Firms Spend Up To $500 Million In Marketing For Mega-Launches

Until recent years, a drug that exceeded $500 million in annual revenue within three to five years of launch was considered a home run. But mega-launches such as Lipitor, Celebrex, Vioxx and Viagra--all of which produced upwards of $1 billion in their first 12 to 18 months--have raised the bar big-time.

And it has not been lost on big pharmaceuticals companies that earlier, more consistent and much more robust investment in sales and marketing were key in pulling off these blockbusters. As a result, they are now spending between $100 million and $500 million on marketing activities for high-potential drugs during the period spanning five years prior to and three years following a launch, according to a new white paper from Best Practices, LLC, "Launching a Blockbuster: Making and Marketing Mega-Brands."

Over the past 36 months, Best Practices, a research and consulting firm focused on improving companies' performance, conducted a series of benchmarking studies that examined the practices behind more than 20 blockbuster products from more than 15 companies.



In addition to pharma players taking much bigger risks in pursuit of commensurately higher payoffs, the firm highlighted two other major trends:

Marketing and sales operations can add or subtract billions of dollars in the lifetime value of high-potential drugs. The case studies confirmed that marketing and sales exert enormous influence on a product's shaping, positioning, sales uptake and ultimate market performance. "Recent pharmaceutical launches are littered with products that had hopes of becoming blockbusters" but failed to meet expectations because of insufficient focus on and support of sales and marketing, state the researchers.

Launch operational issues are more complex, and span a multi-year time frame. Marketing's now-essential role in market-focused development of drugs, and its increasing complexity, require increasingly early involvement in the process.

Marketing support activities for some of the current generation of mega-launches commenced as early as seven years prior to launch. Today, the marketing team must coordinate, over a long span of time, activities that include global work groups, diverse departments, geographically scattered thought leaders, distributed facilities and multiple countries.

All companies with successful mega-launches shared the best practice of aligning marketing resources to provide early, ongoing and consistent support throughout the product development and launch cycle. The new-product planning teams allocated resources (people, dollars and time) early, provided support consistently throughout all phases of the development process, and invested significantly in high-potential products. These companies "don't evenly distribute resources across all products in the pipeline," reports Best Practices.

"Resourcing is a critical predictor of product success," commented one veteran pharma executive. "While managers don't want to encourage wasteful spending, they should seek to give products with the greatest likelihood of major commercial success adequate resources to support all marketing activities, including early and ongoing market research, continuous thought-leader development, speaker programs, journal publications, advisory boards, samples and supplies."

Top performers also developed rigorous resource allocation/timing processes, spending between $7 million and $35 million on market research for high-potential products; $24 million to $105 million on thought-leader development; $47 million to $235 million for marketing activities; and $14 million to $70 million on sales force support.

"What matters is not just how much you spend, but also when, where and how you spend," said one pharma marketing manager.

Other critical best practices identified include:

Ensuring commercially focused drug development by integrating marketing and R&D. "Marketing personnel are keen on building market share and influencing key customers and thought leaders, while clinical people tend to focus on the efficiency of clinical trials and bringing the product to market as soon as possible," noted one brand manager. "Aligning these two sets of goals is critical." Successful companies employ cross-functional teams, structures and processes, among other integration strategies.

Developing integrated thought-leader management systems. Conducting advisory panels and conferences are standard, but too often, thought-leader insights and feedback are gathered after clinical development protocols are set, according to the research. Losing the opportunity to have thought leaders' insights shape development to match market needs is "a key stumbling block" for product launches, the report stresses.

Employing broad-based market research to understand market dynamics. Market research is now an integral part of ensuring that clinical development is anchored in market needs. "Pre-launch marketing investment works like a 401K," said one senior marketing director. "Small sums, invested early, will compound over time with amazing results."

Building sales force support. Building and gaining buy-in from the sales team may be obvious, but it is the "Achilles heel" of many a drug launch, according to the study.

In contrast, a major factor in the success of Celebrex was that co-promotional partners GD Searle and Pfizer Companies engaged in extensive sales force preparation and support.

Companies that achieved successful mega-launches began communicating with and involving their sales teams early on, and engaged in "carefully orchestrated" activities during the 12 to 18 months prior to launch. Communications ranging from information about product potential to sales incentives plans were used to build pre-launch awareness, education, excitement and commitment to the product among sales reps.

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