By Elisabeth Pena Building Bridges and Closer Bringing R&D Marketing Pharmaceutical companies must connect science and marketing at the earliest development stages to optimize resource allocation and produce profitable products. The Bridge Builders Gina Ashe. VP, Marketing and Product Development, InfoMedics Inc., Woburn, Mass.; InfoMedics is the developer and marketer of Patient Experience data, real-world medication feedback and outcomes information gathered from the physician’s own patients to inform prescribing decisions and treatment outcomes. For more information, visit infomedics.com. Daniel J. Burge, M.D. Senior VP, Clinical Development, Trubion Pharmaceuticals Inc., Seattle; Trubion is a biopharmaceutical company focused on the discovery and development of novel medicines to treat inflammatory diseases and cancer. For more information, visit trubion.com. Evan Demestihas, M.D., RPh. President, Chief Operating Officer, SOS, Kennesaw, Ga.; SOS is a contract medical organization that provides comprehensive outsourcing for medical affairs activities, as well as focused medical science liaison services. For more information, visit medicalaffairs.com. Jon Hess. Senior Analyst, Cutting Edge Information, Durham, N.C.; Cutting Edge Information provides research and consulting to the pharmaceutical industry and the financial services industry. For more information, visit cuttingedgeinfo.com. Hilary Jules. Director of Industry Marketing, Plumtree Software, San Francisco; Plumtree creates comprehensive Web environments for employees, customers, and partners across the enterprise to interact with different systems and work together. For more information, visit plumtree.com. Jo Ann Mayer, ph.d. Senior VP and Medical Director, Ribotsky Worldwide Inc., Somerset, N.J.; Ribotsky is a full-service strategic communications group dedicated to making health-related products and services more successful. For more information, visit ribotsky.com. John Monahan. President and CEO, Wolters Kluwer Health, Pharma Solutions division, Parsippany, N.J.; The Pharma Solutions division is a provider of knowledge-based information services and decision-support tools to the pharmaceutical and life-sciences industries. For more information, visit wkhealth.com. Charlene M. Prounis. Executive VP and Chief Marketing Officer, Corbett Accel Healthcare Group, New York; Corbett Accel is one of the largest healthcare communications companies in the world and is a member of the Omnicom Group Inc. For more information, visit corbettaccel.com. Robert R. Ruffolo Jr., Ph.D. President, Research and Development, Wyeth Pharmaceuticals, and Senior VP, Wyeth, Madison, N.J.; Wyeth is a research-based, global pharmaceutical company responsible for the discovery and development of some of today’s most innovative medicines. For more information, visit wyeth.com. Steve Spittel. Executive VP, Director of Marketing, Nelson Communications, New York; Nelson Communications is a full-service marketing and communications company and a member of the Publicis Healthcare Group. For more information, visit nelsoncommunications.com. Norman J. Stalsberg. President, CHS and Health Process Management (HPM), subsidiaries of inChord Communications Inc., Columbus, Ohio; CHS, Scottsdale, Ariz., is a provider of pharmaceutical and biotech contract marketing services. HPM, Doylestown, Pa., uses data analytics to help pharmaceutical, biotech, academic, and government clients turn information into action. For more information, visit inchord.com. he R&D and marketing functions within pharmaceutical companies historically have been two separate entities that perform disparate functions: R&D discovers and develops compounds and conducts the clinical trials necessary to achieve regulatory approval; marketing steps in during the regulatory phase to develop promotional campaigns and, once approved, promotes the drug to physicians and patients. This model is becoming obsolete, however, as the race to market intensifies because of changing government regulations, evolving pharmacoeconomics, diminishing patent protection, and increasing scrutiny by the public. To bring the most successful products to market as fast as possible, marketers and scientists need to work together from the earliest stages of development. Although some companies are beginning to move toward integrating the two functions, to make this a reality changes need to be made to practices that are deeply ingrained in the industry’s traditional drug-development process. Achieving a greater cohesion will require abandoning the siloed organizational structure common in many pharmaceutical companies. In the end, a continuous flow of information between R&D and commercial functions enables companies to make better informed portfolio decisions, serve patients, and achieve higher returns. Norman Stalsberg When R&D and marketing are integrated, products will be on the market faster, have quicker uptake, and have longer life cycles, which drives greater net present value for the company. Dr. Robert Ruffolo At Wyeth, we have R&D and commercial representatives sitting at the table making all the decisions together – and we are making better decisions. We have become a very decisive organization as a result. Coming to the Table MAYER. Marketing addresses the question, “what is the overall opportunity?” When research comes up with a compound, one of the first things to be evaluated is where the compound might be used and what indications the drug could