Commercial Solutions

MODERN DRUG
COMMERCIALIZATION
How Pharmaceutical Businesses Can Optimize ROI
Using Data Analytics

Abstract
In today’s pharmaceutical market, it often takes more than a decade and an estimated
$2.6 billion to bring a new drug to market.1,2 The long development lead time results in
approximately 7 to 10 years of patent protection before generic competition launches.3
During those years, it is critical that an organization optimizes commercialization efforts
in order to get the most value out of bringing a new drug to market. Successful product
launches can help fund future research and development efforts and, ultimately, deliver
better care to more patients around the world. Historically, pharmaceutical companies
have failed to maximize their return on bringing a new drug to market. Some of this is due
to external, uncontrollable factors; others, however, can be influenced. This paper discusses
how companies can use data science and analytics to inform and shape marketing,
sales, and competitive intelligence strategies to help optimize efforts and capitalize
on investments.

1
Munos, Bernard, “The Ugly Cost of Developing Drugs—Can We Make it Prettier?”, Forbes.com,
http://www.forbes.com/sites/bernardmunos/2014/11/20/the-ugly-cost-of-developing-new-drugs-can-we-make-it-prettier/ (published November 14, 2014)
2
Tufts Center for the Study of Drug Development, “Cost to Develop and Win Marketing Approval for a New Drug Is $2.6 Billion”, csdd.tufts.edu,
http://csdd.tufts.edu/news/complete_story/pr_tufts_csdd_2014_cost_study (published November 18, 2014)
3
Mandal, Ananya, “Drug Patents and Generic Pharmaceutical Drugs”, News-Medical.net, http://www.news-medical.net/health/Drug-Patents-and-Generics.aspx (last updated September 8, 2014)
Commercial Solutions | Health and Life Sciences

Successful product launches can help fund future research

and development efforts and, ultimately, deliver better care
to more patients around the world.

Current Landscape
The pharmaceutical industry has experienced growth over the past 5 years, and has been
driven by an increased demand for products from both the growing elderly population and
the rising middle class in emerging markets. It is expected that companies capitalize on this
demand and continue to grow, though at a slightly slower rate of 3.3 percent over the next 5
years (compared to 5.4 percent from 2010 to 2015).4 However, despite this industry growth,
profits have declined over the past 5 years, and the trend is expected to continue. Declining
profits are largely attributed to an increase in competition, an influx of generic drugs entering
the market, and growing price pressures from governments and from insurance organizations
constricting reimbursement rates.

Therefore, today more than ever, it is crucial to maximize new and existing product potential in
the marketplace. One way of doing this is to focus on the commercialization of these products,
preparing for changes in external market factors and ensuring each product is taking
advantage of all revenue-generating opportunities. Looking at historical examples, it is clear
that this has simply not been the case.

Commercialization Pitfalls
There are many examples of pharmaceutical product launches that fell short of analyst
expectations. For some of these, the nature of today’s market is partially to blame (e.g., lengthy
regulatory approval process causing a new product to be second to market); however, many
failures are a result of misjudging and misunderstanding the market. In evaluating recent
pharmaceutical commercialization trends, Booz Allen Hamilton’s Health and Life Sciences
team identified three general trends among commercialization pitfalls (see Exhibit 1):

Exhibit 1: Pharmaceutical Commercialization Pitfall Trends

1 2
Unconvincing

3
Inadequate or Misguided
inaccurate value proposition execution
competitive (Segment, target, (Product, place,
intelligence position) promotion, price)

Competitive intelligence
Accurate, real-time, and relevant competitive intelligence is the foundation for success in
any market. Pharmaceutical companies invest significant resources conducting market
research. This research informs strategy, critical business decisions, product development
investments, and marketing plans. Having inadequate data and misunderstanding
competitor activity can critically hinder launch plans for a new pharmaceutical drug. It is
not uncommon for a pharmaceutical company to launch a drug when there is already a
comparable drug on the market at a fraction of the price. This presents a great challenge for

4
“Global Pharmaceuticals & Medicine Manufacturing Market Research Report”, IBISWorld,
http://www.ibisworld.com/industry/global/global-pharmaceuticals-medicine-manufacturing.html (published April 2015)
the new drug: physicians are unlikely to prescribe a higher-priced drug without significant
additional benefits, insurance companies are unlikely to support reimbursement, and
consumers and government officials may reprimand the company for trying to make more
money at the expense of patients.

