BEST PRACTICES,®

LLCCopyright © Best Practices®, LLC

Best Practices, LLC Strategic Benchmarking Research

Lifecycle Management Excellence: High-Performing Strategies

Used to Maximize Potential Of Mature Brands

BEST PRACTICES,®

LLCCopyright © Best Practices®, LLC

Table of ContentsExecutive Summary, pp. 3-11

Research Overview, pp. 4Benchmark Participants, pp. 5Key Findings & Insights, pp. 6-11

Corporate LCM Goals & Policies, pp. 12-15Use of Key LCM Strategies, pp. 16-19Comparative Effectiveness of Key LCM Strategies, pp. 20-22Relative Costs of Key LCM Strategies, pp. 23-25Relative Time of Key LCM Strategies, pp. 26-28ROI of Key LCM Strategies, pp. 29-31Barriers of Key LCM Strategies, pp. 32-35Key Strategy Profiles, pp. 36-39Gains from Using LCM Strategies, pp. 40-46Strategies Weakened By Regulation or Reform, pp. 47-48Mature Brand Organizations, pp. 49-61Success Factors & Lessons Learned, pp. 62-66Case Example: Pfizer’s Lipitor, pp. 67-70Appendix: Participant Demographic Data, pp. 71-75

2

BEST PRACTICES,®

LLCCopyright © Best Practices®, LLC

Research Project Objective & Methodology

Deployed online survey to representative group of pharma brand & marketing leaders with experience in LCM.

Sample Size: 25

Field Research :

Provide marketing & brand leaders with directional data & proven practices they can use to gain maximum value from late-life products

Result:Key Areas of Investigation:

1. Success rates & ROI of different strategies that leading companies have used to maximize mature-brand value

2. Relative cost, time, complexity, & regulatory barriers encountered with using each strategy

3. An overview of the operation, expenses, responsibilities & business impact of dedicated mature brand (MB) groups

Business Issue:

Best Practices, LLC conducted this benchmarking study to examine the relative effectiveness of 20+ strategies for extending the commercial life of mature pharmaceutical products. The study also compares the goals and responsibilities of Mature Brand (MB) organizations.

With expiring patents & thin pipelines, pharmaceutical companies are increasingly focused on lifecycle management (LCM) planning to make the most of each brand at every stage of its life, including the somewhat neglected back end. In this context, executives seek to understand what strategies and corporate structures are most effective for extending the commercial life of its mature products.

3

BEST PRACTICES,®

LLCCopyright © Best Practices®, LLC

Benchmark Class:

Universe of Learning: Benchmark ParticipantsResearch participants included 25 executives and managers from 18 different pharmaceutical and biotech companies. Respondents represented more than a dozen therapeutic areas. On average, this seasoned group boasts U.S. leadership experience with eight mature products. Two-thirds of this group currently work at the director level or above.

4

BEST PRACTICES,®

LLCCopyright © Best Practices®, LLC

Key Findings: Selected Benchmark Metrics

The following key findings emerged from this study.

Litigation Has Highest ROI: Overall, litigation strategies achieved the highest ROI for participants, with 40% realizing more than 100% ROI and another 20% realizing over 50%. Fixed dose combination, one of the more expensive strategies, had the second highest ROI rating. With respect to time and costs, branded/authorized generics was the most effective strategy in garnering a high ROI.

Most Used LCM Strategies: Almost two-thirds of participants use strategic pricing or publication strategies as a lifecycle management tactic.

Efficiency: Strategic pricing is rated by the benchmark class as the most cost- and time-efficient strategy.

Time Used: On average, benchmark partners used each LCM strategy for 21 months in support of mature brands, with a maximum time of 96 months for a strategy.

Financial Gain: Financial gain from using individual strategies among the benchmark class ranged from $0 to $10 billion, with a median gain of $30 million. The average gain was $254 million.