have. Marketing brings the commercial overview and lets R&D know what the medical need is and presents the overall picture of the commercial opportunity for the pharmaceutical product, as well as what the competitive environment is or will be for the drug. HESS. Marketing folks need to be the commercial voice for a drug. They are the connection between the lab and the business side. Early on, marketing gathers information through thought-leader workshops to find out how people who are afflicted with the disease live and how the disease impacts their daily lives. Marketing then can take that information back to the scientists in the labs and explain what the drug needs to do to compete in the market. Information such as whether the compound needs to be dosed weekly instead of daily is critical. Marketing also does some preliminary market sizing and early pricing studies to determine how the drug will be able to compete in the market when approved. PROUNIS. An advertising agency is usually not brought into the picture until the product is in late-stage Phase III trials or once the NDA has been submitted. Among many things, we’re charged with developing the brand identity. But, in many cases, by the time an agency is brought in the product already has an identity. A product often has been informally categorized by investigators, given a drug number or even a trade name, and its unique properties have been identified and cited by clinical investigators and thought leaders. If that product truly has redeeming qualities, thought leaders already have been talking about it, publications have been written about it, or the product has been discussed at various peer-to-peer events. Often, what the “spin” was is lost. Only a well-integrated approach from marketing, advertising, and clinical development will ensure that everyone is positioning the brand and talking about it in the same way – in a way that builds the brand, strongly and consistently. ASHE. Early marketing tasks that are often overlooked by pharmaceutical companies include preparing the market for the product’s entry and facilitating early experience with the medication for the physician. Even before launch, we conduct unbranded programs with physicians that help them to identify the incidence of a condition in their practice or to learn about their current treatment patterns. This opens the conversation between the manufacturer and the doctor, so that when the product is approved, introducing it to the practice becomes a natural follow-on to the dialogue. Once launched, we focus on providing physicians with practice-specific experience with the medication through patient feedback. It gives them a good working knowledge of the drug and confidence in prescribing the medication that accelerates adoption into their practice. Also often overlooked is setting clean metrics for evaluating doctor perceptions and prescribing patterns early on. One can’t underestimate the role of key opinion leaders in influencing the rest of the medical community. STALSBERG. Somebody with a strong commercial perspective needs to work in tandem with the R&D folks to make sure that everything is being done with the optimal end in mind. The fundamental task from a marketing standpoint is having a sound quantitative assessment of what the unmet needs of the marketplace are and then developing a target product profile that meets those end-user needs. The team needs to test and refine the profile until it comes up with the end goal from a development standpoint. This becomes a tricky component in organizations that are very scientifically driven and where marketing does not play a strong role in the development process. DEMESTIHAS. Many companies’ scientists are focused, justifiably, on uses for compounds that will be easier to evaluate based on today’s FDA approval process. Marketers have a broader view into other uses that may prove very beneficial for both patients and the company by virtue of their relationships with key opinion leaders. These key opinion leaders can provide valuable external insight to help in the design of additional trial protocols, the generation of studies, and the critical statistical analyses to submit a more valuable new drug application to the regulatory agency. BURGE. Everybody knows that marketers need to look at the size of the market, identify the competition, and evaluate the strengths and weaknesses of each product. The real art is combining the marketing input with the science and having the ability to interweave this information into the design of the protein. ASHE. Some pharmaceutical companies are integrating marketing functions as early as Phase I, but clients typically bring us in during Phase III and beyond. We work with the typical flow of a physician’s practice, which is a valuable place to gather data and make an impact, especially before a launch. More and more we’re asked to assess the state of treatment for a disease, profiling how physicians diagnose the target condition among their patients, the treatment alternatives physicians currently consider, and how they assess outcomes. Pharmaceutical companies use these data to find the open space in the market, the gap in physicians’ treatment protocols that their medication fills. Then, when pharmaceutical companies demonstrate these gaps back to physicians, they create a need that their product naturally fills. It has a significant impact on doctors’ willingness to adopt a new drug. This kind of strategy