Why drug launches fail

The industry has long been battling issues around patent protection and failed drug launches. In this piece, we cover five essential steps that will position a brand to successfully launch a drug. Start by laying the framework for your success. Once your drug is ready to get into the market, it may already be too late to plan your sales approach. A victorious launch takes planning and the right approach by a skilled marketing team.

A lot of drugs fail during the launch because the team had no concrete plans. Also, many brands run out of funds before they can even put the drug in the market, since they do not plan for the development stage, which can often cost around two-thirds of the allocated funds for the project. Having a solid blueprint and keeping the budget under control will help prevent financial loss. Therefore, developing an end-to-end plan that ties everything together can significantly improve your chances of success.

Market research includes analyzing information about customers and competitors. If done properly, it can help you possess knowledge about what problems your product will solve and why people will choose your brand over your competitors. One of the most effective ways — pharma companies get ahead by being patient centric. This means that they properly address needs and create awareness about a disease, not just the product.

Go straight to smart. Get the Deloitte Insights app. While pharma companies may not be able to control every single element at launch, many factors that contribute to missing expectations can be mitigated with thorough planning and disciplined execution. Some of these approaches include:. Even though the number of drugs approved by the FDA has increased from an average of 23 per year between and to 38 per year between and , the average revenue per drug has declined significantly.

While the industry needs to improve its overall launch performance, the job of commercial teams has only gotten harder due to the rising influence of payers, declining access to physicians, intense competition, and a shift away from primary care drugs toward specialty therapy areas. Our analysis paints a mixed picture—with many manufacturers in recent years missing launch expectations for a large portion of their products.

The Deloitte Center for Health Solutions analyzed new drugs new indications for both small molecules and biologics launched in the United States between and to determine if they met market expectations for each of the three years after launch.

For our analysis, we considered analyst forecasts to be a general reflection of market expectations for new products and used consensus forecasts, as identified by EvaluatePharma, available at the time of FDA approval. Most of the new drugs launched in the United States between and were specialty drugs 65 percent ; a large number received priority review 60 percent , while a sizeable portion were for treatment of orphan diseases 40 percent.

Three in 10 30 percent products were approved for rare diseases figures 6 and 7 in the appendix. While more than one-third 36 percent of the drugs underperformed in the first year following launch, about half 48 percent beat analyst expectations.

Notably, one in four 26 percent of all drugs far exceeded expectations, generating more than twice the expected sales figure 1. The smallest proportion of drugs 16 percent fell in the middle: meeting expectations within a 20 percent margin.

These results are consistent with prior studies that found that if a product fails to meet launch year expectations, its probability of recovering revenue in subsequent years declines sharply. Our analysis identified three product characteristics that have statistically significant associations with the likelihood of meeting or beating analyst sales forecasts: products receiving priority review by the FDA, specialty drugs, and orphan drugs. Two other product features have a positive but not statistically significant relationship with product performance at launch: first-in-class and biologics figure 3.

Priority review: Three in four 74 percent priority review drugs and less than half 47 percent standard review drugs met or beat expectations in year 1. The priority review designation from the FDA not only allows a shorter regulatory review cycle but also communicates to the market an expectation for significant advancement over existing therapies for a serious condition. In our study, most of the drugs receiving priority review 79 percent were also specialty products.

Specialty: Seventy-two percent of specialty drugs and 48 percent of nonspecialty drugs met or beat expectations at launch.

Specialty drugs are typically prescribed by specialists and have distinct handling, administration, and monitoring requirements. They often garner higher prices than nonspecialty medicines and many use a limited distribution model. This makes specialty an attractive area for pharma companies and accounts for a growing share of industry revenues and pipeline assets.

Orphan: A higher proportion of orphan drugs 73 percent compared to nonorphan drugs 57 percent met or beat analyst forecasts for year 1. Again, there is considerable overlap between orphan and specialty products: Eighty-seven percent of orphan drugs happen to be specialty products.

