Helping your brand live life to the full
Paul Tunnah interviews Neal Hansen
Datamonitor Consulting
The wave of new medicines at the end of the 20th century has since subsided due to increasing pressures on the R&,D pipeline from both regulators and payers. It has therefore never been more critical for pharma to maintain optimal focus on developing only the best candidates for the right indications and ensure they maximise their potential over the medicine’s lifetime.
However, the best strategies for successful lifecycle management can vary significantly by geography, therapy area and type of drug, with mechanisms that were employed ten years ago not necessarily being replicable today.
Neal Hansen has focussed on understanding lifecycle management strategies for over ten years, working with many pharma clients to help them optimise their brands and portfolios. During our interview, we discussed some of the key findings from his work and what pharma can do today to get the most out of each and every brand.
Interview summary
PT: Hello Neal. Can you introduce yourself to the pharmaphorum audience?
NH: I’m the Global Director of Consulting for Datamonitor Healthcare and run a team of about 45 consultants from all over the world, working with pharma companies helping them to make the right business decisions. I was also the Director of Consulting for the European side of Wood Mackenzie’s lifecycle management and going further back I’m a PhD pharmacologist, so came from bench to business.
PT: Perhaps you can start by giving your view of what the term ‘lifecycle management’ encompasses?
NH: For me lifecycle management is really the process of optimising lifecycle profitability from each and every asset that pharma companies and biotech companies produce. It is about understanding which decisions to make, where to make them, and ensuring that they are driving towards maximising that overall return and potential from each asset.
PT: When do pharma companies need to start thinking about lifecycle management?
NH: Lifecycle management really kicks in around phase IIb. Fundamentally, the first lifecycle management decision that a company is going to make is which indication do they choose to launch with – do we go with biggest indication, largest number of people, the one that will allow us to get onto market quickest, the mass market or a niche part with premium pricing? From that point onwards lifecycle management is driven all the way through to patent expiry and beyond.
"...lifecycle management is really the process of optimising lifecycle profitability from each and every asset that pharma companies and biotech companies produce."
PT: As we approach patent expiry, what types of strategies do you see pharma companies employing?
NH: Traditionally you have many developmental tactics like fixed dose combinations and reformulations, which still have a role to play in the mature side of the market. But in addition you’re looking at a full range of commercial tactics - working with generics companies in authorised generics, developing your own generic versions, looking at tactics associated with sales force optimisation and looking into pricing tactics.
PT: How have you seen these strategies change over the last ten years?
NH: From a developmental standpoint you’ve seen an actual decrease in the amount of activity, the previous shotgun type approach has had to evolve into a more targeted approach. People just can’t launch a reformulation today and assume that patients will be switched - if the new formulation doesn’t offer an advantage then payers will put up every barrier to prevent patients being switched over. At the same time you’re seeing an increase in the use and the need for commercial strategies - mature products are increasingly important to pharma, they will be the lifeblood of the next part of R&,D.
PT: Are there particular strategies that are redundant in certain global regions?
NH: The classic developmental strategies will work in most markets around the world, the difference is about when they’ll work and at what point they’re implemented. Early in the lifecycle most companies are still focused on the major Western markets, where you need to get these tactics implemented early because the generic competition is so intense. When you move into emerging markets these tactics can still be employed at a later stage in what we could refer to as the second life of a brand. The second element, which is very tailored to individual geographies, is the use of commercial strategies. If you just look at Europe, for example, the environment post patent expiry across the big five markets and the mechanisms by which a brand is cannibalised by generics is very different. So the commercial tactics really do require a very strong understanding of the individual country dynamics.
PT: Are there particular examples that stand out to you of a mature drug maintaining strong market share?
