The Road to Commercialization: Small Company Considerations
“The Road to Commercialization: Small Company Considerations” was originally published in Life Science Leader. Click here to read the original article.
Making the transition from an R&D company to a fully integrated commercial organization is no small feat. In fact, this is often a make-or-break scenario for biotech companies. Over the last 10 years, the commercialization landscape has changed drastically. With roughly 70 percent of product launches failing to meet their predicted forecasts, it’s obvious that regulatory approvals generated from high-quality and innovatively marketed products alone don’t guarantee a successful bridge into commercialization.
Organizations must consider that payors won’t pay for a product that doesn’t deliver value, prescribers won’t write a drug that doesn’t bring differentiation, and patients won’t take a drug they can’t afford.
Planning and executing a product launch is a complex process that must be tailored to both the product and the market. Success requires strategic focus, cross-functional alignment, and an organizational framework capable of effective delivery.
So, what do organizations need to think about when making the launch to commercialization?
During a recent CRUSH Life Sciences panel discussion with experienced industry executives, valuable considerations emerged for organizations as they began planning for commercialization and beyond.
1. LONG-TERM ORGANIZATIONAL STRATEGY IS ESSENTIAL TO LONG-TERM ORGANIZATIONAL SUCCESS
Without a clear and aligned organizational strategy, the road to commercialization will be bumpy. It’s common for leaders to underestimate the value of setting an organizational strategy and securing cross-functional alignment early on, but focusing only on near-term goals can lead to failed product launches that prevent patients from accessing better treatment options and cost companies time, money, and talent.
It is difficult to get somewhere if you don’t know where you are going. It is similarly challenging for employees to work toward a goal that doesn’t exist or is unclear. Leadership needs to communicate the organizational vision clearly and agree on goals such as target product profile, indications, geographies, etc. by asking clarifying questions, such as: Is the plan to take the product to market or sell the asset? Will the organization be first in class, a leader, or a follower? Will the product be a disruptive one? Is a partnership in the future? Do not underestimate the time it takes to get these big-ticket topics ironed out — especially for a smaller organization that is new to commercialization.
After aligning on goals, you can then focus on strategy and infrastructure. If the plan is to build a fully integrated commercial capability, you need to define by function the required fixed resources (FTEs required for marketing, sales, market access, business analytics, advocacy, medical affairs, etc.) and the variable cost (third-party vendor support, data, systems, etc.). This allows you to budget appropriately early on, so that there isn’t such a shake-up when the time comes.
2. UNDERSTAND YOUR INTERNAL CAPABILITIES AND WHAT YOUR GAPS ARE
Organizational structure is key to success in the commercial market, so it’s important to assess gaps early on. Most organizations are founded by scientists/researchers with little, if any, commercial understanding. Building the correct management team is the first and most critical step in organizational rebalancing. Adding new management can be disruptive, especially when you hire new functions and executives from other industries. However, it’s important to strike a balance. Don’t overemphasize the candidates’ specific experiences and underestimate the importance of cultural fit. Making the shift from evaluating clinical progress to commercial and operational discussions really affects the culture of an organization, so it’s important to be radically transparent and avoid silos from the start.
It’s also important to coordinate your hiring strategy. Consider whether building an entire commercial organization internally or using vendors and technologies for some roles fits better with your overall strategy. For small organizations that don’t have a commercial budget, it’s important to focus on areas that will bring the most value, like a good marketing group and a strong payor expert. Looking at your organization with a view to commercializing and assessing where future gaps and pain points will be allows better hiring decisions. It may be valuable for an organization to hire leadership first and outsource the next level during the launch. Eighteen months post-launch, you can reset and decide to hire people as full-time employees. Remember, it’s going to “take a village” to navigate this long road — surrounding yourself with smart people can save you a lot of money.
3. ENGAGE PAYORS EARLY TO ADDRESS CHALLENGES
Historically, clinical-stage executives have underestimated the value of speaking with payors early on. Having a good payor strategy and engaging with them early can only be beneficial to an organization. We have the opportunity with payors today that we didn’t have many years ago — they want to speak with organizations and understand how the product or brand at hand will differ from the current standard of care. It’s important to look at this dialog as an opportunity; engaging payors early allows them to better understand the clinical value and the value to patients of the target product profile. It should also be noted that, regardless of whether you are looking for an acquisition or commercial partner, you should still plan on engaging payors. Buyers and partners will want to know what payors think. There are numerous examples in the marketplace that have failed because the payor receptivity was just not there at launch, and the organization took years to reset, reprice, and relaunch while hemorrhaging money.”Taking time to slow down and evaluate all the variables involved in commercialization is the difference between entering the market strong or floundering.”
Approach payors when they can understand your Phase 2 program and provide their required input as you develop your Phase 3 programs. Previously, information like this wasn’t shared until approval, and if payors had concerns or were interested in additional data, companies had to go back to collect it. Early involvement allows you to work payor requirements into your Phase 3 programs and bridge two objectives together. Incorporating a clinical representative into those payor meetings allows clinical colleagues to hear what the payor wants first-hand and incorporate that into clinical development. Typically, some of the patient outcomes/endpoints that payors want are difficult or impossible to obtain in retrospect and don’t focus just on the primary endpoint. Hearing from the payors early means patient outcomes can be incorporated into clinical programs when possible.
4. DON’T JUST BUILD FORECASTS, LISTEN TO THE MARKET DATA
Forecasts are often incorrect, but they are crucial to the success of an organization. Organizations must do enough scenario planning for the board to realize the investment needed and what the implications are with each scenario. You must be able to scale up and scale down as you progress through the life cycle of the launch. Forecasting should contain not just your own data but also the epidemiological data in more than a one-year assessment. Look back at competitors and consider why they didn’t do well in year one of their launches. Be candid with internal discussions, challenge each other, and if it doesn’t look right, adjust but don’t dismiss. Ironically, it becomes more challenging for organizations when they get revenue and must continue to deliver — the market value can collapse relatively quickly. This is where scenario-based forecasting can be useful. Don’t get yourself caught flat-footed if you haven’t done scenario planning — major disasters can be avoided if you are able to pivot.
Making the shift into commercialization is one of the most difficult pieces of organizational growth. A clear strategy with data-driven decisions paves the path to a successful product approval. In this fast-paced world, taking time to slow down and evaluate all the variables involved in commercialization is the difference between entering the market strong or floundering. It really comes down to being ready through strategy and preparations, executing your plans, and going the distance.