Budget Allocation for a Successful Bio-Pharma Product Launch

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Winning Necessary Resources for a Successful Product Launch

Best Practices, LLC Strategic Benchmarking Research & Analysis

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Executive Summary

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Field Research & Insight Development:

Best Practices, LLC engaged 34 marketing and brand

leaders at 27 companies through a benchmarking

survey instrument.

Research participants worked in such functions as

marketing, commercial and product franchise.

• Identify Cost of Launching a

New Pharmaceutical Product

• Assess Timing & Impact of

Activity in Launch & Pre-Launch

• Top Success Factors for

Successful Pharmaceutical

Product Launch

Research Objectives & Methodology

Research Objectives:

The objective of this benchmarking study is to help biopharma leaders develop competitive launch

and pre-launch activity budgets to ensure successful U.S. market entry for new products.

This data will serve as a reference or comparison point for brand and marketing leaders as they

develop budgets and allocate funds for their new brands.

Business Objective:

Pharmaceutical companies can no longer afford to rely solely on past experiences when budgeting for a new

product launch in today's fast-changing, highly competitive market. This comprehensive benchmark study

investigates current costs as well as budget and staffing allocations required for a successful drug launch.

Timing for conducting 50+ activities

FTE Allocated to key launch activities

Anticipated budget & activity trends

Top 3 success factors

Industry average cost for new pharmaceutical product

launch

Average cost for multiple specialty, single specialty

and primary product launches

Percentage of budget allocated to 12 key marketing,

education and market access activities during and

prior to launch

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Universe of Learning: 27 Companies Contributed to this Research

This research engaged 34 marketing & commercial leaders from 27 leading pharmaceutical, biotech,

and life sciences companies. Eleven study participants represent large pharma organizations, while

the remaining benchmark class represent medium or small companies.

Benchmark Class:

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Executive VP /Vice

President

Senior Director

Director

Manager

Others

Directors and Vice Presidents make up more than three-quarters of the benchmark class. A little under

half of the respondents work within marketing functions or departments.

Insights Drawn from Directors Working With Marketing & Market

Research Function

Q1. What is your current job title?

N=34

*Other research participants:

Consultant, Head of LCM & BD,

International Business Leader,

Head Commercial Strategy

*

Participant Job Titles Participant Departments/Functions

11%

7%

7%

7%

15%

19%

44%

Others

Medical Affairs

Commercial

New Product Planning

Theraputic Area BU

Market Research

Marketing

* *Other research

participants: Prescription

Medicine, Life Cycle &

Global Strategy, Market

Access N=27

41%

18%

21%

12%

9%

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Launch Investment

Benchmarks

Research Protocol for Participants

Focus all responses on a single product launched recently into the U.S. market.

Provide total investment for launch activities during four budget years leading up to launch.

Total investment is defined as: The total U.S. investment for pre-launch/launch activities in a given budget year. Includes all resources invested in promotional (marketing), educational and market access activities. Excludes only clinical trial costs.

Launch Year: The budget year in which the product was launched.

Launch Years -1, -2 and -3: The budget years one, two and three years

prior to the Launch Year.

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Primary care market entry and launch spend still sets the high-water mark and more closely reflect

launch patterns of the past decade. Specialty products take a more moderate approach throughout the

launch process.

Top-Level Spends in Each Year Driven by Primary Care Products

Q. Indicate your total U.S. investment for pre-launch activities for your product in the three years prior to the U.S. product launch.

Include all resources invested in promotional, educational & market-access activities. Exclude only clinical trial costs.

Total Benchmark

Class Launch Year Launch Year -1 Launch Year -2 Launch Year -3

High $XXX $XXX $XXX $XXX

Top Quartile $XXX $XXX $XXX $XXX

Average (Mean) $XXX $XXX $XXX $XXX

Median $XXX $XXX $XXX $XXX

Bottom Quartile $XXX $XXX $XXX $XXX

Low $XXX $XXX $XXX $XXX

n= 22 22 14 14

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Single Specialty care launches mirror the overall investment patterns reflected in the full benchmark

class with spend trending upward each year.

Single Specialty Launch Year Investment Averages $XX Million



N=39

Single Specialty Launch Year Launch Year -1 Launch Year -2 Launch Year -3







n= 12 12 8 7

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Multiple specialty segment investments oscillate between $ 27 million and $ 2 million in the launch

year. Compared to launch year , launch year – 1 investment for this segment is higher by 61%.

