New Product Launch Spend Report Summary

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Copyright © Best Practices, LLC

Best Practices, LLC Strategic Benchmarking Research

New Product Launch Spend: What It Takes to Win in the U.S. Market

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Executive Summary

Project Objectives & Methodology

Key Findings & Insights

Companies Participating in Study

Participant/ Product Demographic Data

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Project Objectives & Methodology

Best Practices, LLC developed a customized survey tool to capture industry data and deployed it to a representative sample of 27 brand & marketing leaders at 23 leading biopharmaceutical companies.

Contents:

The objective of this benchmarking study was 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.

Industry average cost for new

pharmaceutical product launch

Average cost for specialty and

primary product launches

Percentage of budget allocated

to 12 key marketing, education and

market access activities during and

prior to launch

Timing for conducting 50+ activities

Anticipated budget & activity trends

Top 3 success factors

Study Objective:

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Universe of Learning: Companies Participating in Study

Benchmark participants included 27 executives and managers at 23 leading biopharmaceutical companies.

Survey OnlyParticipating Companies

Abbott, Amylin, Astellas, Bausch & Lomb, Baxter Healthcare, Bayer HealthCare, Bristol-Myers Squibb, EMD Serono, Genzyme, GlaxoSmithKline, Inspire, Lundbeck, Merck & Co., Noven, Novo Nordisk, Onyx,

ProStrakan, Regeneron, Roche, sanofi-aventis, Shire, Teva, Xanodyne.

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Participants’ Job Titles & Functional Areas

Directors and Vice Presidents make up more than three-quarters of the benchmark class. More than half the respondents work within marketing functions or departments.

(n=27)

Participant Job Titles Participant Departments/Functions

19%

7%

7%

52%

11%

Marketing

Commercial

ManagedMarkets

* Other

* Other= R&D, Medical Affairs, Regulatory Affairs, Product Launch, Market Analytics, Business

Development

New Products

(n=27)

VP/EVP/SVP

22%

Director/Senior Director/Executive Director

60%

Manager/ Sr. Manager

11%

Other (Head, Leader)

7%

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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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Launch Year Investment Averages $XXX Million

TOTAL BENCHMARK CLASS

Launch YearLaunch Year

-1Launch Year

-2Launch 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= 19 16 14 9

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.

Launch year spending wins a lion’s share of investment resources. For the total benchmark class Launch Year spend nearly equals the approximate sum of all previous years commercialization investments on average.

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SPECIALTY SEGMENTATION

Launch Year Launch Year

-1Launch Year

-2Launch Year

-3







n= 12 8 8 4



Specialty Launch Year Investment Averages $XX Million

Specialty Care launches mirror the overall investment patterns reflected in the full benchmark class with spend trending upward each year. However, investment levels at launch are lower and more compressed around the median.

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PRIMARY CARE SEGMENTATION

Launch Year Launch Year

-1Launch Year

-2Launch Year

-3







n= 7 7 6 5



Primary Care Launch Year Investment Averages $XXX MillionMarket entry for primary care product launches consumes far greater resources than specialty launches. Correspondingly they receive two to three times greater budget resources at Launch Year to reach the much larger population of primary care physicians.

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Investment Data by Product Segment

Data is segmented by:

Projected Peak Annual Revenue

Therapeutic Areas – Oncology & Endocrine/Metabolic

Product Market Entry Position

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(n=27)

Q. What was the projected peak annual revenue (in $US) for your product before launch?

Projected Peak Annual Revenue

<$250M21%

$250M-$500M25%$750M-$1B 18%

$1B-$2B 25%

$500M-$750M

11%

Peak Annual Revenue Projections Correlate With Resource AllocationsBenchmarked products covered a wide range of market opportunities – each reflecting different projected peak annual revenues. At the high end, one-fourth hope to earn more than $1 billion peak year revenues; at the low end, 21% projected peak earnings of less than $250 million. Peak-year revenue is the metric that most clearly reflects the market opportunity assessment and corresponding market entry budgets.

