Predicting the ‘Patent Cliff’
Patents are particularly common in life sciences, semiconductors, and software industries.
A patent gives a product developer a monopoly market position for several years. Critical to profitability, product renewal and growth, patents allow a manufacturer to recoup its R&D, production- and sales investments to bring a new product to market.
Once the patent expires, competitors are free to enter the market with what are known as generic products. This can cause a severe and immediate drop in market share and revenues of the branded product. In the life sciences industry this is known as the ‘patent cliff’.
Problems to be Solved
We helped our client, a global pharmaceutical company, predict the impact of the patent expiry in the coming year with a purely data-driven approach.
We analysed numerous drugs whose patents had expired since 2002. From the characteristics of the products, such as their type, dosing form, distribution methods, number of competitors and the preference policy conducted by insurers, we were able to identify clear trends within comparable groups and could investigate the causal effects for the different patent cliffs.
The data consisted of a large dataset made available by our client plus several opensource databases. The result was an elaborate database with which we could analyse the trends and causal effects.
We delivered a data-driven answer to predict the market share drop in the 6 to 12 months after expiry for our client’s product, based on the analysis of 20 different products and their historical sales volumes.
The client received an extensive document with a clear summary of our main findings plus the results of our deep dives into the products analysed.
Impact and Benefits for our Client
Our insights disclosed an objective and insightful prediction with which our client could better prepare for the coming patent cliff.
This gave our client more understanding of the future situation and opened up further internal discussions on which actions should be taken to minimize the downsides.
This project shows that a data-driven approach is crucial, especially in times of impactful events that demand strategic decisions. By “doing the math” we validate our visions and often identify trends that improve strategic decisions worth millions of euros.
Ways of Working
The project was delivered on time, in a pressure cooker two weeks, to ensure our client could use the findings in their budget discussions for the coming next year.