Bringing new drugs to market…at last!
pharmafile | October 20, 2003 | Feature | Sales and Marketing |Â Â product launchÂ
In 1987 the average cost of development for new pharmaceutical products was $231 million, and it took between 10 and 15 years, according to the Tufts University Centre for the Study of Drug Development. In 2000 the equivalent data showed that costs rose to $802 million, while the timescale changed very little.
In order to maximise the potential value of a new blockbuster drug it is crucial, and seems self-evident, that the products created are made available for sale very quickly after formal approval is received from the licensing authorities.
Recent research by the PA Consulting Life Sciences and Technology Group shows that performance in this critical area is inconsistent. Most importantly, managers in pharmaceutical companies cannot predict with much confidence that their next product will be available to plan.
Estimated revenues from new blockbuster drugs can be $1 million per day. It is clear, therefore, that any delay in achieving revenue will delay recovering the huge development costs, building the return on investment and delivering increased shareholder value.
The problem is that getting a new product to market is one of the most complex tasks in management. Success requires effective communication, co-ordination of many functional processes, accurate and timely information and a whole lot more. Managing one discrete project, such as developing and industrialising the formulation, is complex enough. Product launch programmes may have many more, equally complex projects to be managed and co-ordinated towards a common outcome and timeframe. Technical failure, delay in planning, competition for scarce resources, development of appropriate skills and capabilities, and budget pressures are a few places where disaster can lurk, waiting to challenge the unsuspecting product managers ambition, namely: "To affect the launch of the new products to plan (predictably), on budget, immediately following formal approval, in all appropriate markets."
When will your next product be approved and available?
PA's research indicates that the actual performance achieved by a range of companies in this ambition is highly variable. Performance has been measured by the number of days delay between regulatory approval and availability in the market. This measures the effectiveness of the operational processes and procedures, and their co-ordination towards a defined objective.
Only 30 of the 75 product launches were available on the market within a month, and only about 50 of the 75 products were available within 100 days from approval. Upon examination, we see little correlation between therapy areas or product types. This again would support the hypothesis that each product launch is treated as an independent, discrete event with plans created accordingly.
The research considered only those markets where there is no predictable delay for price approval, and in which products can be sold freely immediately following receipt of licence.
Excellent performance can be masked by some exceptional activities within the project teams. These can make some dramatic impacts, yet are possibly a symptom of ineffective co-ordination.
Examination of specific launches illustrates that delays are often avoidable. The most common causes of delay are generally within the control of the organisation. Lack of timely information at the right place, co-ordination across departments and functions, or resource conflicts are typical frustrations for product managers.
Most of the companies where launches were examined claim to be effective and have in place cross-functional teams, project planning offices and governance structures, so why is the performance so inconsistent and variable?
PA's experiences in programme management across a wide range of industry sectors show that product launches within pharmaceutical companies are among the most complex project activities undertaken. It is also clear that the traditional methods of project management and supporting organisational structures are not adequate to handle the range of complex activities, interdependencies within the programme, and conflicts that can occur.
When launches are well co-ordinated the results are clear to be seen:
"…since its US launch in mid-April, Advair has contributed £71 million in sales in this market and has achieved 12% market share of new prescriptions." GlaxoSmithKline Half Year Report 2001
When the company is less successful, we see:
"…of the 19 product launches planned last year [2001] only two were delivered on time!" Global Pharma R&D Director
A common finding is that product managers, R&D directors and sales managers responsible for launches in their companies are generally confused about details of the overall process and lack confidence in the ability of their organisations to deliver predictably. One key factor is the confusion of accountability within the organisation for the overall plan. Where accountability is clear, organisational difficulties often prevent direct control of the programme and management of resources.
How do successful organisations manage launches consistently?
The key question is about consistency and predictability. How can your organisation improve the performance of the operational activities to affect all planned launches in a predictable manner?
The answer lies in understanding that there is a need for a common framework within which to plan launches, allowing tight co-ordination of the various activities yet be flexible enough to accommodate variation between different launches and changes in each plan as the activities progress.
A comparison can be seen in the building of a house. The components are largely consistent: wood, bricks, cement, glass, etc. These materials can be combined to produce an infinite number of house designs. It is the design of the house that will dictate how the particular activities need to be executed, co-ordinated and the materials applied. The building process and site management are largely consistent, allowing one site manager to effectively control the construction of a number of houses with different designs on one site, or across a number of sites.
