Post on 19-Jan-2015
description
DRAFT
Novartis Masterminds Competition Entry
2
Agenda
• Novartis Spain hypertension portfolio strategy
• Marketing plan
3
Novartis’ drug Valsartan is dominant drug in hypertension market with €93M annual sales
Note: Assumes that Exhibit 3 data represents all sales for ARB drugs in Spain. Uses ratios from Exhibit 5 to build out broader market view.
Source: Case competition materials
0
20
40
60
80
100%
Spanish hypertension drug sales(Sept 2008-August 2009)
ARB
Sanofi-Aventis (I rbesartan)
Novartis (Valsartan)
Generic (Losartan)
Merck (Iosartan)
188
CCB
No sharedata
48
ACEI
36
Diu
retics
24
Beta
blo
ckers
19
DR
I2
Oth
ers
12 Total = ~€327M
Drug category
AstraZeneca (Candesartan) Novartis(Zelisar)
Novartis category profit heavily dependent on Valsartan
4
Valsartan patent expiration in 2012 could put up to €28M of sales at risk
0
10
20
30
40
50%
Decline in branded drug sales volumes,1-5 years post patent expiry
50
3430
5
Average:30%
Note: Germany, UK, France actual data for time period 1987-1998. Sources: Business Insights; IMS data via “Dynamic Competition in Pharmaceuticals: Patent Expiry,
Generic Penetration and Industry Structure” sourced from JSTOR
Expiry of patents reduces branded drug revenues on average 30%...
… suggesting up to €28M of Novartis sales could be at risk
• Annual Valsartan sales: €93M
• Benchmark average decline: 30%
• Estimated Valsartan sales decline: €28M
5
There are three potential approaches to plugging revenue hole
Grow size of hypertension drug market
Steal market share from competitor drugs
Shift Valsartan volume to Zelisar by 2012
• Work to identify Spanish citizens with undiagnosed or untreated hypertension
• Work with medical professionals to find appropriate medication
How should Novartis plug €28M revenue hole in its hypertension portfolio?
• Choose most vulnerable competitor drugs; target messages to steal share
• Active marketing campaign in support
• Leverage market-leading position of Valsartan to transition market leadership to Zelisar
a b c
Should Novartis follow one, two, or all of these strategies?
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€15M potential from increasing hypertension drug penetration in Spain
Grow market Steal share Shift volume
Market Potential for New HTN Drug in Spain is worth 52M Euro
Limited white space for new drugs to increase market size & spend per HTN
patient
Incremental patients unlikely to differentially be prescribed Zelisar
(28% share for Novartis)
Novartis Zelisar opportunity not greater than 15M Euro from increasing treatment of HTN
patients
Comparative Spend on Hypertension Drugs
Prevalence of HTN patients
in Mil
Spend on HTN Drugs in Bil $
$ Spend / Person
Price Index
Adjusted $ Spend / Person
Spain 15.7 1.8 111.5 100.0% 111.5UK 17.2 4.6 265.1 85.2% 225.8Germany 37.2 2.8 74.2 76.7% 56.9France 19.9 2.5 126.6 75.8% 96.0Italy 18.3 3.2 174.0 79.3% 138.0
Average Adjusted $ Spend per Person (benchmark) 129.2
% Increase Potential on Spanish HTN Drugs market 15.9%
Market Potential for New Drug in Spain (in Euro) 52.0
* Based on figures from Frost & Sullivan “European Drugs Market Analysis”, published October 2006
Market Potential for New Drug
Novartis Share of Opportunity
Max Sales Opportunity by increasing HTN penetration
52M €
28%
15M €
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Historical case studies suggest stealing market share from competitors is challenging
1. Iizuka and Jin, Journal of Industrial Economics December 20072. Pfizer, Bayer, Onyx and GlaxoSmithKline 2007 Annual Reports
Grow market Steal share Shift volume
Incumbent
Challenger
Situation
Results
• Drug: Antihistamine
• Claritin first to market (1994)
• Zyrtex (launched 1996) and Allegra (launched 1997) entered market
• Drug: Oncology (Veg-F)
• Nexavar entered in 2005
• Sutent second to market (2006) with clinical data showing better tolerability
• Drug: Erectile disfunction
• Viagra first to market (1998)
• Levitra 2nd to market in 2003 with similar efficacy
• Cialis approved in 2003 with 36 vs 3 hour effective dose
• Claritin retained 64% in 1999, 3 years after launch of competitors
• Nexavar maintained 48% market share
• Viagra maintained 53% market share
Without dramatically superior drug, difficult to steal competitor
share
8
€18M/year in volume is accessible by stealing share from competitors
Source: Interview with IMS Health analyst (2 December 2009)
Grow market Steal share Shift volume
“Shifting share from competitors is the most difficult thing to do, especially if the new drug is not revolutionary.”
