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Case Study on Sovaldi’s Blockbuster Launch Success in Pharmaceutical Industry

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In 2014 Gilead Pharma launched the first oral HCV medication, Sovaldi. Soon after launch, the drug became a blockbuster hit in Pharma industry. Sovaldi’s high cure rate, short dosage period, less severe side effects, large target market and increased demand helped drive $2.3 billion sales in the first quarter itself.

This case study showcases the strategy and tactics utilized by Gilead in achieving blockbuster status for Sovaldi. It also highlights a nine step analysis of strategy/tactics essential for new product launch.

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Case Study on Sovaldi’s Blockbuster Launch Success in Pharmaceutical Industry

  1. 1. Page | 1Page | 1 Launching A Specialty-Care Blockbuster Franchise in Hepatitis C: How Sovaldi & Harvoni Rewrote New Product Launch History
  2. 2. Page | 2 Table of Contents  Playbook of a Blockbuster: Key Insights from Sovaldi & Harvoni’s Launch Year Success  Birth of A Specialty Medicine Blockbuster -The First Oral Cure for Hepatitis Virus C (HCV)  Having The Insight & Expertise To Envision Transforming HCV Treatment Paradigm  The Seeds of Success: Sovaldi Method of Action Moved Therapy From Treatment to Cure  The Seeds of Success: Epidemiology of Hepatitis C Created A Tsunami of Global Unmet Need  Market Entry History: The Back Story of The New Blockbuster Model  Sovaldi Launches Like A Rocket Ship  Other Noteworthy Market-Entry Tactics and Practices  Pricing New Therapies Offers Multiple Risk Frontiers  Public Reaction Ranged From Jubilation To Outrage  The Global Launch & Pricing Strategy Divided The World Into Key Regions  Payers Crafted Different Strategies Both To Access The New Therapy & Manage Its High Price  Where Blockbusters Grow, Patent Challengers Quickly Spring up  By Its First “Birthday” Gilead’s HVC Franchise Had Rewritten Biopharma Launch History – But Still Faced Many Challenges  Learn More About Best Practices, LLC Page 3 7 16 22 28 37 48 63 77 88 99 107 124 129 138
  3. 3. Page | 3 Image Source: The Scripps Research Institute http://www.scripps.edu/news/press/images/group_images/law_wilson_ward_kong/e2_image.jpg HEPATITIS C’S E2 PROTEIN Key Practice Insights & Lessons Learned from Gilead’s Launch Success With Sovaldi & Harvoni Target Patient Population: Gilead benefitted from a “triple dose” of good fortune: (1) a large patient population, (2) many diagnosed but untreated patients, and (3) a market eager for better treatments. Patient Support: Patient support is instru- mental at launch for expensive treatments. Gilead made superior patient support a cornerstone of launch and market access. Outcomes: Gilead demonstrated superior outcomes using a clear marker. Cannibalization: Embrace “planned obsolescence” of 1st-generation product to ensure sustained market leadership. Price Leadership: Gilead assumed leadership in discounting to hold volume – inside and outside the U.S. Market. Global Epidemic: The market dynamics of high-volume, global health epidemics are unique -- and became part of Sovaldi and Harvoni’s triumphs and tribulations. Third Generation Treatment: Three decades of HCV treatments helped educate the market for Sovaldi – making global patient and payer constituents both appreciative and more militant. Breakthrough Therapy: Sovaldi was a true breakthrough offering near-perfect cure rates without difficult side effects. Launch Tsunami: Sovaldi rewrote pharma launch history: it doubled the sales of the previous full-year launch record in its first quarter – reflecting triple power of its high price, large target market, and pent up demand.
  4. 4. Page | 4 This History of Sofosbuvir’s Development & March Into History Is An Instructive Lesson for Pharmaceutical Marketers ~2008 Sovaldi Polymer (PSI- 7977) Discovered 2009-10 Sovaldi (PSI- 7977) Developed by Pharmasset 2010-11 Sovaldi’s (PSI- 7977) Method of Action Refined 2010-11 Sovaldi (PSI- 7977) Shows Extraordinary Results in Phase 2b Trials, Granted Fast Track Designation by FDA 2011-12 Gilead Acquires Pharmasset 2013 FDA Approves Sovaldi for treatment of Chronic Hepatitis C 2014 Sovaldi Breaks all Launch Records out of History Books Four Months Post Launch “Sovaldi selling way beyond our expectations. The initial prescription data are so massively outperforming even the biggest weeks Incivek ever had, we believe any reasonable comparison between the two drugs would indicate that U.S. sales in 2014, alone, are going to exceed $5 billion.” -- Brian Skorney, Analyst, Baird Source: http://www.gurufocus.com/news/256859/competition- from-abbvie-will-not-hurt-gilead-sciences-
