Milk Your Mature Brands

Something very interesting has happened recently. The year has begun with many of our Clients asking, “We know what you can do for our promoted brands, but what about our brands that have lost patent that we don’t spend anything on. Can you tell us what doing something for them would do to their revenue?” Of course, we can!


Mature Brands are Fascinating.

They have already covered their development costs (hopefully) and revenue from them, therefore, brings more to the bottom line than newer brands that have yet to cover their development costs. The typical routes followed by most Pharma companies with respect to mature brands were ether to keep them without promotion and take whatever you got, co-promote, license them out, or sell them off. These days, however, more and more companies are asking me, “What will happen to our revenue and profit if we promote our mature brands?”

Every company has lost big brands over the patent cliff. These brands once brought in serious amounts of money – billions of dollars in revenue annually, then the patent expired, enter generic competition, and the companies stopped promoting the brands and moved onto the next new drug. Despite patent expiries and no money being spent on these drugs, they are still bringing in fairly impressive amounts of money – although not quite as much as previously. Take Lipitor as an example, with peak annual sales around $9 billion; it is still hanging onto around one third of the market well after patent expiry. This is expected to still be equivalent to $3 billion a year in 2015 – well after LOE.

What Did Pfizer Do to Achieve This?

1. Raised the price while still under patent
2. Advertised directly to consumers in the US market to boost awareness and usage
3. Had a pay to delay deal with the generics makers, Ranbaxy, delaying the generic launch
4. Launched an authorized generic with Watson Pharmaceuticals which shared 70% of its Lipitor profits with Pfizer
5. Helped consumers reduce their co-pays to encourage them to stay on branded Lipitor and not switch to generics, and paid rebates to insurers and PBMs to keep using Lipitor

Not too shabby at all. The marketing spend was on consumers in this case (as it is allowed in the US market), but equally it could be spent on Physician marketing, depending on what the analytics shows.
When it comes to big brands in a market where the brands lack serious differentiation (sadly, as many Pharma brands do as we discovered in a study I outlined in a previous article), the market typically tends to favor the largest player as the target customers have already bought mind-share with them, trust them and often tend to stick with them where possible. Generics may have the same ingredients but the manufacturing process may be somewhat different.

A study completed by Medco with Physicians in the US showed they firmly believed that the generic product was not chemically equivalent, less effective, had more side effects, and was less safe compared with the branded product. Interestingly, Pharmacists did not share these opinions and felt they were essentially the same. However, this does show that, if given a choice, many Physicians feel more comfortable with the original than the generic, which may be part of the reason that many big brands continue to bring in big revenue despite little, if any, sales and marketing activity.

A significant profit opportunity exists here. We have tightening budgets, more challenges than ever before, and more concentrated competition in the key therapeutic classes in which new drugs are being released (especially in Diabetes and Oncology). Very few companies are focusing research in areas where previous blockbusters existed. This suggests that an opportunity lies in cost effective mature brand promotion as companies continue to try boosting sales in their new drug portfolio.

I know of a Pharma company that decided to promote its mature CNS brand, which still had untapped revenue and profit potential. They decided to deploy an outsourced field force on this brand and a few of the other LOE brands. Despite not being the most cost-effective promotion, they were able to achieve an increase in market share, a top line incremental revenue increase of $156 million and a bottom line incremental revenue increase of $132 million within the first 15 months of doing this.

Other Case

Another company with a Gastrointestinal product that was in rapid decline employed an outsourced field force to detail to Primary Care Physicians. The decline ceased at the 8th week of these reps being in the field, and by the end of 1 year it had grown significantly in market share. Another example was for an Alzheimer’s drug that was in decline post LOE and an eDetailing program was embarked upon. The gain in revenue represented a 760% increase on spend and NRx was increased by 68.9%. Imagine what may have been achieved with more cost-effective approaches.

A.G. Lafley, CEO of Procter & Gamble, once said, “Products have lifecycles, brands don’t.” Interesting! Brands tend to follow product lifecycles, reach maturity and then decline; however, well managed brands won’t if the company maintains some resources and commitment.

On the other hand, maintaining some resources should not be automatic, but a carefully considered decision should be made based on the potential revenue upside of doing it versus not doing it. The decision to be made is whether to revitalize with a little resource, or milk it by investing just enough to keep it on the market and get the margins. It should only be done if the analytics show that you will create a stronger market position, and achieve even higher profits from doing something compared with just milking it with no resources.

The key to making this decision is obviously sound analytics run on the brands which can show whether you will gain more revenue and profit from doing something, what that something is, and how much of it to do for optimal revenue and profit gain. Analytics can sift through the options (whether to do something, what channels to use, how much to spend for what return), and provide comfort that your decision is the best one for overall revenue and profitability.