Can Sovaldi’s Launch Success Be Repeated? Examining How Gilead Sciences Utilized Marketing Mix To Rewrite Launch History
We all know this story: Ninety-five percent of drugs in the development pipeline fail to clear the safety and efficacy profiles, and companies then add that R&D cost of such failures to the price of the drug that does reach the market. In fact, in recent years, a company looking to launch a new drug must spend upwards of $350 million before it can be sold in market.
Still, the cost of developing a new drug no longer remains the only critical factor that determines the price at which a new drug will be launched, though the costs of some recently launched treatments annually cost anywhere from $200,000 to more than $500,000 per patient.
Gilead Sciences’ Hepatitis C products Sovaldi and Harvoni are examples of a new world where high costs in developed markets is the price paid for a cure. The anti-viral market (4th largest in terms of world-wide sales in 2013), of which Hep C is a part, presented a huge opportunity with more than 160 million patients globally. However, after launch Gilead began receiving flak for Sovaldi, as payers and patients cringed at a price tag of $1,000 per pill. Public interest groups stated that the company’s pricing strategy was unjust when such large numbers of patients suffered from the disease. And within the United States, some payers estimated that the state Medicaid would have to shell out as much as $55 billion in the first year of the drug’s launch — while others feared bankruptcy. The debate reached an epic level when the U.S. House of Representatives summoned executives from Gilead Sciences to Washington, D.C.
Despite the negative publicity that Sovaldi faced, experts believed that Gilead utilized the market conditions to its favor. The entire hoopla surrounding the drug’s launch helped the company promote the benefits of Sovaldi, which also benefited from predecessors such as Incivek creating market awareness prior to the Sovaldi launch.
A separate group of experts thought, that Gilead’s leadership in HIV provided them a robust platform to handle this therapeutic area. They developed an early strategy for launch, and introduced online patient support. They used the science to command a premium by means of new age media to stimulate the market. Most importantly, they formed a step-by-step strategy by covering the needy patients even before full reimbursement was negotiated.
Whether because of natural advantages or Gilead’s systematic strategy, both Sovaldi and Harvoni did break previous records to become the fastest blockbuster drugs in launch history. Together they generated $12.41 billion within the first year of market entry.
For more information on how Sovaldi made it big, read Best Practices, LLC’s case study, Launching A Specialty-Care Blockbuster Franchise in Hepatitis C: How Sovaldi & Harvoni Rewrote New Product Launch History