Developing and launching new products are very expensive and high-risk activities which biopharmaceutical companies have to undertake if they are to survive, let alone thrive.
Some estimates put the failure rate of new products between 75 per cent and 80 per cent. Finding ways to improve the probability of success, is critical. You only get one chance to get it right first time.
Many companies seek to improve their probability of success by developing their own bespoke framework for being systemically and systematically good at developing and launching new products.
We have seen many variations. The majority that we have seen are well constructed but are often constrained by corporate factors that few can see and even fewer dare to talk about. Depending on whether you subscribe to those of Kotler, Booz et al or your own internal process, there are likely to be 8, 7 or 6 key stages in your new product development approach. Within the biopharmaceutical industry, this robust process should be begun early in the life of a new molecule, optimally, Phase II.
The following stages of the new product development process are listed as stages that follow each other, but in reality the process is cyclical, not linear. The early stages of the framework are often repeated several times, to varying degrees of detail, until the product’s design is complete. Generally, most frameworks follow the following stages:
This stage requires a creative flair to search for and generate new product ideas. This stage is not easy. A team (cross-functional, one hopes) must generate a long list of ideas in order to find one that is worth pursuing. The main sources of new product ideas will include:
- internal sources – (often overlooked, a lot of insight and knowledge resides within the heads of key team members). Directional bias is often introduced at this point
- Customers – (for sure they will know but often do not know that they know. so cannot tell you what you really need to know
- competitors – (a lot of good info is to be found here but the old approach of follow what the market leaders did, is high risk
Typically, the second step in a New Product Development process is often that of Idea screening. The primary aim of this stage is to narrow these down to those that are genuinely worth pursuing. Many see the objective of this stage as to find ways to kill ideas as quickly as possible. An alternative approach could be to try to find reasons to keep the ideas alive. What will it take to make them great and viable new product ideas?
Companies have different methods for doing this – from new product review boards, to market research. It is helpful at this stage to have a list of evaluation criteria that can be used to rate each idea based on the factors required for successfully launching the product in the marketplace and their relative importance. Against these, the core team can assess how well the idea fits with the company’s experience, expertise, approach to risk, strategic aims, marketing capabilities and resources. Finally, the management can obtain a dashboard of ideas, each with an overall rating of the company’s ability to launch the product successfully.
Concept Development & Testing
This third step in a New Product Development approach is often called, Concept Development and Testing. This is where the leading ideas are developed into Product concepts. As opposed to a product idea that is an idea for a product that the company can see itself marketing to customers, a product concept is a detailed version of the idea stated in meaningful (segmented) customer terms.
Once the concepts are developed, these need to be tested with customers. There are many approaches to do this. Some are inherently flawed, as they rely on the customer rationalising their future behaviour. Others follow principles to overcome this weakness. We would be happy to elaborate further.
Often companies extrapolate their quantitative findings to the entire market in order to estimate future sales volume. The roughly-right approach is most useful at this point, rather than the accurately wrong approach. The correlation between estimated future sales and realised sales is pretty close to zero. In spite of this, it is common to see forecasts presented at this point in the product’s lifecycle that claim to predict future sales potential to the 3rd decimal place. Really! Nevertheless, it is a reality that company share prices are highly dependent on the potential of the product pipeline to be commercialised successfully. Therefore, the cost of failing to successfully launch a product is high.
This is often the fourth and highly iterative stage in a new product development framework. The marketing strategy document articulates the clear path to an attractive return on investment (ROI):
- the first part usually describes the target market analysis, the planned product concept positioning and the sales, market share and profit goals for the first few years
- the second part outlines the product’s market access strategy and marketing budget for the first year
- the third part of the marketing strategy statement describes the planned long-run sales, profit
Here, R&D develops the product concept into an evidenced product. This stage requires a substantial investment. R&D seeks to prove that the product concepts will meet and exceed customers’ expectations according to the desired parameters identified during stages 2 and 3.
It is critically important that all options for what an asset could be are fully elucidated prior to the lock-down of Phase III studies. If you have not looked to prove it in your studies, then you cannot say it in your marketing messages.
Pressure Testing/ Test Marketing
There are two ways to check whether a strategy is fit for purpose:
- Implement it and see what the market thinks
- Pressure test the strategy prior to implementing it. A quick external assessment of whether the strategy will do what is expected of it could be invaluable in improving your chances of success.
The aim of the external pressure-test, is to give the marketer an opportunity to tweak the marketing mix before going into the expense of a product launch. Course correcting post-launch is difficult and expensive.
In order to increase speed to market, most companies have abandoned the linear approach to development and have taken up a faster, more flexible and simultaneous development approach. Under this approach, many company departments work closely together, overlapping the steps in the product development process to save time and increase effectiveness. Because all these tasks are interconnected, and the marketing environment is complex and shifting, good planning at this stage is often what distinguishes the successes from the failures. Unfortunately, when a senior team member with a particular bias or axe to grind, can disrupt internally facilitated commercialisation workshops.
Post Launch Review
A new product development framework should not be static, the entire process is an ever evolving testing platform where errors will be made, ideas will get thrown out, decisions will be revisited. It is important to look at what went well and what did not go so well. One of the challenges is that few executives get to launch more than one major project in their careers. The consequence is that learnings are often lost to the company and thus, mistakes get repeated.
Implementing any of the above stages is difficult. Implementing them all well, is near impossible. Kasocio’s Product Development and Launch Excellence framework offers tried and tested tools for every step in this process, from asset and market assessment, to sophisticated segmentation & positioning, to messaging. We have made and seen many mistakes over the years.
Product development and launch managers can use the framework to develop a strategy that coordinates core functions and is highly adaptive to new information and changes in market dynamics. It is not a one-size-fits-all approach. The framework can be tailored to your needs on the basis of the market they are entering and the attributes of their particular product. Most importantly, we can help facilitate its use and thus, help minimise bias, ensuring at the same time that the focus is on launching products that have been proactively designed with success in mind.
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