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Early business strategy to optimise a new drug’s product differentiation & chances of market success

By: Sven Undeland, FHC Undeland, and PCG Clinical Services 

Drug development is a huge investment for small and large pharmaceutical companies, that is both lengthy and risky. Reducing time to market and increasing the chances of a drug’s success are essential for pharmaceutical companies of all sizes. The majority of drugs fail due to their biological or chemical behaviour, but even safe and effective drugs can fail on the market if they are not adequately differentiated. This article reviews the benefits and competitive advantage that can be gained early in drug development through defining a Target Product Profile and incorporating business-led strategy into the design of the clinical programme.

Introduction

The high costs and high failure rates of new drug development are well documented1. It’s accepted that significant investments have to be made for pharmaceutical companies to investigate each new drug’s biological actions, efficacy, and safety. However, even after a drug has been approved for marketing, there can be considerable additional development costs1,2, and the relative success of the drug will ultimately depend on its differentiation to drive market adoption and pricing. Furthermore, the sponsor has only a limited amount of time (normally 10-15 years) to recoup its development costs – which are likely to be in the region of $2.5 billion2 – before the patent expires and generic versions become available to the market.

During early clinical phases, sponsors tend to focus on meeting the regulatory requirements to ensure regulatory approval. As a result, they may delay assessing the candidate drug’s likelihood to gain market access and pricing strategies until it is closer to meeting marketing approval. However, by taking these factors into account earlier in the process i.e., pre-Phase I –pharmaceutical companies can gather valuable intelligence about the unmet medical need, pipeline, payer’s requirements and more. Such information is vital for ensuring the proposed product will be well differentiated in the market place. The findings, in turn, are beneficial for optimising the aims and design of the clinical study, as well as the business strategy. Ultimately, this approach could increase the chances of the drug’s success during trials as well as in the market place.

Defining the Target Product Profile

A useful tool for such a business-driven strategy is to define a compound’s Target Product Profile (TPP). The TPP is a planning document that was introduced by the FDA in 1997, to provide a format for discussions and “efficient dialogue” between a sponsor and the FDA, throughout the drug development process3. The TPP therefore focuses on the overall aim of the drug development programme along with the goals, which represent the intended labeling concepts. The TPP details the specific studies objectives that will be carried out to support these overall goals, thereby guiding the clinical trial design, conduct, and analysis. In turn, the authority can see clearly what the sponsor aims to achieve and may offer advice concerning the proposed trials during different stages of the development programme.

The document helps to streamline talks between a sponsor and the FDA by ensuring discussions are focused on the sponsor’s stated goals. The FDA has identified that a TPP can be particularly useful for pre-new drug application (pre-NDA) and pre-biologics licence application (pre-BLA) meetings3. The TPP document is typically dynamic, being updated during the development programme as new information about the drug, market, and competitors are obtained, to support further discussions with the regulatory authority.

It is not mandatory to complete a TPP by FDA, yet many pharmaceutical companies have adopted similar tools within their routine planning processes. In addition to facilitating discussions with the regulatory authority, the TPP is a useful shared resource that helps relevant parties to remain focused on the programme’s goals. However, TPPs seem to be less commonly used within smaller pharmaceutical and biotech companies.

Competitive advantage through early differentiation

An important benefit of completing the TPPs is that the sponsor clearly thinks through the intended use and product differentiation, prior to planning the clinical trials. Ideally, this process should involve comprehensive market analysis and assessment to define the clinical needs and business opportunity for the product (see figure1). This research is vital because the potential success of a drug depends not only on its biological effect and efficacy but also on its ability to improve upon current standards of care through addressing unmet needs. The market analysis should, therefore, include analysis of current standards of care for the candidate drug’s proposed indications, as well as intelligence from competitors’ existing and pipeline products. This analysis phase should also assess existing products’ patent expirations and discussion of current pricing trends with the potential payers.

Talking to the payers in order to understand their priorities can also be extremely useful. Drug development typically focuses on meeting regulatory approval, but meeting the payers’ requirements is also very important. Without a suitable pricing strategy and adequate market access, even the most efficacious drug is unlikely to succeed. Payers’ needs often relate to public health and economic benefits, these are guided by their healthcare systems and influenced by politics; they are also restricted by regional budgets4. Payers typically require evidence of the product’s differentiating value for the customer, in addition to the safety and efficacy data. By considering the payers’ perspective during early planning stages, it is possible to develop a more realistic product opportunity that will form the pricing strategy and help to increase the chances of the drug’s market success.

Figure1. There commended steps to identify the unmet needs (1), defining the TPP (2) and understand the product value (3), which together form a comprehensive business strategy

3steps to developing Target product profile

 

Reassurance for potential investors

Once the market analysis has been completed, a well-informed TPP document can be developed along with a realistic pricing strategy. These in turn support business planning and can help with placing a value on the product, sales forecasting and risk management. Many drug developers require investors/partners to help take the product through late stage clinical trials, or may consider in/out licensing agreements. Such deals could be expedited if the sponsor has completed thorough market analysis, product opportunity assessment, TPP and business forecasting prior to the clinical research (Figure 1).

Ideally, having the TPP in place helps sponsors to confirm their research is on track to meet the intended goals. However, it is not unusual for drug developers to discover during early research that a compound is actually more suitable in a different indication. Therefore, when planning the clinical programme, sponsors do not need to be restricted to one TPP per candidate drug. Having several TPPs in place could help to identify new opportunities, as well as aid in go/no-go decision making.

Conclusions

In this highly competitive, costly and risky industry, product differentiation, sound business planning, and streamlined clinical programmes are key to improving the chances of a new drug’s success. A new drug needs to meet not only the safety and medical efficacy requirements, but also have a clear differentiation and fulfill the payers’ criteria. Sponsors should ensure their compounds will meet these needs through comprehensive market analysis and development of the TPP, before beginning clinical research. This requires collaborative efforts between the commercial, regulatory, medical, and clinical teams. This approach also provides valuable data for the business and commercialization plans, as well as for potential investors.

 Finding a CRO with expert TPP development and strategic business planning advice can help companies to identify the optimal market opportunity for their treatment, prior to planning clinical research.

 

References  

  1. Tufts Center for the Study of Drug Development. Outlook 2015. Available from http://csdd.tufts.edu/files/uploads/Outlook-2015.pdf (Accessed January 2017.)
  2. Mullin R (2014). Drug R&D costs take big leap. Chemical & Engineering News 92 (47): 6.
  3. US FDA (2007). Guidance for industry and review staff: Target Product Profile – a strategic development tool. Available from: fda.gov/downloads/drugs/guidancecomplianceregulatoryinformation/guidances/ucm080593.pdf (Accessed March 2017)
  4. Schoonveld E (2011). Think like a payer. PM Live, 24th Available from: http://www.pmlive.com/pharma_news/think_like_a_payer_275432 (Accessed March 2017)

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