Strategic Product Positioning, Launch & Marketing in the EU & US

C5’s Forum on US FDA Regulation for European BioPharma Industry Players, December 2006, London

Nermeen Varawalla, MD, DPhil (Oxon), MBA Vice President, Corporate Development PRA International

Agenda: Product Positioning, Launch & Marketing R&D Early Adoption Usage: Efficacy, Safety & Compliance Pricing & Reimbursement


Rising cost of new drug development

• • • •

Drivers High Attrition Regulatory Requirements Patient Recruitment Inefficient Processes


New drug development continues to be lengthy
Drivers Patient Recruitment Demands on Data Incomplete Application of Technologies Pipeline Volumes

• • • •

Biologics represent increasing proportions of new drug approvals
New research tools e.g. pharmacogenomics accelerate drug discovery with a greater application to biologics.


Product type influences drug development outcomes.


Early adoption of new drugs: influencing variables
Variable Pre-product Launch Company Prescribing Loyalty Total Pre-product Launch Prescribing Volume Physician’s Age Comments Trust in pharmaceutical company Less relevant in follow on drugs High prescribing volume = high patient flow hence more unmet medical need < 36 and > 65 least likely to be early adopters

Pharmaceutical Marketing Support Detailing, Free samples, advertising – DTC & professional journal Practice Type Clinical Investigator Experience Specialist in Therapeutic Area Office based > likely than hospital based, possibly more restrictions Participation in Phase III trials More likely to see treatment challenges

Source: Glass & Rosenthal, 2004


Pharmaceutical marketing support does influence drug adoption
Detailing: interactions with drug sales representatives
most important

Prescriber advertising: medical bulletins & journals Specialist meetings, presentations, conferences and symposia: more important for new drugs Direct to Consumer advertising – US & NZ only:
anti-depressants, anti-histamines, anti-hyperlipidemic agents and anti-inflammatory agents – influence on prescribing patterns debatable

Increasing placement of clinical trials in emerging countries
US 100% 75%
% of total 1572s filed 50%

Western Europe

Rest of World

25% 0% 1997
Source: Tufts CSDD





Changing Mix of FDA-Regulated Clinical Investigators

Emerging countries have future commercial Value: China Example
Pharmaceutical Market Size in USD Billion
25 20 15 10 5 0




 7th largest pharmaceutical market in the world in revenue  Rapid growth fuelled by: • Population = 1.33 bn in 2005 • 60 yr olds = 160 M in 2005, 280 M in 2025 • Relatively low baseline: per capita drug expenditure at 12 USD is 2% of that in the US • Urbanisation & affluence • Conversion from the exclusive use of Traditional Chinese Medicine  Most large pharmaceutical companies have a major presence in China

Product usage
Blockbusters (annual sales > 1bn USD) = 1/3 global drug sales Follow on drugs add value
• 32% are priority rated

Orphan drugs – 1/3 of 2005 NMEs
• 39% not first approvals

Compliance is a challenge
• 50% compliance for chronic treatments • 70% of prescriptions not consumed

Oncology and Neurology account for over half of R&D efforts
Match between unmet medical need / commercial potential and R&D pipelines

Source: Tufts CSDD


Important therapeutic areas are under served
Perhaps because of less commercial potential

Source: Tufts CSDD


New product adoption in spite of unmet need is challenging
• 2,000 unmet medical needs • 5,000 – 8,000 rare diseases • 30-50% of patients with chronic disease have unsatisfactory treatment

Source: Tufts CSDD, 2005


Drug safety concerns making regulators more cautious
FDA receives > 400,000 AE reports / year 10 safety withdrawals since 2000 5-10 fold safety – efficacy range in normal populations
80% Share of NMEs Approved 60% 40% 20% 0% 1970-84 1985-86 1987-93 1998-04 Post marketing study commitments

• FDA is encouraging exploratory IND studies with more reliance on post marketing safety studies • Reduce cost & time to launch new drug • Product risk management plans
Source: Tufts Center, CSDD 15

Pricing and Reimbursement
Rising drug prices Rising end user prices in the US fuelling public distrust in the pharmaceutical industry > in the US Insurers & state active to contain and fund rising prescription costs
• Payer (HMO, state, NICE) becomes a customer • Imperative to engage with / lobby state & payers • Health economics end points


US response to rising drug bill
Multi-tier cost sharing by US insurers that promote use of generics & preferred brands to further expand
• Helped reduce growth rate of Rx drugs bill from 15% in 2001 to 8% in 2004 • In 2004 70% of insurers use a 3-tier cost sharing, up from 50% in 2001

More Rx to OTC switches expected
• Following on from Claritin and Prilosec

Boost of Rx drug spending by Centers for Medicare & Medicaid Services to 70 bn USD from 8 bn USD in 2003
• Raise the profile of CMS within the drug industry

Medicare drug benefit to emphasise evidence based reimbursement
• More so for expensive and high utilisation drugs • Similar to Australia, Canada, France, Netherlands & the UK

Source: Tufts Center for the Study of Drug Development, Outlook 2006


How does Europe differ?
Reimbursement levels for drugs in the UK and US are similar 93% vs 87% 10% of US formularies impose conditions on coverage vs 40% in the UK US health insurers demand higher co-payments than NHS in UK More formulary variation & different cost sharing practices in the US compared to EU
Source: Tufts Center for the Study of Drug Development, Outlook 2006


Dr Nermeen Varawalla,
MD, DPhil (Oxon), MBA Vice President Corporate Development, PRA International Pacific House Imperial Way, Worton Grange Reading, Berkshire RG2 OTD, UK

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+44 118 918 1025