Launching a company and drug simultaneously.
(What follows is a synopsis of a recent “team development call,” something that occurs at The NemetzGroup over Zoom every other week. During these calls, we select a topic that allows us to enhance our learning, share best practices, and improve our client offerings.)
We began by stating the obvious: With each passing year, drug launches and the essential pre-planning become more challenging. As competition becomes fiercer, government oversight increases, and financing options tighten, biopharma companies are achieving fewer and fewer blockbuster successes.
Indeed, according to Bain & Company, half of all drug launches now in their peak sales range did not meet expected levels. And, of those, half again missed expectations by 50% or more. (Those metrics are worthy of study at a broader industry level, to understand whether the definition of success is off or if the plans to execute toward that success are themselves failing.)
Regardless, our discussion focused on the fact that the environment is particularly challenging for small and emerging biopharma companies that are preparing for the launch of their first drug while simultaneously building their company. As Lori observed at the outset, it’s like constructing a car while driving at full speed – there are many additional complications and considerations to contend with beyond simply staying between the lines!
Given that the average single-product biopharma company (we know our clients are not average) spends ~$125M in SG&A in the three years leading up to launch, it’s imperative that this investment is carried out in a mindful and strategic way. Mistakes at launch are expensive to correct (if not impossible) and can impact product sales of the drug and success of the company for years to come.
With that in mind, and as a result of our discussion, we have identified below four key challenges and our related recommendations for those launching a company and drug in parallel.
#1. Lack of commercialization planning, including the hiring of key personnel at the right time.
Challenge:
Leaders of emerging biotechs often fail to appreciate the importance of, or resist the investment in, early commercialization planning. By design, these organizations are lean, existing team members are stretched thin, and roles and responsibilities are not yet fully defined. Further, all this keeps changing as the company grows.
In some part, this results from the lack of a commercialization mindset. As Colleen described to the group, in clinically-oriented companies, in particular, there may be an implicit assumption that the science is paramount and commercialization considerations can come later. Also, people tend to confuse commercialization with “sales,” missing the fact that market and customer insights are critical – not only for shaping product strategy long-term but also for development considerations early in a product’s lifecycle.
The misperception about what true commercialization planning comprises can lead to a delay in filling key commercialization positions (or providing that expertise) at an appropriate (read: timely) point in the process. The result? When the sprint toward launch is necessary, the team is not in place or does not have the needed experience of working together to withstand the inevitable pressure.
Recommendation:
It’s important to map out a plan, with milestones, for needed capabilities and key hires early on. This should include the rationale for timing, clearly defined roles and responsibilities for the team, and the development of analogs of other companies’ successful commercialization builds. And even though some aspects of these roles can be filled with consultants and contractors (we wouldn’t be here if this were not the case!) the leadership and management requirements remain important for the entire team.
In terms of addressing the internal cultural divide, we talked about some of the success we’ve seen with “Commercialization 101” sessions with the leadership team, where the insights are then shared throughout functional teams. The goal of these internal “road shows” is to provide an overview of the commercialization process, with a particular emphasis on the risks of delayed commercialization efforts and how market insights inform product decisions. It is also helpful to hear concerns (yes, commercial people are different) and proactively discuss the reality that while the team will grow, the values and the culture can be maintained.
#2. Leadership distracted by priorities not related to launch.
Challenge:
Often, and appropriately, the executive team is focused on issues of partnering, financing, corporate communications and other priorities intended to establish the company itself. But that reality may result in equally appropriate attention not paid to the “on the ground” details of launch preparation and execution. Further, and as mentioned above, leadership distraction frequently results in the commercialization focus not occurring until late in the development process, after the time when critical insights are needed.
This can be exacerbated if the company struggles to secure sufficient financing and, therefore, delays critical investments and hires while the drug development continues to progress.
Recommendation:
In emerging biopharma companies, engaged leadership and clear prioritization are key. Absent the deep pockets of big pharma, smaller companies need to make critical resource allocation decisions daily, using the best knowledge on hand at the time.
Prioritization in these situations requires remaining focused on the core product strategy and objectives, as well as the critical development and commercial milestones. In our work with clients, for example, we often develop flexible budget scenarios that ensure focus on commercialization imperatives in a constrained environment (must haves vs. nice to haves) and clearly lay out the risks of underfunding certain areas (e.g., publication planning, market research, market access, stakeholder engagement). We also advocate a periodic review of the triggers for accelerating commercialization investment.
#3 Intertwining of the company and product branding and messaging.
Challenge:
A topic about which there was broad agreement in our discussion was the fact that in one-product companies there is often little differentiation between corporate strategy and brand strategy. The first drug is proof of the technology; it validates the vision. But as a result, and due to the importance of the lead asset, corporate communications often include data updates and product messages, blurring the distinction further (both internally and externally) and potentially sowing confusion down the road in communications to future customers.
When this occurs early in the process, before the commercialization team is on board and has crafted a clear positioning and messaging platform, messages now in the public domain may be difficult to “undo” or put in context with the ultimately approved label.
Recommendation:
Given the reality of combining the corporate and brand strategies of emerging companies, an important first step is to develop separate company and product SWOT analyses to differentiate what is core to the company and what is unique to the product. This process also ensures that each is considered in the context of relevant benchmarks.
Partnering with corporate communications early on in the commercialization process is also helpful in that companies can clarify the information needed by different audiences, ensure consistency of external messages, and establish a strong feedback loop for product messages in the context of the market need and competitive environment.
#4 Corporate process and infrastructure are not in place to support commercialization planning.
Challenge:
Process does not always come naturally to emerging companies that embody a more entrepreneurial culture. But, as the organization shifts towards commercialization, the necessary processes, systems, infrastructure, and governance are critical to ensuring that timely decisions are made, efficiencies are gained, initiatives are successfully implemented, and compliance guidelines are followed.
Often, there is resistance to this change, and the lack of clarity on infrastructure and decision-making becomes increasingly challenging as the company grows.
Recommendation:
From the beginning, and frequently throughout the company’s growth, we suggest that the leadership team identify core required processes and infrastructure needs through commercialization. These can be flexible and non-bureaucratic, so long as they clarify how decisions get made and by whom, and which metrics will be used to define success. Towards that end, part of our standard approach with clients involves creating a detailed, yet integrated, commercialization map that identifies the essential activities, summarizes functional owners, and lays out implementation timelines, all while tracking everything as part of an overall plan.
In terms of technology and tools, it’s important to work with an IT expert to develop an integrated systems architecture that envisions the future, is scalable through launch, and maps out the key commercial/medical systems and tools required as well as the timeline for implementation.
Conclusion
The success or failure of a product launch is determined well before the product is even submitted to the regulatory agency or launches in the market.
This is especially true (and difficult) in emerging biopharma companies, where distractions are the reality, performance is inextricably tied to the success of a single product, and the future company (for better or worse) is built day by day.
In our experience, these four challenges, if handled well from the outset, can make the difference between commercialization success and failure, both for the company and product.
Question: What additional ideas have you seen that work well when a team is launching its first drug and its company at the same time?