Loss of Exclusivity (LOE) Management for Branded Products Returns Forecasting Monday , March 4 | 3:30 PM-4:30 PM. Ed Crimmins, Partner, Kindler & Crimmins Associates, LLC Steve Kindler, Partner, Kindler & Crimmins Associates, LLC. Session Objectives.
Loss of Exclusivity (LOE) Management for Branded Products Returns Forecasting
Monday, March 4| 3:30 PM-4:30 PM
Ed Crimmins, Partner, Kindler & Crimmins Associates, LLC
Steve Kindler, Partner, Kindler & Crimmins Associates, LLC
A branded pharmaceutical product with an expiring patent is facing new competition from one or more generic manufacturers selling equivalent product at a fraction of the cost of the branded product.
* Non-Foods Magazine, “Drug Patent Expirations”, Volume 15 No. 1 2012-2013, Pgs. 153-154.
** 2011-2012 HDMA Factbook, “Table 95 Brand Patent Expirations: 2012-2013”, 2011, Pgs. 84-85.
Source: “Drug Patent Expirations”, Non-Foods Magazine, Volume 15 No.1 2012 – 2013, 153-154.
In 2006, branded drugs accounted for 36.6% of the prescription count and 80% of the prescription sales dollars.*
By 2010, the branded prescription count had dropped to 22.4% while the prescription sales dollars dropped to 74.6%.*
The pace of this movement is dependent on many factors, but is quickening with almost every LOE event.
* 2011-2012 HDMA Factbook, “Table 89 US Prescription Drug Market Share by Generic and Branded Pharmaceuticals: 2006-2010”, 2011, Pg. 79.
To help trading partners better communicate and manage inventory before and after LOE event, ultimately reducing unproductive inventory and eventual unsalable / outdated return volume.
The report is solely focused on analyzing and developing successful strategies for fixed date LOE events
‘At risk’ launches do not allow trading partners to prepare for and execute pre-launch activities aimed at proactively reducing and managing inventory levels
Is a collaborative model between the manufacturer, distributor, and retailer possible?
Can an LOE event be managed and controlled by following a structured, well communicated plan?
Do data and findings support established assumptions and theories?
Manufacturer and distributor members of the HDMA’s Returns Task Force, along with representatives of retail pharmacies provided subject matter expertise and / or data for the report
Kindler & Crimmins Associates (KCA) acted as the clearing house for the collection of data and information
Inventory Management Agreements between manufacturers and distributors have successfully reduced inventories while providing increased visibility to distributor inventory
Most manufacturers and distributors have identified retail returns as the ‘black hole’
Retail pharmacies (chain, mass, independent and food stores) represent approximately 55% of the pharmaceutical market share (2010 sales dollars)*
* 2011-2012 HDMA Factbook, “Table 109 Pharmaceutical Sales by Customer Categories: 2009-2010”, 2011, Pg. 79.
Participating retailers were asked to complete an LOE Event Process Questionnaire
The responses detailed significant retailer handling variations that appear to have impacted product return rates
This information was extremely helpful in identifying successful practices that resulted in lower rates of returns
*Total is greater than 6 since retailers communicate multiple messages related to this topic.
Other Factors Impacting Conversion:
Key elements in successful programs:
Manufacturer informs distributor/retailer of LOE and relevant dates
Each trading partner holds internal meetings to develop handling plans
Distributor/retailer share inventory information and handling process with manufacturer
Replenishment orders closely monitored
Retailer communicates conversion and inventory information with manufacturer
Retailers utilize all available return and redistribution opportunities
Manufacturer works with distributor/retailer to address non-moving, residual inventory prior to product expiration
There is no silver bullet!
Each LOE event has its own unique circumstances that must be considered
There is no ‘one size fits all’ approach that will work for every situation
Proactive planning and sharing of information is critical
Anticipate obstacles and challenges and adjust plans accordingly