For an emerging, development-stage biopharmaceutical company, the possibilities for the company’s future seem endless – which can be both exciting and challenging. Companies at this stage are usually working hard to advance their lead asset(s) through the clinic while also trying to determine their long-term business strategies. In some ways, they are trying to answer the question, “What are we building towards and why?” Strategic decisions made at this early stage can have far-reaching effects, dramatically impacting a company’s direction, value, and ability to make an impact in its chosen market(s).
Early stage companies are, more often than not, highly driven by the science to support initial R&D. As a result, their leaders tend to be the founding scientists, so many critical decisions are often made through a scientific lens. However, the commercial perspective—which focuses more on understanding and addressing the needs of patients, healthcare providers, payers, and other external stakeholders—is not always fully considered and incorporated into decision-making.
Integrating the commercial perspective into early strategic decision making is critical when it comes to a company’s long-term success. In fact, there is a collection of extremely important (and highly related) “make or break” factors for early stage companies that reflect the importance of informing decisions from a commercial perspective. This article introduces seven “make or break” factors and lays the groundwork for a series of seven follow-up articles, each of which will explore an individual factor in more detail.
Let’s get started!
Factor 1: Educating and Aligning Internal Decision-Makers
As mentioned above, the commercial perspective considers the needs and attitudes of patients, providers, payers, and other potential stakeholders in the market. Leaders who bring the commercial perspective into early decision-making understand those groups’ importance to the company and can represent their needs when the company considers key strategic decisions.
However, company leadership teams are not always aligned on the importance of the commercial perspective—especially for clinical and corporate decisions—in part because of a limited understanding of the value it can bring. If anyone in the leadership team possesses that understanding, it may become their responsibility to educate and align other decision-makers in the company. It’s also important to remember that this education and alignment is not “one and done”, and often spans a range of internal stakeholders beyond the executive leadership team.
With sufficient organizational alignment, a company can leverage the commercial perspective to gain a deeper understanding of the market and make more informed strategic decisions, which will be a focus of several other factors.
Factor 2: Generating The Most Important Customer Insights
Once leaders agree on the need, it’s important to move from alignment to action. Good decisions are made based on a deep understanding of the market and customer needs. However, given the breadth of decisions that a company needs to make in the journey from R&D to commercial, as well as the need to use resources efficiently, many companies don’t get the right insights at the right times.
Starting with the end in mind, companies usually need to address the following questions in their journey from R&D to commercial:
- What unmet need(s) can this therapy address and what is the true market opportunity associated with the need(s)? (to inform how much to value the asset / company and how much to invest)
- What product profile will optimize the value of the product? (to inform registrational program design)
- Where and how would one need to invest to realize that value? (to inform the required capabilities, preferred go-to-market model, and more)
To make these decisions in a more informed way, the most important insights to gather early include a nuanced understanding of:
- The overall patient journey / treatment flow
- Unmet needs in the market
- Features and benefits that patients, physicians, payers, and others are seeking in a new product to address their unmet needs
- How prescribers and payers react to a target product profile and the implications for prescription decisions, access & reimbursement, adherence, etc. (including anticipated barriers that must be addressed)
- The actual size and concentration of the target patient population: for example, whether patients are spread throughout the community (as with chronic lymphocytic leukemia) or concentrated more in academic medical centers (as with relapsed / refractory acute myeloid leukemia)
When the right insights are incorporated into these decisions, the overall attitude evolves from “What do we need to do to get this therapy approved?” to “How do we best meet the needs of the market to maximize the value we bring to customers (and as a result, the company)?”
Failure to leverage the right customer insights can result in some highly negative outcomes. These can include a therapy with poor market access, slow uptake, and mismatched or wasted commercialization investments.
Factor 3: Integrating the Commercial Perspective Into Clinical and Corporate Decisions
As should be evident by now, the “make or break” factors tend to build on one another. First, leaders must align on the need to integrate a commercial perspective. Then, they need to gather the right market data and generate insights to inform that perspective. Next, it’s important to actually leverage that perspective as the company makes key decisions.
For the sake of this article, we will think about the decisions made by early-stage companies in three main categories: commercial, clinical, and corporate (a term used here to refer to decisions that can impact the fundamental, strategic direction of the company and can include a range of clinical, commercial, financial, and other considerations). Commercial decisions are the focus of later “Make or Break” factors and are clearly driven by a commercial perspective, but too often companies don’t include enough commercial perspective in corporate and clinical decisions.
