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Early on Commercial Planning Investments within the R&D Process: The Business Case - Full Article

Commercial investments within the early phase of R&D generally rank very low on a company’s priority list.  To use a sports expression, commercial investments often don’t make the cut, and get relegated to the bench. There are many reasons as to why early investment in commercial planning too often can get ‘side-lined’, such as a lack of resources, expertise or a lack of perceived value in this type of investment.  And after all, with so many balls to juggle at once, something has to give – right? And with commercialization being far in the future, it appears normal to spend all the energy and resources on moving the product through the various clinical phases, and delay any commercial investment to the back-end of the R&D process. Makes sense, no? Actually, maybe not…

 

This short article aims at describing, in a rapid-fire format, key reasons as to why early-on investments in commercial planning should be highly considered.

 

1.      Defining the market need is as important (if not more) as developing the solution itself.  “Don’t find customers for your products, find products for your customers.”  Creating a powerful, unique, and sustainable value proposition should be at the foundation of any R&D program that hopes to achieve commercial success. The development of a value proposition starts by gathering a deep understanding of the market dynamics, the external environment (e.g. political, economic, social, technological, environmental, legal), and the individual needs of the key stakeholders. A deep and thorough understanding of the medical need in the context of the commercial environment is therefore foundational to any product development. This exercise should be conducted in the very early stages of the R&D program, as it will influence its development. 

2.      We are always selling, like it or not!  For most, sales activities start after an asset receives its regulatory approval, or shortly before. This is when the ‘rubber hits the road,’ some will say, although, one could argue that this couldn’t be farther from the truth. In reality, selling happens throughout the R&D continuum.  As an example, for development stage companies seeking funding, selling starts from inception. The client, in such case, is not a prescriber, a health system, a patient or a payer, but members of the investor community, which as we know will be crucial stakeholders for moving the program forward. At the core of investors’ thinking is the notion of risk-reward, anchored, at every stage, around financial valuation.  Maximizing the company’s value at every inflexion point of the R&D process and avoiding losing value points should be a good enough justification to invest in early commercial planning. It can allow moving the discussion from to “how big is the market” to “how believable is the opportunity”, and how likely is our chance to have a real shot at it. Having a tight, credible and externally validated commercial story increases the likelihood of gathering traction with investors and/or strategic partners, whilst also helping to de-risk the asset and support their investment and/or partnership decision, and related valuation. Any commercial story should aim at providing a framework on how to think about the opportunity, to then let the market tell the story, using externally validated data. Therefore, early on commercial development can be seen as an investment vs. an expense, as per its ability to create significant value, aligned with the company’s inflexion points. An investment in commercial knowledge might then pay the best dividend…

3.      Payers have major influence on the commercial success of an asset, and their needs have to be considered early on the R&D process.  In the past, doctors were the primary stakeholders responsible for the commercial success of a product, since they had the freedom to prescribe almost any therapy they felt was best suited for their patients.  A product received regulatory approval, and shortly after, it was assumed that payers would put it on their list of covered products, without too many hurdles. But things have changed, dramatically, to say the least. Payers have become, over the years, a predominant player within the commercial equation. As the ones who are ‘paying the bill’, they want to get the best value for their investment (rightly so), and have their own ways to establish and quantify what ‘value’ means, and how they will or won’t put a specific treatment on their covered list. Policy-makers and payers search for ways to control cost without compromising care, and the failure to communicate a convincing value proposition to these stakeholders results in one being forced to compete on price vs value. The accountability is now on the manufacturer to develop a powerful value proposition for this important group of stakeholders, and to generate the required clinical evidences within the R&D program in support of this value proposition. This means that the clinical program should not only aim at satisfying regulators for product approval, but also payers to ensure market access, or better said, patient access. Understanding payer’s needs early on and making sure to embed their needs into the R&D program is a very wise thing to do, as market access can either enable or severely restrict the commercial success of a product.  Studies define the launch window of a life science product to be the first 6 month period, after which it becomes extremely difficult to reverse the adoption trajectory; thus, securing patient access early on becomes critical. Also to note, payer pressure and the related risk in securing market access can be a key element of discussion in business development discussions when assessing the commercial potential of an asset. To be ready for such discussions, one needs to be armed with the data and a solid path to market access, which can only be generated via a planned and carefully, executed commercial development effort.

 

This short article aimed at providing a few thoughts as to why commercial investments should be carefully considered at every stage of R&D. And to the question, when is early… my answer is pretty straightforward: as early as possible, whilst recognizing that investments in commercial planning do require to be phased in time, following an exponential function trajectory. As a company moves its program through the various clinical phases, the risk also migrates from technical to commercial. The level of investment should also follow that same timeline.