is very typical in other industries, where there’s a great deal of end-use consumer research done early in the development phase. We’re just starting to see this in healthcare. These types of evaluations should be done earlier in the process and should be done by marketing working hand-in-hand with the development teams. MONAHAN. Product development and marketing groups can help the R&D teams by initiating an aggressive strategic publication-planning process. Many pharmaceutical companies are beginning the publication-planning process much earlier in clinical development than they have in the past to differentiate their products in the marketplace before they have even been launched. Customers, both on the R&D side and the marketing side, are modeling data to understand their products. For example, if the compound is in Phase II trials and isn’t tackling a mechanism of action better or doesn’t have fewer side effects than another product in development, pharmaceutical companies can decide if they need to pull the drug or do different studies. Doing strategic publication planning much earlier in the process and having access to these types of data help companies pull their development plan together with the right market and competitive intelligence. BURGE. The real question is: Can a company involve marketing early enough in the process to actually have an impact on the design of the molecule and on the characteristics of the molecule? When scientists act in isolation without marketing input, they don’t have all of the information that they need to optimally design their molecule. Though companies are obtaining marketing input earlier, it is unclear, in most cases, whether they have the ability to alter their product candidates to capitalize on the input from marketing. The Disconnect RUFFOLO. Tension between the R&D organization and the commercial organization exists throughout the pharmaceutical industry. Often the objectives of the two groups are different. Scientists may want to follow the science, which is not always clinically and commercially viable. Commercial folks will appropriately optimize the return on investment, which may not be scientifically the best thing to do. This tension exists to varying degrees in most companies and most industries. HESS. The gap between marketing and R&D is typically caused by a geographical or physical location difference. R&D staffs oftentimes do not work in the same location as the marketing people, which presents communications problems. Also, the organizational structure can have a large impact on the gap. The pharmaceutical companies that are beginning to realize this are changing their structures to connect R&D and marketing teams and give both sides equal say in making critical drug-development decisions. DEMESTIHAS. Not completing trials in a timely manner is often an issue that can be resolved when marketing and R&D communicate effectively. Marketing, by investing early in relationships with key opinion leaders at national, regional, and local levels, often has a good handle on who may be treating patient populations identical or similar to those being studied. Good communication ultimately can contribute to higher and faster enrollment of patients into key studies. MONAHAN. Drug development is similar to a relay race and if that baton is not properly passed from one function to the next, a pharmaceutical company is not going to win the race. If everything is siloed in one R&D bucket and there are not a lot of good links and communications with the commercialization and marketing side, that baton is not going to get handed off properly. Time will be lost along the way. Losing this race for the pharmaceutical industry is a pretty expensive proposition. STALSBERG. By not having unity between the R&D function and the marketing function, pharmaceutical companies end up with products that are not optimally positioned to deliver the financial performance they should for the company, its employees, and shareholders. If products are being scientifically driven and not market driven, meaning they are not being developed and being put through clinical trials based on filling an ultimate unmet need in the marketplace, there is an impact on financial performance. If a company is spending resources against products that are less than optimally commercially viable, there is a misallocation of resources. PROUNIS. The opportunities lost to brand a product from the beginning as well as the inconsistencies in messaging are the most common problems, we find. Every communication about the brand is an investment in its equity. If everyone is not aligned early, then the clinical-research people will be discussing clinical-trial design, primary and secondary endpoints, and subset analyses up front that may not be critical to the end user in the marketplace. Each of these critical inputs helps shape the label, which provides the basis for the promotional claim at launch. Ensuring that the commercial team – the marketers in particular – are working alongside the clinical R&D group to identify the unmet needs, the attitudes and behaviors on competitive products, and barriers and motivations to use new products are critical success factors. The job of the R&D and marketing teams is to optimize the label in the early phases. MAYER. The major problems caused by the gap between R&D and marketing is having a product that isn’t commercially viable and is a “me-too” product when it comes to market. There