The share of new molecular entities (NMEs) from first-time launchers has dramatically increased over the past decade.1 From 2017 to 2021, 42 percent of NMEs were from first-time launchers—roughly three and a half times the share during the period from 2002 to 2006.2 This trend is expected to persist, notably in blockbuster products with forecast peak sales exceeding $1 billion annually (Exhibit 1). Based on pipeline data, first-time launches are projected to outnumber those from established companies by nearly two to one.3
First-timers preparing for a product launch are on the brink of a fundamental shift. R&D-stage companies, once laser focused on their development programs, will evolve into commercial-stage organizations with multiple priorities. This change will surface new decisions and trade-offs, requiring thoughtful attention to investments, organizational buildup, capabilities, and culture.
Significant value is at stake as more biotechs are lining up to make this leap. Will their blank slate allow them to think beyond traditional approaches, fostering innovations to better serve patients? Or will their lack of experience hinder the transformative potential of their medicines?
A rare opportunity
Developing a great product is not enough to improve patients’ lives and maximize value potential; the product must also be commercialized. The potential for patient impact is great: many first-time launchers focus on underserved conditions and areas of high unmet need. Central nervous system (CNS) and rare-disease products account for nearly half of launches from new players, compared with just 35 percent of those from established pharmaceutical companies.4 But despite the potential, many first-time launchers struggle.
One challenge many first-time pharma launchers face is maximizing drug adoption to realize the expected value of their launches. Only 28 percent of first-time launches exceed analysts’ prelaunch forecasts, compared with nearly half of equivalent launches from experienced companies.5 In our experience working with first-time launchers and in a recent survey that we conducted with 28 leaders of first-time launchers, we see challenges in striking the right balance of time and investment to fuel a successful launch.6
In 2022, the tides turned in biotech financing and investing. One of the forces propelling first-time launchers in the past five years has been plentiful capital, but in the current market, this trend may continue, stall, or reverse. Independent biotech launches in the United States still have a compelling case that they will create value for investors. A broad set of financing options could take the place of follow-on financing for peri-commercial biotechs. However, much greater scrutiny of investments related to product launches is anticipated. An analysis of SG&A expenses in the years surrounding first launches indicates they typically increased fivefold from the two years before to the two after launch, often reaching amounts surpassing $100 million (Exhibit 2). Given the substantial investment required and the state of the market, it is more important than ever to leverage the lessons of prior launches.
In today’s capital-constrained environment, first-time launchers face the unique challenge of rapidly building a commercial-ready organization while managing the product launch. This comes with a clean slate—the chance to design the organization from the ground up without the encumbrance of legacy processes, organizational decisions, or traditional ways of working. Innovative biotechs have advanced the industry’s commercial model by exploring new possibilities; for example, they’ve replaced certain in-person stakeholder engagement activities with virtual alternatives and harnessed the power of advanced analytics to improve engagement with healthcare professionals and consumers. Our analyses show that such practices can lower SG&A costs by 20 to 40 percent, empowering first-time launchers to manage their investments more effectively in a challenging financial environment.
Four factors are key to making the transition from R&D to commercial: defining the North Star for the next horizon, investing in key commercial capabilities and ramping up rapidly as approval nears, attracting key talent to lay the foundation for the future organization, and evolving from a science-focused to a patient-centric culture.
Success factors
First-time launchers that effectively transition to a commercial-stage organization set themselves up not only for a strong launch but also for the sustainable commercial success of their future portfolio. Four factors can help launchers overcome the challenges and maximize the advantage of starting with a blank slate.
Defining the North Star for the next horizon
To build a successful organization, maturing biotechs should first consider defining their destination. This North Star can set the company’s vision for how it will change the way a disease is treated, how it will shape the patient journey, and what outcomes it strives to give patients. It can then inform the commercial objectives and the capabilities and processes to be built as the vision takes shape.
In the past few years, changes in the healthcare ecosystem have altered the nature of a successful pharma commercial model. Increasingly, pharma company representatives have limited access to healthcare professionals, so virtual and hybrid engagements consistently are at the center of the go-to-market model. In addition, healthcare professionals have higher expectations for the quality of interactions with pharmaceutical companies, elevating the importance of customer engagement and satisfaction. Finally, the rise of telemedicine and patients’ increased ownership of how they access their medicines have accelerated the use of direct-to-patient models.
Transitioning biotechs are uniquely positioned to shape their commercial organizations around these trends. First-time launchers can embrace digital and analytics to engage healthcare professionals and experiment with virtual, on-demand engagement models. For example, as these biotechs build their commercial organizations, they may redefine the traditional mix of field roles to simplify the customer interface and coordinate among interactions. They may go all-in on direct-to-consumer channels, including partnering with digital-care-delivery companies to give customers access to their therapies.
