Eli Lily: Tele-detailing case study

The March 2011 issue of Pharma Marketing News reported on a tele-detailing case study presented by an Eli Lily Sales Innovation Manager at a conference in Italy. Some of the impressive, and somewhat surprising, takeaways were:

How fresh is Big Pharma's Freshness Index?

 Πηγή: Forbs

A convenient way to gauge pharmaceutical innovation is to look at the percentage of a company’s sales that comes from products approved in the last 5 years. This is sometimes called the “Freshness Index”. In the last decade, pharmaceutical companies have been more open about the sales of their leading products, which they now routinely disclose in their financial reports. In 2012, for example, the top 13 big pharma reported the sales of 314 products, representing 79% ($309 bn) of their pharmaceutical sales ($391 bn). Products that were not reported were those too small to matter to investors. These sales figures, combined with knowledge of when products were approved, make it possible to calculate the percentage of sales coming from drugs of various “vintages”. The results are shown in Exhibit 1.

As can be seen, only 10% of sales from reported products ($32 bn) came from drugs approved since 2007, and only 48% ($150 bn) from drugs approved during the last 12 years, which approximates the effective patent life of medicines. Paradoxically, the majority of sales from pharma’s biggest products ($159 bn) comes from drugs approved before 2001, that are either generic, or about to become so. This is quite unexpected, as products falling off the patent-cliff are supposed to be quickly headed for oblivion. Perhaps this longevity is understandable for biologics since there are few biosimilars. Indeed, 31 of the reported products approved before 2001 are biologics, with aggregate sales of $59 bn. That leaves $100 bn for small molecules older than 12 years. The future of big pharma, at least in the short-term, hinges in great part on its skills at selling generics.

The appendix below shows the 116 small molecules approved before 2001. It makes interesting reading in defensive marketing. Some of the bigger names have either recently become generic, or will soon do so, but many drugs survive thanks to brand recognition, patented formulations, and other life-cycle management tools.

Exhibit 2 shows each company’s percentage of reported sales coming from drugs approved since 2007. Novartis leads the pack with a “Freshness Index” of 19%. This supports the view that, in pharmaceuticals, the way to innovate is to focus on breakthroughs, not blockbusters. This is not a new idea. George Merck stated it famously in the 1950s, and for decades, it defined the industry and underpinned its success. Companies that strayed from it have paid a stiff price. Exhibit 2 also shows that 6 out of the top 13 pharma draw less than 5% of their reported sales from products 5 years or younger.