






n= 7 7 6 5

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Investment Data by
Product Segment
Data is segmented by:
 Projected Peak Annual Revenue
 Therapeutic Areas – Oncology & Endocrine/Metabolic
 Product Market Entry Position

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Peak Annual Revenue Projections Correlate With Resource Allocations
Benchmarked products covered a wide range of market opportunities – each reflecting different projected
peak annual revenues. At the high end, one-fourth hope to earn more than $1 billion peak year revenues; at
the low end, 21% projected peak earnings of less than $250 million. Peak-year revenue is the metric that most
clearly reflects the market opportunity assessment and corresponding market entry budgets.

Q. What was the projected peak annual revenue (in $US) for your product before launch?

Projected Peak Annual Revenue

$1B-$2B 25% 21% <$250M

$750M-$1B 18% 25% $250M-$500M

11%

(n=27) $500M-$750M

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Total Launch Investment by Peak Revenue Category:

Data for Launch Year

PROJECTED PEAK
# Responses Average
ANNUAL REVENUE: High Low
in Range (Mean)
LAUNCH YEAR
<$250 M 4 $XXX $XXX $XXX
$250M -$500 M 5 $XXX $XXX $XXX
$500 M - $750 M 2 $XXX $XXX $XXX
$750 M - $1B 3 $XXX $XXX $XXX
$1 B- $2 B 5 $XXX $XXX $XXX

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Average Spend Comparison for Each Market Entry Position
Crowded market products spend less than one-third overall than do differentiated
products in either novel or established areas, however, they close a large portion of
that gap in the final year, when their spending increases nearly eight-fold over Year -1.

Average Total Spend by Market Entry Position

Launch Launch Launch
Market Entry Position Launch Year TOTAL
Year -1 Year -2 Year -3
Differentiated Product in Novel
Treatment Area
$XXX $XXX $XXX $XXX $XXX

Differentiated Product Entering
Established Market
$XXX $XXX $XXX $XXX $XXX

Crowded Market Upstart Product $XXX $XXX $XXX $XXX $XXX

Differentiated products entering
established markets have the highest total
spend, with the greatest difference
occurring in Year-1.

(Total n=27)

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Launch Activities
Benchmark partners were asked to indicate which launch activities
they fund within each of the following categories during the last
four budget years leading up to launch.

 Agency Fees (excluding DTC)
 Direct to Consumer & Advertising Expenses
 Health Economics/ Outcomes Research
 Launch Meeting/ Kickoff
 Managed Markets/Market Access
 Market Research/Analytics (excluding DTC)
 Medical Affairs
 Patient Education/ Assistance
 Physician Education
 Sales Force Preparation
 Other

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Activities Included in Agency Fees Spend
Key activities funded by participants within the Agency Fees budget category were
promotion/advertising and communications/publications. Promotion was the activity
funded by the most companies in the Launch Year, Year -1 and Year -2. In the Year -3,
the greatest number of companies funded communications/publications activities.
Q. Please check all of the listed activities that were included in your product's Year -3, Year -2, Year -1
and Launch Year budgets.

AGENCY FEES (excluding DTC)
Pre-Launch Launch
Year -3 Year -2 Year -1
Promotional/
33% 80% 92% 100%
Advertising

Communications/
83% 60% 85% 76%
Publications

67% 40% 54% Public Relations 76%

17% 40% 38% Retainers 41%
=most frequent
activity per year
0% 10% 0% Other (specify): 0%
Other (Year -2):
n=6 n = 10 n = 13 n = 17 • Positioning, campaign development

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Activities Expected to Gain Funding in Near Future
Health Outcomes and Health Economics Research are expected to grow significantly in
importance in the next three years, with 97% projecting spending increases there. A
majority of participants also expect increases for managed markets, medical affairs and
patient education spend.
Q. In your opinion, how will recent and anticipated market changes impact funding levels for
the following types of launch activities over the next 24-36 months?
Total
Significant increase Some increase
Increase
Health economics/outcomes research 40% 56% 96%

Managed markets/market access 24% 60% 84%

Medical affairs 8% 72% 80%

Patient education/ assistance 8% 52% 60%

Physician education 36% 36%

DTC 8% 28% 36%

Samples 4% 28% 32%

Sales force preparation 4% 28% 32%

Market research/analytics (excluding DTC) 8% 24% 32%

Launch meeting (kickoff) 16% 16%

Agency fees (excluding DTC) 12% 12%
(n=29) % Responses

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Launch Investment Allocation
 Participants indicated their total U.S. investment for pre-
launch activities for their respective product in four
different budget years: Launch Year, Year -1, Year -2, and
Year -3.
 Budget numbers provided include all resources invested in
promotional, educational & market-access activities,
excluding only clinical trial costs.
 Slides in this section exhibit average, high and low spend
allocated for activities in 12 categories for the Launch Year
and the three years preceding launch.
 Data is provided for the full benchmark class. In addition,
data is provided for the following benchmark class
segments: Primary care products, specialty products and
Oncology products.

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Investment Allocation by Activity Category (1)
Total Benchmark Class: Yellow highlights indicate highest three spend areas
for each year. Red circles indicate activities for which
Launch Year & Launch Year -1 Year -1 spend exceeds Launch Year investment.

