Ben Hohn, Cody Powers and Judith Kulich co-wrote this article with Renuka Agarwal.
The 2019 JPMorgan Chase Healthcare Conference kicked off with a bang as Eli Lilly announced its acquisition of Loxo Oncology for $8 billion. Loxo, a young biotechnology company that partnered with Bayer to launch its first asset, Vitrakvi, in 2018, isn’t a unique story: In today’s environment, the number of first launches for U.S.-based companies—defined by ZS as the first marketed assets of companies that have FDA “novel” status—is rapidly increasing. There were only three first launches from U.S.-based companies in 2011 compared to an astounding 16 first launches in 2018, primarily in oncology, according to ZS research.
Given the increasing number of first launches and the exit implications of how a biopharmaceutical company chooses to commercialize, ZS’s pipeline and launch strategy practice held a discussion on first launches at the JPMorgan conference, delving into the commercialization decision of “going it alone” vs. partnering in both the U.S. and Europe and illustrating the considerations behind this decision through case studies.
One of the most important considerations for companies is whether they have the internal capabilities, resources and budget necessary to support a first launch, including internal commercialization expertise and the ability to have their own sales force. If they don’t believe that they’re well-positioned, partnering can be a very attractive alternative. In the case of Pharmacyclics, its early co-development and co-promotion partnership with Janssen enabled an equal sharing of launch costs. For the launch of Imbruvica, Janssen and Pharmacyclics split the cost of around 125 dedicated sales representatives. With reduced commercialization responsibilities, Pharmacyclics was able to gain four indication approvals for Imbruvica before AbbVie’s acquisition of Pharmacyclics in 2015 for $21 billion. Although Pharmacyclics chose to partner for its first launch, the majority—79%—of the 43 first launches from 2011 to 2018 chose to self-commercialize in the U.S., with the remainder choosing to co-promote, according to our research.
In Europe, this is a very different story. Of the 43 first launches from 2011 to 2018, half of these assets subsequently launched in Europe. Our research shows that of these 22 launches, 64% were through partnerships (55% out-licensed, 9% co-promoted). Two notable go-it-alone exceptions are Tesaro and Intercept. In Tesaro’s case, its go-it-alone launches in Europe were aided by its proactive investment in European infrastructure. At the time of its Varubi first launch in the U.S. in 2015, Tesaro opened its European headquarters in Switzerland, two years ahead of its European launches. By the time it launched in Europe with Varuby and Zejula, Tesaro had 55 employees in nine European countries. GSK ultimately acquired Tesaro for $5.1 billion. Intercept also chose to go it alone in Europe with its first launch, Ocaliva, establishing a dedicated European sales force to address physicians that treat PBC patients. Intercept’s upcoming phase 3 NASH trial results will contribute to the overall return that Intercept is hoping to realize on its European investment.
There are many factors to consider when deciding between a go-it-alone or partner approach. Based on our conversations with biopharma leaders during the conference, we’ve identified some key challenges and areas of opportunity:
1. We see increasing momentum in rare diseases, specialty therapeutics and gene therapies, given speed to market and degree of unmet need. In these areas, a go-it-alone approach may be more attractive as investment requirements are a lower barrier to launch and the commercial footprint required for the company to successfully launch is more feasible.
2. As companies aim to maximize the effectiveness of their launch efforts, innovative strategies—such as alternative sales and marketing channels to supplement or potentially replace traditional sales forces—will continue to emerge.
3. It’s important for companies to fully assess manufacturing needs alongside commercialization needs, as underappreciation of regulatory complexity and a lack of preparedness can significantly delay launch.
4. What to do with respect to Europe and Asia still remains a key question for emerging biopharma companies considering a U.S. first launch. When considering going it alone vs. partnering, a company’s key consideration should be to capture launch upside without exposing itself to financial, strategic or operational risk. If a company chooses to partner as a way to hedge this risk, they should consider regional nuances specific to the launch market—including differentiated and evolving pricing environments, market concentration and trade restrictions—to select the right partner.
Overall, as markets, pipelines and policies continue to evolve, pharmaceutical companies must embrace an agile and flexible approach to launch. This will enable them to maximize launch success and value for all stakeholders involved at launch and beyond.