Artificial Intelligence to Navigate Loss of Exclusivity in Pharmaceuticals

In brief

• Pharmaceutical companies are facing major headwinds due to loss of exclusivity (LOE) as product patents are set to expire, with billions in sales at stake.
• While sunsetting products is not new, maximising value in today’s environment requires a strategic approach.
• Savvy industry leaders are aligning sales, marketing, legal and other functions to reduce costs and drive value at the end of a product’s lifecycle.

Introduction

When a new prescription drug is launched, the pharmaceutical innovator holds exclusive rights to develop, sell, and market the drug during the patent period, typically lasting 10 to 15 years. After this period, the brand faces loss of exclusivity (LOE), relinquishing its monopoly and preparing for the entry of lower-cost generic (Gx) alternatives. This significant milestone requires a comprehensive adjustment in brand strategy.

Defensive strategies, such as intellectual property (IP) litigations and patent extensions, are often the first recourse prior to LOE. However, once these legal options are exhausted, the impact of Gx entry on sales volume can be immediate and substantial. To mitigate this, companies can maximise the revenue potential of the brand through line extensions and leveraging brand loyalty.

This necessitates strategic planning around commercial priorities and close coordination with other functions, akin to the launch phase of the drug. When extracting further value from the brand is no longer viable, companies typically switch patients to next-generation or over-the-counter (OTC) products, gradually sunsetting the original brand.

As a pharmaceutical company approaches the LOE, it must also navigate a highly competitive landscape where market dynamics rapidly shift in favour of cost-effective alternatives. This transition phase demands a proactive approach, integrating market access strategies with advanced analytics to anticipate and respond to competitive pressures.

Understanding prescriber behaviour, payer influence, and patient adherence becomes critical in retaining market share. Moreover, effective communication with healthcare providers and stakeholders is essential to maintain the brand’s value proposition during this pivotal period.

Current Approach and AI’s transformative potential

The critical steps in developing a post-LOE strategy is to understand the current state of the market, decode historical use-cases for similar products, and then apply those learnings to predict that pattern. It requires analyses of what happened to similar products post-LOE, how stakeholders reacted, and what actions the company took or did not take to influence the asset’s positioning after LOE. To do this, pharmaceutical companies use various quantitative and qualitative methods to collect data on the factors that influence market positioning post-LOE.

The current quantitative and qualitative approaches have significant limitations in delivering meaningful value. Quantitative forecasts of the Loss of Exclusivity (LoE) often oversimplify the market reality by considering only a few variables due to the constraints of Excel. This results in a subjective understanding, as modelling and interpreting numerous interdependent variables require substantial computational power. The goal is to comprehend how the LoE will impact product positioning and strategy, which necessitates a nuanced understanding of the market. Similarly, the qualitative approach involves analysing vast amounts of data to construct a compelling narrative, often relying on subjective or biassed assumptions that require hundreds of manual labour hours.

AI can help understand the impact of loss of exclusivity on a branded pharmaceutical asset’s lifecycle by analysing historical data to forecast sales erosion and revenue trajectories, mining data sources to identify potential generic competitors, and examining real-world data to understand patient behaviour and switching patterns. It can also model the effects of different pricing and contracting strategies on profitability and track regulatory changes and litigation that could affect generic entry timing. By integrating diverse data sources and modelling complex scenarios, AI enables pharmaceutical companies to better manage risks and opportunities associated with loss of exclusivity and develop proactive lifecycle management strategies.

Through the use of AI, the LoE models reflect real-time market changes, rather than being a one-time exercise like most industry practices. Similarly, AI is accelerating qualitative approaches by speeding up the synthesis and distillation of the evidence base. The new technology can analyse data from clinical trials, HTA documents, payer dossiers, submissions, and other datasets to provide a clear and comprehensive visualisation of a drug’s evolution, pricing, and the impact of various events. By doing so, companies can develop a robust strategy for managing a brand’s end lifecycle.

Path Ahead

With US$356 billion of global branded sales at risk from patent expiration between 2023 and 2028, it is crucial to explore strategies that help innovators continue deriving value from their brands by tailoring market access, sales, and marketing efforts.

Pharmaceutical companies approaching LOE face significant challenges, including potential revenue loss, market share erosion, and the need for operational adjustments. They require robust strategies to navigate this transition effectively and maintain as much value as possible from their branded products.

Vamstar offers comprehensive solutions designed to address these challenges through advanced analytics, integrated market insights, and strategic collaboration platforms. These capabilities enable pharmaceutical companies to optimise pricing, market access, and patient engagement programs, ensuring brand loyalty and market presence are maintained even post-LOE.

Clients expect to minimise revenue decline, retain market share, and smoothly transition patients to next-generation or OTC products, leveraging Vamstar’s strategic support and innovative solutions.

Pharmaceutical companies nearing LOE typically encounter several challenges:

1. Revenue Threat: Significant revenue loss due to the entry of generic competitors.
2. Market Share Erosion: Potential loss of substantial market share to generics.
3. Operational Adjustments: Need to adjust sales and marketing strategies to maintain profitability.
4. Strategic Transition: Planning for a seamless transition to next-generation or OTC products.

Vamstar addresses these challenges through a multifaceted approach, leveraging its core capabilities:

1. Advanced Analytics: Utilising predictive analytics to forecast market trends and competitive dynamics, aiding in informed strategic decision-making.
2. Integrated Market Insights: Providing comprehensive market insights and competitive intelligence to refine pricing and market access strategies.
3. Strategic Collaboration: Facilitating cross-functional collaboration between sales, marketing, legal, and other departments to align efforts and optimise outcomes.
4. Cost Optimisation: Implementing cost-effective strategies to reduce operational expenditures while maintaining market presence.