Clarkston’s team of sales and marketing consultants have highlighted the top life sciences sales and marketing trends that businesses should consider. Read all 4 trends for 2023 by downloading the full report here.
As we progress into 2023, it’s no secret that we are in a time of dynamic change and transformation for the life sciences industry. For the commercial organization, sales and marketing teams will continue to feel the impact of economic inflation in more ways than one, while also propelling into digital transformation. What does this mean for the future of the industry?
Today, we’re breaking down these 2023 life sciences sales and marketing trends through the lens of drug pricing and the economy; commercialization with a minimal viable product mindset; 360-degree view of the patient; and next best action to help commercial leaders answer the following questions:
Drug Pricing and the Economy: With the macro trends of economic inflation and a focus on pricing, how are pharmaceutical commercial organizations impacted? How does the Inflation Reduction Act impact pharma and biotech innovation?
Commercialization Minimum Viable Product: With money becoming more and more expensive, investments require higher returns, and organizations investing in the pharmaceutical space become more cautious. Given this landscape, where should commercial organizations be putting their focus during their commercialization journey?
360-Degree View of the Patient: With patient centricity moving beyond the patient services teams, how can pharmaceutical organizations focus on engaging the patient in order to diversify the patient population and create an equitable patient experience from clinical through to commercial interactions? How can a focus on community engagement and marketing bring more DE+I to the patient experience?
Next Best Action: What does the push for next best action mean for the future of field interactions for life sciences companies?
2023 Life Sciences Sales and Marketing Trends
Trend #1: Drug Pricing and the Economy
Pharmaceutical and biotech companies have always been in the spotlight regarding pricing and patient access to affordable medications. However, with increasing costs due to inflation and the approval of the Inflation Reduction Act in August 2022, pharma and biotech manufacturers are now being forced to reduce pricing in some areas. The short-term effects will be costly for manufacturers and certain patient populations, specifically in rare diseases, but companies will need to review and revise processes for long-term gains.
While inflation has increased medication prices overall, Medicare will see price reductions as a result of the Inflation Reduction Act, which has given Medicare the power to negotiate prices with pharmaceutical and biotech companies. Products that are subject to negotiation include single-source Medicare Part D and Part B medications, such as those on the market for at least seven years approved under a New Drug Application (NDA) without a generic available and those on the market for 11 years approved under a Biologics License Application (BLA) without a biosimilar available. Authorized generics under NDAs are also subject to negotiation. Price-setting exclusions apply to orphan drugs only approved for one rare disease or condition, as well as low-spend Medicare drugs, plasma-derived products, certain small biotech drugs (until 2029), and other biologics that will inevitably have a biosimilar on the market.
Perhaps the greatest concern and unintentional consequence of the Inflation Reduction Act is the impact to innovation in rare disease and orphan drug development. Orphan drugs are excluded from negotiation only if they’re indicated for one disease state. Adding a second indication qualifies orphan drugs for price-setting, causing some manufacturers to cancel drug development programs or forego adding second indications to specific medications. Orphan drugs have already taken a hit from a court case decision in 2021, which blocks other manufacturers from getting approval within a disease state when one drug already treats that disease, even if it has only been approved for a narrower use or single indication. This is expected to negatively affect rare disease pediatric product development the most, as many approved drugs start with adult clinical trials before the medication is tested with pediatrics.
To offset inevitable revenue impacts and remain profitable without significantly impacting R&D, companies may need to revise the way they approach drug development. One way to do this is through increased partnerships with small biopharma companies and university research labs. Many new drug patents come from small biopharma companies that started as university research labs funded by the National Institute of Health and various philanthropies. Although larger biotech and drug companies have historically funded clinical trials and end stages of drug development, these partnerships will be more important than ever to keep research costs down for all companies.
Another important factor will be utilizing technology to reduce inefficiencies in the overall industry and specifically in R&D. This is especially crucial during clinical trials, which can be costly and time-consuming. Technology assistance, such as increased use of data and analytics, automation for repetitive tasks, and other process improvements, can drastically lower drug and biologic cost to market. We saw an example of both partnering between companies and a reduced time to market with the COVID-19 vaccines. Even though COVID-19 vaccine approval was part of an emergency use authorization, we now know that development and approval process improvements are possible in collaboration with the FDA.
While pharma and biotech revenues will be impacted by the Inflation Reduction Act in the short term, the industry will leverage efficiency advancements that adapt to this change in the long term. In the meantime, manufacturers will need to find a balance between preserving profitability and continuing drug and biologic innovation within the constraints of the Act to set themselves up for the future.
Trend #2: Commercialization Minimum Viable Product
For pre-commercial life sciences organizations, the right funding and planning for commercialization is needed to keep productive momentum, mitigate risks, and thrive in the future. Technology continues to drive unprecedented changes at accelerating rates, and COVID-19 further drove significant digitalization of the life sciences industry. To be “future proof,” life sciences organizations must innovate their operating model and technology simultaneously, which is even more key as they approach commercial launch. As with the pace of technology, operating costs continue to increase with constrained commercial returns across the industry, showing the need for cost-cautious strategies such as Minimum Viable Product (MVP) when building out commercial IT capabilities. Continue reading by downloading the full report below.
Read last year’s Life Sciences Sales and Marketing Trends Report here.
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Contributions from Aaron Chio, Janel Firestein, Marika Inouye, Brandon Miller, Sara Morris, Mike Onore, Elizabeth Osota, Jessica Wagner, and Courtnie Williamson