The Third Way: Managing risk and retaining control for commercialization success

Karen Fraser

Quintiles

Increasingly, partnering with a commercial outsourcing provider is a viable option for small- to mid-size biotech developers seeking to bring an asset to market and still retain strategic control. Karen Fraser of Quintiles discusses this as our partnerships and licensing themed month continues.

For any biotech or pharmaceutical company with development-stage assets but limited or no commercial infrastructure, maximizing value for a product can be a challenge. As successful commercial launches are complex, resource-intensive processes, effectively seizing market opportunities requires understanding the landscape, evaluating available options and getting the big strategic decisions right.

Traditionally, small- to mid-size biotech developers seeking to bring an asset to market face the choice of licensing their product to a larger pharmaceutical company or building their own commercial infrastructure. Both strategies have clear benefits but can have significant drawbacks as well, specifically around managing risk and retaining control over the asset. As commercialization is a completely different arena than clinical development, the challenge is to find a way to harmonize a wide range of disciplines, such as clinical, regulatory, sales, marketing and more, all within a strategy that aligns clinical development with commercialization goals while maximizing returns and reducing risk.

Increasingly, partnering with a commercial outsourcing provider is becoming a viable option for biotech companies looking to commercialize their innovative products. Outsourcing partners, if blessed with sufficient scope, commercial expertise and geographic reach, can help address the complex sales and marketing challenges developers face. At the same time, the right partner can mitigate other barriers to entry such as constraints on capital, lack of familiarity with foreign markets, and management and resource flexibility.

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“…small- to mid-size biotech developers seeking to bring an asset to market face the choice of licensing their product to a larger pharmaceutical company or building their own commercial infrastructure…”

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A fundamental question of value

At its core, the most fundamental question any biotech or pharmaceutical company with development-stage assets but no commercial infrastructure must ask itself is: Does keeping strategic control over the asset in question help or hinder the chances of maximizing return on value?

If the case for keeping control can’t be seen clearly, the path to commercialization often becomes simple: leverage the asset’s current value with a partner—most likely a larger pharmaceutical company with global reach—to secure the missing commercialization and branding power. Here, the advantages can include gaining considerable launch experience, an ability to harness existing staff, expertise and infrastructure, global reach and key opinion leader (KOL) relationships. In addition, out-licensing an asset can bring a biotech firm immediate revenue or future royalty payments.

On the other hand, for those developers seeking to maximize value by retaining strategic control, the pull to “go it alone” may be strong. After all, what better way to protect a molecule representing years of hard work and dedication than keeping the intellectual property rights and marketing strategy decisions with those who know the product best?

Yet, building a commercial infrastructure from scratch requires access to capital that could well be in short supply for a firm nearing the finish line of product development, while distracting management and potentially extending launch and development timelines. This is especially true for distant geographies outside the company’s home market.

A new path for new opportunities

For firms that have already weathered great risks to get their asset past previous development hurdles, the path to commercialization represents yet another, significant period of risk that must be successfully navigated. The downsides of these risks can be substantial. Whether it’s signing away future revenue streams, misunderstanding the regulatory landscape or choosing a partner organization with hidden or changing priorities, it’s easy to see how even the most well-intentioned commercialization strategy involves risks that smaller and more entrepreneurial developers may find untenable.

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“…the right partner can mitigate other barriers to entry such as constraints on capital, lack of familiarity with foreign markets, and management and resource flexibility.”

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However, if done properly, partnering with the right commercial outsourcing provider can specifically address the inherent disadvantages found in some of the more well-worn routes to market success while still providing the control over strategic assets smaller developers may need for long-term viability. Such an approach offers a biotech company a wide range of strategic advantages even as it gains access to commercialization power, including:

• Local expertise, geographic reach. For providers with an established presence in more than one country, clarity and insight into the realities “on the ground” in a given country can prove crucial to commercialization success. Increasingly, navigating regulatory schemes, engaging key stakeholders, reaching key opinion leaders and finding qualified staff demands local attention and experience.

• Operational efficiencies. In planning and developing a successful launch, access to critical knowledge such as regulatory best practices, risk management programs, medical affairs functions and performance management can help simplify processes, reduce costs and accelerate market outcomes. A partner with deep experience in commercial success can help pinpoint potential problem areas and offer proven strategies for operational success.

• Broad scope. A commercialization outsourcing partner with depth of experience in clinical, commercial, consulting and communications can provide a more holistic perspective while offering innovative methods and non-traditional alliances to further brand success and return on investment. Additionally, experience in developing creative solutions such as multi-channel marketing, e-detailing and patient engagement can help to maximize commercialization spend.

• Greater flexibility and lower fixed costs. Partnering allows a smaller company to tailor the services it receives at any time during the commercialization process, adding or subtracting resources depending on changing dynamics and the success of the product. Such a model not only lowers costs but also helps minimize the risk of infrastructure exposure for a growing company.

• Management involvement. When a solution is created specifically for a company’s needs, the role of senior management oversight can be as in-depth as is needed to ensure a focus on quality and performance, along with joint discussion and decision making.

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“There is no perfect commercialization option for any company.”

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Making the right choice

There is no perfect commercialization option for any company. Making the right strategic decision is about managing trade-offs that are often about strategic control, vision and whether the company that has developed the asset wants to help guide the product’s ultimate success or simply wants to maximize near-term value and cash flow.

Nevertheless, bringing an asset to market no longer requires a binary choice between surrendering strategic control in exchange for commercial access or breaking the bank to build infrastructure from scratch. Instead, working with a commercial outsourcing partner offers the chance to retain full control of commercial and brand strategy while still accessing the experience and infrastructure of a biopharmaceutical services organization focused on commercialization success.

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About the author:

Karen has over 25 years experience in the industry and is VP for Global Marketing &amp, Brand Solutions within the Quintiles Commercial group.

She worked as a sales representative before moving into marketing with Amersham International and subsequently Glaxo where she was responsible for a number of brands in different therapy areas before assuming responsibility for the launch of Imitrex. She subsequently became UK Marketing Director for Synthelabo with commercial responsibility for the whole portfolio.

Prior to joining Quintiles 11 years ago, she established and ran a profitable marketing consultancy, introducing the concept of outsourced brand management and successfully co-ordinating the UK launch of 4 brands for 3 international companies. During her time at Quintiles, she has provided marketing insight and support to many partnership opportunities spanning the US, UK, Europe and the Far East in numerous therapeutic areas. Karen is also a judge for two leading European Marketing awards – the Communique Awards for Healthcare Communication and PMEA (Pharmaceutical Marketing Excellence Awards).

What benefits does partnering with a commercial outsourcing provider bring?