are many times that a product comes to the market and doesn’t generate the expected return on investment. Coordination between marketing and research may not eliminate this from happening, but can make it less likely. BURGE. Companies are trying to get marketing involved earlier and earlier in the development process. An obvious advantage is helping with resource decisions. The challenge is to additionally use this input in the design of a product candidate. The ideal situation is when a company can actually modify a product based on the market needs and the science behind these attributes desired by the market. This is a great advantage and would allow companies to bring products to market earlier with greater impact. SPITTEL. The best way to improve the disconnect between R&D and marketing is through dialogue and participation in multidisciplinary activities. When the team is working together from the early stages of product development it is less likely that there will be surprises regarding the labeling that will be submitted to FDA. This cooperation also reduces, but does not eliminate, the likelihood that additional post-launch trials will be required to either supplement the labeling or produce publications that will enhance the ability to effectively promote the product either through the salesforce or through medical education. Counterculture RUFFOLO. Usually when R&D and the commercial organizations are at odds, often it is the R&D group that is most at fault. Sometimes we can have the attitude that we are all driven by science, and marketing couldn’t possibly understand the science. MAYER. Researchers with a background based in science are very dedicated, which they need to be to delve into the rigors of the research. But often they take tremendous ownership for what they have developed. Sometimes, scientists will defend their compound without being objective as to its shortcomings or that the compound may be entering a mature and crowded marketplace with no distinct advantages over available products. Or the marketplace may have moved to a whole new category for the treatment of that disease. Although the science may be absolutely correct, the timing may be wrong. It is very hard for a scientist, who has invested so much time and effort into a compound, to be objective and say “you are right, this is not a good commercial opportunity for the company and we should not continue development.” HESS. Differences in the education and professional backgrounds of each group can be an issue. The R&D folks have a scientific background. They usually don’t have a lot of business experience as compared with the commercial people, who are focused on the business aspects. These types of issues lead to R&D and marketing folks being on a different page and oftentimes not understanding what each other is doing. Sometimes R&D folks want to push their drugs through development, especially the scientists who have been working on their compounds from very early discovery. While this is a natural tendency, it can be detrimental to a drug’s progress all throughout development, particularly in pharmaceutical companies where key drug-development decisions are dominated by R&D executives. STALSBERG. A big issue in pharmaceutical companies is when marketing people are put on early-development teams as figureheads; they are there supposedly to represent the commercial operation but are not granted intimate involvement in the process. Marketing needs to be included on the development team as a true partner to work with the R&D functions to truly shape everything – from bench development through clinical development. Marketing’s involvement throughout the process ensures that at the end of the day the product that reaches the market is the one that has the greatest commercial value for the company from the standpoint of addressing the unmet needs of the patient population. MAYER. Sometimes those in R&D believe that marketing is trying to direct the science, and that doesn’t go over well. Researchers believe they are the champions in bringing new entities to the company. Although marketing takes the lead in pushing the compound forward for commercialization, the greatest insights to making a drug successful, to learning how it really works, and how it compares with the competitors, come from the researchers. SPITTEL. Recently I was at a client meeting with the R&D group to discuss the results of Phase II and Phase III data. To our surprise, when the R&D team leader started the presentation he did so with his thoughts on the marketing of the product and even included a “tagline” he had written for advertising and promotion. I also have had very positive experiences with activities such as war games where multidisciplinary groups within the company get together to “plot out” strategy versus a competitor product. This tends to develop a sense of camaraderie and a real exposure to the talents of the individuals on the various teams. Most important is keeping everyone in the loop on a routine basis, whether through written or oral communication. The last thing a product manager wants to hear is that a Phase III or Phase IV clinical study has been “designed” without his or her input. Closing the Gap HESS. A handful of pharmaceutical companies are starting to change the way they approach drug development and tackle some of the critical decisions in the early stages: preclinical, Phase I, and Phase II. It really comes down to changing the