Press "Enter" to skip to content

Strategies for Branded Drug Lifecycle Management: Part 5 – Adaptation

Copyright © DrugPatentWatch. Originally published at Strategies for Branded Drug Lifecycle Management: Part 5 – Adaptation

This is part five of a six-part series on drug lifecycle management: Four Strategic ChoicesPrevention Innovation Extraction Adaptation Summary and Conclusion

This article is adapted from Song CH, Han J-W. Patent cliff and strategic switch: exploring strategic design possibilities in the pharmaceutical industry. SpringerPlus. 2016;5(1):692. doi:110.1186/s40064-016-2323-1 under a Creative Commons Attribution 4.0 International License. It has been edited for length and style.

Adaptation strategy

The last strategic pathway is to introduce branded generics.

Two conceptually similar strategic alternatives fall into this category: (1) developing a low-cost alternative in the form of wholly owned subsidiary focusing on generic drugs, which operates separately outside the main organization (Gilbert and Strebel 1987); (2) offering of a generic through the innovator-company itself (Agrawal and Thakkar 1997).

The basic principle of ‘adaptation strategy’ is therefore to retain existing customers through an active entry into the business of generic drugs, and to capture a share of the generic profits. In small markets, branded generics may deter generic entry, as the innovator will have a manufacturing advantage. The underlying rationale behind the launch of generic by a subsidiary is to leverage synergies and to diversify the product portfolio by having a strong presence in different key markets. In the past, the attempt to gather the innovator-company and generic suppliers under the same roof ended up with failure. This is due to operational agility required for generic businesses as well as a focus on market research and approval processes rather than in R&D. But today, many established brands have their own generic subsidiary (e.g. Sandoz from Novartis Group) and intentionally separate branded and generic divisions.

The launch of a “second brand” (a so-called fighter brand) with an additional branded product sold at a discounted price under its own corporate brand is frequently discussed as a potentially promising new strategic option, but has been rarely implemented because of its credibility. Raasch (2008) confirmed that the rationale behind the launch of a fighter brand is “a segmentation of demand according to price sensitivity, maintaining a higher profit margin on the units sold […] but not entirely losing more price-sensitive prescribers”. Similarly, a company considering the launch of a fighter brand can receive following competitive advantages: (1) brand popularity and reputation as the producer of the proven drug will likely benefit the new brand; (2) the brand owner can take advantages of already existing manufacturing infrastructure to profit from learning curve-based cost advantages (Raasch 2008).

A downside is that commercialization of low-priced products is often incompatible with the corporate image as well as culture and the business model of the research-driven company. Also it cannibalizes the original drug. The critical issue for implementing this strategy is whether the discounted drug should substitute the high-priced branded drug or if both are expected to complement one another. In both cases, it opens up the possibility of securing a part of the generic market, thereby exploiting the experience-related advantages in the synthesis and packaging of the drug and contributes to the coordinated utilization of existing production capacities.

However, the first approach can gain a substantial market share only if the subsidiary brings its generic to the market in the course of early entry before other generic competitors, thereby realizing the first-mover advantage. Therefore, it is imperative to consider the likely development of the price corridor after the generic entry. A proactive pricing behavior and an aggressive marketing communication towards the prescribers would positively contribute to the success of launching secondary brand product.

Table 4: Overview of adaptation strategies

Strategic optionsDescriptionEffect
Branded generics (1)Offering generic through subsidiary“First mover advantage”; serving different markets
Branded generics (2)Offering generic through brand ownerServing different customer segments

Next: Part 6 – Summary and Conclusion

This is part five of a six-part series on drug lifecycle management: Four Strategic ChoicesPrevention Innovation Extraction Adaptation Summary and Conclusion