NH: Probably the best example would be Novartis with Voltaren (diclofenac), which is a painkiller. It’s sold over the counter in many countries and even though the product has lost its patent pretty much everywhere it still sits there within Novartis’ top ten brands globally. The reason for this is it had looked at hyper-stratifying its market, with many different formulations and dosage forms tailored to the individual needs of each market. It’s also really taken emerging markets as its primary focus - Voltaren has been a really good example of one that has understood the need to focus on those markets, leveraged it, built its portfolio, tailored what it needs to each individual market and driven that forward. The only thing to note though is that following some of these case studies blindly is also a dangerous game. Voltaren it has the advantage of being in the pain market and very much in the consumer mindset, so it can work in OTC formulations. Really good lifecycle management is about saying no as much as it is about saying yes, it’s about recognising when not to invest and when the best thing to do is just take whatever you can get and not keep going.
"Really good lifecycle management is about saying no as much as it is about saying yes..."
PT: Where do you see the balance between the generics industry and the innovative pharma companies right now?
NH: Historically there have been a wide number of tactics that pharma companies have been able to play by exploiting loopholes that would exist in various parts of the market, using tactics that don’t really make a difference to the end patients to maintain exclusivity. What generics is now doing is driving pharma to recognise that all of their drivers for lifecycle management need to be focused on the best interests of the patient, the physicians or the payer. The generics industry is also itself getting increasingly difficult, it’s getting hyper competitive, there are more and more players. So the balance and momentum is moving from the generics companies looking at the big assets and driving it to looking everywhere to see where they can penetrate, areas like biosimilars. So you’re seeing these competitive dynamics forcing pharma to become more patient centric and forcing the generics companies to become more innovative.
PT: A number of major players conduct both innovative drug research and play in the generics space. Do you see more pharma companies diversifying in this way?
NH: In the Western markets you’ve got two approaches towards generics. One is the value of a generics business on a brand by brand basis with respect to generic strategies. So Pfizer’s Greenstone business, for example, operating very much as an authorised generics business and an asset that Pfizer can use when it’s trying to manage its own portfolios. The second side is about companies actually having that broad-brush diverse portfolio of generics to be able to play, much like Sandoz being the second largest generics player. So I really don’t see pharma deciding to get into it in a much greater level of detail for the major markets, it is so hyper competitive. Where I do see more expansion is when you look at emerging markets, and here portfolio selling is different. If you compete with Dr. Reddy’s or Ranbaxy in that market, they’ll be coming in with a very broad portfolio of different assets to sell together in one big bundle. So what you are seeing with companies like AstraZeneca and GSK is their innovative assets being sold alongside a portfolio of branded generic drugs. I think you will see an increasing focus of pharma starting to expand their portfolios in key markets with branded generic drugs.
PT: On the broader issue of lifecycle management, what do you see are the key regulatory changes recently or legal cases which have impacted on strategies?
NH: Over the last five to ten years there’s been a steady effort both by the European and the US regulatory authorities to close many of the loopholes. For example in Europe, previous regulations would allow an individual brand to be withdrawn from a market and then a generic drug couldn’t launch a direct copy. But as the reforms came in the mid 2000s you saw the fact that any generics company could launch a version of a drug anywhere across the EU provided it had been marketed in at least one country sometime in the previous ten years. But pharma also references other industries, and a particular case was looking at the concept of using an automatic breaking system for a car [KSR International Co. vs. Teleflex Inc.]. Essentially you have an adjustable brake pedal with a sensor so it would automatically adjust. They patented it and it was successfully challenged along the lines of it being a non innovative step, somebody reasonably well educated would be able to say putting these two things together made common sense. Now this creates a precedent that now could potentially impact all sorts of things for combination therapy in pharma, it really has put that element of what is obvious into what is patentable. Products such as Nexium, where you’ve gone from a racemic mixture to a single isomer - it potentially puts the future of that completely up in the air, because someone would say well it’s obvious.
"It’s like some of the realities of life - death, taxes and generic / biosimilar competition!"
PT: Biosimilars present some unique challenges for the entry of generics, so is this helping innovator pharma companies with their lifecycle management?
