New Product Launch Spend Report Summary


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Pharmaceutical new product launches require many different activities and levels of investment. It is critical for launch teams to understand the right level of resources required for the key activities that give a new product its best chance for gaining a market foothold.

This study provides current data on the funding levels of the key activities necessary to bring a new product into the U.S. market. Data are presented not only for launch year but also for each of the three years preceding product introduction. Brand and marketing leaders can use the results of this study to identify shifts in launch activity spending priorities across the industry and to compare spending levels for their own launch preparation programs against industry averages.

Based on a recent Best Practices, LLC benchmarking project, the study provides quantitative metrics to help companies chart effective budget strategies and allocate funds for new brands.

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New Product Launch Spend Report Summary

  1. 1. BEST PRACTIC1Copyright © Best Practices , LLCBest Practices, LLCStrategic Benchmarking ResearchNew Product Launch Spend:What It Takes to Win in the U.S. Market
  2. 2. BEST PRACTIC2Copyright © Best Practices , LLCExecutive Summary Project Objectives & Methodology Key Findings & Insights Companies Participating in Study Participant/ Product Demographic Data
  3. 3. BEST PRACTIC3Copyright © Best Practices , LLCProject Objectives & MethodologyBest Practices, LLC developed a customized survey tool to capture industry data anddeployed it to a representative sample of 27 brand & marketing leaders at 23 leadingbiopharmaceutical companies.Contents:The objective of thisbenchmarking study was tohelp biopharma leaders developcompetitive launch and pre-launch activity budgets toensure successful U.S. marketentry for new products.This data will serve as areference or comparison pointfor brand and marketing leadersas they develop budgets andallocate funds for their newbrands. Industry average cost for newpharmaceutical product launch Average cost for specialty andprimary product launches Percentage of budget allocatedto 12 key marketing, education andmarket access activities during andprior to launch Timing for conducting 50+ activities Anticipated budget & activity trends Top 3 success factorsStudy Objective:
  4. 4. BEST PRACTIC4Copyright © Best Practices , LLCUniverse of Learning: Companies Participating in StudyBenchmark participants included 27 executives and managers at 23 leadingbiopharmaceutical companies.Survey OnlyParticipating CompaniesAbbott, 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.
  5. 5. BEST PRACTIC5Copyright © Best Practices , LLCParticipants’ Job Titles & Functional AreasDirectors and Vice Presidents make up more than three-quarters of the benchmarkclass. More than half the respondents work within marketing functions or departments.(n=27)Participant Job Titles Participant Departments/Functions19%7%7%52%11%MarketingCommercialManagedMarkets* Other* Other= R&D, Medical Affairs, Regulatory Affairs,Product Launch, Market Analytics, BusinessDevelopmentNew Products(n=27)VP/EVP/SVP22%Director/Senior Director/Executive Director60%Manager/Sr. Manager11%Other (Head, Leader)7%
  6. 6. BEST PRACTIC6Copyright © Best Practices , LLCLaunch InvestmentBenchmarksResearch Protocol for Participants Focus all responses on a single product launched recently into theU.S. market. Provide total investment for launch activities during four budgetyears 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 allresources invested in promotional (marketing), educational andmarket 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 threeyears prior to the Launch Year.
  7. 7. BEST PRACTIC7Copyright © Best Practices , LLCLaunch Year Investment Averages $XXX MillionTOTAL BENCHMARKCLASSLaunch YearLaunch Year-1Launch Year -2Launch Year-3High $XXX $XXX $XXX $XXXTop Quartile $XXX $XXX $XXX $XXXAverage (Mean) $XXX $XXX $XXX $XXXMedian $XXX $XXX $XXX $XXXBottom Quartile $XXX $XXX $XXX $XXXLow $XXX $XXX $XXX $XXXn= 19 16 14 9Q. Indicate your total U.S. investment for pre-launch activities for your product in the three yearsprior to the U.S. product launch. Include all resources invested in promotional, educational &market-access activities. Exclude only clinical trial costs.Launch year spending wins a lion’s share of investment resources. For the totalbenchmark class Launch Year spend nearly equals the approximate sum of allprevious years commercialization investments on average.
