Balancing act: aligning competing strategic objectives in turbulent times

IMS-balancing-act

In Spring 2010, IMS Health detailed how the pharmaceutical industry’s coming challenges will force dramatic change on how products are commercialized and managed once in market. While many industry leaders have started assessing the process, pharma executives have a complex agenda for 2011. At the top of the list is a common objective to develop New Commercial Models (NCM) that offer greater effectiveness, as well as increased efficiency in promotional spend and strategies. Furthermore, many are also balancing sometimes competitive strategic objectives, the most common of which are:

• Achieving Launch Excellence - ensuring that what is in the pipeline is optimally launched in new market realties and managed to commercial return;
• Securing the Right Exposure to the Pharmerging Markets - aligning the organization's current and future strategy across new markets while addressing major markets that are flat to declining in opportunity;
• Identifying Solid Sources of Growth - positioning the organization so that, as the market returns to growth after the patent cliff, commercial, R&D and investment decisions today are properly aligned to future needs.

For example, consider organizations that are addressing both the need for an NCM and the desire to optimally launch products.  A key for these organizations is that they are generally not considering both initiatives simultaneously.  This can result in one of the initiatives overshadowing the other, or for both to be dilutive to the company's overall success.  Common implications of this disconnect include:

-      Launches that are constrained and less effective, as the commercial model is in flux or can no longer support the brand strategy;

-      Misappropriated launch investments, requiring the company to build or buy essential services that internal resources can no longer support , driving up overall expenses;

-      And, an NCM effort that is delayed or derailed within a company due to a short-sighted focus on critical launches.

From IMS's research in the areas above and among our clients, it's noteworthy that most companies face simultaneously evolving NCMs while effectively managing a good deal of launches.

Best Practices: NCM Development and Launch Excellence

Through extensive research, IMS has defined best in class strategies for NCM development and Launch Excellence.

New Commercial Models:  5 Key Building Blocks

1.  Landscape Assessments:  Understand the Market Realities of the Future - Companies that have not yet fully determined their future direction should develop a common point of view on how the healthcare environment will change over the short- and long-term.  Essential to this is recognizing how power will shift among key stakeholders for a given therapeutic class in a given geography.  Companies are most successful in performing this analysis when they properly plan and fund the collection of information, maintain corporate or best-in-class frameworks across geographies, and execute in parallel with local market resources.  To be accurate, the analysis must have full participation from therapeutic and functional experts and across business functions.  In most cases, this means a good deal of pre-work, teamwork, and execution within each local market.

2.  Strategic Planning:  Articulate the Implications for the Business - Companies that have already established the commercial context in which they will operate need to assess the timing and importance of various trends and events.  The ideal method of devising a commercial strategy is to hold a series of organized and integrated planning sessions with representatives from all disciplines across the commercial organization.  Conducting smaller meetings between representative disciplines and stakeholders can result in a better solution and a stronger roadmap as the group comes back together.  The group should follow a pre-defined process that includes reading and reacting to prepared materials and thinking outside the "box" imposed by current roles, capabilities, and other organizational barriers.

3.  Capability Assessment:  Support the New Strategy - Any change in a company's commercial strategy also directly affects a wide range of capabilities within the organization.  Depending upon the types of changes implemented, companies may need to build or amend their marketing, technical, motivational, knowledge repository, reporting, and analytical capabilities, among others.  Rather than tackling drastic, sweeping changes all at once, companies are finding it more manageable and ultimately more successful to make incremental changes to their commercial capabilities.  Once the supporting capabilities are in place, they can gradually evolve their traditional approaches to deliver a return on their investment.  A well-structured commercial blueprint with logical priorities, coupled with a roadmap to the future and proper key performance indicators (KPIs), is at the core of successful initiatives.

4.  Organizational Design and Development:  Organize to Support the Strategy - For companies that have designed their blueprint and envisioned the required capabilities, the task at hand is to organize the change required to support the implementation of the new strategy.  They must consider the structural implications (the organization, roles, and responsibilities) as well as non-structural implications (processes, tools, skills, and knowledge).  Companies often underestimate the effort required to drive even step-wise evolutionary change.  IMS sees companies make the most progress planning their new organization and supporting processes when they bring together people from geographical management, brand leadership (sometimes with emerging P&L responsibilities), and those in charge of new service strategies.  In the end, most strategies will cross all of these stakeholders in different contexts.

5.  Execution and Performance Management:  Make Changes and Track Progress - For many companies, this is where the strategy meets its doom, for as the roadmap is sent down the line to be implemented, it is quickly dismantled due to budget limitations, technological deficits, and other "unnatural" boundaries.  IMS recommends that companies implement and support a thoughtful, change-management program not only for the macro transformation, but for the smaller components as well.  In addition, IMS recommends that organizations rely on change agents at the regional and local level; follow the overarching plan (but do not be afraid to move slowly when needed); assess progress often, as managing expectations is critical while pilots and other implementation aspects take place; and realize that there is no such thing as "over communicating," as communication is a primary tool for ensuring alignment and inspiring acceptance throughout the organization.

Figure 1            Strategy Building Triangle

Achieving Launch Excellence

The global launch environment continues to change, and in many ways, has become more challenging for launches.  There's an ongoing shift in power among stakeholders, with decreasing influence from prescribers.  These stakeholders have expanded the criteria by which they assess new products and have generated requirements for stronger and broader levels of evidence.  To engage these stakeholders, companies have expanded business functions, which has, in many cases, exacerbated existing organizational disconnects.  As a result, IMS has found that launches, even the best ones, are not doing as well as those in previous years in terms of early market share.

