Strategic Decisions Group was brought in to find new ways of improving a development asset’s value and explore other approaches that the company could take as it developed new indications for a new drug. The initial evaluation of the company’s momentum strategy confirmed that the key uncertainties were market size and pricing. The current development plan for the new drug was facing the potential of significant losses, and the multiple risks were difficult to mitigate—especially around compliance rates for the lead indications.

Situation Analysis

A pharmaceutical company had successfully negotiated a license for developing and commercializing a new drug, “GastroNovel,” in two lead indications (A and B) with related milestones and upfront payments. One year later, however, while the company was focused on delivering this project plan, troubling new information began to surface. Current treatment for indication A was largely over-the-counter products, and the company questioned how much the market could be driven in favor of novel prescription products. Competitors had recently launched other novel products that had garnered prices that were lower than expected or not fully reimbursed, which set a problematic precedent. Additionally, the drug’s promotion had to be outsourced to a third party after plans for sharing the sales force with another in-house product were scrapped. With these developments unfolding, Strategic Decisions Group was brought in to find new ways of improving this development asset’s value and explore other approaches that the company could take as it developed new indications for GastroNovel.

Discovery & Solutions

The initial evaluation of the company’s momentum strategy confirmed that the key uncertainties were market size and pricing. The current development plan for GastroNovel was facing the potential of significant losses, and the multiple risks were difficult to mitigate—especially around compliance rates for the lead indications.

With this background, SDG dove deeper into the company’s decision-making approach. We began by investigating all the key decisions made to date, putting those decisions back on the table, and revisiting all of the choices that had heretofore been “taken as given,” which can lead to overlooking variables and their contributions  to value and risk. We explored new solutions for market access and promotion and new alternatives surrounding the drug’s indications.

In terms of the promotion strategy, SDG found that one popular option on the table, accessing a larger set of prescribers with a co-promotion sponsorship, was not value-creating. Additional promotion was expected to boost revenue significantly, but narrower and more strategic targeting by the internal sales force was actually a far more effective and economical approach. Furthermore, we found that a price premium could be achieved if the drug were launched in a new indication, not yet considered. In order to add significant volume and reduce exposure to low prices for the two previously planned lead indications, we found that a delayed launch schedule—not the conventional wisdom—was the most balanced, nimble and value-creating strategy.

Results & Impact

Ultimately, this was a powerful case of how errors of omission can destroy value. Instead of sticking with its previous momentum strategy, with SDG’s help the company began to openly explore its operational biases focused on rapid implementation and redirect its thinking towards value creation potential. It quickly found that this approach was far more effective for decision making than simple sales volume optimization. By casting a wide net of alternative approaches and embracing open discussion, the company was able to productively utilize the new, multi-tiered approach to reduce its exposure to pricing and reimbursement risks, while at the same time optimizing its promotional strategy.