Key clinical decisions can include which assets to take into and through the clinic, determining the optimal clinical and regulatory path to market (and throughout the longer-term lifecycle), and designing individual trials within the overall development plan. By supplementing a scientific perspective with a customer-centric (commercial) perspective, companies can ensure that their products are designed to deliver real and impactful value that best meets customers’ needs.
Key corporate decisions can include deciding which geographies to enter, which business model to use in each geography, how to value the asset / company, when and how to raise capital, and more. Often, these decisions are made with higher-level assumptions as part of financial planning exercises. However, leveraging the focused insights gained in Factor 2 helps refine those assumptions—especially around value and investment required—based on a more nuanced understanding of the market.
Factor 4: Knowing What It Will Take to Commercialize
Regardless of what a company ultimately decides to do with its therapeutic assets, it needs to know what it would take to commercialize them. However, leaders who have not commercialized a company’s first product often underestimate the effort, resources, time, and infrastructure required to commercialize a therapy.
By developing a clear understanding of what it will take to commercialize, a company will put itself in a stronger position whether it intends to commercialize or not. First off, gaining a clear understanding of the requirements to commercialize often helps inform the best path forward (see Factor #5 below). If the company decides to commercialize, then it will be much better prepared and less likely to suffer delays or wasted resources. If it decides to not commercialize and instead out-licenses / sells the asset, then it will have a more thorough understanding of what a potential partner will need to do, leading to a more informed position when it comes time to negotiate deals.
Factor 5: Choosing The Best Commercial Path Forward
Emerging companies typically have a range of strategic options on how to realize value from their assets. At the highest level, a company needs to decide which geographies to commercialize in, and for each product in each geography, whether to:
- “Go alone”, aka build all of the necessary infrastructure and commercialize without any partner
- “Outsource” some or all commercialization capabilities to one or more partners
- Fully out-license
Companies will often pursue a combination of these strategies. For example, a US-based company with a single product may choose to “go alone” in the US market, establish partnership(s) in key ex-US markets (usually major European markets), and fully out-license in other geographies (such as Asian and Latin American markets).
The optimal path forward will depend on the company’s vision, product portfolio, therapeutic area(s), geography, and a host of other variables. Given the number of potential permutations and potential inputs, this decision can be complex and often pushed much later. As a result, some companies leave too many options on the table for too long, creating “organizational swirl” as teams lack sufficient clarity to plan for the long-term, ultimately putting launch timing at risk and jeopardizing value. The art to navigating this decision is to quickly select one or two base case / preferred planning options while remaining flexible to adapt to new information.
Factor 6: Right-Sizing Your First Launch
Although there are commonalities, each launch is truly unique. A winning launch strategy and plan should be tailored to address the unique needs of the customers / market and company. However, sometimes emerging companies fall into one of two extremes for their first launch.
On one hand, some emerging companies will adopt a “big pharma” approach, which usually involves building large teams (home office and/or field), creating complex processes and ways of working, and over-spending on launch tactics or activities. In totality, all of this can expose the company to undue financial risk and inefficient use of resources.
On the flip side, some companies aim to minimize spend and ultimately end up under-resourcing their first launches. This can result in delays and rework that end up costing more in the long-run, or causing the company not to invest in capabilities or activities that end up being critical to launch success.
Companies that do a good job with Factor #4: Knowing What It Will Take To Commercialize are much less likely to fall into either trap.
Factor 7: Establishing New “Ways of Working”
Corporate governance is highly important to making everything mentioned above work. CEOs (or executive leadership teams) in emerging companies often get used to making—or personally approving—all of the key decisions. That’s usually ok while the company is focused on a few discrete decisions, but there inevitably comes a time when that’s no longer feasible (because there are too many decisions for one person to make) or desirable (because those decisions benefit from a different set of expertise). For example, a scientist founder may not have the capacity or experience to effectively make key strategic decisions in Factors #2-5 that must hinge on commercial input.
A company must develop a governance framework that outlines roles and responsibilities for decision-making, collaboration, and communication. At first, this is most critical to clarify where and how the executive leadership team makes decisions, but over time the governance model should evolve as the organization grows and adds new teams or expands existing ones. Creating clarity in ways of working – and helping all stakeholders through any change is critical to ensuring that the right decisions get made at the right times by the right people.
Coming Next
In our next installment, we will take a deeper dive into Factor 1: Educating and Aligning Internal Decision Makers. In particular, we’ll stress why this is important to do early, who needs to be involved, and approaches for effectively facilitating the process.
