When it comes to launching a next-generation drug, first is always best, right? Press releases can call it a "first-in-class" product. Sales and marketing teams can get a leg or two up on any follow-up rivals. What's not to like?
McKinsey & Co. wanted to find out. As the management consulting firm notes in a new report, companies spend lots of money, time and people-power to beat everyone else across the finish line. If a drug doesn't take off as expected, that investment might not deliver the sort of returns executives want to see.
After sifting the data on 492 different drug launches, McKinsey confirmed industry suspicions: Yes, first-to-market is indeed an advantage. The first entrant tends to enjoy a bigger market share even 10 years later--6 percentage points higher than any rival, on average.
But averages cloak a lot of individual differences, and the first-to-market bonus varies widely. On the positive side, a first-mover that develops at least one indication ahead of competitors delivered an average 13-percentage-point boost to share. Fewer indications than rivals? A 6-point deficit.
Here's more nitty-gritty:
Specialty drugs enjoy a bigger advantage than primary care drugs do. New primary care drugs can face bigger hurdles to reimbursement, and the size of the total market tends to be larger--so latecomers have more opportunity to grab share of their own.
A smaller field equals a bigger boost. In one-on-one contests, arriving first is a much bigger deal than in markets with 5 or more. The first out of the gate in a two-horse race gained an 11-point edge in market share, versus an average of 4 points in broader contests.
Obviously, having a bigger lead on the rest of the pack helps: If the follow-up drugs hit three years later--or more--the advantage is 11 points, share-wise. Less than three years? Two points, on average.
Experience in the market helps, too, but the margin isn't as wide; first-to-market drugs from companies well versed in the field get a 9-point boost, but even inexperienced leaders get 5 points on their later rivals.
One of the biggest aids to first-to-market advantage? Being Big Pharma. If a large drugmaker leads the way as primary marketer, that means an 11-point edge in market share over later entrants. Small drugmakers that launch first get no edge at all. In fact, in the long term, they end up with a two-point shortfall.
So, here's some advice. If the race to market is tight, pull out all the stops to be first. The value of beating everyone else "should not be overestimated" in that situation, McKinsey concludes. And have a solid development program going to keep growth coming with new uses.
And you smaller drugmakers out there? Get a partner already. "[S]maller companies that lack experience and scale should seriously consider partnering with large pharma companies," the analysts contend. We all know a few drugmakers who didn't take that advice--and now regret it.
- read the McKinsey article
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