decision-making process and changing the structure of the teams that are working closely with the drugs. Typically, pharmaceutical companies will have someone in a project-management function. This person leads the team for a drug and is ultimately responsible for that drug’s progress through development. This person should have both a scientific and business background so he or she understands both sides of the business. STALSBERG. The key to success in bringing R&D and marketing together is closely aligning the people from each organization who are really driving the initiative forward on a day-in and day-out basis. They have to have an extremely comfortable working relationship and clearly understand what their roles and responsibilities are on the team. These people have to take co-ownership and have passion for the process. One group can’t feel as if it is being devalued by the other group. If that happens there tends to be a power struggle between the two organizations, and valuable time and resources get wasted. Team unity can be fostered up front when members of the team from both organizations sit down and go through a quantitative needs assessment of the market and clearly understand where and why they are heading in a specific direction. This creates buy-in from both sides of the organization. Both sides know what the team is shooting for and everyone is trying to hit that target. Otherwise, there tends to be an adversarial or dictatorial role within each organization, which is when everything falls apart. BURGE. We have many people who we can work with to help us out with the initial marketing analyses of a product, despite the fact that there is nobody in-house full time at this point. We have used consultants to help design a plan to move a product forward. Marketing evaluations have been considered in the design of every Trubion product candidate. RUFFOLO. At Wyeth, three-and-a-half years ago the R&D and commercial organization decided that operating at different poles was not the right way to go. We integrated the commercial organization into everything R&D does, from the earliest parts of discovery through the management of early-clinical and late-clinical development. Specifically, the first thing we did was set up a Development Council, which approves every drug that goes into development and monitors its development all the way through to market and beyond. And the council includes not just the R&D and commercial organizations, but also law, finance, and regulatory. Every department in the company has a member on the Development Council. PROUNIS. Genentech does it right. The company is forward thinking and plans well ahead with a fully integrated team between commercial operations and clinical R&D; it is amazing to see the alignment really work. Positioning, branding, and messaging all are agreed to by the multifunctional team, which then serves as the platform to inform all promotional and educational initiatives. The goal is speed to market penetration, not just speed to market, and with a corporate culture of bringing together clinical research and marketing early on in the process, Genentech is well on its way to accelerating market penetration. BURGE. Not only should marketing be involved early, but it should be there at the very beginning. To design the optimal characteristics into a molecule, those characteristics need to be identified at the beginning. At Trubion, we have taken a very right-to-left approach. We start with the market and what the characteristics of the compound need to be and then move backward to design a molecule that will demonstrate those characteristics. A pharmaceutical company, if it waits too long, may go too far down the road with a molecule with less than ideal attributes for a particular market. SPITTEL. To create that “optimal” label, studies must be designed to produce the necessary information. To make this happen requires that both marketing and R&D are on the same page early on in a product’s development – as early as Phase II when clinical studies begin to determine what “claims” the pharmaceutical company really wants to be able to make and what the ideal competitive agents are. ASHE. Closing the gap between R&D and marketing is a function of efficient project management and effective teamwork. Everyone needs to clearly understand the mission and understand what his or her role is in accomplishing that mission. When teams are as large as we see with some of our clients, often extended by copromotion across other pharmaceutical companies or supplemented with outsourced support, there is not a lot of clarity about who makes which decisions and who actually is the ultimate decision maker to keep the commercialization effort moving forward. RUFFOLO. Wyeth has a relatively new pharmaceutical headquarters, which allows us to have all of the commercial and R&D people located in one building. R&D and commercial people are all mixed in – we are all together. We are now organized by therapeutic area or business unit. All the commercial people and R&D people who support a business unit are together. So, it is not just agreeing to work together on committees, but actually working right next to each other; this has worked absolutely beautifully. HESS. Another tactic pharmaceutical companies have come up with is a process-based solution, which is a target candidate profile document that is put together as early as preclinical. This is a precursor to the later stage drug-management