Framework for strategic interactions in product launches

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Pharmaceutical companies live and die by their pipelines. Then, product launch excellence is key in the pharmaceutical business, as most of a new molecule’s success depends on the product launch.

The current pharmaceutical market is tough and there are not many new products that can claim to be first-in-class or best-in-class. Additionally, many companies are beginning to see their much treasured biological blockbusters threatened by the launch of biosimilars.

Then, pharmaceutical companies must excel not only in product launches, but also countering competition’s product launches. The days of gentlemanly competition are definitely gone.

We believe that a useful framework for improving product launches’ success is to consider how the incumbent (the company already in the market) can react to the entrance of a new product. The model we are going to present is for sustaining innovations not disruptive innovations. It means that products to be launched are improvements on existing ones, but do not disrupt the market by creating a new one or significantly changing the value chain.

Likely incumbent moves to counter a new product launch:

In general, an incumbent will try a series of moves before the launch, during the launch and after the launch itself. These moves are aimed at making the launch as unsuccessful as possible, or, at a minimum, to wear down the new entrant.

These moves can be summarized, as follows:

The team organizing the launch, then, must count on the incumbent doing what it can so the launch is not successful. Using this framework might be useful for product launch teams.

Key in the process is to see the market and possible moves from the point of view of the incumbent. Using strategic war-games can be a good way to get that point of view, as teams put themselves on the shoes of the incumbent. We will cover strategic war-games in a future article.

Some of the examples mentioned above might seem on the border of the ethical, such as discrediting clinical trials or products. However, we have conducted war games on how to respond to competitors that in real life, for example:

  • Developed PK/PD studies using double the dosage of the product on the market so it could show better results than the ones of the regular dosage.
  • Mentioned the results in one region, as if they were overall, as this region had the best results. To make it even worse, the results mentioned as overall were significantly lower in our region (Latin America). Then, the theoretical benefits brought by the product were non existing, indeed, the product had a severe disadvantage in our region.
  • Companies mentioning side-effects competing products had (even though the own product had the same side-effects and a higher incidence).
  • Used a definition of night (two hours less than the accepted one) so that its product showed a better performance against the new one.

These are just a few examples that demonstrate that the era of gentlemanly competition is, probably, gone for-ever in the pharmaceutical market.

The use of dirty tricks will obviously depend on the incumbent, as there are companies that do not use these tricks. The new product launch team, however, will be naïve to assume that the incumbent will not use dirty tricks to protect its market share. Before making such an assumption, it has to put itself on the competitor’s shoes and see the world from the competitor’s point of view, including its ethical boundaries.

The incumbent is not limited to use just one of these moves. Indeed, our experience in the pharmaceutical market is that more than one move is generally used, as the probabilities of successfully countering the launch increases, as the number of moves used also grows.

Competitors successfully countering product launches generally begin early on and do not wait till the product is launched, as they try to position the new product in the least favorable way before the launch. This way, the product launch team will have to be concentrated on correcting mis-perceptions and concerns instead of properly positioning the product.

The longer it takes for the new product to become successful, the more difficult it will be to succeed, as the sales-force and management will wear down.

Application example:

Using how Pfizer’s Viagra reacted to Cialis launch in the USA might be useful to understand how this framework is put in practice. A summary of the situation in 2003 can be seen in the following table:

Item  Viagra  Cialis
 Launch  April 1998 End of 2003 (expected)
Company Pfizer Eli Lilly/ICOS
Product effectiveness 80% 81%
Number of patients 3 million Not launched yet
Main product claim Takes one hour to work, lasts 4
Tested in real life
Takes half hour to work, lasts 36 hours
Not affected by food or alcohol
Minor side effects
European experience (it was launched there first)

Patent trial

Price war

Targets the whole market
Emphasis on the couple relationship
Duration “le week-ender”
Lower side effects

The way Viagra reacted to the launch using this framework can be seen below:

We believe that this framework can be useful for considering what incumbents can do to counter the new product launch and that teams launching new products would do well using it. Indeed, quoting one of our customers with whom we used this framework, he said: “The work we did with this framework was extremely useful, because it helped me see what the competitors will do and be one step ahead of them. It played a key role in the successful launch of the product”, just as a background note, the product was the third in the market, however, it had several key differentials.