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Total Launch Investment by Peak Revenue Category:

Data for Launch Year

PROJECTED PEAK ANNUAL REVENUE:

LAUNCH YEAR

# Responses in Range

Average (Mean)

High Low

<$250 M 4 $XXX $XXX $XXX

$250M -$500 M 5 $XXX $XXX $XXX

$500 M - $750 M 2 $XXX $XXX $XXX

$750 M - $1B 3 $XXX $XXX $XXX

$1 B- $2 B 5 $XXX $XXX $XXX

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Average Spend Comparison for Each Market Entry Position

Market Entry Position Launch YearLaunchYear -1

LaunchYear -2

LaunchYear -3

TOTAL

Differentiated Product in Novel Treatment Area $XXX $XXX $XXX $XXX $XXX

Differentiated Product Entering Established Market $XXX $XXX $XXX $XXX $XXX

Crowded Market Upstart Product $XXX $XXX $XXX $XXX $XXX

Crowded market products spend less than one-third overall than do differentiated products in either novel or established areas, however, they close a large portion of that gap in the final year, when their spending increases nearly eight-fold over Year -1.

(Total n=27)

Average Total Spend by Market Entry Position

Differentiated products entering established markets have the highest total spend, with the greatest difference occurring in Year-1.

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Launch ActivitiesBenchmark 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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Activities Included in Agency Fees Spend

0%

41%

76%

76%

100%

Other (specify):

Retainers

Public Relations

Communications/Publications

Promotional/Advertising

Key activities funded by participants within the Agency Fees budget category were promotion/advertising and communications/publications. Promotion was the activity funded by the most companies in the Launch Year, Year -1 and Year -2. In the Year -3, the greatest number of companies funded communications/publications activities.

LaunchYear -3 Year -2 Year -1

33% 80% 92%

83% 60% 85%

67% 40% 54%

17% 40% 38%

0% 10% 0%

Pre-Launch

AGENCY FEES (excluding DTC)

n = 13n = 10n = 6 n = 17Other (Year -2):• Positioning, campaign development

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.

=most frequent =most frequent activity per yearactivity per year

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Activities Expected to Gain Funding in Near Future

Q. In your opinion, how will recent and anticipated market changes impact funding levels for the following types of launch activities over the next 24-36 months?

Agency fees (excluding DTC)

Launch meeting (kickoff)

Market research/analytics (excluding DTC)

Sales force preparation

Samples

DTC

Physician education

Patient education/ assistance

Medical affairs

Managed markets/market access

Health economics/outcomes research

Significant increase Some increase

96%

84%

80%

60%

36%

36%

32%

32%

32%

16%

12%

Total Increase

(n=29)(n=29)12%

16%

24%

28%

28%

28%

36%

52%

72%

60%

56%

% Responses

8%

4%

4%

8%

8%

8%

24%

40%

Health Outcomes and Health Economics Research are expected to grow significantly in importance in the next three years, with 97% projecting spending increases there. A majority of participants also expect increases for managed markets, medical affairs and patient education spend.

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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, high and low spend 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: Primary care products, specialty products and Oncology products.

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Investment Allocation by Activity Category (1)

Total Benchmark Class:Launch Year & Launch Year -1

Activity Category Launch Yr. n = 18 Year -1 n = 14

High Average Low High Average Low

Agency fees (excluding DTC) $XXXX $XXXX $XXXX $XXXX $XXXX $XXXX

DTC & Advertising Expenses $XXXX $XXXX $XXXX $XXXX $XXXX $XXXX

Health economics/ outcomes research

$XXXX $XXXX $XXXX $XXXX $XXXX $XXXX

Managed markets/ market access


Market research/ analytics (excluding DTC)


Medical affairs $XXXX $XXXX $XXXX $XXXX $XXXX $XXXX

Patient education/ assistance $XXXX $XXXX $XXXX $XXXX $XXXX $XXXX

Physician education $XXXX $XXXX $XXXX $XXXX $XXXX $XXXX

Sales force preparation $XXXX $XXXX $XXXX $XXXX $XXXX $XXXX

Other Marketing activities $XXXX $XXXX $XXXX $XXXX $XXXX $XXXX

Launch meeting (kickoff) $XXXX $XXXX $XXXX $XXXX $XXXX $XXXX

Samples $XXXX $XXXX $XXXX $XXXX $XXXX $XXXX

* $70 mil response not included in calculations. * $50 mil and $13.8 mil responses not included in calculations.