Multiple Specialty Segment Launch Year Investment Averages $XX Million



N=39

Multiple Specialty Launch Year Launch Year -1

High $XXX $XXX

Top Quartile $XXX $XXX

Average (Mean) $XXX $XXX

Median $XXX $XXX

Bottom Quartile $XXX $XXX

Low $XXX $XXX

n= 3 3

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Compared to other care areas companies invest highest in primary and specialty segment. Year on year,

the investments in this segment jump by 51%, 166% and 137% respectively in year – 2, year – 1 and

launch year.

Primary Care/Specialty Launch Year Investments Averages $XXX Million



N=39

Both Specialty And

Primary Care

Physicians Launch Year Launch Year -1 Launch Year -2 Launch Year -3







n= 6 6 4 5

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Investment Data by

Product Segment

Data is segmented by:

Projected Peak Annual Revenue

Type of Drug

Product Launch Year

Product Market Entry Position

Therapeutic Areas – Oncology, Respiratory, Diabetes,

Cardiovascular

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Peak-year revenue is one of the key metrics that helps companies determine corresponding market entry

budgets. Eighteen percent of respondents expect to achieve a peak revenue of more than $1 billion, while

36% of respondents foresee earning less than $250 million upon product launch. By contrast, in the 2011

study, 25% of companies projected more than a billion dollar in peak year revenue.

In Competitive Market, Predicted Peak Revenues Lower Than in the Past

Q10. What was the projected peak annual revenue for your product before launch?

N=33

Peak Annual Revenue Projection:

Under $250 M

$251 M-$500 M

$501 M-$750 M

$751 M to $1 B

$1.01 B - $1.5 B

$1.51 B - $2 B, 3%

More than $2 B

* *

*Source: Best Practices, LLC’s 2011 Product Launch Spend Study

36%

18%

15%

12% 6%

9%

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Data for Launch Year

Total Launch Investment by Peak Revenue Category:

N=39

Total Launch Investment by Peak Revenue Category


PROJECTED PEAK

ANNUAL REVENUE:

LAUNCH YEAR

Projected Peak Revenue <=

$1Billion

Projected Peak Revenue >

$1Billion

Max $XXX $XXX


Mean $XXX $XXX

Median $XXX $XXX


Min $XXX $XXX

N= 17 4



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On average, the total launch investment for differentiated products entering an established market was

higher by about $11 million during launch year than differentiated products in a novel treatment area.

Total Launch Year Investment -- By Market Entry Position

N=39



MARKET ENTRY

POSITION: LAUNCH

YEAR

Differentiated Product In

Novel Treatment Area

Differentiated Product

Entering Established Market

Max $XXX $XXX


Mean $XXX $XXX

Median $XXX $XXX


Min $XXX $XXX

N= 5 15


Total Launch Investment by Product Position at Market Entry

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During launch year -1, the average investment for differentiated products entering an established market

is significantly higher than differentiated products in a novel treatment area.

Total Launch Year -1 Investment -- By Market Entry Position

N=39



MARKET ENTRY

POSITION: LAUNCH

YEAR-1

Differentiated Product In

Novel Treatment Area

Differentiated Product

Entering Established Market

Max $XXX $XXX


Mean $XXX $XXX

Median $XXX $XXX


Min $XXX $XXX

N= 4 13

Data for Launch Year-1


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Launch year -2 breaks the trend with a higher investment for differentiated products in novel treatment

area.


N=39

MARKET ENTRY

POSITION: LAUNCH

YEAR-2

Differentiated Product In Novel

Treatment Area

Differentiated Product Entering

Established Market

Max $XXX $XXX


Mean $XXX $XXX

Median $XXX $XXX


Min $XXX $XXX

N= 4 8





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The average total launch investment for launch year -3 shows the investment for differentiated products

entering an established market is almost double the investment for differentiated products in a novel

treatment area.


N=39

MARKET ENTRY

POSITION: LAUNCH

YEAR-3

Differentiated Product In Novel

Treatment Area

Differentiated Product Entering

Established Market

Max $XXX $XXX


Mean $XXX $XXX

Median $XXX $XXX


Min $XXX $XXX

N= 4 7





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Launch Activities

Benchmark partners were asked to indicate which launch

activities they fund within each of the following categories

during the last four budget years leading up to launch.

Agency Fees (excluding DTC)

Direct to Consumer & Advertising Expenses

Health Economics/Outcomes Research

Launch Meeting/Kickoff

Managed Markets/Market Access

Market Research/Analytics (excluding DTC)

Medical Affairs

Patient Education/Assistance

Physician Education

Sales Force Preparation

Other

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Public relation activities start from year – 3 and continue throughout the pre-launch and peaks at launch.