  8. 8. BEST PRACTIC8Copyright © Best Practices , LLCSPECIALTYSEGMENTATIONLaunch YearLaunch Year-1Launch Year-2Launch Year-3High $XXX $XXX $XXX $XXXTop Quartile $XXX $XXX $XXX $XXXAverage (Mean) $XXX $XXX $XXX $XXXMedian $XXX $XXX $XXX $XXXBottom Quartile $XXX $XXX $XXX $XXXLow $XXX $XXX $XXX $XXXn= 12 8 8 4Q. Indicate your total U.S. investment for pre-launch activities for your product in the three yearsprior to the U.S. product launch. Include all resources invested in promotional, educational &market-access activities. Exclude only clinical trial costs.Specialty Launch Year Investment Averages $XX MillionSpecialty Care launches mirror the overall investment patterns reflected in the fullbenchmark class with spend trending upward each year. However, investment levelsat launch are lower and more compressed around the median.
  9. 9. BEST PRACTIC9Copyright © Best Practices , LLCPRIMARY CARESEGMENTATIONLaunch YearLaunch Year-1Launch Year-2Launch Year-3High $XXX $XXX $XXX $XXXTop Quartile $XXX $XXX $XXX $XXXAverage (Mean) $XXX $XXX $XXX $XXXMedian $XXX $XXX $XXX $XXXBottom Quartile $XXX $XXX $XXX $XXXLow $XXX $XXX $XXX $XXXn= 7 7 6 5Q. Indicate your total U.S. investment for pre-launch activities for your product in the three yearsprior to the U.S. product launch. Include all resources invested in promotional, educational &market-access activities. Exclude only clinical trial costs.Primary Care Launch Year Investment Averages $XXX MillionMarket entry for primary care product launches consumes far greater resources thanspecialty launches. Correspondingly they receive two to three times greater budgetresources at Launch Year to reach the much larger population of primary carephysicians.
  10. 10. BEST PRACTIC10Copyright © Best Practices , LLCInvestment Data byProduct SegmentData is segmented by: Projected Peak Annual Revenue Therapeutic Areas – Oncology & Endocrine/Metabolic Product Market Entry Position
  11. 11. BEST PRACTIC11Copyright © Best Practices , LLC(n=27)Q. What was the projected peak annual revenue (in $US) for your product before launch?Projected Peak Annual Revenue<$250M21%$250M-$500M25%$750M-$1B 18%$1B-$2B 25%$500M-$750M11%Peak Annual Revenue Projections Correlate With Resource AllocationsBenchmarked products covered a wide range of market opportunities – each reflecting different projectedpeak annual revenues. At the high end, one-fourth hope to earn more than $1 billion peak year revenues; at thelow end, 21% projected peak earnings of less than $250 million. Peak-year revenue is the metric that mostclearly reflects the market opportunity assessment and corresponding market entry budgets.
  12. 12. BEST PRACTIC12Copyright © Best Practices , LLCTotal Launch Investment by Peak Revenue Category:Data for Launch YearPROJECTED PEAKANNUAL REVENUE:LAUNCH YEAR# Responsesin RangeAverage(Mean)High Low<$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 $XXX
  13. 13. BEST PRACTIC13Copyright © Best Practices , LLCAverage Spend Comparison for Each Market Entry PositionMarket Entry Position Launch YearLaunchYear -1LaunchYear -2LaunchYear -3TOTALDifferentiated Product in NovelTreatment Area$XXX $XXX $XXX $XXX $XXXDifferentiated Product EnteringEstablished Market$XXX $XXX $XXX $XXX $XXXCrowded Market Upstart Product $XXX $XXX $XXX $XXX $XXXCrowded market products spend less than one-third overall than do differentiatedproducts in either novel or established areas, however, they close a large portion ofthat gap in the final year, when their spending increases nearly eight-fold over Year -1.(Total n=27)Average Total Spend by Market Entry PositionDifferentiated products enteringestablished markets have the highest totalspend, with the greatest differenceoccurring in Year-1.