Activity Category Launch Yr. n = 18 Year -1 n = 14

High Average Low High Average Low

Agency fees (excluding DTC) $XXXX $XXXX $XXXX $XXXX $XXXX $XXXX
DTC & Advertising Expenses $XXXX $XXXX $XXXX $XXXX $XXXX $XXXX
Health economics/ outcomes $XXXX $XXXX $XXXX $XXXX $XXXX $XXXX
research
Managed markets/ market $XXXX $XXXX $XXXX $XXXX $XXXX $XXXX
access
Market research/ analytics $XXXX $XXXX $XXXX $XXXX $XXXX $XXXX
(excluding DTC)

Medical affairs $XXXX $XXXX $XXXX $XXXX $XXXX $XXXX
Patient education/ assistance $XXXX $XXXX $XXXX $XXXX $XXXX $XXXX
Physician education $XXXX $XXXX $XXXX $XXXX $XXXX $XXXX
Sales force preparation $XXXX $XXXX $XXXX $XXXX $XXXX $XXXX
Other Marketing activities $XXXX $XXXX $XXXX $XXXX $XXXX $XXXX
Launch meeting (kickoff) $XXXX $XXXX $XXXX $XXXX $XXXX $XXXX
Samples $XXXX $XXXX $XXXX $XXXX $XXXX $XXXX
* $70 mil response not included in calculations. * $50 mil and $13.8 mil responses not included in calculations.
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Success Factors

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Top Areas to Consider in Setting Launch Budgets
Survey participants identified Managed Care access and reimbursement, physician
awareness, KOL relationships, and solid market research as the most important areas to
consider in establishing successful new product launch budgets.
Q. What are the three most important success factors to consider in establishing and allocating
new product launch budgets in today’s market?
Success Factor Categories Verbatim Responses:
Managed Care Access/ Reimbursement 50% “Good definition of the key influencers & decision makers.”
Physician/KOL Awareness/ Education 38% “Getting medical information/education to physicians without
use of sales reps.”
Market Research/Market Analytics Data 38%
“Competitive differentiation for HE/OR benefit.”
Data - Clinical, Health Economics/ 33%
Outcomes, Comparative Effectiveness “Use new/digital vehicles with field force, physician, payer,
Patient Education/Awareness 25% patient.”

21% “Investment in physician education (CME & Promotional).”
Product Differentiation
“Expertise/presence in market today vs. being new entrant.”
Physician Access 21%
“Ensure managed marketing is adequately funded.”
Sales Force Preparation 17%
“Differentiating the brand via strategic marketing.”
Launch Trajectory 13%
“Using alternative marketing sources/direct to physician.”
Favorable Co-pay 13% “Creativity and collaboration from the team.”
(n=25) Sufficient Investment 13% “Focus on fundamentals.”
% Responses “Touch - the number of thought leaders that touch the drug
Other: Experience in new market, patient assistance, either in preclinical or clinical settings pre-launch.”
understanding competition, understanding how product
will be paid for, team collaboration, advocacy. “Research/phase III.”

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Most Important
Future Activities

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Activities for Successful Future Specialty Product Launch
Nearly half the participants expect managed care access and reimbursement activities to
be among the Top 3 most important product launch activities over the next few years.
Also key to launch success will be physician education, health outcomes research, sales
force prep and market data & analytics.
Q. Within the next 24-36 months, what launch activities (traditional or emerging) do you think will
be the Top Three most important to achieving a successful launch for a specialty product?
Top Activity Categories Verbatim Responses:
Managed Care Access/Reimbursement 44% “Targeted research activities that alter the standard of care
Market Data & Analytics in settings where the drug is or will be used most frequently.”
28%
(e.g., segmenting, forecasting, pricing)
“Elucidating clinically significant differentiation vs. standard
Sales Force Preparation 28%
of care.”
28%
Physician Education “Use of novel channels to more frequently reach and
28% connect with end users (Internet).”
Health Outcomes/Economics Research
16% “Clear patient (and payer) value proposition.”
New Channels (e.g., social media)
16% “Consumer marketing via internet and social media.”
Product Differentiation/Positioning
12% “Non-personal education and promotion to physicians.”
KOL Relationships
“Reimbursement support/Pharmacoeconomics.”
Value Proposition 12%
“Outcomes Research and Studies - Comparative Outcomes.
Patient Education 12%
12% “Claims data analysis.”
(n=25) Physician Access
% Responses “Interactive educational tools.”
“Evidence based guidelines for product use.”
Other: CI, reimbursement landscape research & prep, test promotional
campaign, interactive educational tools, post-marketing outcomes data, “Clinical outcomes data/post marketing.”
attend ad boards, use evidence-based guidelines, strong value proposition

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About Best Practices, LLC

Best Practices, LLC is a research and consulting firm that conducts
work based on the simple yet profound principle that organizations
can chart a course to superior economic performance by studying
the best business practices, operating tactics and winning
strategies of world-class companies.

Best Practices, LLC
6350 Quadrangle Drive, Suite 200, Chapel Hill, NC 27517
919-403-0251
bestpractices@best-in-class.com
www.best-in-class.com

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