PRODUCT DEVELOPMENT STRATEGY – ESCP, Estimating Product Performance Part 1 – Playground Physics
By: Josef Bossart, PhD
After more than 4 decades in the industry, I continue to be surprised by companies chasing new product opportunities that carry not only the usual development risks, but also a surprisingly high risk of commercial failure.
While risk is a given when it comes to pharmaceutical product development, formulation-enhanced products using previously approved actives take on more risk than they should. The real risk for these products, beyond a technology failure, lies in commercial acceptance. If you make it, they will only prescribe it if there is a perceived benefit.
In a series of short articles, I will introduce a qualitative model to help understand and visualize the potential of a product with prescribers, patients, and payors. This simple model can help weed out product ideas that may at first glance seem attractive but offer little potential in the real world. Any number of sophisticated models are available to forecast product opportunity. Too often, these models are unreasonably complex, hard to “feed” with the necessary information, and don’t provide an easily grasped sense of why a product does, or doesn’t, represent a worthy opportunity. More importantly, these quantitative models don’t provide guidance of how to improve a product’s potential and turn good into better.
A classic physics model using playground equipment provides a useful visual framework.
Efficacy (E), Safety (S), Convenience (C), and Price (P), or ESCP will be familiar concepts. These are the parameters that determine the performance and acceptance of a product. The relative importance or “weight” of these parameters follows the order E>S>C>P.
In the real world of prescription pharmaceuticals, you will not secure regulatory approval for any product that does not demonstrate some degree of efficacy. What qualifies as efficacious in the eyes of a regulator depends on the condition it serves. A product that can demonstrate a statistically significant improvement of cognitive or functional performance in any number of neurological diseases, even if relatively minor, is likely to be approved given the significant need. In the case of indications such as hyperlipidemia or hypertension, the standard for efficacy may be very high. The net/net is that without suitably validated efficacy, a product is unlikely to gain regulatory approval
Once efficacy is demonstrated, the next parameter of importance is safety and tolerability. As with efficacy, there is a variable scale. A treatment for cancer that is very effective but relatively toxic might still be approved if the risk/benefit ratio is deemed acceptable for the indication. A product that demonstrates comparable efficacy, but has more safety or tolerability issues, may be approved but probably will not compete effectively against a comparably efficacious, but safer, product.
A new product that offers comparable efficacy and safety benefits to an approved product but is more convenient as evidenced by increased patient adherence is likely to gain significant market acceptance. A product with greater convenience at the expense of reduced efficacy or safety is unlikely to receive significant market acceptance in most cases.
In the case of two products with comparable E, S, and C, things will be tipped by price. Price is actually a rather weak parameter. Most everyone is willing to pay more to achieve a better clinical outcome.
PLAYGROUND EQUIPMENT, THE SEESAW
Think back to being on the playground as a child. The seesaw (Figure 1), or teeter totter, introduced you to one of the earliest real-world demonstrations of physics. Being able to lift the person on the other side of the seesaw depended on your weight and where you were positioned on the seesaw. By properly managing weight and location, you could seize the advantage. In this way, a seesaw is quite different than a simple double beam scale; a seesaw responds to both weight and relative position.
Another important difference between a seesaw and a scale is the pivot point. On a scale, the pivot point is designed to provide as little friction as possible. In the case of a seesaw, the pivot point, depending on how well it is maintained, can have a big impact on how easy it is to gain leverage when differences in weight and position are reasonably small. Put an elephant on one side of a seesaw and a mouse on the other and no amount of friction at the pivot is likely to prevent the obvious outcome. But, put two different sized mice on either side of the seesaw and a rusted pivot will disguise any weight difference or relative position on the seesaw.
BALANCING PRODUCTS ON A SEESAW
It may be pretty obvious where this is headed. Product features and benefits using the ESCP parameters can be visualized using a seesaw-type device. How a product concept stacks up against a competitor, or competitors, can be imagined based on a few simple concepts:
Concept 1 – the seesaw is a fair device, meaning that both sides are the same length and the same weight.
Concept 2 – the weight of products on both sides is modeled using buckets that are of infinite size and are weightless, filled with the same “stuff.” A greater benefit or weight of a bucket is achieved by adding in more “stuff.”
Concept 3 – the order of the buckets from furthest to closest to the pivot is Efficacy, Safety, Convenience, and Price. This is consistent with their inherent clinical and market “weight.”
Concept 4 – the pivot point can be manipulated by managing its friction.
Perhaps the simplest example to explain the process is to compare two products that are identical except for price; one is a generic (left), and the other is a full price branded prod uct (right). As shown in Figure 2, it is pretty clear the generic product tips the balance. That extra “weight,” or greater value, in the Price bucket makes the difference.
Things get more interesting when we compare two branded products and all four parameters come into play. Does a bit more weight in the Efficacy bucket overcome a little bit less weight in the Safety bucket? Is it possible, or desirable, to “grease” a rusted pivot hinge? What are the options to gain leverage? What is the best bucket in which to “invest” resources?
In future articles, I will examine these questions in the context of real products and how they have been accepted as evidenced by commercial success. Product success and failure should never come as a surprise.
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