Drug companies reinvest up to 10% or more of revenues to research and develop franchise and product line extensions, according to a new report published by pharmaceutical business intelligence firm Cutting Edge Information.  Cutting Edge Information’s research finds most drug companies spend $100-$150 million – and as much as $250 million – on R&D for franchise and product line extensions.

These drugs, which often feature improved delivery mechanisms or come in extended release form, also help drug companies retain market share in the face of generic competition.  If a company can introduce an extension six months or a year before an existing drug’s patent expires, it has a chance for transitioning patients to the new, patent-protected drug.  If it is successful, the company can retain market share even after generic copies of the original drug reach market.  Without a line extension, companies risk losing 80% or greater market share to less expensive generics.

Cutting Edge Information published the full findings of its research in a detailed report, “Combating Generics: Pharmaceutical Brand Defense” (http://www.PharmaGenerics.com), which examines a variety of product- and legal-based strategies available to product management teams for retaining market share even as generic competition reaches market.  Each strategy – including “flanking” generics, Rx-to-OTC switching, developing franchise and line extensions, and market-crossover strategies – is explored in detail using in-depth industry case studies.  The report examines both successful and unsuccessful examples of patent and product defense in the face of generic competition.

“AstraZeneca successfully retained its share of the gastrointestinal market when it introduced Nexium to replace Prilosec,” says Eric Bolesh, senior analyst at Cutting Edge Information.  “It transitioned 40% of Prilosec patients to Nexium, and actually grew the franchise by 10% the year after generic versions of Prilosec came to market.  Other brand teams can achieve similar success using the AstraZeneca Prilosec-Nexium model.”

To download a free summary of this 190-page report, visit http://www.PharmaGenerics.com. For more information or to learn about other Cutting Edge Information research, contact Diana Borja at diana_borja@cuttingedgeinfo.com or 919-433-0219.

 
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