SOURCE: Cutting Edge Information

November 19, 2007 08:20 ET

New Drugs Launch With Million-Dollar Promotional Budgets

RESEARCH TRIANGLE PARK, NC--(Marketwire - November 19, 2007) - In a drug's first year on the market, its company may spend anywhere from $1 million to nearly $50 million on US marketing, according to a report released by research firm Cutting Edge Information.

The report, "A Product Director's Guide to Promotional Mix"
(http://www.cuttingedgeinfo.com/postlaunchmarketing/index.htm), examines marketing budgets for nine drug brands in their first, second and third years on the market. The data shows that larger products -- brands with higher sales expectations -- spend dramatically more than drugs with modest revenue goals.

Potential blockbusters, for example, spent more than $150 million over the three-year span. Smaller niche products, however, spent less than $30 million. According to the study's lead author, Eric Bolesh, such trends are not surprising.

"Everyone expects a larger brand to spend big bucks," Bolesh said. "The important thing is to understand the underlying factors that contribute to each product's budgeting. Teams allocate their dollars in very different ways."

Principles for Success

The report details elements for promotional success in a drug's first three years.

-- Identify and support critical components of the promotional mix -- Each profiled brand developed a distinct promotional mix that addressed unique challenges and objectives. Brands make very different resourcing decisions according to their specific needs.

-- Increase spending alongside rising sales expectations -- As sales expectations rise, so does total marketing spending. The expected time to peak sales, however, has little impact on spending levels.

-- Confirm role of major cost categories in total financial allocation -- All brands followed comparable patterns for major budget buckets, such as promotional mix, decision support and market access.

-- Build formal market access capabilities as funding allows -- Significant market access spending tends to be the territory of larger companies with established market access and reimbursement groups.

"A Product Director's Guide to Promotional Mix" provides a comprehensive breakdown of brand promotional spending, excluding sales force budgets, in the first three years on the market. The report details the most critical areas of brand investment, including:

--  Promotional mix (e.g. detail aids, samples, speaker programs and
    journal ads)
--  Decision support (market research and competitive intelligence)
--  Market access (e.g. reimbursement and pharmacoeconomics)
    

Download a free summary of this report: http://www.cuttingedgeinfo.com/postlaunchmarketing/PH87_postlaunch_Download.asp#body

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