  5. 5. Page | 5 “This leaves us optimistic about the opportunity that lies ahead. In fact, with an estimated 1.7 million diagnosed patients in the U.S. and around 400,000 under treated care, we have to take just a small fraction of those who can benefit from treatments in the future.” -- Paul Carter - EVP, Commercial Operations, Gilead Science Sovaldi’s Initial Target Market In U.S. Consisted Of 1.3 Million Patients Who Were Diagnosed But Not Under Active Care Not Diagnosed, 59% Diagnosed, 41% Diagnosed & Under Care, 23% Diagnosed But Not Under Care, 77% 4.1 Million Total Hepatitis C Patients in the U.S. In the U.S. Gilead aimed initially to target patients who are already diagnosed but not under treatment for their disease. Sovaldi Target
  6. 6. Page | 6 HCV Patient Segments Have Multiple Faces Based On Various Factors By Genotype By Disease Progression By Dosing & Treatment Regimen
  7. 7. Page | 7 Sovaldi’s ROI At Launch Was Historic Gilead Invested Around $150 Million to Support Ongoing Sovaldi Launch in 1Q 2014 Gilead’s Sovaldi Sales Totaled $ 2.3 Billion for 1Q 2014 – its 1st Q In-Market
  8. 8. Page | 8 “Our U.S. patient assistance program for Sovaldi, Support Path, has been very active since launch. This program helps patients navigate benefits coverage, as well as provide assistance where allowed with copays and foundation grants. We anticipate that 30% to 50% of commercial patients will utilize our copay assistance program. ” -- Kevin Young, EVP, Commercial Operations The Support Path provides Patients with: • Treatment Information • Action Planning Tools to help manage treatment • Tips to manage stress and cope with your emotions • Advice to help you work well with your healthcare team Gilead Also Launched Its Online Patient Support Program – Called “Support Path” – With Entry into the U.S. Marketplace
  9. 9. Page | 9 Sovaldi Sought A Significant Price Premium to Competitors Incivek, $49,200 Vitrellis, $53,000 Olysio, $66,000 Sovaldi, $84,000 $- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 1st Generation Treatment Even though Sovaldi was not a first in class drug Gilead Priced Sovaldi much higher as compared to competitors. In fact, it is around 300% higher than 1st generation treatment and 30% higher than latest approved Olysio by J&J “I used to have an easy argument that treating hepatitis C was cheaper than paying for a liver transplant or liver cancer,”… “But it’s getting a little closer.” -- Jonathan Fenkel, Director of Jefferson University Hospitals’ Hepatitis C Center in Philadelphia
  10. 10. Page | 10 Gilead Sought To Craft A Global Pricing Strategy That Reflects Each Country And Its Marketplace… USA: $84,000 UK: $57,000 France: $76,000 Germany: $66,000 India: $900 ‘‘Gilead’s global pricing model is based on a country’s ability to pay,” -- Gregg Alton, Executive Vice President of Corporate and Medical Affairs for Gilead “The federal government is going to have to step in and say there’s a concern about the public welfare, and we can’t allow companies to take advantage like this,”…. “Is what they’re charging really appropriate?” J. Mario Molina, CEO, Molina Healthcare Inc. (MOH) Source: http://www.bloomberg.com/news/2014-03-05/hepatitis-c-drug-price-limiting-state-medicaid-approvals.html Egypt: $900 Highest Cost High-Medium Cost Lowest Cost Lowest Cost
  11. 11. Page | 11 Payers Used Multiple Strategies To Combat High Prices For Sovaldi and Its Fixed Dose Combination Formulation Harvoni Public relations campaigns, prior authorization programs Influence clinical guidelines to support tiering and stage gates so only sickest get the medicines Shame Manufacturers Negotiate with other competitor drugs about tiering Sovaldi if they come out with less expensive drugs Demanding health outcomes to prove efficacy Organize coordinated protests to pressurize manufacturer Wait & watch Conduct cost benefit analysis Accept Sovaldi http://www.uhcpharmacyinfocus.com/article/hepatitis-c-big-changes-coming-soon-2 Create Deals To Offer Plan Exclusivity in Exchange for Discounts
  12. 12. Page | 12 Learn More About Our Company Our company is an internationally recognized thought leader in the field of best practice benchmarking®. We provide research, consulting, benchmark database, publishing and advisory services to the biopharmaceutical and medical device sectors. We work closely with business intelligence groups. Our work is based on the simple yet profound principle that organizations can chart a course to superior economic performance by leveraging 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 www.best-in-class.com Phone: (919) 767-9228 Email: Cbogan@best-in-class.com Page | 12

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