5

BEST PRACTICES,®

LLCCopyright © Best Practices®, LLC

Benchmarked LCM Strategies for Use with Mature Brands

Aimed at enlarging

patient base

Aimed at enlarging

patient base

Aimed at maximizing commercial

value & extending

protected life

Aimed at maximizing commercial

value & extending

protected life

• Added safety features• Extended release formulation• Fixed dose combination• New dosage form (e.g., patch)• New dosing regimen• New Indication• Shelf-stable version

Development & New Formulation Strategies

Commercial & Legal/ Regulatory Strategies

This study benchmarked the use of 19 development, new formulation, commercial, and legal strategies used to extend the commercial life of mature, legacy pharmaceutical brands.

• Add-on services (e.g., reimbursement assistance)• Brand loyalty programs• Branded/authorized generics• Contracting with large-volume purchasers• Extending into new, emerging markets (e.g., China)• Labeling changes• Litigation• OTC switching• Packaging innovations (e.g., co-packaging 2 drugs)• Publication strategy demonstrating clinical superiority• Repositioning product• Strategic pricing

6

BEST PRACTICES,®

LLCCopyright © Best Practices®, LLC

(n=24)

Q. Please indicate which of the following strategies you have used in the U.S. during your career. (Check all that apply.)

54%

54%

54%

58%

63%

67%

67%

67%

75%

50%

50%

Contracting with large-volume purchasers

Add-on services (e.g., reimbursementassistance/patient support)

Brand loyalty programs

Repositioning product

Extending into new, emerging markets (e.g., China)

Branded/authorized generics

Strategic pricing (adjusting price to maintain sales orgrowth)

New indication

New dosing regimen

Publication strategy demonstrating superior clinicalattributes (safety, efficacy, convenience)

New dosage form (e.g., patch, liquid)

LCM Strategy Usage

* Other: Taste enhancements, Reduce complexity, Contract Sales Organizations% Responses

LCM Strategies Are Widely Used by Benchmark ParticipantsMore than two-thirds of benchmark participants have experience with the top four LCM strategies examined in this study. New dosage form is the most-used strategy overall (75%). More than half of companies have experience with extending into emerging markets.

7

BEST PRACTICES,®

LLCCopyright © Best Practices®, LLC

17%21%

25%29%

38%38%

46%50%50%

8%4%Other new formulations

Other development strategies

Shelf-stable version (e.g., no longer requiresrefrigeration)

Other commercial strategies

OTC switching

Litigation strategies

Fixed dose combination (e.g., combining twocomplimentary products)

Added safety features (e.g., abuse resistant product)

Labeling changes

Extended release formulation

Packaging innovations (e.g., co-packagingcomplementary drugs)

(n=24)

Q. Please indicate which of the following strategies you have used in the U.S. during your career. (Check all that apply.)

LCM Strategy Usage, Continued

% Responses

*

**

Benchmark participants

used an average of four different LCM strategies for

mature brands.

All Strategies Used by at Least 25% of Participants; Other by 21%Benchmark partners listed eight additional strategies, indicated in the “Other” bars below. Other Commercial strategies include: Building alternative promotional channels, CSOs, reducing complexity, post-patent contracting, and taste enhancements. Other Development strategies include: drug/device combination and packaging.

*

8

Oth

er

BEST PRACTICES,®

LLCCopyright © Best Practices®, LLC

Publication strategy demonstrating superior

clinical attribute

New Dosing Regimen

New Indication

Strategic Pricing

Strategy Profiles: Overview of Mature Brand LCM Tactics

• 75% used• 88% users rated Effective (38%)• Time: 76% Rated > 3 years• Cost: 44% Rated > $10 million

Overview:

New Dosage Form (e.g., patch, liquid)

Considerations:Strategy:• Average ROI: 58%• Barrier(s): Technical Feasibility (57%)• Weakened by Regulation: High

