Lifecycle Management Strategies: Maximizing ROI through indication expansion, reformulation and Rx-to-OTC switching

Table of Contents

Chapter 1 Introduction 18

• Summary 18
• The importance of lifecycle management 19
• Patent expiration 20
• Types of patents 20
• The value of patents 21
• Expiring patents on blockbusters 22
• Impact on drug revenues 24
• Cost containment and the rise of generics 24
• United States 24
  • United Kingdom 27
  • Germany 28
  • France 29
  • Italy 30
  • Spain 31
• Patent challenges 32
  • Case study: Lipitor (UK, US) 32
• Brand loyalty 34
• Strategic pricing 36
• Lifecycle management options 38
• Benefits and limitations of lifecycle management strategies 39
  • Low product sales 40
  • Patent expiration 40
  • Niche products 42
  • Lack of brand equity 42
  • Ineffectiveness 42
  • Side effects 43
  • Uncompetitiveness 43
  • Budgetary constraints 44
  • Lack of research and development expertise 45
  • Lack of strategic focus 45
• Trends in usage of lifecycle management strategies 46
• Conclusion 47

Chapter 2 Indication expansion 50

• Summary 50
• Introduction 51
• Objectives of indication expansion 52
• Prerequisites for a successful indication expansion 53
• When indication expansion is appropriate 53
• Strategic considerations 56
• Pricing 57
• Timing 58
• Benefits and limitations of indication expansion 59
• Benefits 60
• Limitations 60
• Case studies 63
• Betapace (US) -- unsuccessful indication expansion 63
• Singulair (US) -- successful indication expansion 64
• Conclusion 65

Chapter 3 Reformulation 68

• Summary 68
• Introduction 69
• Line extensions 70
• Objectives of reformulation 71
• Prerequisites for implementing a successful reformulation 72
• When reformulation is appropriate 73
• Strategic considerations 75
• Pricing 75
• Timing 75
• Benefits and limitations of reformulation 77
• Benefits 78
• Limitations 79
• Case studies 82
• Paxil (US) -- successful reformulation 82
• Prevacid (UK) -- unsuccessful reformulation 84
• Conclusion 86

Chapter 4 Second generation launch 88

• Summary 88
• Introduction 89
• Objectives of second generation launch 91
• Prerequisites for implementing a second generation launch 91
• When second generation launch is appropriate 92
• Combination products 94
• Strategic considerations 96
• Pricing 96
• Timing 97
• Benefits and limitations of second generation launch 98
• Benefits 99
• Limitations 100
• Case studies 103
• Nexium (US) -- successful next generation launch 103
• Conclusion 105

Chapter 5 Rx-to-OTC switching 108

• Summary 108
• Introduction 109
• The OTC market 110
• Rx-to-OTC switch regulation 111
• Objectives of switch 113
• When a switch is appropriate 114
• Industry pressure to switch 116
• Prerequisites for competing in the OTC market 117
• Strategic considerations 118
• Pricing 118
• Timing 119
• Benefits and limitations of Rx-to-OTC switch 119
• Benefits 121
• Limitations 122
• Case studies 125
• Claritin (US) -- successful Rx-to-OTC switch 125
• Prilosec (US) -- successful Rx-to-OTC switch 128
• Zocor (UK) -- unsuccessful Rx-to-OTC switch 129
• Conclusion 130

Chapter 6 Launch of a branded generic 132

• Summary 132
• Introduction 133
• The generics market 133
• Objectives of generic launch 135
• Prerequisites for competing in the generics market 135
• When a generic launch is appropriate 140
• Determining the attractiveness of a potential generic 140
• Proactive versus reactive launch decisions 143
• Opportunities arising from the US patent system 144
• Strategic considerations 145
• Pricing 145
• Timing 146
• Benefits and limitations of generic launch 147
• Benefits 148
• Limitations 149
• Case studies 151
• Capoten (Germany) -- successful generic launch 151
• Conclusion 152

Chapter 7 Divestiture 154

• Summary 154
• Introduction 155
• Out-licensing 155
• In-licensing 156
• Discontinuation 157
• Objectives of divestiture 158
• When divestiture is appropriate 159
• Strategic considerations 162
• Pricing 162
• Benefits and limitations of divestiture 163
• Benefits 164
• Limitations 165
• Case studies 166
• ElixSure (US) -- out-licensing 166
• Conclusion 167

Chapter 8 Appendix 170

• Primary research methodology 170
• Index 171
• Glossary 175

List of Figures

• Figure 1.1: Efficacy of lifecycle management strategies based on product and owner characteristics 39
• Figure 1.2: Timing considerations for lifecycle management strategies 41
• Figure 1.3: Risk and return for lifecycle management strategies 44
• Figure 1.4: Implementation times and costs of lifecycle management strategies 45
• Figure 1.5: Shifts in usage of lifecycle management strategies 46
• Figure 2.6: Breakdown of new indication launches by therapeutic area, 2005 55
• Figure 2.7: Pricing opportunities and threats for a new drug indication 57
• Figure 2.8: Efficacy of indication expansion based on owner and product characteristics 59
• Figure 3.9: Efficacy of reformulation based on product and owner characteristics 77
• Figure 3.10: Comparative benefits of drug reformulation 79
• Figure 4.11: Efficacy of second generation launch based on product and owner characteristics 98
• Figure 5.12: Efficacy of Rx-to-OTC switch based on product, condition and owner characteristics 120
• Figure 6.13: Average number of generics by market size 141
• Figure 6.14: Average generic price relative to brand by patent challenge situation, 2003 - 2005 146
• Figure 6.15: Efficacy of generic launch based on product and owner characteristics 148
• Figure 7.16: Drivers of drug divesture 159
• Figure 7.17: Efficacy of divestiture based on product and owner characteristics 163

List of Tables

• Table 1.1: Revenues and patent expirations for selected companies' blockbusters, 2005 23
• Table 2.2: Selected indication expansions for US commercialized drugs, 2000-05 54
• Table 3.3: Selected reformulations for US commercialized drugs 74
• Table 4.4: Selected second generation launches for US commercialized drugs 93
• Table 4.5: Selected combination products introduced in the US, 1999-2004 94
• Table 5.6: Non-prescription drug classification structure by country 109
• Table 5.7: US switches, 1995 - 2005 112
• Table 5.8: Switch environment by country 115
• Table 5.9: Key events leading to Claritin's switch in the US 116
• Table 5.10: In-house OTC capabilities of major pharmaceutical companies 117
• Table 6.11: In-house generics capabilities of major pharmaceutical companies 136
• Table 6.12: US alliances between branded and generic manufacturers, 2001 -- 2005 138
• Table 7.13: Selected recent divestitures of US commercialized drugs, 2003 - 2005 162