Interview with IMS Health Analyst
Assumed share gain (of ARB market) of 10 points by 2014,
shifted to Zelisar
10% of €188M ARB market = €18M opportunity
99
Companies have successfully used existing strong positions to launch new drugs
1. Wallstreet Journal June 6, 20022. Wallstreet Journal March 22, 20023. GlaxoSmithKline 2007 annual report
Grow market Steal share Shift volume
Drug losing patent
New drug
Situation
Results
• Drug: Gastrointestinal reflux
• Prilosec 1st to market
• Prilosec patent expired in 2002
• AstraZeneca planned to shift volume to Nexium in advance; major campaign to support this goal
• Drug : Congestive Heart Failuire
• Patent expired in 2007
• GSK shifted volume from Coreg to the product line extension CoregCR
• AstraZeneca Moved 100% of revenue to Nexium before patent expiry1
• The CoregCR franchise protected 83% generic loss
With active effort, companies canshift volume to next-generation
drugs
Even Product Line ExtensionsProperly Planned shield BrandedDrugs from Generic Competition
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Through 2012, Novartis should shift Valsartan volume to Zelisar, then focus on share gains
Grow size of hypertension drug
market
Steal market share from competitor drugs
Shift Valsartan volume to Zelisar by 2012
• Regulations make it difficult to channel new patients directly to Zelisar
• Likely to be very costly (need to find remaining undiagnosed patients)
• Generates incremental revenues for Novartis
• Swap can be done before drug goes generic
• Allows Novartis to leverage existing salesforce relationships
a b c
Est. revenueimpact
Positives
+€15M +€18M +€22M
Focus, 2010-12Proceed, post-2012Do not proceed
Negatives • Difficult due to lack of revolutionary new drug by Novartis
• May be difficult due to restrictions claims vs. competitive drugs; need to wait for trials to be completed
• Not truly incremental volume
11
Swapping Valsartan volume and growing share raises 2014 revenue ~€42M vs. base case
Note: Assumes universal 5% organic growth for all years
0
25
50
75
100
€125M
Novartis Spain hypertensionportfolio sales
99 100102103
88
73
Base case: do nothing Move & Grow Strategy
0
25
50
75
100
€125M
Novartis Spain hypertensionportfolio sales
99 99 98 98106
115
Valsartan base business
Zelisar organic growth
Zelisar Valsartan swap-out volume
Steal competitor share
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Agenda
• Novartis Spain hypertension portfolio strategy
• Marketing plan
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Focus of different marketing vehicles should shift over time, matching evolving strategy
Clinical trials
Communication to medical prof.
Branded communications
Sales force
Medical conferences
2010 2011 2012 onwards
Prepare Valsartan swapping effort
Major Valsartan swapping campaign
Identify top doctors who promote Zel.
Send doctors to major conferences; key messaging around Zelisar as latest drug
Lay out benefits of swap to Zelisar
Benefits of Zelisar against competitor drugs
Prepare for phase 2: In-depth trial, Zelisar vs. non-Novartis competitor drugs
Steal competitor share
Lay out benefits of moving to “next generation” Zelisar from Valsartan
Aspirational campaign
Vehicle
Strategic focus:
Shift Valsartan volume to Zelisar by 2012
Steal market share from competitor drugs
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Action plan – 2010 to 2012 - Shift volume from Valsartan to Zelisar
Strategic objective
Clinical trials Communication to medical
professionals
Branded communications
Sales force Medical conferences
• Work to get Zelisar into more drug combination guides
• Urgently develop compelling evidence of safety and efficacy of Zelisar
• Launch print material campaign focusing on “newness” of Zelisar, with slogan “Zelisar – the latest proven drug from the hypertension market leaders”
• Focus on benefits: safety, convenience, cost, efficicacy
• Lower priority for phase 1
• Continue to build credibility by working with medical institutions and key specialists (Instituto Cardiovascular Novartis
• Minimal advertising to general public
• Intensive training of sales force in “swapping best practices” learned from competitors
• Implement sales incentives for swapping Valsartan to Zelisar
• Active swapping effort in-field by mid-2010
• Identify early adopters of large-scale Zelisar switching from Valsartan
• Work to support these physicians with additional research
• Arrange to have doctors speak on benefits of Zelisar to major medical conferences
Timing
Key levers
• Shift Valsartan volume to Zelisar before 2012 patent expiry
• Build case for why Zelisar is dramatically superior to Valsartan
• Leverage sales force to shift prescription behaviour to Zelisar
• 2010-2012
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Action plan – 2012 and beyond – Steal share from competitors
Strategic objective
Clinical trials Communication to medical
professionals
Branded communications
Sales force Medical conferences
• From 2010, begin preparing clinical trials comparing Zelisar with suite of competitive drugs (across all classes)
• 2012: Launch results (ideally) showing dramatic gains with Zelisar use
• From 2012, highlight benefit of switching patients from generic ARBs and drugs in other classes to Zelisar
• Key messaging around Novartis commitment to hypertension research: Instituto Communicacion en Biomedicina
• Broad-based communication effort highlighting branded offering Zelisar against generic competitors – “why not go with the newest drug for your hypertension?”
• Leverage Novartis’ “Aspire Higher” global campaign
• Develop key messaging around why doctors should switch patients to Zelisar as “first choice” hypertension option
• Continue to drive messaging on Novartis being source of innovation for patients (vs. generics)
• Continue to leverage physician promoters to convey benefits of switching patients to Zelisar
Timing
Key levers
• Actively move share from competitive drugs to Zelisar
• Convince doctors that increasing numbers of patients would benefit from using branded Zelisar product vs. other generics
• 2012 and beyond