Forecasting generic competition
A new report, The Five Myths of Generic Competition from Thomson Reuters, takes an informative look at what originator pharmaceutical and biotech companies can do to improve their understanding and forecasting of competition from generic drugs.
The group, whose research was conducted during May and June 2008, says pharmas can improve competitive intelligence processes by focusing on more effective sources of long-range signals and by providing brand teams with the resources and tools necessary to better understand generic competition.
Thomson Reuters found, through their research, that many commercial professionals believe there is nothing they can do to prevent sales erosion by generics or assume that the problem is being dealt with by others in their organization. The five myths presented in the report expose these and other false assumptions made by many pharmas and highlights companies can do to improve their forecasting of the likely timing, source and intensity of generic competition.
The survey of executives and managers in key commercial functions of originator pharmaceutical companies found that:
Monitoring and analysis of generic competition is often ad hoc and poorly coordinated
Many companies use standard information techniques too late in a products lifecycle to be effective
Short planning windows and rapid career development often hampers understanding of generic competition among senior management
Brand teams often lack time, resources and incentive to adequately analyze generic competition
Change will require top-down driven accountability for understanding the timing and impact of
generic competition
Thomson Reuters says the first myth is that the primary interest of generic companies is in products with sales in excess of $500 million. But the group says competition and specialization in the generic industry is resulting in products with US $20 million or even less per annum in sales being considered as potential generic opportunities.
This means that originators cannot afford to ignore possible generic competition, even if theyre not in the blockbuster league, the report says. And yet a corporate culture that focuses purely on supporting and defending big brands risks leaking significant revenue elsewhere.
The second myth, according to the group, is that patent challenges, ANDAs (Abbreviated New Drug Applications) and Drug Master Files are the first signs of generic activity. But the group says these activities come towards the end of developing a generic product.
The earliest and most reliable signal of future generic competition is the activity of companies manufacturing generic active pharmaceutical ingredients (APIs), Thomson Reuters reports. Accurate intelligence on API manufacturing may increase an originators ability to detect developing generic competition by several years.
The third myth is that the right time to start generic competitive intelligence activities is two years before patent expiry, the group says. Approximately half of those the group surveyed say there was no value in performing regular generic competitive intelligence activities any earlier. But Thomson Reuters cautions that most generic companies work to similar development timelines as originators typically 8-10 years.
The product targeting process is actively examining drugs for future development as soon as theyve been approved or launched, some even while theyre in phase III clinical development, the group says.
The fourth myth, according to Thomson Reuters, is that generic competition is inevitable and there is nothing that can be done. The group argues that although patent expiration and loss of exclusivity are inevitable, generic competition is not.
there are many examples where well-managed patent strategy and technical complexity have not made generics inevitable, the report says. In tandem with thorough competitive intelligence, lifecycle management is the most effective tool an originator can use to grow and defend their brand.
The fifth, and final, myth, the group says, is the belief that somebody in the company is on top of generic competition. Many respondents in the study admitted that theres often neither the time nor adequate priority to get the job of monitoring, analyzing and reporting on developments concerning generic competition done. Many, the group says, simply hope that someone else in the organization is doing it for them.
Brand protection and generic defense is often an ad hoc and disorganized process, the group reports. Most respondents monitor generic activity only for their own brand, with only about a third monitoring generic activity on competitors products.
Thomson Reuters reports that none of the companies surveyed allocated specific resources in the product budget for generic defense, even in the face of industry compression and downsizing, when it is most needed.
The group says good internal communication and a concerted, organized plan of action, with clear responsibilities throughout the management chain, are among the most important strategies for heading off generic competition.
Understanding and forecasting generic competition remains undoubtedly a serious strategic challenge for anyone with a brand product on the market, says Claude Basset, VP Specialty Markets for Thomson Reuters. Its clear, however, that there is more originators could do better and earlier to prepare for generic competition.
To learn more or read the full report, visit the Thomson Reuters web site at www.thomsonreuters.com. And be sure to attend eyeforpharma's upcoming Forecasting Excellence Europe conference in Madrid, April 20-22. For more information or to register, visit www.eyeforpharma.com/forecasting09
Author: Lisa Roner, editor, eyeforpharma