The Orphan Drug Act provides tax incentives and extended market exclusivity for pharma companies that develop medicines to treat small patient populations. The higher profitability and a longer exclusivity period 8 have attracted commercial interest from pharma companies and resulted in a significant growth in the number of orphan drug approvals in recent years. We found that drugs launched by large companies underperform compared to those launched by small and medium-sized companies, even when controlling for product characteristics.

As figure 4 shows, the observed differences are greatest for orphan drugs. Small and medium-sized companies outperform large companies for orphan drug launches: Ninety-two percent of orphan drugs launched by small companies and 79 percent launched by medium-sized companies met or beat expectations, compared to only about half 53 percent of orphan drugs launched by large companies.

A possible explanation for the relatively better performance of smaller companies is that they may have a clearer focus and deeper expertise in a specific disease area, which contributes to a keen understanding of the market and credibility with the clinician and patient community. Although large companies have more resources and access to talent, multiple launch teams compete for these resources, cross-functional coordination is often lacking, and not all launches receive the same amount of attention.

This phenomenon may be even more pronounced in companies with a diverse product portfolio spread across multiple therapeutic areas. Recognizing this challenge, many large pharma companies are reorganizing themselves around a smaller set of specific therapy areas to develop greater depth as opposed to breadth.

The product and company characteristics from the previous four findings are not the only ones or even the most important determinants of success. To understand what stands in the way of a successful launch, we reviewed analyst reports that discussed the launch performance of 50 out of 54 total drugs that missed expectations and for which information was available.

Based on the frequency of mentions, the typical reasons for missing expectations fell into six broad categories outlined in figure 5, and for most drugs, multiple reasons were mentioned. In addition to having deep functional silos, it may be easy for them to fall into the following pitfalls: believing that they already understand the market from adjacent products, employing a one-size-fits-all approach to launch or replaying what worked before, or presuming that the learning curve is short for existing staff to build expertise in a new disease, therapy area, or market.

Product X was a first-in-class agent from a large pharmaceutical company in a crowded cardiology market. The initial expectations for Product X were high due to its impressive clinical trial data, improved efficacy over the standard of care, and significant reduction in indication-associated acute events. The product stumbled on multiple fronts. This case example demonstrates that in the current landscape, a robust clinical profile is not enough; a sophisticated economic value proposition is a critical requirement to bring the payer community on board.

Real-world data is essential for gaining a place in treatment guidelines and influencing physician practice. And an impactful marketing plan to educate physicians and consumers about the new drug is necessary to overcome inertia and facilitate adoption of the new standard of care. In our view, many factors contributing to missing expectations can be mitigated with meticulous planning, innovative approaches to market intelligence and customer engagement, and disciplined execution.

The increasing diversity of product types and the market segments they serve calls for comprehensive disease area expertise, deep relationships with the clinician and patient community, a thorough understanding of the value drivers for key stakeholders especially payers , and a nimble launch execution. Companies with these capabilities will be well-positioned to improve their overall launch performance. The study included all new drugs approved in the United States between and for which data was available in EvaluatePharma.

For this analysis, we considered analyst forecasts to be a general reflection of market expectations for new products and used historical consensus forecasts, as identified by EvaluatePharma, issued at the time of FDA approval.

Later revisions to the original forecasts based on actual sales were not considered. Actual sales and analyst projections for the United States were captured for three years.

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Those figures make it the most successful drug launch of all time. The medication worked better than anything that had come before it.

Treating hepatitis C with Sovaldi meant higher cure rates, lower side effects, and a shorter period of treatment. Absent from this commentary, however, was a critical component of the launch. As important to its success as the quality of the product was the caliber of the sales team. Research from McKinsey found that nearly two-thirds of drug launches fail to meet pre-launch sales expectations and those that fall short usually continue to underperform over the next two years.

Since launch is a make or break moment in the lifecycle of a new product, companies need their sales team ready to go the moment they receive FDA approval.

But lining these people up in anticipation of approval is no small feat.