• 67% used• 86% users rated Effective (7%)• Time: 80% Rated < 2 years• Cost: 54% Rated $1-5 Million• 67% used• 71% users rated Effective (14%)• Time: 77% Rated > 3 years• Cost: 42% Rated $1-5 Million• 67% used• 86% users rated Effective (40%)• Time: 80% Rated > 3 years• Cost: 57% Rated > $10 million• 63% used• 72% users rated Effective (29%)• Time: 93% Rated < 1 year• Cost: 66% Rated < $1 million

• Average ROI: 64%• Barrier(s): Length of Time (57%)• Weakened by Regulation: High

• Average ROI: 51%• Barrier(s): Length of Time (61%),

Regulatory Feasibility (57%)• Weakened by Regulation: Medium• Average ROI: 69%• Barrier(s): High Cost (83%), Length of

Time (74%), Reg. Feasibility (70%)• Weakened by Regulation: Medium• Average ROI: 34%• Barrier(s): None• Weakened by Regulation: High

The next three slides summarize findings regarding the most commonly used strategies in this study. NOTE: Green arrows indicate New Formulations strategies; Light blue = Commercial strategies; Dark blue = Development strategies. Values in red type represent the % of respondents rating each strategy “Highly Effective.” Only barriers with a response greater than 50% are shown.

9

BEST PRACTICES,®

LLCCopyright © Best Practices®, LLC

(n=18)

22%

22%

28%

28%

22%

17%Fixed dose combination (e.g., combining twocomplimentary products)

New dosage form (e.g., patch, liquid)

Branded/authorized generics

Strategic pricing (adjusting price to maintain salesor growth)

Brand loyalty programs

Publication strategy demonstrating superior clinicalattributes (safety, efficacy, convenience)

Q. Given the current health care reform environment, politics, mature drug shortages and other regulatory issues, do you expect any strategies that you have used successfully in the past to become ineffective or unusable within the next

12-24 months? (Check all that apply.)

Strategies Weakened by Regulation/Reform:

% Responses

Regulation & Reform Are Weakening Current StrategiesMore than a quarter of benchmark partners expect strategies used successfully in the past to be less effective in the future, due to regulatory issues in the current healthcare environment. Publication strategies and brand loyalty programs are viewed as the most vulnerable. Other strategies that will be affected include new dosage form, branded/authorized generics, and strategic pricing.

10

Other Strategies Selected More Than Once:

• Add-on services (e.g., reimbursement assistance/ patient support)

• Extended release formulation

• New indication

• New dosing regimen

• Repositioning product

• Packaging innovations (e.g., co-packaging complementary drugs)

Other Strategies Selected More Than Once:

• Add-on services (e.g., reimbursement assistance/ patient support)

• Extended release formulation

• New indication

• New dosing regimen

• Repositioning product

• Packaging innovations (e.g., co-packaging complementary drugs)

BEST PRACTICES,®

LLCCopyright © Best Practices®, LLC

No48%

Yes52%

(n=25)

Q. Does your company have a group or function dedicated to managing and supporting mature/legacy products in the U.S. market? (Choose one.) If no, who is responsible for maximizing mature products in the U.S.?

More Than Half Have a Dedicated Mature Brands Organization

Brand Teams73%

Global Marketing

9%

Brand Lead/Marketing

Director9%

Mature Products Commercial Team

9%

Dedicated Function Managing Mature Brands in the U.S. Market:

(n = 11)

Responsible Party if No Dedicated MB:

Dedicated mature brand (MB) organizations are in place at 52% of the companies in this study. For those with no dedicated MB group, brand teams are most often responsible for maximizing the commercial success of mature products.

11

BEST PRACTICES,®

LLCCopyright © Best Practices®, LLC

About Best Practices, LLCBest Practices, LLC is a research and consulting firm that conducts work based on the simple yet profound principle that organizations can chart a course to superior economic performance by studying the best business practices, operating tactics, and winning strategies of world-class companies.

12

Best Practices, LLC6350 Quadrangle Drive, Suite 200,

Chapel Hill, NC 27517www.best-in-class.com

Telephone: 919-403-0251best@best-in-class.com