  14. 14. BEST PRACTIC14Copyright © Best Practices , LLCLaunch ActivitiesBenchmark partners were asked to indicate which launch activitiesthey fund within each of the following categories during the lastfour 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
  15. 15. BEST PRACTIC15Copyright © Best Practices , LLCActivities Included in Agency Fees Spend0%41%76%76%100%Other (specify):RetainersPublic RelationsCommunications/PublicationsPromotional/AdvertisingKey activities funded by participants within the Agency Fees budget category werepromotion/advertising and communications/publications. Promotion was the activityfunded 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.LaunchYear -3 Year -2 Year -133% 80% 92%83% 60% 85%67% 40% 54%17% 40% 38%0% 10% 0%Pre-LaunchAGENCY FEES (excluding DTC)n = 13n = 10n = 6 n = 17Other (Year -2):• Positioning, campaign developmentQ. Please check all of the listed activities that were included in your products Year -3, Year -2, Year -1and Launch Year budgets.=most frequentactivity per year
  16. 16. BEST PRACTIC16Copyright © Best Practices , LLCActivities Expected to Gain Funding in Near FutureQ. In your opinion, how will recent and anticipated market changes impact funding levels forthe following types of launch activities over the next 24-36 months?Agency fees (excluding DTC)Launch meeting (kickoff)Market research/analytics (excluding DTC)Sales force preparationSamplesDTCPhysician educationPatient education/ assistanceMedical affairsManaged markets/market accessHealth economics/outcomes researchSignificant increase Some increase96%84%80%60%36%36%32%32%32%16%12%TotalIncrease(n=29)12%16%24%28%28%28%36%52%72%60%56%% Responses8%4%4%8%8%8%24%40%Health Outcomes and Health Economics Research are expected to grow significantly inimportance in the next three years, with 97% projecting spending increases there. Amajority of participants also expect increases for managed markets, medical affairs andpatient education spend.
  17. 17. BEST PRACTIC17Copyright © Best Practices , LLCLaunch Investment Allocation Participants indicated their total U.S. investment for pre-launch activities for their respective product in fourdifferent budget years: Launch Year, Year -1, Year -2, andYear -3. Budget numbers provided include all resources invested inpromotional, educational & market-access activities,excluding only clinical trial costs. Slides in this section exhibit average, high and low spendallocated for activities in 12 categories for the Launch Yearand the three years preceding launch. Data is provided for the full benchmark class. In addition,data is provided for the following benchmark classsegments: Primary care products, specialty products andOncology products.
  18. 18. BEST PRACTIC18Copyright © Best Practices , LLCInvestment Allocation by Activity Category (1)Total Benchmark Class:Launch Year & Launch Year -1Activity Category Launch Yr. n = 18 Year -1 n = 14High Average Low High Average LowAgency fees (excluding DTC) $XXXX $XXXX $XXXX $XXXX $XXXX $XXXXDTC & Advertising Expenses $XXXX $XXXX $XXXX $XXXX $XXXX $XXXXHealth economics/ outcomesresearch$XXXX $XXXX $XXXX $XXXX $XXXX $XXXXManaged markets/ marketaccess$XXXX $XXXX $XXXX $XXXX $XXXX $XXXXMarket research/ analytics(excluding DTC)$XXXX $XXXX $XXXX $XXXX $XXXX $XXXXMedical affairs $XXXX $XXXX $XXXX $XXXX $XXXX $XXXXPatient education/ assistance $XXXX $XXXX $XXXX $XXXX $XXXX $XXXXPhysician education $XXXX $XXXX $XXXX $XXXX $XXXX $XXXXSales force preparation $XXXX $XXXX $XXXX $XXXX $XXXX $XXXXOther Marketing activities $XXXX $XXXX $XXXX $XXXX $XXXX $XXXXLaunch meeting (kickoff) $XXXX $XXXX $XXXX $XXXX $XXXX $XXXXSamples $XXXX $XXXX $XXXX $XXXX $XXXX $XXXX* $70 mil response not included in calculations. * $50 mil and $13.8 mil responses not included in calculations.Yellow highlights indicate highest three spend areasfor each year. Red circles indicate activities for whichYear -1 spend exceeds Launch Year investment.