document. This document acts almost like a book or a manual where people from R&D, marketing, market research, and clinical development can include all the information that they have on a drug and everyone has access to this document and everyone can see what the other teams are doing. This is another way to share information and bring information from the scientific side of the organization and the business side together in the same place. RUFFOLO. We have set up a portfolio-management process. Senior members from every part of the company rank every compound in every conceivable manner, from technical probability of success to medical need to commercial viability, to launch costs, to manufacturing costs and marketing costs, to scientific competition. The entire development portfolio is ranked on a series of templates with everyone sitting at the same table having their say. Then we all agree on all the numbers, whether it is a R&D cost or a launch cost, and then we lock the database and come up with a priority. Nobody is allowed to second guess later on because everybody had his or her say. Now we are able to make decisions about our pipeline without arguing back and forth between R&D and the commercial organization. JULES. Pharmaceutical companies are beginning to deploy collaborative portals to bridge the communication and collaboration gap between drug R&D and marketing. These companies are replacing today’s ad hoc paper- and e-mail-based collaborations with portal-based solutions that provide all relevant constituents with a customized view of a drug’s current status, upcoming milestones, trial results, regulatory and nonregulatory documents, archived project status reports, and meeting notes. A collaborative portal becomes the place where drug team managers go daily to get their work done. Team members go as needed to contribute to the effort. And senior company executives go for a dashboard view of progress across multiple drug-development projects. MONAHAN. We are not seeing the two groups coming together structurally, but we are seeing them growing closer through data request needs and competitive analysis. We are seeing a greater demand for understanding what is happening on the R&D side from the commercial folks. We also are seeing R&D teams requesting more information about what is happening on the commercial side. MAYER. In my experience, companies that have successfully aligned their marketing and R&D have created mutually agreed upon criteria for what makes that compound viable in the marketplace. The criteria are established, and there are certain expectations, milestones, and hurdles that a potential product needs to attain. If the compound doesn’t achieve those criteria then it either loses its priority funding and staffing status to another compound or it doesn’t go any further in development. By setting up real objective criteria, companies can eliminate the emotions and any subjectivity involved in the decision-making process. F PharmaVoice welcomes comments about this article. E-mail us at [email protected]. Steve Spittel Deep within most scientists lurks a “wannabe” marketer. While most have gone into the discipline for their love or understanding of science, I am finding more and more that they really enjoy the opportunity to connect with their marketing peers. After all, we are all consumers at heart. TOPIC of interest Gina Ashe There needs to be a continued focus on the decision-making process. Marketing is focused on lead times, message impact, and market uptake. The clinical and safety teams are focused on the quality of research and meeting the scientific endpoints that will usher a medication through the FDA approval process. Dr. Jo Ann Mayer Management has realized that R&D and marketing teams should be aligned to drive the product to the market faster. Most companies have global development teams, but whether they work antagonistically or cooperatively and if they have the ability to be objective are the issues now. John Monahan Success comes when the best scientists understand the marketing and when the best marketers understand the science. Charlene Prounis Ensuring that the commercial team is working with the R&D group to identify unmet needs and barriers and motivations for using new products are critical success factors. The job of R&D and marketing teams is to optimize the label in the early phases. Dr. Evan Demestihas Marketing helps to provide analysis via quantitative and qualitative market research reports. Based on those results, marketing recommends key opinion leader protocols that will seek out expanded market opportunities or lay the groundwork for broader indications. Early-Stage Commercial Spending as % of Total Budget About 21% of total commercial spending occurs during preclinical through Phase IIIa development. Pre-NDA submission commercial spending Source: Cutting Edge Information, Durham, N.C. For more information, visit cuttingedgeinfo.com. COMMERCIAL STAFFING BY PHASE Commercial staffing increases as a product moves through development. This reflects a higher probability that a product will reach the market and an increasing need for market development and commercial support Source: Cutting Edge Information, Durham, N.C. For more information, visit cuttingedgeinfo.com. arly-stage commercial spending allocations depend heavily on product size (as measured by projected peak annual sales levels), net present value, strategic importance to the company or business unit, and