Innovative Contract Commercialization Model Can Yield Over 20% in Launch Savings

In thinking about the economics around the launch of pharmaceutical products, it is useful to compare the situation to another area that has seen its economics evolve in recent years: space travel. For decades, the only reusable space vehicle was NASA’s space shuttle. When the space shuttle was in operation, it could launch a payload of 27,500 kilograms for $1.5 billion, or $54,500 per kilogram. Today, the SpaceX Falcon 9, the reusable rocket used to access the International Space Station, can launch a payload at a cost of just $2,720 per kilogram.

Much like the cost savings reusable rockets could bring to the future of space travel, reusable infrastructure and resources can streamline and accelerate the launch of pharmaceutical products, reducing costs significantly while enabling rapid cycles of innovation that change the launch landscape. By partnering with a fully integrated contract commercialization provider, manufacturers can realize enormous benefits in resource efficiency and innovation.

The Cost of Launch

Both experienced and first-time launchers have to invest significantly in preparing for launch, with first-time launchers incurring additional investments to build up the infrastructure. Cost drivers for experienced and first-time launchers include:

• Hiring or building a commercial team two to three years in advance of launch, resulting in organizations investing significantly early and not being able to utilize the team efficiently.

• The application of outdated launch preparation models meant for blockbusters in an age when blockbusters no longer exist.

• Spending significant effort and time in issuing RFPs, selecting vendors for hundreds of projects, and undertaking project management for 50+ vendors across a wide range of activities and coordinating their efforts to function together seamlessly.

• The disruption caused by teams bringing their legacy cultures and processes to the new organization.

Additional cost drivers for first-time launchers include:

• The support cost drivers of hiring shared service teams and building and maintaining infrastructure and systems for the first time, including IT, HR, finance, legal/compliance, corporate communications, investor relations and pharmacovigilance.

• The core commercial cost drivers of hiring an executive and management team, including recruiting costs and time and the challenges of getting the team to work together and be productive quickly.

Reducing Overspend Through Innovative Models

Significant cost avoidance can be realized by adopting an outsourced, innovative commercial model and taking advantage of efficiencies in terms of both people and activities to mitigate the major cost drivers surrounding a product launch.

Under the outsourced model, the manufacturer does not need to hire a large commercial team two years in advance of launch. Instead, outsourcing allows for “just-in-time” hiring. And instead of hiring 30-50 commercial team members, a manufacturer would need only three to five full-time commercial team members to perform some core strategic functions, with the rest of the staff comprising the contract commercialization organization. The manufacturer would also see savings through improved utilization of resources, with no downtime from 100% billable resources.

Through analysis of some real-world examples, it is possible to quantify the cost avoidance that can be realized through adopting an outsourced commercial model. We examined a field of 75 companies with launches completed between 2014 and 2020, boiling the field down to 10 launches for which we could 1) reasonably estimate commercial cost per year to launch the product and 2) run our own integrated contract commercial plan model against it. Download the full study for details, including three detailed case studies.

How It’s Done

Creating cost efficiency and value creation while ensuring launch excellence comes about as a result of five key benefits of an integrated, complete commercialization model:

Agility and Action: With a single internalized structure rather than a fragmented set of bureaucracies, the contract commercialization model allows for real-time decisions and actions through integrated leadership and operations.

Product and Patient Visibility: Insights from Patient Services, Field Solutions, Channel, and Data and Analytics provide visibility into products and patients in order to optimize core metrics — onboarding, adherence and abandonment — which helps to predict and course correct.

Single Team Operations: Unlike traditional siloed models, in the complete commercialization model, teams exist under one roof and are organized based on the critical success factors of the launch vs. their own vendor-oriented business area (e.g., patient services, agency). Launch and in-market teams work together to eliminate operational silos and gridlock.

Aligned Objectives: Shared incentives drive optimal shared success, and accountability is demanded at all layers of the operating model.

Investments and Cost Structure: The contract commercialization model offers ready-to-deploy investments in global infrastructure and data and analytics. Significant investment in digital innovation and data partnerships creates “data-driven” SOPs and playbooks.

Conclusion

Today’s economics simply do not support building launch capabilities from scratch for every occasion, only to dismantle that infrastructure until the next need arrives. Instead of building from scratch, having an advanced commercialization services platform that can be adapted for varying market needs is the key to success. EVERSANA can take a process-driven approach to provide a high-performance, complete commercialization infrastructure while affording the same cost savings and efficiencies the pharma industry has already enjoyed when it comes to outsourcing research and manufacturing duties.

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