Headlines have been scattered with recent pharmaceutical stock woes stemming from late stage withdrawals and poor performance of new product introductions. Driven by increasing competitive pressures, many believe the launch of new blockbuster drugs will no longer provide the double-digit revenue growth experienced in previous decades. Instead, pharmaceutical companies will need to look outside the core molecular based products and expand their portfolios - not just with more and probably smaller products, but also with drug-device combinations, biological and genetic based products.
With many pharmaceutical companies having optimized their drug discovery and clinical development processes in the 1990s, the ability to maintain a competitive advantage in coming years may stem on the capability to consistently deliver successful new products to the market.
Product Managers would be wise to evaluate and address the gaps in existing product launch processes to expedite the path to peak performance in future product launches. Fortunately, they need not embark on this path alone. In this article we present three key best practices developed across multiple industries, including medical devices, consumer packaged goods (CPG), high tech, and pharma itself that can help them get there.
As the sheer number and diversity of pharmaceutical products introduced to the market increases and the opportunity for blockbuster products diminishes, the ability to repeatedly deliver successful product launches will become a strategic priority in the pharmaceutical industry.
Recent headlines have highlighted the challenges pharmaceutical companies have experienced with their existing, and next generation, blockbuster portfolios. Driven by increased competitive pressure from generics, increased regulatory demands and a rapidly decreasing exclusivity period, the business environment for blockbuster products is expected to become increasingly challenging. With these factors significantly impacting a product's lifetime revenues, top-quartile growth in the future will most likely be fueled by an increased number of smaller product launches and an expansion of product portfolios beyond the molecular-based product categories.
Although the pipeline for blockbuster products has diminished, the rate of new product launches has remained nearly constant. Since 1999, the FDA has approved an average of 85 new pharmaceutical products each year, including new molecular entities,combinations and formulations(1). If R&D productivity increases are realized, this trend will continue with an increase in the number of product launches in new or niche markets.
As pharmaceutical manufacturers begin to explore growth opportunities in new areas such as drug/device combinations and biological and genetic-based solutions, product launch teams will be asked to navigate increasingly more complex and untested reimbursement models, stricter regulatory requirements, and less flexible supply models.
In 2003, J&J launched the first drug-coated stent - a product that challenged the traditional provider-based reimbursement model. With a prohibitive cost to providers, J&J marketed the product's value to the payer (in this case Medicare) and in turn opened an enormous opportunity for stent manufacturers and providers alike. The drug-coated stent market quickly grew to a +$5 billion dollar market. In Europe, GlaxoSmithKline realized similar success by challenging the existing OTC-centric business model for smoking cessation products. During the launch of Zyban, GSK amplified smoking cessation as a major public health issue on the political agenda and ultimately changed the market from a predominantly OTC based market to one that now includes prescription products.
Although most pharma companies have delivered at least one highly successful launch in recent years, the hunt for repeatable launch capabilities continues to elude many firms. With less optimal launches no longer an option, Product Managers would be wise to build on existing capabilities. Existing experience and knowledge within the pharmaceutical industry can be supplemented with that learned by leaders in related industries such as consumer products, medical devices and high tech to achieve consistent product launch success.
Nothing as intricate and complex as a product launch should ever be attempted without a detailed and expertly crafted plan. It is no secret that all successful product launches begin very early on with a meticulous plan and an intense focus on maintaining momentum up to and beyond the actual launch. Achieving this will greatly enhance the possibility for the product to reach its real potential.
Timing the transition from development into launch planning is critical, and early commercial input to the development and market shaping activities is crucial. A well-developed launch plan can help position a product and the brand team for a smooth transition to the later stages of the product lifecycle. As such, a global launch plan should have no less than a three year time horizon, with regional launches having a slightly shorter horizon of two years. The plan should incorporate activities before and after the official launch date (e.g. T-36 through T+12 months). While some launch teams have attempted to shorten the time horizon of the plan, many find themselves re-extending it as the details of the plan are further developed.
Best-in-class launch plans usually include all activities from clinical trials to the shipment of goods. These and the many other activities orchestrated by the plan can be categorized in three parts:
Understanding the market requires early clinical and commercial investments. Market research and analysis are but two examples of marketing activities that should be done early as both are critical inputs to shape the market and develop the target product profile. Early investments are a clear sign that the organization is mobilized and truly committed to the success of the product launch.
A successful launch characterized by steep market penetration and sales maximization will only be obtained if these three parts are executed in an aligned and structured way - which will require the development of a robust and detailed launch plan. As a result, successful organizations ought to have a standardized and repeatable launch planning process including a detailed launch plan template with key milestones covering these three areas. New product launch teams can then customize the plan template to the specific product and provide lessons learned to future launch teams.
However, having a launch plan template is not enough. Too often launch plans are built on lofty assumptions. A successful product launch team challenges the critical launch assumptions and existing business models built into their launch plans and develops clear and actionable contingency plans. Doing so mobilizes the organization behind the launch plan and creates the support and commitment necessary for success. In particular, areas that require special attention are the evaluation of regulatory constraints and timings, market knowledge, reimbursement and formulary requirements, product positioning and investment linked to expected sales.
With pharmaceutical companies increasingly looking outside the molecular based product categories, launch plans first constructed to address traditional business models may already be obsolete. Launch teams will need to develop a deep understanding of the impact the new business models can have on their product launch including reimbursement, distribution and supply strategies and proactively develop alternative approaches to bring these products to the market. While J&J's reimbursement strategy for drug-coated stents was in itself an innovated approach that reaped many benefits for the brand team, equally impressive was the launch team's foresight in ensuring the activities leading to the reimbursement scheme approval coincided with the overall launch plan.
