Balancing Risk and Opportunity to Choose Winning Therapies

The ability to take a drug to market is an important milestone, but it is not the entire picture. To truly move the needle, both clinically and commercially, biopharma companies must fine-tune their teams, approaches and incentives to produce unique and innovative products.

Around 90% of new drugs under investigation fail in clinical trials, but that only tells part of the story. Even among therapies that receive a coveted FDA nod, around 62% underperform commercially during their first year. 

This is a complex problem that originates far upstream, when biopharma companies are deciding which assets should advance through their pipelines. At that point, it’s easy to choose therapies with the best chance to achieve FDA approval, but it can be a mistake to consider this in isolation. Leadership should also be prioritizing therapies that provide unique clinical and commercial benefits.

Unfortunately, this isn’t always the case. In 2023, the FDA approved 55 therapies but only 11 were the first in their indications, and that trend is continuing. For example, there are five IL-17-targeting therapies for plaque psoriasis in early trials, while four similar therapies have already been approved. These existing IL-23 and IL-17 inhibitors have established high bars for safety, efficacy and convenience. In other words, if approved, those five IL-17 therapies will enter a tough, competitive marketplace. 

While it may seem easier to advance “safe” therapies, with well-characterized targets, there is a clear opportunity cost. In addition to commercial underperformance, making what appears to be the “safe bet” could divert resources away from more innovative products. In today’s harsh markets, companies must always strive to make the best possible choices. By strengthening their commercial teams and harnessing available data, they can minimize risk, maximize opportunity and improve their overall odds of success.

Fighting poor incentives

Looking at the poor first-year results for most therapies – and how they came to pass – the issues aren’t usually vision, commitment or capability, but instead it is often how companies are organized and incentivized. Decision-making processes may not fully prioritize commercial considerations, particularly early in development. 

In some cases, R&D groups are encouraged to meet clinical development goals, incentivizing them to choose proven targets. Since multiple companies may be taking the same approach, these decisions meet the short-term goal of filling the pipeline but create products that face greater long-term competition.

In addition, companies can become over-invested in an asset’s scientific promise. While that drug might find regulatory success, it must also have a compelling value proposition to realize commercial success. If the company cannot connect the science to an improved outcome, it may want to consider making the difficult decision to drop that asset and reinvest those resources.

Rethinking how therapies are prioritized

How can companies adopt a more clear-eyed understanding of a therapy’s clinical and commercial value? They may want to reform how they make those go/no-go decisions to better balance risk with opportunity. 

Some drugs fail in the marketplace because their commercial potential was not fully assessed in early development. Commercial teams can be underpowered, giving R&D perspectives more power. Incorporating commercial perspectives into early-stage decisions gives companies the necessary tools to quickly drop assets with limited market potential and prioritize those with significant upside. 

Organizations can benefit from giving their new product planning (NPP) team’s opinions equal weight to those of their R&D colleagues. In addition, companies can also limit the number of assets each NPP group member supports to help the team provide meaningful insights on early-stage therapies. 

Without this commercial perspective, companies may be tempted to deprioritize early programs to focus on later-stage assets nearing clinical milestones. Scaling up these teams can enable market-driven decision-making early on, helping prioritize assets with the greatest ROI.

Companies should also pay close attention to the scientific literature and how therapeutic areas are evolving. Real-world data, customer insights and artificial intelligence provide valuable resources to support this work. Objectively identifying areas of need through AI-driven comparative intelligence can guide decision making for both individual assets and broad portfolios.  

Periodic portfolio reviews can harmonize pipelines with the emerging scientific consensus and competitive landscape. In addition, objective, external perspectives are invaluable to help prioritize assets and identify misaligned internal incentives.

While FDA approval has long been a singular prize, companies should also mine their assets for the strongest commercial opportunities. Again, the ability to take a drug to market is an important milestone, but it is not the entire picture. To truly move the needle, both clinically and commercially, biopharma companies must fine-tune their teams, approaches and incentives to produce unique and innovative products. By putting these robust systems in place, they can identify winners early and hopefully often.

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