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Product Lifecycle Management: Create Value for your Product and a Future for your Company
The iPod. Compact fluorescent bulbs. Cell phones. The razor blade. What do these items have in common? All are examples of products that have been re-engineered through a manufacturing concept known as product lifecycle management, or PLM. PLM is not new. In fact, companies have been incorporating this principle into their manufacturing and marketing efforts for decades. Simply viewed, PLMs purpose is to better serve the current and future needs of an existing manufacturers customer base by improving the quality of life of the end user, adapting the product to meet the changing needs of the market and helping to achieve better outcomes. Properly executed, PLM can increase the shareholder value of a company For pharmaceutical and biotechnology manufacturers, PLM is critical, considering the enormity of the expense, time and effort it takes to bring a drug to fruition. Making the Most of Each Product Although PLM always played a role in the modern pharmaceutical and biotechnology industry, its importance has grown over time. In years past, companies concentrated most heavily on reaping the returns on their investment and developing the next products in their pipelines as earlier patents neared expiration. Today, however, pipelines have dwindled and the patent cliff looms for many best-selling drugs. The everincreasing expenses of development and marketing mean that companies need to get the most benefit out of alreadylicensed agents for as long as possible. Market Trajectory A new drug will typically enter one of two types of markets non-competitive or competitive each requiring a different strategic approach. In a noncompetitive market, a drug that is first in its class requires a quick launch, to
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meet patient/physician demand for a newer or better treatment and to beat potential competitors to the marketplace. However, once a drugs patent expires, the introduction of low-cost generics turns the market fiercely competitive. The importance of generic competition cannot be underestimated. Generics manufacturers whether standalone firms or divisions of innovator companies are in business to anticipate patent expirations. They have submitted their data to regulators well in advance and are ready to launch as soon as possible after the starting gun fires. Typically, by owning a period of exclusivity, the company first out of the box captures the market and collects the rewards. That is why manufacturers of branded pharmaceuticals and biotechnology drugs need to start PLM planning early so they can anticipate the anticipators and devise a counter-strategy. Staying Flexible to Meet Changing Market Needs When to start PLM planning depends on factors like the companys culture, therapeutic area, and the projected competitive landscape. In prior years, companies pipelines were robust with new and lucrative compounds that were quickly introduced to the market with very little thought given to PLM. Today, with many pipelines drying up, ever-increasing costs associated with research and development, and a far more competitive market for new products, many companies have changed their business models to focus on PLM planning as early as the clinical phase. Regardless of timing, flexibility is important. Changes in the marketplace or regulatory environment may prompt companies to reconsider a drugs design. As an illustration, approximately 10 years ago, US policy-makers suggested that one way to help lower Medicare costs would be for doctors to prescribe higher doses of a medication than a

patient actually needed, and then instruct the patient to split the tablets in two. But there were concerns about whether the tablets could be split precisely enough to yield two identical doses. Careful research found that some medications could indeed be split with less-than-exact precision, yet still yield two comparably effective doses. This meant that some medications theoretically could be made available in a larger, scored tablet. This case study demonstrates that a carefully crafted PLM plan might enable a company to anticipate changing market needs and be prepared to quickly meet them conferring an earlier advantage to the innovator. Industry Attitudes PLM is quickly gaining increased importance in the pharmaceutical and biotechnology industry, as it can play a significant role in the success of a product. Most pharmaceutical executives agree that PLM, particularly when incorporated early in the planning process, can not only boost a products chances of success, but can also help save costs. Components of an Optimal PLM Strategy Pharmaceutical and biotechnology firms can use various combinations of the following PLM tactics, depending on the product and its market. New Geographical Markets Seeking product approvals across appropriate international markets may be the most straightforward way to extend a products lifecycle. To be successful, the company must incorporate a carefully honed regulatory strategy into its development process, based on in-depth knowledge of different markets regulatory requirements, and keep abreast of changing standards. New Indications Using the same drug to treat different
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conditions allows the drug to reach entirely new markets. Recently, it was announced that a well-known wrinkle reducer is being considered for approval in the United Kingdom for the prevention of chronic migraine headaches, with a likely US approval this year.1 Product Redesign Reformulating a drug can be another way to extend a products patent protection, as well as potentially making it more appealing or user-friendly. Take oral medications, for example, which averaged nearly 65 percent of the pharmaceuticals market (value in US dollars) from 2001 2009, according to IMS Health. Different doses of the same tablet or capsule can be colour-coded, making it easier for both patient and pharmacist to distinguish dose strength, and potentially prevent medication errors. For tablets that some patients find taste bad or are difficult to swallow, a coated formulation can be developed, or the drug can be redesigned as a capsule. Developing extended-release formulations reduces the frequency of dosing, which not only enhances convenience but may help some patients maintain compliance with their medication schedule. For some patients, a well-scored, easily split tablet with evenly distributed active ingredient provides cost savings while not compromising effectiveness. Features like coatings, colours and robust scoring offer an additional benefit: they are relatively expensive for the drug manufacturer to provide. That means generics firms, which compete almost exclusively on price, offer such luxuries less frequently. Coatings are rare, and scored tablets may crumble when cut without using top-of-the-line capabilities. Should the innovator company decide to take its drug generic at generic prices
Figure 1: Introducing a new drug will require one of two approaches, depending on whether the therapeutic marketplace is non-competitive or competitive. In either situation, early product lifecycle management is important to long-term success.