Companies are acknowledging, but not yet consistently responding to, the new demands of the changing launch environment.  IMS research has identified three recurring themes that are common to every excellent launch and which we believe will be the key to future launch success.

1.     An Aligned and Prepared Organization - Misalignment can occur at the functional as well as the geographic levels and can turn a potential winner into an also-ran.  Common goals, shared incentives, and earlier launch preparation are essential.

The importance of organizational alignment has been central to the findings of IMS launch excellence studies, underscoring its pivotal role as a driver of success.  At its simplest level, alignment means that the various functional and geographic elements of a company are working together in harmony, with common goals, on the launch.  This may seem obvious and straightforward.  Yet both our quantitative analysis and our qualitative research suggest that lack of real alignment for launches is very common and achieving it is very difficult.

A far from trivial issue, misalignment has the potential to create:

• Inconsistent performance between countries. Launches continue to show great variation in performance across countries. Much of this is avoidable and translates directly into lost revenues at a global level.

• Launches that are ill-prepared for today's commercial environment. Products may gain regulatory approval but fail to optimize market access because the value proposition for payers has not been properly created.

• Confusion among external stakeholders about the target patient group, the key messages and value and role of the product. This is often a consequence of internal confusion on positioning and value proposition.

• Internal lack of clarity or conflict about the market potential, critical success factors, performance expectations and benchmarks for the launch.

2.     A Powerful and Pertinent Value Proposition - Successful launches are powered by compelling demonstrations of value, drawn from evidence generated that addresses disparate stakeholder needs.  Gaining advocacy, approval and market access requires a powerful and pertinent value proposition that appeals to both regulators and payers.  This increasingly means meeting disparate - and possibly contradictory - needs.  Our research suggests that companies are facing the growing dilemma of finding the right balance between regulatory requirements for trials versus payer expectations from trials, as well as trial investment (for the same label) pre- and post-launch.  Companies should:

• Invest in creating clinically demonstrable differential advantage over existing gold standard therapy. Companies must invest in building trial programs that enable the creation of value propositions which meet the needs of different stakeholders. Trials must be designed with sufficient patient numbers to satisfy regulators on safety, and the potential for sub-analyses of specific populations to prove specific or differential value propositions.

• Stay nimble and pragmatic. Success is not only about trial size. Several launches we studied benefited from a pragmatic and nimble approach to developing the value proposition across a broad set of criteria. In the case of one late in-licensed drug, existing clinical data covered only a very mild population. When direct payer research suggested that success would depend on targeting a smaller, more severe patient population at a reimbursement level equivalent to a similar incumbent, the company focused on differentiation around patient experience. The product succeeded with a market share that met or exceeded pre-launch targets versus the competitor.

3.     Effective and Efficient Stakeholder Engagement - Stakeholder power shifts are acknowledged and earlier engagement is growing, but new models must address ability to influence widespread product usage.  Companies are well aware of changes in the relative importance of different stakeholders.  But have they adjusted their approach to development and commercialization?  Where are the genuinely new models of effective and efficient stakeholder management for launch?  How have they fared?

Among companies with major launches during the period 2005-2008, earlier stakeholder engagement has become increasingly common.  Internationally, they are beginning to gather payer insight much sooner, in time to genuinely influence development of the launch value proposition, although rarely before Phase III.  In some cases, successful organizations have driven earlier country-level stakeholder engagement and examples exist where this has been vital to launch performance in that country.  However, it is still unusual to devote significant resources to stakeholder management as early as a year in advance.

Continued Focus on the 5 Drivers of Uptake

Companies that focus on these three core success factors will be positioned to maximize the five drivers of uptake that critically build market share.  These five drivers include:

1.     Achieving brand advocacy among regulators, payers, key opinion leaders, prescribers, patients and other stakeholders, with an early focus on creating the right value proposition;

2.     Gaining brand approval at a regulatory level with optimal positioning and label for the right patients to maximize brand success;

3.     Securing market access on the right terms with national and local payers;

4.     Attaining brand adoption for the optimal patient segments with a focus on working with prescribers and providers to achieve early strong positioning in the dynamic market (new, switch, and, if relevant, add-on patients);

5.     Ensuring brand adherence by retaining patients as loyal repeaters for as long as is clinically appropriate.

Harmonizing Efforts

Internal harmonization efforts across NCM and Launch Excellence initiatives are the key to long-term success.  Aligning the organization includes:

-      Collaboratively setting objectives and timelines of both NCM and key launch.  For example, what market landscape will the product(s) be launching into?  What is the end-state commercial model goal and how does this impact additional launches moving forward?  Working with R&D/Clinical to understand pipeline and future portfolio goals ensures the commercial model changes can withstand and support the future portfolio.

-      Communicating launch strategies early and then often (milestones) to those in charge of NCM activities to ensure both efforts are complimentary and not competitive.

-      Taking steps to ensure that running both initiatives, simultaneously, does not cause confusion to stakeholders outside, and inside, the company.

-      Considering geographical priorities across both initiatives as to not overload local affiliates.

-      Ensuring commercial models, both in their current and future state, effectively engage and support communication of value to various stakeholders, and can be supported by transitional infrastructures.

-      Ensuring proper focus of people involved in both initiatives, so you don't lose focus on one of the initiatives, or both.

Companies with sometimes competing internal efforts across new commercial models and launches will set their own destiny.  Those that do not address the space between the two initiatives will ultimately dull the success of the new launch or hamper movement to new commercial models.  However, those that create synergies between the two initiatives will create competitive advantage in the marketplace, and quite possibly even discover new commercialization strategies as an output of their harmonization efforts.