Similarly, new product launches vary in technology, formulation, geography of manufacture and sale, packaging, market dynamics and personnel. However, they all incorporate common components, such as sales and marketing support, manufactured product, securing regulatory approval (product and facilities), ordering packaging components and generating documentation required for distribution.
Unlike house building, however, pharmaceutical product launches are often planned individually, and from scratch. Learnings, process and people tend to be transferred by exception rather than in a strategically managed development of corporate capability. Since the effective launch of new products is a strategic necessity for pharmaceutical companies, there is a very real need for improved management of the activities that support this effort. Such a framework ensures consistency, enabling knowledge to be transferred across projects to enhance the capability of the organisation to improve continuously.
How to develop a strategic approach to launches
All companies will have a high-level strategy that identifies their ambition to launch more and more new products, on time and within budget. The issues lie not in the ambition itself but in the operation of the activities that will achieve that ambition. In reality, the top team is separated from the operational groups. How can we produce a plan, a strategy, which links together the high-level rhetoric with the day-to-day realities?
The answer lies in the approach taken to the planning of product launches. These are not just operational activities that impact one functional area, they are of utmost importance to the company as a whole and need to be addressed as such. In all cases, accountability is at the highest level of management, although responsibility for performing the tasks will be with line management. The connection and governance need to be explicit.
When conflicts occur, it is only at the highest level that the necessary vision and appropriate priority can be directed where conflicts occur. Only at this level can the necessary resources and capabilities be pointed towards constraining factors, and it is at the highest level that real, factual information about performance must be delivered. This is not overstating the case. It is at the board level that accountability lies for this specific measure of performance, so it is here that the task of steering and directing the activities must rest.
How is it that business functions can develop their strategies and manage their operations so well? We see excellence in many functional groups, by devastating their targets, being best in class, or by re-defining the rules of the game to beat competition. Manufacturing excellence awards, salesforce effectiveness prizes, 'gold standard' customer service accolades are but a few recognisable achievements. None of these ambitions can be achieved without a well-structured plan that plots a path for their teams from mediocrity to the highest pinnacles of achievement. They are all laudable ambitions and add significantly to their businesses.
By adopting the business unit strategy approach to develop a strategy for product launches, similar transformations in performance can be achieved. A typical strategy development process must be issues led and develop through building consensus and realism to achieve a set of actions that have the essential ingredient, 'buy in' and commitment to implement. These are the keys to predictability.
Management of the plan needs to be inclusive, collaborative and visible
Having identified the key actions and priorities, the task of co-ordination comes to the fore. The manager of the plan, the steering committee and programme manager must be in a position to understand the inter-relationships and interdependencies of the activities, and their impact on the overall objective. There will be activities that, when undertaken, may cut into functional measures of performance, divert resource from one area to another, and make decisions based upon the overall assessment of risk versus opportunity (eg, the printing, in advance of licence number, packing materials to support immediate manufacture of product).
A typical framework to manage the activities must align the goals, targets and aims of each process and functional group. Major benefits of creating a plan are the communication and visibility that the plan affords to all associated with the activities. The framework must be compact (one page), easily distributed and unequivocal in its aim.
The key issues of a successful launch
Functional groups within any organisation have their own drivers, cultures and measures of performance. Any cross-functional co-operation and co-ordination requires a high-level steering function to over-ride functional preferences or resource allocations. Product launches represent the most important cross-functional process possible.
No two product launches will be the same. Product launches cut across markets and geographies manufacture on one continent, package in another region, distribute and sell within the third country. Differences between product types – sterile formulation, tablet code, device specification, blister film composition, and analytical methods – all represent complexity that is situational. They represent specific issues (or non-issues), yet must be considered in the overall framework. Decisions taken at one point in the development cycle can radically impact upon the ability to produce, manufacture or sell in certain markets. All of these situations must be handled in the context of the overall plan.
Measures of performance and incentives will vary across the functions. Sales teams may receive bonuses based on sales, however, it is unlikely that those working in the depths of the registration or other administration departments will get any tangible incentive to move the documents faster! Equally, performance-related pay in the manufacturing environment might conflict with the requirements of quality assurance and best practice. What if a product launch team were to be given a team-based incentive of substantial proportion? How well do you think they might overcome the parochial, functional difficulties that tend to create heat and light within organisations?
Senior management teams set the ambition and direction within a company. Seldom do the operational activities link back so directly to the implementation of that strategy as they do within product launches. The one page strategy process forges the explicit links between the ambition and the detailed operational plans and activities of each business unit, function or geography.
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