Root Cause: Why does Regulatory Approval Not Always Equate to Commercial Success?

Why is it that some approved products do not have commercial success and market adoption? There are in my opinion three major reasons; 1) Addressable market based on the product label; 2) Product manufacturability, 3) The pricing power versus the cost.  What is at the denominator for all three major reasons for commercial failure?

The root cause is a regulatory strategy that early on fails to define the most critical aspect of product development which is the Target Product Profile (TPP). The TPP is defined in many ways but it essentially involves deciding what the manufacturers have to do clinically to assess the safety and efficacy of their product based on the proposed Mechanism of Action (MOA) and other product attributes. The TPP eventually defines the final drug product label. In reality, what is claimed on the product label is not only a reflection of the product characteristics and MOA but it is also about other factors (see below).

So what should a manufacturer consider in their regulatory strategy to address this root cause?  They should consider addressing the four major factors that are directly or indirectly linked to the product TPP; and what is ultimately approved on the final drug product label.

1. Addressable market based on approved product label: The product label defines the addressable market not vice versa.

2. Manufacturability: The manufacturers tend to forget that if you cannot make the product consistently at the cost that is affordable to payers, as defined by the labeling claim, the commercial success of a product could be at jeopardy!

3. Pricing: The pricing power is often determined by the manufacturing cost and what the market can tolerate based on the label of the final drug product and any competing therapies.

4. Intellectual Property (IP): The IP consideration may be very difficult to assess early on but a weak initial IP position will ultimately and definitely be expected to increase the cost of the approved product.

The manufacturers often view an optimal regulatory strategy as one that permits them getting access to the market the fastest way but this approach could potentially be short sighted! The real solution to these challenges lies in conducting a careful regulatory strategy analysis, very early on, that encompasses not only the regulatory and technical considerations, but it also includes various considerations as outlined above. For this reason, Parexel has chosen to provide their client’s with an integrated approach for regulatory strategy that considers not only the technology and product attributes, and non-clinical and clinical considerations, but also other factors such as the addressable market based on the final approved labeling, IP considerations, and competing market analysis.

In the end a successful strategy must be commercially sustainable one that requires consideration of some of these aforementioned factors in a sequential manner allowing for commercial, business and marketing assumptions which are based on the best scientific and regulatory analyses.

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