Investing in commercial capabilities and ramping up rapidly
Under the pressures of a first launch, companies often spread internal resources and managerial attention thinly across the diverse set of capability-building initiatives. However, our research indicates successful first-time launchers are differentiated by early and meaningful investment in certain key activities (Exhibit 3). In medical affairs, they establish the medical, legal, and regulatory review process and kick off medical engagement. In commercial, they conduct market research, competitive intelligence, and foundational analytics. And in patient advocacy and market access, they define and initiate engagement strategies four to six months before their less successful counterparts.
Successful launchers made early and sustained investments in multiple functions in the two years leading up to launch. And in the launch year, they doubled their investments in nearly every functional area (Exhibit 4).
Beyond these foundational investments, first-time launchers can also invest in capabilities specific to their launch and organization. For example, if a distinctive customer experience is a strategic priority, it may be necessary to invest in best-in-class consumer engagement. Or a biotech focused on rare diseases may want to allocate resources to advanced analytics applications that can power the launch.
These new capabilities need not all be internal. Outsourcing can enable a company to scale up rapidly while investing in other areas. An increasing number of specialized offerings are available to maturing biotechs. While some first-time launchers select one vendor for their outsourcing needs, 60 percent of first-time launchers we surveyed report partnering with several to ensure they have access to diverse specialized capabilities.
First-time launchers should think carefully about these investment and capability decisions, as some established players have been slow to change and innovate due to legacy tech and data infrastructure, legacy commercial ops groups, or vendor constraints. The blank-slate opportunity of biotechs could be an advantage if they invest in the optimal capabilities from the beginning.
Attracting key talent for a commercial organization
As biotech pipelines mature, their executive teams typically evolve to reflect the new business objectives (Exhibit 5). New roles—including chief commercial officers (CCOs) and heads of strategy and business development—are needed as companies transition to late-stage development. It is important to have experienced commercial perspectives in leadership, often in a CEO or CCO with prior launch success. However, companies can balance the experience of these new leaders with the blank-slate opportunity to create a purpose-fit model. Successful biotechs leverage their leaders’ expertise, while innovators build on these lessons to go beyond traditional playbooks and rethink the possible.
In our survey, successful launchers consistently hired for key roles, including chief commercial officer and medical affairs lead, on average four months earlier than less successful launchers. Nearly half of the less successful launchers report hiring for these critical roles too late in the launch timeline, while 80 percent of successful launchers say their timing was “just right.” Bringing in these leaders early sets the tone and organizational framework for their functions and positions them to tackle growing pains as the organization expands. By contrast, we found no significant differences between successful and less successful launchers in the timing of onboarding product-specific field roles, such as sales reps and patient support roles, during the year leading up to launch.
As maturing biotechs look to build out their organizations, certain profiles can be especially valuable. One launch leader highlighted the value of people who are “talent magnets” with deep networks in the industry and who can add functional expertise to the growing team. Successful biotechs also seek leaders who can balance various responsibilities and take on a wide breadth of activities to empower the organization while keeping it lean and nimble.
Evolving from science-focused to patient-centric culture
As an organization shifts from R&D to the commercial stage, its underlying vision and culture will evolve. Previously tasked with developing a safe and effective product, first-time launchers now aim to deliver value to patients. As a result, the fundamental objectives of the business will change, and successful biotechs will adapt to articulate and cascade these aspirations throughout the organization.
This refreshed vision is critical to sustainable success. A unified culture that connects commercial priorities to the purpose and vision of the organization will empower new commercial and launch teams while maintaining a link to the R&D organization. A refreshed vision that speaks to the core ethos of the organization can rally teams and focus them on driving patient benefits and unlocking future innovation. Successful biotechs may use a collaborative, iterative process, regularly engaging leaders from commercial and R&D organizations to craft a shared vision and culture that engages employees.
As first-time launchers look to become commercial-stage biotechs, they have to manage the launch while making substantial changes to their capabilities, processes, talent, organization structure, and culture, all while carefully managing their resources.
Investment planning will look quite different in the coming years. By leveraging best practices and recent innovations, chief commercial officers, chief medical officers, and data and analytics leaders can drive constructive, stage-gated budget dialogues to advance critical work and capability building before the launch. These plans can require lower cumulative investment than traditional approaches.
A crucial part of commercial leaders’ jobs is to articulate the importance of these investments to the rest of the leadership team and the board and to cascade these messages down the organization. Getting this right can propel an organization to the next horizon and benefit the patients they serve.
