Jadara Pharma consults on new product introduction to both big pharma and healthcare SME's.........
The Quest for Profit Life Cycles
One of the important challenges for the ethical drug industry in early 21st century is the move of business focus from product life-cycles to profit life-cycles of new products. The focus on profit rather than revenue is a feature of the need to maintain a long term R&D enterprise and to appropriately reward investors in the business. Within companies the profit scrutiny with new products has also led to a focus on the speed and cost of market entry. This inevitably leads to the consideration of the cost of manufactured goods (COGs) at product launch balanced against the treatment or re-imbursement price for the available patent life of products.
Product cost, driven through COGs, is now an important dynamic in the introduction and successful commercial exploitation of a new product. For a new product ‘mature’ or target cost at launch will assist cost competitive supply leading to strong market take up, wide treatment utility and finally market return. Companies now focus on COGs to ensure they recoup the R&D cost of products through the profit life-cycle and usually have to strive for the Net Present (NPV) of products to be typically greater than $500M.
The need to focus on profit life-cycles and mature COGs has driven both product development within R&D and product introduction in manufacturing to re-think the ways to reduce the cost and time to market, and to maximise the rapid global commercial exploitation of products. The traditional isolated bastions of time-based focus for R&D and the cost-based focus for manufacturing to achieve this are now unsustainable.
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