Logistics Solutions for Patent Cliff Challenges
Catherine Taylor
Communication & Content Manager
Pharmaceutical patents serve as critical safeguards, protecting the significant investments required for drug development. They offer manufacturers the exclusive right to market their products, recover costs, and fund future innovations. However, when these patents expire, companies face the challenge of a “patent cliff,” where profitability can plummet as generic alternatives enter the market.
While this creates opportunities for broader accessibility, it also demands careful planning to sustain business operations and patient care. Here’s how pharmaceutical companies can strategically manage the patent cliff while maintaining efficiency and quality.
How manufacturers adapt
Pharmaceutical companies often use specific strategies to address the challenges of patent expiration. A simple approach could be timing the launch of new products to coincide with the expiration of older ones, maintaining a steady income.
However, the unpredictable nature of drug development, with only 1 in 500 drugs reaching the market, makes this easier said than done. Decades of research, rigorous clinical trials, and regulatory approvals often mean significant investments without guaranteed results.
Some companies instead focus on extending the lifecycle of existing drugs. By developing new formulations or delivery methods, such as transitioning from tablets to injectables, manufacturers can reach new patient groups and maintain market relevance.
Expanding a drug’s use to treat additional conditions also opens up new revenue opportunities. For instance, the diabetes drug Ozempic was repurposed and launched as a treatment for obesity, securing extended patent protection and reaching a broader market.
Logistics for post-patent success
As a drug nears the end of its patent, adjusting logistics operations becomes critical to adapt to new market dynamics and increased competition. Key considerations include:
- Assessing shipping volumes and costs – Post-patent, competitive pricing pressures often drive manufacturers to seek cost-effective logistics solutions. Lightweight and durable packaging that maximises cargo space can reduce shipping expenses while maintaining product protection.
- Gaining insight from stability data – Following patent expirations, these drugs will come with extensive stability data which may allow for simplified logistics processes, focusing on cost efficiency. This is unlike newly launched drugs with limited stability data which require solutions with real-time monitoring to enable immediate intervention in case of unexpected temperature deviations, safeguarding product efficacy.
- Building strategic partnerships – Working with trusted distribution partners who have scalable operations and robust fleets supports timely delivery, even in competitive or resource-limited regions. These partnerships are particularly important in markets with a high presence of generic manufacturers, where efficient and adaptable logistics solutions are crucial.
- Strengthening resilience – In today’s landscape, disruptions like geopolitical tensions or natural disasters are so common that factoring them into planning is no longer optional, especially as companies navigate the pressures of the patent cliff. Proactive measures such as employing advanced risk management tools, diversifying transportation routes, and maintaining flexible operations are critical for handling increased competition and market shifts effectively.
- Managing inventory – Balancing inventory to match demand fluctuations is crucial, especially after a patent cliff when efficient resource use becomes essential. Overstocking ties up resources, while understocking risks supply interruptions. By analysing sales data and market trends pharmaceutical companies can fine-tune inventory distribution and prevent costly inefficiencies.
Keeping logistics on track
In addition, the post-patent landscape demands innovative solutions to maintain competitiveness. Technologies such as IoT, blockchain, and AI-driven predictive analytics are transforming logistics operations by enhancing visibility, efficiency, and risk management.
- IoT enables real-time tracking of temperature, location, and other environmental factors, allowing proactive responses to potential issues during transit.
- Blockchain improves traceability, reducing the risk of counterfeiting and strengthening regulatory compliance, simplifying a critical aspect of pharmaceutical logistics.
- AI provides predictive analytics to streamline processes, reduce costs, and improve performance by identifying inefficiencies and forecasting demand.
As nearly half of all new medicines are expected to require cold storage in the coming years[i], integrating these technologies into cold chain processes is more important than ever. Doing so will prepare companies for the increased complexities of shipping temperature-sensitive products and ensure cost-efficiency and product integrity.
Beyond the patent cliff
While the expiration of a patent may seem like a major hurdle, it also presents opportunities for reinvention. By adopting innovative logistics strategies and embracing advanced technologies, pharmaceutical companies can not only navigate this challenging period but also lay the groundwork for future success.
Efficient logistics, tailored to the unique needs of each product, help manufacturers sustain their operations, meet patient demands, and maintain the quality of life-saving medicines. The patent cliff isn’t the end of the road. With the right approach, it can be the start of a new journey.
Are you curious about how innovative logistics strategies can help at every stage of your product lifecycle? Reach out to our expert team to explore your options.
Resources
[i] Outlook for medicine use and spending through 2027 – IQVIA infographic, 2023