Table of Contents
This is part six of a six-part series on drug lifecycle management: Four Strategic ChoicesPrevention Innovation Extraction Adaptation Summary and Conclusion
This article is adapted from Song CH, Han J-W. Patent cliff and strategic switch: exploring strategic design possibilities in the pharmaceutical industry. SpringerPlus. 2016;5(1):692. doi:110.1186/s40064-016-2323-1 under a Creative Commons Attribution 4.0 International License. It has been edited for length and style.
Summary
To prolong the effective patent life for the drug beyond the expiry date of the patent, companies can take various pathways defined by the different stages of the product lifecycle. Determining which pathway to pursue depends on company’s capabilities, priorities and the chosen time period. Not all options are available at a given time. For some companies, the remaining time until patent expiration may not be sufficient or the necessary investment may be too high to allow appropriate adjustments to be made in time or pursuing a certain strategy may appear to be not in accordance with management philosopies.
There are distinct phases of product lifecycle of the blockbuster drug to consider. This summary overlays the periods before patent expiration. on encountering patent expiration, and following patent expiration with the four strategic options previously discussed.
Strategic and Tactical Design Possibilities for Pharmaceutical Lifecycle Management
| Strategic option | Prior to patent expiration | Encountering patent expiration | Post patent expiration |
|---|---|---|---|
| Prevention | Strategic patenting (Exploitation of legal provisions to extend patents) Patent settlement agreements | Patent term restoration (Hatch-Waxman, SPC) Pediatric clinical trials Orphan drug status | Strategic patenting (Exploitation of legal provisions to extend patents) |
| Innovation | Product modifications through innovation (Layering of patents, reformulations, combination drugs) | New indications; Business model innovation | New indications; Business model innovation; Rx-to-OTC switch; Follow-on products |
| Extraction | Licensing or selling patent rights | Differentiation (brand advertising) | Differentiation (brand advertising) Exit strategy (‘mliking the product’) |
| Adaptation | Strategic alliance with generic firms;(Leading manufacturing capacity; co-marketing) | Branded drugs; (Launching secondary brands; introducing authorized generics) Strategic alliances with generics firms; (lending manufacturing capacity; co-marketing) | Branded drugs; (Launching secondary brands; introducing authorized generics) Strategic alliances with generics firms; (lending manufacturing capacity; co-marketing) |
Conclusion
Patent expirations are among of the most important events in the lifecycle of pharmaceutical products. In view of diminishing product pipelines, growing significance is attached to the active marketing of the existing products—even beyond the expiry of patent protection. As it is becoming increasingly difficult for major pharmaceutical companies to continuously develop new blockbuster drugs on a regular basis, companies can consider developing their own generic versions of blockbuster drug to minimize the loss to their brand or offer promotional consumer discounts by reinventing themselves as a more customer-centric organization.
An open question is how aggressively brand owners are willing to support the drug with investments aimed at differentiating it from generic competitors. Branded pharmaceuticals have certain attributes that lead to different patterns of losing market share after they go off patent. Thus, the challenge lies not only in evaluating the potential, but also in arriving at a reliable forecast.
Given the wide range of possible outcomes upon facing generic entry, understanding the specific attributes and their relationship to the brand’s intrinsic potential are critical to make the right strategic decisions about post-patent expiry and to sustain the franchise. Hence, the innovator-company needs to treat patent-related (i.e. regulatory) and factual strategies both as weapon and a shield to outpace the generic competition. The product-related strategies need to be supported by a consistent pricing and promotional strategy.
