Investing for Launch Success: Finding the Right Balance

Experts explore why executives often underspend on the launch of new products and how companies can course correct.

Companies decide how much to spend for launch based on many factors, including their expectations for the product and where it fits in the overall corporate strategy. It is common, though, for companies to wait to kick spending into high gear until the year before launch. This is especially true for emerging companies that tend to be resource-constrained and risk-averse until they are certain that launch is imminent. The problem with this wait-and-see approach is that many clinical-stage companies find themselves either underfunding launches and underperforming in the market, or overfunding launches too late in the launch period in an attempt to catch up, thus incurring costs that do not add incremental value to commercial success.

We have conducted market research, and a survey and an executive roundtable of more than 300 biopharmaceutical executives from small-to-midsized biopharmaceutical companies and finance/advisory services professionals to understand in more detail their experiences and perspectives with SG&A investment prior to launch. In this paper, we explore potential reasons why executives tend to underspend, how spend expectations differ by role and experience and how companies can course correct.