  19. 19. BEST PRACTIC19Copyright © Best Practices , LLCSuccess Factors
  20. 20. BEST PRACTIC20Copyright © Best Practices , LLCTop Areas to Consider in Setting Launch BudgetsQ. What are the three most important success factors to consider in establishing and allocatingnew product launch budgets in today’s market?Verbatim Responses:“Good definition of the key influencers & decision makers.”“Getting medical information/education to physicians withoutuse of sales reps.”“Competitive differentiation for HE/OR benefit.”“Use new/digital vehicles with field force, physician, payer,patient.”“Investment in physician education (CME & Promotional).”“Expertise/presence in market today vs. being new entrant.”“Ensure managed marketing is adequately funded.”“Differentiating the brand via strategic marketing.”“Using alternative marketing sources/direct to physician.”“Creativity and collaboration from the team.”“Focus on fundamentals.”“Touch - the number of thought leaders that touch the drugeither in preclinical or clinical settings pre-launch.”“Research/phase III.”Success Factor Categories(n=25) 13%13%13%17%21%21%25%33%38%38%50%Sufficient InvestmentFavorable Co-payLaunch TrajectorySales Force PreparationPhysician AccessProduct DifferentiationPatient Education/AwarenessData - Clinical, Health Economics/Outcomes, Comparative EffectivenessMarket Research/Market Analytics DataPhysician/KOL Awareness/ EducationManaged Care Access/ Reimbursement% ResponsesOther: Experience in new market, patient assistance,understanding competition, understanding how productwill be paid for, team collaboration, advocacy.Survey participants identified Managed Care access and reimbursement, physicianawareness, KOL relationships, and solid market research as the most important areas toconsider in establishing successful new product launch budgets.
  21. 21. BEST PRACTIC21Copyright © Best Practices , LLCMost ImportantFuture Activities
  22. 22. BEST PRACTIC22Copyright © Best Practices , LLCActivities for Successful Future Specialty Product LaunchQ. Within the next 24-36 months, what launch activities (traditional or emerging) do you think willbe the Top Three most important to achieving a successful launch for a specialty product?(n=25)Top Activity Categories Verbatim Responses:“Targeted research activities that alter the standard of carein settings where the drug is or will be used most frequently.”“Elucidating clinically significant differentiation vs. standardof care.”“Use of novel channels to more frequently reach andconnect with end users (Internet).”“Clear patient (and payer) value proposition.”“Consumer marketing via internet and social media.”“Non-personal education and promotion to physicians.”“Reimbursement support/Pharmacoeconomics.”“Outcomes Research and Studies - Comparative Outcomes.“Claims data analysis.”“Interactive educational tools.”“Evidence based guidelines for product use.”“Clinical outcomes data/post marketing.”Physician AccessPatient EducationValue PropositionKOL RelationshipsProduct Differentiation/PositioningNew Channels (e.g., social media)Health Outcomes/Economics ResearchPhysician EducationSales Force PreparationMarket Data & Analytics(e.g., segmenting, forecasting, pricing)Managed Care Access/Reimbursement 44%28%16%28%28%28%16%12%12%12%12%% ResponsesOther: CI, reimbursement landscape research & prep, test promotionalcampaign, interactive educational tools, post-marketing outcomes data,attend ad boards, use evidence-based guidelines, strong value propositionNearly half the participants expect managed care access and reimbursement activities tobe 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, salesforce prep and market data & analytics.
  23. 23. BEST PRACTIC23Copyright © Best Practices , LLCAbout Best Practices, LLCBest Practices, LLC is a research and consulting firm that conductswork based on the simple yet profound principle that organizationscan chart a course to superior economic performance by studyingthe best business practices, operating tactics and winningstrategies of world-class companies.Best Practices, LLC6350 Quadrangle Drive, Suite 200, Chapel Hill, NC for Report: New Product Launch Spend