Promotional advertising starts in year – 2 and peaks at year – 1, while communication starts as early as

year – 3 and peaks at year – 2.

Public Relations Budgeted for Pre-Launch & Launch

Q. Please check all of the listed activities that were included in your product's Year -3, Year -2, Year -1 and Launch Year

budgets.

AGENCY FEES (excluding DTC)

11%

16%

79%

84%

84%

Other

Retainers

Communications/Publications

Promotional/ Advertising

Public Relations

Pre-launch Launch Year

Year-3 Year-2 Year-1

50% 60% 65%

30% 60% 94%

80% 90% 82%

10% 20% 18%

10% 20% 18%

N=10 N=10 N=17 N=19

*Others: Website/Social Media platform Development(4), Strategy(2),

Competitive Landscape, market access and HEOR

*

=most frequent

activity per year

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Physicians no longer wield all influence over market entry. Payers, HEOR, and Patients also are hotspots

for increasing launch investment. Medical Affairs also is on the rise.

HEOR & Managed Market Activities Expect Significant Funding

Increases

Q. How will recent and anticipated market changes impact funding levels for the following types of launch activities

over the next 24-36 months?

Activity Funding in a Changing Market:

3%

7%

10%

7%

7%

5%

20%

3%

34%

38%

14%

17%

17%

7%

13%

33%

7%

5%

27%

33%

48%

41%

59%

60%

37%

57%

47%

30%

66%

71%

43%

57%

14%

17%

24%

20%

Samples

Launch meeting (kickoff)

Sales force preparation

DTC

Agency fees (excluding DTC)

Other key activities

Physician Education/Market Shaping

Market research/analytics (excluding DTC)

Managed markets/market access

Health economics/outcomes research

Patient education/ assistance

Medical affairs/Medical Education

Significant increase Some increase About the same

77%

73%

79%

82%

36%

47%

10%

14%

40%

23%

14%

20%

Total Expecting Increase

N=21-30

*Others: HECOR, Mobile

communications, Advocacy

Activities

*

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Launch Investment Allocation

Participants indicated their total U.S. investment for pre-launch activities for their

respective product in four different budget years: Launch Year, Year -1, Year -2, and

Year -3.

Budget numbers provided include all resources invested in promotional,

educational & market-access activities, excluding only clinical trial costs.

Slides in this section exhibit average, top quartile and bottom quartile allocated for

activities in 12 categories for the Launch Year and the three years preceding launch.

Data is provided for the full benchmark class. In addition, data is provided for the

following benchmark class segments: drug type, launch year, market entry position,

peak annual revenue projection, targeted physicians and therapeutic area.

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Total Benchmark Class:

Launch Year & Launch Year -1

Investment Allocation by Activity Category (1)

Activity Category

Launch Year Year -1

Top Quartile Average Low Top Quartile Average Bottom

Quartile

Agency Fees - excluding

DTC $XXX $XXX $XXX $XXX $XXX $XXX

DTC Expenses $XXX $XXX $XXX $XXX $XXX $XXX

Health Economics/

Outcomes Research $XXX $XXX $XXX $XXX $XXX $XXX

Managed Markets/ Market

Access $XXX $XXX $XXX $XXX $XXX $XXX

Market Research/

Analytics - excluding DTC $XXX $XXX $XXX $XXX $XXX $XXX

Medical Affairs/Medical

Education $XXX $XXX $XXX $XXX $XXX $XXX

Patient Education/

Assistance $XXX $XXX $XXX $XXX $XXX $XXX

Physician

Education/Market

Shaping $XXX $XXX $XXX $XXX $XXX $XXX

Sales Force Preparation $XXX $XXX $XXX $XXX $XXX $XXX

All Other $XXX $XXX $XXX $XXX $XXX $XXX

Samples $XXX $XXX $XXX $XXX $XXX $XXX

Launch Meeting (kickoff) $XXX $XXX $XXX $XXX $XXX $XXX

N=20 N=20

Yellow highlights indicate highest three spend areas

for each year. Red circles indicate activities for which

Year -1 spend exceeds Launch Year investment.

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Best Practices®, LLC is an internationally recognized thought leader in the field of best practice

benchmarking®. We are a research, consulting, benchmark database, publishing and advisory firm that

conducts work based on the simple yet profound principle that organizations can chart a course to superior

economic performance by leveraging the best business practices, operating tactics and winning strategies of

world-class companies.

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Chapel Hill, NC 27517

(Phone): 919-403-0251

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