  1. Agrawal M, Thakkar N (1997) Surviving patent expiration: strategies for marketing pharmaceutical products. J Prod Brand Manag 6:305–314 View Article Google Scholar
  2. Bhat VN (2005) Patent term extension strategies in the pharmaceutical industry. Pharm Policy Law 6:109–122 Google Scholar
  3. Bigliardi B, Nosella A, Verbano C (2005) Business models in Italian biotechnology industry: a quantitative analysis. Technovation 25:1299–1306 View Article Google Scholar
  4. Brass EP (2001) Changing the status of drugs from prescription to over-the-counter availability. N Engl J Med 345:810–816 View Article Google Scholar
  5. Bulow J (2004) The gaming of pharmaceutical patents. In: Jaffe AB, Lerner J, Stern S (eds) Innovation policy and the economy, vol 4. MIT Press, Cambridge, pp 145–187 Google Scholar
  6. Chandon P (2004) Innovative marketing strategies after patent expiry: the case of GSK’s antibiotic Clamoxyl in France. J Med Mark 4:65–73 View Article Google Scholar
  7. Ching AT (2010) Consumer learning and heterogeneity: dynamics of demand for prescription drugs after patent expiration. Int J Ind Organ 28:619–638 View Article Google Scholar
  8. Chong CR, Sullivan DJ (2007) New uses for old drugs. Nature 448:645–646 View Article Google Scholar
  9. CHPA (2015) Rx-to-OTC switch. Accessed 25 Oct 2015
  10. Denoon A, Vollebregt E (2010) Can regenerative medicine save Big Pharma’s business model from the patent cliff? Regen Med 5:687–690 View Article Google Scholar
  11. Dolfsma W (2011) Patent strategizing. J Intellect Cap 12:168–178 View Article Google Scholar
  12. Dolgin E (2010) Big pharma moves from ‘blockbusters’ to ‘niche busters’. Nat Med 16:837 Google Scholar
  13. Druss BG, Marcus SC, Olfson M, Pincus HA (2004) Listening to generic Prozac: winners, losers and sideliners. Health Aff 23:210–216 View Article Google Scholar
  14. Dubey R, Dubey J (2009) Pharmaceutical product differentiation: a strategy for strengthening product pipeline and life cycle management. J Med Mark 9:104–118 View Article Google Scholar
  15. EMA (2015) Orphan designation. Accessed 29 Oct 2015
  16. European Commission (2009) Pharmaceutical sector inquiry final report. Accessed 02 Oct 2015
  17. Gilbert X, Strebel P (1987) Strategies to outpace the competition. J Bus Strateg 8:28–36 View Article Google Scholar
  18. Glasgow LJ (2001) Stretching the limits of intellectual property rights: has the pharmaceutical industry gone too far? IDEA J Law Technol 41:227–258 Google Scholar
  19. Glass G (2004) Pharmaceutical patent challenges—time for reassessment? Nat Rev Drug Discov 3:1057–1062 View ArticleGoogle Scholar
  20. Grabowski H, Kyle M (2007) Generic competition and market exclusivity periods in pharmaceuticals. Manage Decis Econ 28:491–502 View Article Google Scholar
  21. Grabowski H, Vernon JM (2000) Effective patent life in pharmaceuticals. Int J Technol Manage 19:98–120 View ArticleGoogle Scholar
  22. Higgins MJ, Graham SJH (2009) Balancing innovation and access: patent challenges tip the scales. Science 326:370–371 View Article Google Scholar
  23. Hollis A (2002) The importance of being first: evidence from Canadian generic pharmaceuticals. Health Econ 11:723–734 View Article Google Scholar
  24. Hong SH, Shepherd MD, Scoones D, Wan TTH (2005) Product-line extensions and pricing strategies of brand-name drugs facing patent expiration. J Manage Care Pharm 11:746–754 Google Scholar
  25. Hutchins M (2003) Extending the monopoly—how ‘secondary patents’ can be used to delay or prevent generic competition upon expiry of the basic product patent. J Med Mark 1:57–71 Google Scholar
  26. IMS (2012) The global use of medicines: outlook through 2016. Accessed 06 Feb 2016
  27. James AD (2002) The strategic management of mergers and acquisitions in the pharmaceutical industry: developing a resource-based perspective. Technol Anal Strateg 14:299–313 View Article Google Scholar
  28. Jimenez J (2012) The CEO of Novartis on growing after a patent cliff. Harv Bus Rev 90:39–42 Google Scholar
