By Jane Honeyman and Katherine Gracey
Bringing new and improved products into the market place is so important and rewards your company with continued and significant presence. New products create excitement, promote innovation, attract new customers and increase revenue.
So how do you develop a new product?
Looks easy right? It can be for the FMCG (fast moving consumer goods) industry but unfortunately this straightforward timeline does not work so well if you are in the pharmaceutical industry….
Let’s look at some key difference between the two markets.
Looks like life is lot easier for a marketing manager in the FMCG industry!!
The two key problems that pharmaceutical companies face during product development are:
1. Testing, design and development
- tightly regulated clinical trials and manufacturing requirements (it can take up to 15 years for some products to reach the market!)
- products are not easily ‘tweaked’
- difficult to test products during development and subsequently only launch the ‘popular’ products
- patents may expire before a product is even released
The cost of developing a prescription drug that gains market approval is currently estimated to cost around $2.6 billion!!!!
And only an estimated 1 in 10 drugs currently in Phase I clinical trials are eventfully approved and launched into the market!!!
2. Advertising, promotion and sales
- restrictions and regulations mean that prescription drugs cannot be advertised to the consumer and the customer (the doctor) chooses the product for the consumer (the patient)
- products cannot be freely promoted through any channel (TV, social media, radio)
- generic (‘copycat’ versions) of the drug can be released before the innovator drug has turned a profit (an estimated $113 billion of sales during 2010-2014 was lost to generics)
An unfortunate decline in innovation
The process of discovering and developing new drug products is unique, difficult and unusual when compared to the rather straightforward process experienced by the FMCG industry.
The cost of research and development in the pharmaceutical industry keeps increasing and the development of a new drug requires huge investments into resources and technological expertise, strict adherence to testing regulations and manufacturing standards….and then, and only maybe, will a new drug be available to the general population.
Drugs approved by the US Food & Drug Administration (FDA) have plunged 40% since 2005 whilst R&D costs have surged 40%. The average number of drugs approved per year between 2005 and 2010 was a mere 22.
The FDA is speeding up the approval process for drugs, but is this a wise idea? Lengthy clinical trials minimise the chance of serious, but unusual, side effects from occurring in a small percentage of the population.
Competitors in the industry may have to combine their knowledge and resources and start working together to improve the rate of successful drugs being released on the market.
Maybe the perception that pharmaceutical companies are ‘greedy’, ‘immoral’ and ‘evil’ is not so fitting….
Do you think the pharmaceutical industry needs saving?