channel, distribution and Trade Case studies

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Opportunity:

A start-up manufacturer that was launching their 1st Oncology IV product was seeking a partner who had the ability to develop their channel, distribution and trade operations and strategies and implement them. This included the selection of all channel partners (3PL, SD & SP network partners). The client had another firm estimate their potential channel costs for budgeting purposes and was told to support the channel it would be $5 million for the launch year and $68 million over first 3 years post launch.

Solution: 

• Led the client team through a Channel Insights & Current State Session to review their current trade and channel organization launch readiness
• Facilitated an interactive Channel Strategy Design Session to identify the optimal go-forward solution including multiple channel options and their associated detailed channel financial models
• Delivered a Business Case and Action Plan which detailed the option selected, options not chosen and rationale for non-selection, budgetary impact, operational impacts by department, risk and mitigation strategies and a detailed tactical action plan through product launch

Results:

We provided the client with new product channel strategy and contract trade support allowing them to choose a defined distribution model with targeted channel partners. We assisted with a rigorous RFP process to identify both the 3PL and SP channel partners. While the client chose to wait until after PDUFA date to hire a full-time trade leader, we were engaged to lead all client-facing implementation activities until their trade leader was hired. The identified strategy was executed and launched while saving the client $4 million during launch year and an estimated $55 million over the 1st three years following launch, compared to the estimates provided by the other firm.

Opportunity:

After assisting in the development of the channel strategy for a new manufacturer launching their first product in the neurology space, the client required hands-on assistance working with their Sr. Market Access and Trade Director to execute the tactical implementation and execution of the identified strategy. With only 5 short months remaining before launch, it was imperative they were successfully set up and running to meet anticipated product demand.

Solution: 

• Working on behalf of the client we engaged all identified channel partners (3PL/SDs and SPP) to complete the required new manufacturer set-up documents and paperwork  
• Developed and wrote specialty distribution agreements on the manufacturers “paper” including the development of trade policies and procedures
• Assisted the Trade Director with red-line negotiation and execution of fair, balanced and economically appropriate distribution and dispense agreements with the network specialty distributors and specialty pharmacy

Results:

Due to the provided channel strategy launch support, the client was successfully set up with all identified channel partners well before the product launch date as a new manufacturer. We assisted the Trade Director to execute distribution & dispensing service agreements with all channel partners (3PL/SDs/SP) inclusive of best-in-class terms, conditions, data and metrics with an equitable value exchange on service fees with the channel partners to assure consistency of performance.

Opportunity:

One of the larger US Pharmaceutical manufacturers with a well-established product portfolio of oral and self-injected products had recently launched their first physician administered IV product. Their assumption was this new IV product would fit perfectly into their traditional oral and self-injected channel strategy. However, within 6 months of product launch they noted demand uptake was lagging vs. forecasted expectations and to complicate things further, their full-line wholesale channel partners had contacted them with calculations that indicated they were no longer paying enough in DSA fees for their traditional product portfolio.

Solution:

• Performed an evaluation of all existing full-line wholesale (FLW) and specialty distribution (SD) agreements to ensure they are supportive of appropriate and expected fair balance provisions between channel partners and the client manufacturer
• Conducted an analysis of all current concessions and discounts in existing FLW and SD agreements to ensure they were productive discounts that clearly supported the physician clinical choice, patient preference and product journey
• Identified all unproductive concessions and discounts in the SD agreements such as 2% prompt payment or non-bona fide fees that would negatively impact physician cost recovery following physician clinical conviction and eliminated those from existing agreements
• Calculated the effective vs. contracted agreement value of the manufacturer to the FLW and their SD subsidiaries 

Results:

After performing a portfolio-wide channel strategy health check, we discovered they had numerous unproductive discounts and concession language in their existing specialty distribution agreements that had significantly impacted physician ability to use their IV product. This was based on suboptimal medical benefit cost recovery due to average selling price erosion. These discounts and concessions were amended out of the existing SD Agreements. These changes along with expanding their market access program resulted in a rapid increase in demand sales for their IV product. Additionally, based on our holistic manufacturer financial analysis of effective vs. contracted fee terms in the agreements, the client was able to illustrate the true value of their relationship with the FLW/SD entity. DSA fees were kept at the present levels on the existing full-line wholesale agreements saving the manufacturer over $121 million on an annual gross to net basis.