Takeda Pharma to Delay Launch of New Drug Delivery Product

Case Type: new product; operations strategy.
Consulting Firm: IMS Health Consulting Group second round summer internship job job interview.
Industry Coverage: healthcare: pharmaceutical, biotech, life sciences.

Case Interview Question #00700: The client Takeda Pharmaceutical Company Ltd is the largest pharmaceutical company in Japan and Asia and one of the top 15 pharmaceutical companies in the world. The company has over 30,000 employees worldwide and achieved $16.2 billion USD in revenue during the 2012 fiscal year. Takeda Pharmaceutical is focused on metabolic disorders, gastroenterology, neurology, inflammation, as well as oncology.

Takeda Pharmaceutical has come to your consulting firm for advice on a new drug product launch that would treat a degenerative disease. A degenerative disease is a disease in which the function or structure of the affected tissues or organs will increasingly deteriorate over time, whether due to normal bodily wear or lifestyle choices such as exercise or eating habits.

What factors should Takeda Pharmaceuticals consider in terms of timing the launch of a new drug product that just received FDA approval?

Possible Answer:

This is a qualitative strategy case with a nice twist at the end. The interviewee has to think outside the box to get to the solution. There is room for the interviewee to draw the pharmaceutical value chain during this case (added bonus).

I. Suggested Approach/Framework

The interviewee should think about the following areas within his or her framework.

• The Launch and Market Share Objectives of the client company
• The Competitive Landscape
• The Financial Implications

1. Objective of new product launch

a. Gain market share, slipping market share due to undifferentiated products.
b. Loyal patients have been moving to the competitor’s product; hence, we need to regain lost patients. The new launch is for a drug delivery device.
c. The launch should also gain patients from the competition in order to build market share.
d. Improve corporate image.

2. Competitive Landscape

a. It is a $1B market, the client has 10% market share.
b. A key competitor is going to launch their new device in a matter of weeks. There is unrest on further market share erosion and loss of current patients.
c. There are four major competitors in the market; one with 60% share (the company with an upcoming launch) and the rest almost equally divided amongst the other three (which includes our client Takeda).

3. Financial Implications and Objectives

a. The goal is to double revenue within one fiscal year.
b. We are two months into the year and can potentially launch next month, but that will be a few weeks after the competition has launched anyway.
c. The launch budget is $7 Million, 1/5 the competition’s budget for launch.
d. The value each patient offers is $150,000 annually for adults and $60,000 annually with pediatrics.

4. Other Factors

a. The positioning of the competitor’s product is along safety. Market research has indicated that this resonates most with pediatrics.
b. We have 22 sales representatives in the field.
c. The rest of the competition has no launch plans.

II. Analysis

1. How many patients does Takeda need?

Client company makes 10% of a $1B market which is $100M and needs to make another $10M within one year.

• This translates into about 67 adult patients ($100M / $150K = 667) within the fiscal year.
• The result is approximately 30 patients per sales representative within the year (667 / 22 = 30) — to even out the distribution you can average one patient in the weaker territories and 30 – 50 patients in the dense territories. (Please make a note that in defining what is weak/dense the upside potential of a territory should be identified, not just the hold of our client in that territory).

2. Focused targeting

• Physicians/Clinics — Target physicians who are more concerned with patient quality of life and ease of use (use publications and sales force input).
• Distribution centers — Target distribution centers that are not in long-term contracts with the key competition and gain their loyalty.
• Patient Type — Focus on young adults with a high volume upside and more inclination towards quality of life vs. safety (assuming all products meet safety standards by FDA guidelines).

3. Broadening reach to gain critical mass

• Large upside geographic centers — Research the location of clinics and consumers that have a large uptake, but a more fragmented dipping into all products — aim at gaining their loyalties.
• Mid-size distribution centers — Since large distribution centers are in “grandfathered” contracts with the competition, target the mid-size centers that have been ignored and cater to their population. Try to lock annual high volume contracts.
• Patient Advocacy groups

III. Recommended Conclusion

Timeline — the new product launch should indeed be delayed as the client Takeda is still in the first quarter and this gives them time to sharpen their strategy with us and leverage the following:

• Identify weaknesses from the competition’s launch.
• Allow the competition to preempt key customers and then target the unmet market.
• Wait until the competition has set their brand strategy and use the time to target a differentiated brand strategy.
• Positioning and alignment with key customers especially while negotiating contracts with distributors and clinics (the competitor contracts would be public knowledge at this stage).

There is benefit to being second-to-market, as long as a strategic plan is incorporated, inclusive of various scenarios. However, there should not be a delay over three months as this might compromise the launch uptake and time needed to gain critical mass.