NH: The concept of biosimilars and the issue of biosimilars it is definitely an area where the level of competition is less aggressive. Pharmacist substitution is a key driver of accelerated generic penetration and without this in place for biosimilars then there’s one of the resistors to overly extensive penetration. But I think it is just a matter of time - payers are taking a relatively cautious approach, they want to make sure that the biosimilars live up to what they hope they will be and they want to make sure there aren’t any safety issues. Biosimilars are there - Teva has been coming out very recently with comments about an accelerated programme to attack brands such as Rituxan from Roche. It’s like some of the realities of life - death, taxes and generic / biosimilar competition!
PT: Where are the regulatory pathways right now for approval of generics of biological products?
NH: Europe has taken the lead, so you have biosimilars approved and on market for multiple classes. Looking at other countries, Canada and Japan have got regulations in place now. The one major market that’s still behind is the US, which has approved Omnitrope as a biosimilar but through a different pathway. For the US the biggest challenge is that normal chemical drugs and biologics have been mediated through two different approval pathways - the CDER for drug approval and the CBER for biologics. As a result the generic approval pathways can’t work at the moment for products that have been approved through the CBER. Omnitrope and the generic version of Lovenox were approved through CDER, so they were approved as chemical drugs rather than biologics.
PT: What kind of external partnerships do you see pharma companies forming to help bolster their lifecycle management capabilities?
NH: From a developmental side it can be technological partnerships to be able to bring different forms of formulation technology, diagnostic or device technology into a portfolio. You’re also seeing relationships for combination therapies - if you look at Exforge, another Novartis drug, its launch was very successful but built off a platform from Lotrel, a combination of an old ACE inhibitor benazepril and amlodipine from Pfizer. It massively outperformed the monotherapy, but part of the reason was because of an exclusive relationship between Novartis and Pfizer to allow the amlodipine combination to be put in place before the amlodipine patent had expired.
PT: What do you think would be the major market changes that would impact lifecycle management over the next ten years?
NH: I would say you’re looking at two things, much more intense, increased focus on the patient as the real driver for lifecycle management and a lot more innovation in mature brand management. This is a huge focus for many pharma companies at the moment, and I expect to see much more focus on assets where historically the companies have just given up.
"The third part, which is absolutely critical for lifecycle management, is a strong corporate memory."
PT: Finally, if you had to pick just a few things as the real keys to successful lifecycle management, what would they be?
NH: There’s probably three main things that you can think about. The first one is starting early, companies really need to be thinking about this in early phase two if not before. The second part is reviewing regularly, the world changes, lifecycle management needs to recognise that the world is going to evolve. The third part, which is absolutely critical for lifecycle management, is a strong corporate memory. The average product lifecycle from phase II is maybe 15 to 20 years until patent expiry. The average lifespan of a Brand Manager or a Brand Director in pharma is 18 months to two years. With that much movement of human capital and expertise it is very easy for companies to lose the understanding, the intelligence and the whole basis on which their plans are built. So developing corporate memory, making sure that communication flow is there and that understanding why decisions are made is recorded is something that is critical. It sounds easy, but the amount of time I work with pharma companies and find that you work with a team and they have really no understanding of where that plan has come from happens far too frequently.
About the interviewee:
Neal leads a multi-disciplinary team focusing on the provision of decision support solutions to leading players in the pharmaceutical and biotechnology industries in key areas such as portfolio and brand management, in- and out-licensing and forecasting. He has authored in-depth analysis on strategic issues affecting the pharmaceutical industry, focusing on lifecycle management, pharmaceutical sales force strategies, competitive dynamics in mature and emerging markets and the changing nature of the global generics sector. He has chaired a spoken at numerous conferences in the field of lifecycle management and the changing nature of the generics industry. Neal holds a PhD in Pharmacology (University of Cambridge), and a MA in Natural Sciences (University of Cambridge).
For further information on these issues, Neil can be contacted on nhansen@datamonitor.com or telephone +44 (0)20 7675 7423.
What is good lifecycle management about?
