Pharma Marketers Try New Strategies to Avoid Product Cannibalization

After spending over a decade on research and investing $1 billion to develop a successful prescription drug, some firms discover that they may have a second solid candidate to go to market for treatment of the same medical problem. This dilemma puts a marketer in the unenviable position of having to avoid product cannibalization, the erosion of the existing product’s sales. Some marketers have found that specific strategies will help prop up sales of an existing drug while they introduce the new one.

Best Practices, LLC analysts encourage pharma companies to maximize their profit potential by expanding their product line. Doing so can result in:

  • Market leadership
  • Increased market share
  • Higher visibility with prescribing physicians

To achieve these benefits, they should shift the way they promote the legacy product. For the most part, direct-​to ‑consumer advertising becomes more important for the legacy drug. The emphasis should be on direct mail pieces and coupon discount programs. Pharma companies should also move away from speaker programs for the legacy drug. In addition, the new drug, especially during the first year of release, should receive about 2/3’s of the joint ad spending while the legacy drug spending  should account for the remaining 1/​3.

Following this strategy allowed over 90% of surveyed pharma companies to successfully roll out a new product in the same market where they were already promoting an existing one without damaging overall revenue. Other pharma companies will be likely to explore out this marketing plan.

Check out Ad-ology's Audience Interests & Intent report on Coupon Users to learn more about consumers who respond to this type of promotion.
[Source: Establishing a Product Portfolio. Best​-in​-class​.com. 2012. Web. 24 Sept. 2012] 

Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.