  29. Kakkar AK, Dahiya N (2014) The evolving drug development landscape: from blockbuster to niche busters in the orphan drug space. Drug Dev Res 75:231–234 View Article Google Scholar
  30. Kvesic DZ (2008) Product lifecycle management: marketing strategies for the pharmaceutical industry. J Med Mark 8:293–301 View Article Google Scholar
  31. Magazzini L, Pammolli F, Riccaboni M (2004) Dynamic competition in pharmaceuticals—patent expiry, generic penetration and industry structure. Eur J Health Econ 5:175–182 View Article Google Scholar
  32. Mittra J (2007) Life science innovation and the restructuring of the pharmaceutical industry: merger, acquisition and strategic alliance behaviour of large firms. Technol Anal Strateg 19:279–301 View Article Google Scholar
  33. Mittra J, Tait J (2012) Analysing stratified medicine business models and value systems: innovation–regulation interactions. New Biotechnol 29:709–719 View Article Google Scholar
  34. OECD (2014) Generic pharmaceuticals. Accessed 30 Oct 2015
  35. Pammolli F, Magazzini L, Riccaboni M (2011) The productivity crisis in pharmaceutical R&D. Nat Rev Drug Discov 10:428–438 View Article Google Scholar
  36. Paul SM, Mytelka DS, Dunwiddie CT, Persinger CC, Munos BH, Lindborg SR, Schacht AL (2010) How to improve R&D productivity: the pharmaceutical industry’s grand challenge. Nat Rev Drug Discov 9:203–214 Google Scholar
  37. View Article Google Scholar
  38. Prajapati V, Tripathy S, Dureja H (2013) Product lifecycle management through patents and regulatory strategies. J Med Mark 13:171–180 View Article Google Scholar
  39. pwc (2009) Pharma 2020: challenging business models. Accessed 10 Oct 2015
  40. Raasch C (2006) Der Patentauslauf von Pharmazeutika als Herausforderung beim Management des Produktlebenszyklus. DUV, Wiesbaden Google Scholar
  41. Raasch C (2008) Launching a fighter brand to cushion patent expiry: the case of Zocor. J Med Mark 8:119–126 View ArticleGoogle Scholar
  42. Raasch C (2009) Strategic options to tackle patent expiration: theoretical framework and case studies. Int J Intell Prop Manage 3:278–300 Google Scholar
  43. Rusu A, Kuokkanen K, Heier A (2011) Current trends in the pharmaceutical industry—a case study approach. Eur J Pharm Sci 44:437–440 View Article Google Scholar
  44. Scott Morton FM (2000) Barriers to entry, brand advertising, and generic entry in the US pharmaceutical industry. Int J Ind Organ 18:1085–1104 View Article Google Scholar
  45. Somaya D (2003) Strategic determinants of decisions not to settle patent litigation. Strateg Manage J 24:17–38 View ArticleGoogle Scholar
  46. Tambuyzer E (2010) Rare diseases, orphan drugs and their regulation: questions and misconceptiosn. Nat Rev Drug Discov 9:921–929 View Article Google Scholar
  47. Teece DJ (2010) Business models, business strategy and innovation. Long Range Plan 43:172–194 View Article Google Scholar
  48. Tuttle E, Parece A, Hector A (2004) Beyond lifecycle management—optimizing performance following patent expiry. Accessed 02 Oct 2015
  49. van Waterschoot W, van den Bulte C (1992) The 4P classification of the marketing mix revisited. J Mark 56:83–93 View Article Google Scholar
  50. White RE (1986) Generic business strategies, organizational context and performance: an empirical investigation. Strateg Manage J 7:217–231 View Article Google Scholar
  51. Zott C, Amit R, Massa L (2011) The business model: recent developments and future research. J Manage 37:1019–1042 Google Scholar

Make Better Decisions with DrugPatentWatch

Get the Daily Briefing or Try a trial

Copyright © DrugPatentWatch. Originally published at Strategies for Branded Drug Lifecycle Management: Part 5 – Adaptation
Get the DrugPatentWatch Daily Briefing

✓ Patent Expirations and Generic Entry

✓ Insightful Articles & Case Studies

✓ Patent Litigation & Challenges

✓ 505(b)(2) & Biosimilars

✓ Industry Trends

DrugPatentWatch - Make Better Decisions