Value proposition
Having a robust and meaningful value proposition is key for any drug to be successful. A
great value proposition requires diligence in segmenting the market appropriately, identifying
the key targets, and positioning the drug to appeal to the target population(s) within the
market segment. These pieces must be emulated in the value proposition. For example, one
pharmaceutical company developed an oncology drug that was thought to be superior to
their existing, in-market solution, initially supporting a much higher price tag. Once the new
drug was in use in the market, physicians did not see significant improvements to justify
the premium. The company, in response, offered a discount on their new drug. Segmenting
the market appropriately in this case by offering a discount on their previous offering and
launching the new drug at a more reasonable price point may have helped them avoid a
marketing mishap.

Execution
The execution phase of marketing is often where commercialization pitfalls have the
greatest impact. A strong execution is grounded in competitive intelligence. Without
being properly informed, errors can easily occur in any one of the four Ps (product, place,
promotion, and price). For example, a new drug’s high price tag must be justified by the
product claims (benefits), and mirror the market’s willingness to pay (patients, insurance
companies, government). This mismatch is no stranger to the pharmaceutical industry in
which new drugs that are priced too high result in significantly lower sales than projected.

By addressing strategic gaps and opportunities in these three areas—competitive

intelligence, value proposition, and execution—pharmaceutical companies can avoid
common commercialization pitfalls. The key to addressing these opportunities is equipping
the organization in robust data science and analytical capabilities that can be applied across
the commercial side of the business to inform strategy and business decisions.

Improving Commercialization through Data Analytics

Integrating data science and analytics through predictive intelligence, scenario planning, and
digital intelligence, can help pharmaceutical companies improve drug commercialization.
Additionally, pharmaceutical companies may actually be better poised for adoption of
these analytic methods than they think. Some leading-edge companies are already taking
advantage of analytics because they possess a wealth of data internally. When married with
external data sources, advanced analytic models help find insights that inform strategic
decision making on commercialization.

Predictive intelligence
Predictive intelligence pertains to extracting information from data and using it to predict
trends and behavior patterns. It is an effective tool when working to understand the market
and creating marketing and sales strategies that will yield desired results. Predictive
intelligence can be applied across businesses to help companies build, analyze, and
understand predictive models to enable dynamic business intelligence decisions. A
pharmaceutical company could apply this capability to help predict clinical trial outcomes.
Using sophisticated analytical techniques to understand the key drivers and inhibitors of
success of a clinical trial could ultimately help companies predict future product behaviors.
These behaviors include those that are expected to appear in future phases of a trial, as
well as in the market. As a result, a company could be better prepared for future events and
better understand drug effectiveness.
Commercial Solutions | Health and Life Sciences

Scenario planning
Scenario planning builds on the predictive intelligence capability by helping the organization
better anticipate and prepare for future events. Scenario planning begins with workshops
that combine market and competitive intelligence with company knowledge to develop
alternative future scenarios for exploration. This intelligence includes expected long-range
and emerging trends, which is then combined with company knowledge such as strategy,
current market performance, and investments.

These scenarios are tested, and plausible future scenarios are identified, to help a company
pinpoint key insights and recommendations on business strategy.

Scenario planning can also be applied across various departments at a pharmaceutical

company—from product development to market access—ultimately helping to solidify
successful product commercialization strategies. With such a dynamic marketplace, it is
imperative for commercialization teams at pharmaceutical companies to be prepared to
change course and execute on an alternative future when market factors shift in order to
capitalize on market opportunities.

Digital intelligence
Digital intelligence encompasses a wide range of capabilities used to help pharmaceutical
companies actively manage the market, competitors, and their own brands. This intelligence
can be portrayed into user-friendly, real-time, and historic dashboards to be leveraged
by employees across departments. For example, early warning systems and consumer
sentiment analysis can detect perception and reputation issues before they grow to scale,
have a negative impact on sales, or elicit regulatory action. Marketing mix optimization is
another application that can be refined as the impact of various scenarios are visualized.
Further, trend analysis can help guide strategic planning in current and future markets. There
are many other applications for digital intelligence, and its capabilities can be customized
depending on the user requirements. Digital intelligence enables users to be all over the
world, at one time, by listening to all stakeholders on a daily basis.

Conclusion
A product’s commercialization lifecycle can be a complex journey. Working to take full
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and how Booz Allen can support your success, advantage of the product’s benefits is critical to the success of the business. There are,
please contact: however, many market forces that require adjustments to marketing and sales strategies
throughout the lifecycle. By incorporating and integrating predictive intelligence, scenario
Robert Zambon planning, and digital intelligence into everyday commercialization activities, companies can
Senior Associate optimize and refine their commercialization strategies to help them maintain a sustainable
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