the probability of reaching the market. From preclinical development through Phase IIIa, budgets rise, on average, as marketing activities ramp up and the likelihood that products will reach the market and produce positive returns increases. Cutting Edge Information collected phase-by-phase commercial spending data on several products ranging from the small ($0 to $300 million in projected peak annual sales) to blockbuster ($900 million and up) categories. The average commercial spending for these products rises by 33% from $1.5 million in preclinical development to $2 million in Phase I. Once drugs show positive early clinical results, companies analyzed for this report loosen the purse strings and triple spending to $6 million for Phase II. Finally, when products enter Phase IIIa where the probability of reaching the market is high and companies prepare to submit a new drug application (NDA) to the FDA, marketing spending skyrockets to more than $23 million, on average. Despite the significant sums thrown behind products before NDA submission, early-stage spending still pales in comparison to late-stage marketing budgets. Marketing spends from preclinical through Phase IIIa comprise about 21% of total commercial spending, while launch, Phase IIIb, and Phase IV account for 79% of all marketing dollars (see chart on left). Commercial Budgets: Preclinical Only one of every 1,000 drug candidates that make it to preclinical development is deemed promising enough to advance to human clinical trials. With such small odds of progressing to even Phase I, companies are naturally hesitant to back preclinical drug candidates with hefty marketing budgets. Instead, they focus spending on a few key commercial activities, such as clinical planning, market research, competitive intelligence, and early product profile development. On average, for commercial spending, pharmaceutical companies spend $1.5 million for preclinical drugs. Commercial Budgets: Phase I Phase I commercial spending remains relatively constant for midlevel and blockbuster drugs. But, smaller product spends rise significantly – and can as much as double – from preclinical to Phase I. Small product budgets tend to vary only slightly throughout early-stage development relative to their blockbuster counterparts. Small drug budgets range from a low of $2 million in preclinical to a high of $8 million in Phase IIIa. Average financial backing rises from $1.5 million in preclinical development to $2 million in Phase I. Interestingly, Cutting Edge research shows that companies spend more on small/specialty drugs in preclinical and Phase I. Often, this results from having to conduct more original market research, competitive intelligence, and analysis into niche, specialty markets. Commercial Budgets: Phase II About 33% of drugs entering clinical trials complete Phase II. But, these odds are significantly improved over the 0.1% of drugs that make it from preclinical to clinical development. As such, portfolio managers are comfortable authorizing larger budgets to execute more market preparation activities. As Phase I trials close, drugs progress to Phase II and expanded human testing to show efficacy. Their net present values rise on the increasing likelihood that they will reach the market and eventually turn a profit. Pharmaceutical companies spend an average of $6 million on Phase II marketing. The most marked trend is that spending on drugs that are anticipated to become blockbusters rises five-fold from Phase I to Phase II. Additionally, midlevel drug spending grows by 400% to 1,000% from Phase I to Phase II. Small and specialty commercial budget increases are more modest. Commercial Budgets: Phase IIIA The percentage of drugs entering clinical trials that complete Phase III drops to about 27%. The likelihood that products will reach the market inches higher as they progress to Phase III. Phase IIIa marketing spending grows dramatically in preparation for launch. Phase IIIa drugs are backed with substantially greater resources. On average, surveyed pharmaceutical companies spent more than $23 million on marketing in Phase IIIa. Of the Phase IIIa marketing activities of the companies surveyed by Cutting Edge Information, strategic marketing received the greatest support at $4 million, followed closely by medical and regulatory affairs, key opinion leader management, and business development. The other top activities supported in this phase include market research, brand teams, advocacy management, and competitive intelligence. It is in Phase III that companies entertain copromotion opportunities, thought leaders advise on key decisions and make a final push to create a “buzz” in the market about new drugs, and pharmaceutical companies seek approval from the Food and Drug Administration to market their new products. Source: Cutting Edge Information, Durham, N.C. For more information, visit cuttingedgeinfo.com. Jon Hess If R&D and marketing are communicating better and earlier in the development process and working toward the same objectives, companies will move more of the right drugs through the clinic. This also weeds out drugs that won’t make it to market, thus reducing unnecessary time and money that should be used for drugs that are more promising. Dr. Daniel Burge When marketing and R&D are unified, there is an opportunity to design a therapeutic agent with the product characteristics that are most desirable.

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