after patent expiration, it offers value to patients that competitors would find hard to beat. The incremental costs of providing such benefits would be built into the products price over the lifetime of the drug. When an innovator introduces an improved version of its drug, it does so for one of two reasons: 1. To offset inevitable generic competition with a version generics firms couldnt afford to manufacture themselves, or 2. To offset competition by another innovator company that has a new but similar compound. The sleep aid market offers a fine example. In 2005, a new controlled release version of a popular sleep aid was launched in the US by the drug originator. Although the original version of the drug was successful and continues to be marketed, its patent was due to expire. The new version of the sleep aid is being marketed as the first and only extended-release prescription sleep medication. This new version has a long patent life due to the extended-release technology, and is more expensive to manufacture. User Comfort How a drug is administered that is, its delivery system is a key part of PLM. To make good choices means really understanding the current state of the market and emerging trends. Knowing a drugs intended patient population is an important first step. Today, conditions that require long-term or chronic care are being managed more and more through homecare programmes. This suggests that pharmaceutical and biotechnology manufacturers should use the most patient-friendly formulations and drugdelivery systems possible. Injectable drugs which comprised

almost 25 percent of the pharmaceuticals market (value in US dollars) between 2001 and 20092 present distinct PLM challenges. If a company first introduces a drug using a vial/diluent system, because it is the quickest way to bring a much-needed drug to the market, it may decide that switching later on to a system like a prefilled syringe or cartridge/pen will provide added benefits. For example, managing conditions such as rheumatoid arthritis and diabetes increasingly requires that patients self-administer their medications. Another example of patient-friendly packaging is the dual-chamber syringe, which allows lyophilised drug to be packaged along with its diluent. Such a system allows the end user, whether patient or caregiver, to reconstitute and administer the drug with one push of the plunger, rather than needing a clinic-based nurse to mix and inject it. The system may also help prevent medication errors by providing an accurate prepackaged dose. Other enhancements to injection systems, such as anti-needle-stick features and anti-counterfeiting measures, also benefit the patient. Following Technical and Marketplace Developments To manage a products lifecycle as effectively as possible, a company needs to apply technological and marketplace insights, which requires following key trends, including: The demographics and characteristics of the target patient population, along with their needs and preferences Whether a drug is likely to be administered in the home by the patient or family member, or in a clinical setting by a healthcare professional. Adapting a PLM strategy quickly
Options Launch first-in class product as quickly as possible Introduce simple administration form first Develop alternative versions in parallel Establish unique selling point(s) Cost User-friendliness, e.g.,
Coatings Colors Extended release Auto-injection/pen Dual-chamber syringe

Market situation at time of launch Non-competitive market Significant need for medication No competitive drug on the market

Product lifecycle management

Competitive market

No urgent need perceived for this version of medication Competitive drugs already on the market

Improved molecule

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in response to new marketplace developments is one key to long-term product success. Pricing Strategy Regulation and price are tightly interwoven. Governments are continually looking for ways to increase quality of care while reducing costs. Staying on top of pricing trends and concerns among regulatory bodies is critical. Even in countries such as the United States that have no formal cost controls in the private market, they exist nevertheless. Whether governments or insurance companies impose controls, pharmaceutical and biotechnology firms must prove their product worthy to be put on formulary for reimbursement. Pricing strategy is key to any PLM plan. Points to consider: Is the product novel? Does it improve management of the disease its meant to treat? Does it offer advantages over existing products? How urgent is the need for the product, and for how many people? Is it best to seek a premium price, due to the need and utility of the product, or to price it competitively with other, lesser products, to make quick inroads into the market? Robust scientific and carefully designed pharmacoeconomic studies will help convince regulators and purchasers that the product is priced appropriately. An auto-injector, for example, may cost more per unit than less sophisticated systems. But if a patient can inject herself at home, rather than racking up expensive office visits, or can avoid a hospitalisation because prefilled dosing prevents medication errors, the more advanced technology may demonstrate cost savings (this argument is particularly challenging when publicly traded insurance companies feel pressure to show quarterly rather than long-term results to justify their financial decisions to shareholders). Maintaining Both a Short and a Long View for Successful PLM To maintain a drugs clinical value and marketplace profitability pharmaceutical and biotechnology companies should incorporate PLM into their products development from the earliest point possible. Waiting until competing products have reached the market will be too late and will shorten a drugs viable commercial life. Easier, safer, more patient-friendly dosing, packaging and administration can be achieved only by carefully planning. These advantages position the company to continue to market a beneficial product while developing its portfolio and pipeline. Finally, dont underestimate the power of a trusted brand name. Patients who do well on their drugs dont want to switch to a no-name generic. Securing customer loyalty will serve companies well that decide to take their branded drug generic post-patent. Marketing strategy is an integral part of an effective PLM plan n References 1.U.K. Approves Botox for Migraines, The Wall Street Journal, July 9, 2010, http://online.wsj.com/article/SB100014 2405274870407560457535690033052 5706.html?mod=djemHL_t 2. IMS Health Max Horn has been a Managing Director of Vetter PharmaFertigung GmbH & Co. KG since November 2002. He joined the company in 1981 after graduating from the German Academy of Business and Administration in Ravensburg, taking a position in the finance department. Four years later, he became head of the department and in 1993 assumed the position Director of Controlling. Max Horn was named Vice President of Controlling in 2000. Email: info@vetter-pharma.com

Making products more user-friendly can be part of an effective PLM strategy. Pictured below, the dual-chamber syringe holds the lyophilised active drug in one of its chambers, the other the diluent. The contents of the two chambers are combined directly before administration. This all-inone concept increases dosage accuracy and ease of administration for the end user, whether patient or caregiver.

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