A solid launch plan will include the following:
For years, IBM was focused on keeping it hardware specifications secret, never publishing them and servicing its equipment with an internal force. This business model worked well in their traditional, mainframes business. Initially, the business wanted to apply the same business model for its new PC line. However, IBM decided to use retail channels to sell the equipment for them. However, retailers make a larger portion of their income from maintenance than from selling the equipment themselves, thus requiring access to hardware specifications. During the rollout of the first IBM PC, the product launch team worked hard to change this strategy in the organization. IBM PC was the first product IBM sold not using its own internal sales force, and its success was a direct result of the successful distribution of the PC through the retail channels with the subsequent change of the business model.
A successful launch requires seamless coordination across geographic and functional boundaries, including medical, pricing and reimbursement (managed care), regulatory, legal, finance, supply chain, sales and marketing. Typically, this will involve coordinating both internal and external partners as more and more launch teams look to leverage 3rd party service providers. Getting this to work in an efficient manner requires a strong governance model.
Slow decision making, lack of accountability, and constant fire fighting are all signs of a weak or missing governance structure. While it may be difficult to place a value on a proper governance structure, a robust launch governance model will drive quicker decisions and clear accountability. Furthermore, it will be an invaluable asset while navigating through issues that invariably arise during a product launch.
A robust governance model will evolve over the course of the launch planning cycle. It will consist of multiple teams and committees to ensure the proper balance between global scale and local effectiveness while helping to facilitate cross- functional alignment. Quite often in today's launches research and development plays a dominant role early in the launch planning cycle with the commercial functions taking the lead in later stages. Ideally commercial functions like marketing and market research will take an active role earlier in the launch plan to support the shaping of the product.
A governance model can have many different forms depending on what works for the specific company and its decision making structure. However, there are some best-in-class themes that should exist. The Executive Planning Team should sit atop the pyramid and maintain responsibility for reviewing all pharma sector recommendations. These individuals will be involved in prioritizing across multiple product launches in a variety of therapy areas. At the second level, a Global Steering Committee consisting of senior functional management will provide strategic guidance to the launch team during the planning and execution phases. At the more tactical level, the global launch team can also benefit from a further division into functional sub-teams that execute the launch planning for the different functional areas. Examples of sub-teams are market research, publications, phase IV program, lifecycle management and branding. It is common to have 7-10 sub-teams working in parallel during a global launch, and it is highly recommended that the governance structure to a great extent be mirrored at the affiliate level.
Early involvement from all parties is not enough to establish an effective governance model. Decision making and accountability can only be driven by clearly outlined roles & responsibilities. Numerous tools exists which can help organizations establish clear roles and responsibilities, including scenario planning, RACI frameworks and project charters.
A robust governance model requires:
A launch team tasked with defining their governance model and decision making processes opted to use a combination of scenario planning techniques and a RACI framework (RACI is a framework used to outline the decision making process by identifying for each decision/activity the individual Responsible, Accountable, Consulted, and Informed). Key members of the team outlined a draft RACI chart for each of the launch activities and held a workshop to challenge their governance/decision making process under potential launch scenarios. The workshop enabled launch team members to discuss and better understand how each role would evolve based on these scenarios. Each team member was expected to understand not only WHO would be involved but also HOW they will be involved should the different scenarios play out during the launch. As a result, the team entered the launch with a well defined, understood, and accepted governance model that helped alleviate the slow decision making and lack of accountability typical of weak governance models.
Writing a bulletproof plan and engaging an efficient governance model need to be more than theoretical exercises. Launch success is dependent on the hard work of the launch team and execution of the launch plan. Keeping the organization mobilized to deliver on these plans can only be accomplished by establishing a project management process which includes feedback mechanisms to monitor progress, incorporate previous lessons learned, and make adjustments when needed.
Techniques consistently used by successful launch teams include:
One key is to have a consistent Plan-Do-Review routine to review progress against plan in preparation for management review of key milestones, KPIs and next steps. There needs to be a clear picture of the adherence to the launch plan, which should preferably be done through regular global launch team meetings. The review of progress and performance against milestones is one of the most critical activities for the leader of the Global Launch Team. Similar to the drug discovery process, adopting a stage gate model helps ensure diligence is applied to the criteria for proceeding to the next stage of the launch process.
Due to the complexity of a global launch, the review function is often delegated to a PMO team. The PMO team can use a number of program management tools to ensure that follow-up is done on a consistent basis. For example, best-in-class PMO teams will use such tools as launch master plans, KPI dashboard, issues tracking logs and internal communication plans to facilitate the process.
Execution is also dependent on mobilizing the organization through aligned objectives and key activities. This can be achieved by incorporating regular communications on progress and key achievements and by holding several cross-functional and cross-regional workshops. The workshops should be held at specific intervals in the pre and post launch phases to discuss progress, share best-practices, and build capabilities of internal resources.
An effective launch execution involves:
Although developing and retaining the needed capabilities to deliver successful product launches are vital, an organization must balance its needs with those of its key resources. Product launches are highly emotional and stressful programs, and resources will quickly burn out and seek other positions if not given the time to recuperate. Therefore, executives must undertake the onerous process of instilling knowledge sharing and competency development mechanisms within their organization.
Leading product launch programs will collaborate with HR to develop rotational programs. Key resources will be involved at varying levels, from SME to program manager, based on their last assignment, strengths and identified development needs. The program will act as a feedback mechanism enabling the organization to consistently retain and improve on existing capabilities and knowledge while developing new capabilities along the way.
Pharma executives realize that business performance and growth are directly related to their ability to bring superior products and services to market in a cost-effective manner. In the post-blockbuster era, gaining competitive advantage will increasingly depend on establishing the capabilities to consistently deliver successful product launches.
In this article, we have presented 3 best practices developed across multiple industries that can help product managers establish these capabilities and deliver successful product launches, including: