Novartis master minds 2009 final

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DRAFT Novartis Masterminds Competition Entry

description

Business plan competition for market entry of a new pharmaceutical.

Transcript of Novartis master minds 2009 final

Page 1: Novartis master minds 2009 final

DRAFT

Novartis Masterminds Competition Entry

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Agenda

• Novartis Spain hypertension portfolio strategy

• Marketing plan

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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

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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

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Valsartan patent expiration in 2012 could put up to €28M of sales at risk

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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

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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

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€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

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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

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Swapping Valsartan volume and growing share raises 2014 revenue ~€42M vs. base case

Note: Assumes universal 5% organic growth for all years

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€125M

Novartis Spain hypertensionportfolio sales

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Base case: do nothing Move & Grow Strategy

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€125M

Novartis Spain hypertensionportfolio sales

99 99 98 98106

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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