Patent, pricing, production, and partnerships – these are the four Ps that companies must keep front and center for a successful market entry. Orexo’s CEO Nikolaj Sørensen answers some questions about how his company addressed these aspects when Orexo entered the US market.
Although Orexo has successfully entered into the US market, you have been quite transparent about the challenges that this has entailed. Could you share some pitfalls with us?
“The challenges are immense, and I believe they are often underestimated. Apart from the internal challenges of developing a competitive product and meeting formal requirements from the authorities, you need to be ready to face all sorts of attempts to throw you off course. In Orexo’s case, we eventually succeeded in a long patent litigation.”
“Another significant pitfall is around pricing and reimbursement – I have worked ten years with the US market and I am still in a learning mode to understand the US pricing and reimbursement dynamics.”
“This has of course influenced me significantly and my strong advice is that before you enter the US market you need to carefully analyze if you have the muscles to protect your patent rights. Another significant pitfall is around pricing and reimbursement – I have worked ten years with the US market and I am still in a learning mode to understand the US pricing and reimbursement dynamics. The US market consist of multiple different pricing and reimbursement systems and the list price, which tends to be high in the US, is never the net price you will get paid.”
“In addition, if you have competitors with products with similar clinical profile, it adds a competitive dimension where you need to understand how easily competitors can out-maneuver you from the market. To give an example, incumbents in the market will make long term rebate agreements with payers prior to the entrance of a competitor. This can delay your access to certain parts of the market for years unless you have very convincing evidence of superiority of your products.”
So, that touches upon two of the four market-entry Ps –pricing and patent. Patent protection and IP is obviously something which ought to be in place early on. How can you prepare for this?
“I am sure all companies are well aware of the need to get patent protection and are working actively with advisors to secure this. However, in my own experience, even top international patent advisors have rarely been directly involved in actual patent litigations in the US, and a patent litigation is very different from getting a patent approved. In a litigation process your opponent will seek flaws in your argument. They will scrutinize all relevant external and internal documentation from the development process, and they will read it through the lens of what will benefit them in court.”
“As a patent litigation seems to be inevitable for successful pharmaceutical products, it is essential to be prepared and ensure all documentation from early discovery to approval is ready for scrutiny. To give an example, it is natural to discuss pros and cons for certain patent claims with your internal colleagues before making the patent application, but an e-mail from a developer questioning the strength of a certain patent claim will certainly be used against you in court.”
“Another area which I believe is often forgotten in early discovery is that scientists named as inventors of a patent will eventually be part of a deposition and even court hearings.”
“Another area which I believe is often forgotten in early discovery is that scientists named as inventors of a patent will eventually be part of a deposition and even court hearings. It might feel tempting to recognize the contribution of all scientists involved in the innovation process by adding them as co-inventors of a patent, but this also expose them and the companies when they will be forced to be part of a litigation process and face depositions and court hearings in the US.”
What else is easily overlooked in the market entry to a US market?
“The third P is production – which in my experience has been one of the main risks and causes of delays in approval by the FDA when we have looked at product-acquisition candidates. One common mistake is for senior management to almost exclusively focus on the drug candidate and the clinical evidence for the product, and give much less attention to all the other issues to handle to ensure your product meets FDA’s quality standards. This includes how to build a quality assurance system, or who to partner with for manufacturing, how much control to outsource to manufacturing partners. Even practical matters such as what IT support tools to use can cause serious issues when approaching final approval and launch of the product. As an example, most cloud-based ERP systems are not compliant with FDA’s requirement for the supply chain management.”
“One common mistake is for senior management to almost exclusively focus on the drug candidate and the clinical evidence for the product, and give much less attention to all the other issues to handle to ensure your product meets FDA’s quality standards.”
“You need to address the whole spectra of challenges that comes with market entry and not just the ones related to the science, although that is of course the very foundation for having something to put on the market in the first place. But we tend to focus too narrowly on that, and these other aspects are rarely gaining similar attention.”
So what should be done differently?
“There is not one single answer for all companies, as the challenges are very different on all of the four Ps, depending on the type of product. However, this is also the answer to the question – to have a strategy and deliberate discussion with senior management and the board of directors around the product profile, patent, pricing, and production strategy early in the process. This will be a good start and will reduce the hurdles and headaches when you approach commercialization.”
“The most important success factor is to ensure you have the right people in place.”
“In the end I believe the most important factor is to recognize the complexity of all aspects of a product life cycle. The most important success factor is to ensure you have the right people in place. When a company is entering a new step in its evolution, you need people who have relevant experience – for example you can be very smart and successful from commercialization in Europe, but this carries limited value when entering the US market.”
Partnering is the last of the four Ps – to partner up with the right actors to actually sell what you have developed is one of your most important decisions. Being a small fish in a big ocean is tough, and several Nordic companies are looking to partner up with larger actors. What advice would you like to give to a CEO currently developing their sales-organization strategy for the US market?
“I have full respect for companies who take on the challenge of building a US presence and take responsibility for the commercialization of their products. This is the only way to keep most of the value created by successful products in-house, and enable the financing of future pipeline projects. Unfortunately, this is an area where Sweden is weak – Denmark and only a few Swedish companies have taken that step the last two decades. To build a commercial presence is also associated with high risk and very few commercial launches are profitable the first three years, so financing of the company is essential. And the only thing that is certain is that the launch will never go as planned.”
“And most importantly, engage with people who have done it before and who knows the US market from the inside.”
“My main advice is to be prepared, make a thorough market analysis of your product’s strategic market entry options and ensure the board of directors are aware and supportive of the investments needed. And most importantly, engage with people who have done it before and who knows the US market from the inside.”
Orexo has successfully navigated its way into the US market and is now looking to expand to Europe, what would you say are the main differences in how to approach market entry in the US and Europe?
“The regulatory landscape is completely different, with MDR and IVDR now coming into play for instance. Regardless of which market you turn to, you need to build up a close relationship with key stakeholders locally. From that perspective, Europe is more complex, with each country having their own ecosystem defining the route to market access.”
“Regardless of which market you turn to, you need to build up a close relationship with key stakeholders locally.”
“For these reasons Orexo has decided to partner with a company with presence in all markets in Europe rather than building our own commercial infrastructure.”
Photo of Nikolaj Sørensen: Jenny Lagerqvist/Orexo
This article is published in collaboration with SwedenBIO