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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Success Factors

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Top Areas to Consider in Setting Launch Budgets

Q. What are the three most important success factors to consider in establishing and allocating new product launch budgets in today’s market?

Verbatim Responses:

“Good definition of the key influencers & decision makers.”

“Getting medical information/education to physicians without use of sales reps.”

“Competitive differentiation for HE/OR benefit.”

“Use new/digital vehicles with field force, physician, payer, patient.”

“Investment in physician education (CME & Promotional).”

“Expertise/presence in market today vs. being new entrant.”

“Ensure managed marketing is adequately funded.”

“Differentiating the brand via strategic marketing.”

“Using alternative marketing sources/direct to physician.”

“Creativity and collaboration from the team.”

“Focus on fundamentals.”

“Touch - the number of thought leaders that touch the drug either in preclinical or clinical settings pre-launch.”

“Research/phase III.”

Success Factor Categories

(n=25) 13%

13%

13%

17%

21%

21%

25%

33%

38%

38%

50%

Sufficient Investment

Favorable Co-pay

Launch Trajectory


Physician Access

Product Differentiation

Patient Education/Awareness

Data - Clinical, Health Economics/Outcomes, Comparative Effectiveness

Market Research/Market Analytics Data

Physician/KOL Awareness/ Education

Managed Care Access/ Reimbursement

% Responses

Other: Experience in new market, patient assistance, understanding competition, understanding how product will be paid for, team collaboration, advocacy.

Survey participants identified Managed Care access and reimbursement, physician awareness, KOL relationships, and solid market research as the most important areas to consider in establishing successful new product launch budgets.

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Most Important Future Activities

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Activities for Successful Future Specialty Product Launch

Q. Within the next 24-36 months, what launch activities (traditional or emerging) do you think will be the Top Three most important to achieving a successful launch for a specialty product?

(n=25)

Top Activity Categories Verbatim Responses:

“Targeted research activities that alter the standard of care in settings where the drug is or will be used most frequently.”

“Elucidating clinically significant differentiation vs. standard of care.”

“Use of novel channels to more frequently reach and connect with end users (Internet).”

“Clear patient (and payer) value proposition.”

“Consumer marketing via internet and social media.”

“Non-personal education and promotion to physicians.”

“Reimbursement support/Pharmacoeconomics.”

“Outcomes Research and Studies - Comparative Outcomes.

“Claims data analysis.”

“Interactive educational tools.”

“Evidence based guidelines for product use.”

“Clinical outcomes data/post marketing.”

Physician Access

Patient Education

Value Proposition

KOL Relationships

Product Differentiation/Positioning

New Channels (e.g., social media)

Health Outcomes/Economics Research

Physician Education


Market Data & Analytics (e.g., segmenting, forecasting, pricing)

Managed Care Access/Reimbursement 44%

28%

16%

28%

28%

28%

16%

12%

12%

12%

12%

% Responses

Other: CI, reimbursement landscape research & prep, test promotional campaign, interactive educational tools, post-marketing outcomes data, attend ad boards, use evidence-based guidelines, strong value proposition

Nearly half the participants expect managed care access and reimbursement activities to be among the Top 3 most important product launch activities over the next few years. Also key to launch success will be physician education, health outcomes research, sales force prep and market data & analytics.

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About Best Practices, LLC

Best Practices, LLC is a research and consulting firm that conducts work based on the simple yet profound principle that organizations can chart a course to superior economic performance by studying the best business practices, operating tactics and winning strategies of world-class companies.

Best Practices, LLC6350 Quadrangle Drive, Suite 200, Chapel Hill, NC 27517

[email protected]

www.best-in-class.com

New Product Launch Spend Report Summary

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