CONFIDENTIAL,Pharmaceutical Life Cycle Management (LCM),Client workshop,June 2001,Todays discussion,*Footnote Source:Source,Key elements of Life Cycle Management,Thoughts on how to organize for LCM,Key issues,1,Life Cycle Management,Life Cycle Management is largely about building brands over time by incremental investments in value creating activities to maximize the value of a compound,Objective,Building a business based on a great product idea/brand not just launch an innovation,Mindset,2,LCM requires a commercial mindset,Setting ambition level,Shape the product,Shape the market,Shape the company,3,LCM requires a commercial mindset,Setting ambition level,Early cross functional agreement on vision for the product (target label) Invest with a venture capitalist mindset Deliver against timeline Focus on what is important Continuously enhance competitive differentiation Clinical development entirely focused on value creation (e.g., most important indications),4,LCM requires a commercial mindset,Setting ambition level,Shape the market early and actively Clear and consistent messages in communication/PR strategies Recognize regional differences in key markets Clear and broad perspective on resources required to shape the market Ensure tight link between R pink sheets; 10-K; Morgan Stanley analyst report (7/98); McKinsey analysis,Worldwide salesUSD billions,Lipitor* (with WL),Zoloft,Viagra*,Norvasc,Years after launch,Lipitor (97),Norvasc (90),Viagra (98),Zoloft (90),Years after launch,Number of countries*,11,Marketing investment becoming more aggressive,Lipitor,Pravachol,Cumulative US details Thousands,Years from launch,Years from launch,Source:Sales and details from Scott Levin US,Cumulative US sales USD millions,Lipitor (1997),Pravachol (1991),Projected,12,Many large pharmacos are still in the process of adopting this tool,Dynamic marketing model,13,Physician is aware of new drug,Physician considers new drug,Physician differen-tiates new drug from old drug,Physician tries new drug,Physician endorses new drugs for patients with unresolved symptoms,Physician endorses new drug for all old drug users,Few, if any, unmet needs No long-term safety profile,Believes that new drug efficacy is not significantly superior to that of old drug,Lack of samples,Lack of experience with new drug; prefer true and tested drug New drug is not on many formularies/ physician does not want to deal with MCO callbacks,Physician does not want to switch patient who is stable on old drug Not all patients respond well to new drug New drug is not on many formularies New drug does not have full range of indications,Example of physician decision funnel,Bottle-necks,ILLUSTRATIVE EXAMPLE,14,Publication volume is important in differentiating drug products,Source:Cited reference science database, various marketing/sales database and publications,Diovan (Novartis) launched in 1994 oneyear after Cozaar (Merck) with a higher efficacy and better tolerated drug; however, Cozaar was able to leverage a 532x greater publication volume to beat Diovan,Sales,USD millions,Cozaar,Diovan,0,250,500,750,1000,1992,93,94,95,96,97,98,2Q99,Cozaar,20,220,420,620,1992,93,94,95,96,97,98,Diovan,Number of citations,Correlation between drug sales and publications,15,Master planning chart,Top level milestones,EXAMPLE,Process,Disease orientated,Updated disease orientated,Final disease orientated,Initial project specific staircase,Refined based on market research and trial results staircase,Final pre-launch,Only if issues/LCM*,MS1,MS2,TG1,MS4,TG2,TG3,TG4,MS8,Global marketing,Target label,Positioning,Branding,*Updated annually,Broad initial,Updated as CD is elected,Updated based on develop-ment studies and focus groups with KOLs,Final pre-launch based on market research and clinical trials,Reposition if necessary,Initial very preliminary,Updated based on market research and focus groups,Final pre-launch based on input from markets and trials,Rebranded only in unusual situations,Covers key dimensions Product development Global marketing Product supply Patents Etc. Top level milestones and more detailed activities,16,Best practice targets for ”extend” phase,17,Examples of product extensions,Patient based innovation,Safety/tolerability profile,Line extensions,Pharmacoeconomic,Further/expanded indications,New indication,18,Examples of product extensions,Ways to create product extension,Description,Examples,19,Capturing benefits of continued research,Source:UK office of Health Economics/Market letter June 13, 2001,25-40% of sales of top selling drugs in UK/USA are for indications discovered only after the drugs were launched,20,Impact of new indications,Experience shows Substantial spillover effects from being first company to launch indication First mover can get up to 10% more market share even where off-label exists The follower running the same indications usually is not able to improve his mark