The four business models for success at Loss of Exclusivity

Expert insight by Dr Neal Hansen and James Kettlewell, faculty members of The Loss of Exclusivity Planning Course for Pharma

When it comes to planning for Loss of Exclusivity (LOE) for a market, there is no one-size-fits-all approach. There is enormous diversity in the evolution of dynamics following the entry of generics or biosimilars across global markets. 

The adoption of business model archetypes is a highly effective approach to managing the complexities of late-lifecycle planning. This approach enables global teams to simplify a highly diverse landscape and develop appropriate strategies across markets, while helping local teams understand the key dynamics that should guide their LOE decisions.

These business model archetypes should clearly articulate a range of approaches to building LOE plans, capture resourcing & investment implications and, most importantly, define the strategic goal and what realistic success looks like for markets that fall into a given business model archetype. Four typical business models include:
 

1. Baseline Resourcing: Maximise Value per Retained Patient

   Markets characterised by intense generic or biosimilar competition, an undifferentiated brand value proposition, and policy and preference environments that strongly favour generics or biosimilars.

2. Optimise Value: Maintain Value Niches, Compete Beyond the Brand

   Markets where generics and biosimilars dominate undifferentiated segments, but brand competition remains viable in selected market segments or niches.

3. Compete for Share: Maintain Profitable Competitive Share

   Markets where the policy and preference environment is agnostic, or even favourable, to originators, combined with a more moderate intensity of competition, enabling a more competitive brand value proposition.

4. Develop and Grow: Grow market and compete for share

   Markets where the brand has a strongly differentiated value proposition or where strong originator preference exists, supporting continued potential for growth following LOE.
    

➡️ Choosing the Right Business Model

Selecting the most appropriate business model for a given brand and market depends on two defining characteristics that govern competitive potential post-LOE and shape both business model selection and LOE planning:

1. Local Market Policy & Preference Environment

   To what extent does the local policy and preference environment support the adoption of biosimilar or generics versus enabling the continued use of originator brands?

2. Competitive LOE Archetype

   How significant is the barrier-to-entry for generics or biosimilars (market value, API sourcing, manufacturing process, substitutability, etc.) and how will this influence the post-LOE competitive environment?

Of course, there are other factors that must be considered and should be layered on to these foundational characteristics to determine whether a more or less active strategy is warranted:

1. Competitive Intensity

   The number of generic or biosimilar competitors can impact both price erosion and achievable market share.

2. Level of Brand Differentiation

   Unique SKUs or other brand features can enable differentiation from generics or biosimilars and support an ability to compete for share.

3. Molecular Sustainability

   Generic or biosimilar entry may relax access barriers (such as reimbursement restrictions) leading to growth of the molecule and a larger market for post-LOE competitors.

4. Portfolio Fit & Synergies

   Significant portfolio synergies (such as overlapping stakeholder targets or commercial programs) may enable a more active strategy with limited additional cost or resource.

The adoption of these four business model archetypes brings clarity and structure to the LOE planning process by focusing on and simplifying the important dynamics of planning and revealing a clear strategic direction.