There has been a long-running debate in the pharmaceutical industry about the value of being first to market. Companies spend considerable resources seeking to increase the odds of beating their competitors to market and often fret about the commercial disadvantage of being late.
In the high-stakes race to market for a novel drug class, companies firmly believe that every month of lead time ahead of a competitor is significant. This concern is not without justification, as the daily revenue lost due to delayed market entry has been estimated to be as high as $8 million dollars.
This 'first mover' debate also plays out amongst service vendors, focused on shortening the drug development lifecycle, and in particular the clinical trial one of the last bastions of manually intensive operations. According to a recent study by KPMG, within the pharmaceutical industry, the return on R&D expenditure has fallen from an industry average of approximately 20 percent 20 years ago, to 10 percent now, with the average cost of developing a drug rising during that period at a rate 7.4 percent higher than inflation, with the increasing costs of conducting clinical trials responsible for most of this increase.
The market for eClinical software is expanding at a compound average growth rate of 13.80%, increasing from $3 billion in 2014 to $6.8 billion by 2020. In this environment opportunities abound encouraging new entrants and the dreaded carbon copy "innovators", known as the "Me-Too's".
In an attempt to grab market share or slow down the market penetration of an incumbent industry leader, organizations will often rush an undifferentiated product to market, often in the form of slideware or vaporware, with accomplying vague promises of future functionality.
In reality, all these organizations do is validate the need in the industry, and drive market awareness and increased demand. Speed to market is certainly an important factor to an organizations success, but a premature entry is also certain to backfire, and set the impression with prospective customers that your offering is well below par with the competition. These impressions are often long lasting.
Differentiation is the mantra that is often touted in an organizations success, but central to this is providing an offering with unique customer benefits and superior value. According to Robert Cooper, author of Product Leadership: Creating and Launching Superior New Products, "truly superior, differentiated products" have an average 98% success rate and 53.3% market share, while "Me-Too" products average an 18.4% success rate and only 11.6% market share.
Indeed, the desire for quick revenue and immediate return within organizations is often the root cause for Me-Too's lackluster performance and poor market penetration.
Cooper offers seven ingredients of a unique, superior product with real value for the customer:
- Meets customers' needs better than competitive products
- Is a better-quality product than competitors'
- Has unique benefits and features for the customer
- Solves customers' problems with competitive products
- Reduces the customers' total in-use costs (better value-in-use)
- Has highly visible benefits for users
- Is innovative or novel – the first of its kind on the market
Experience is another important factor which must be gained through time and in-depth interactions with customers. A "high-velocity organization", characterized by Professor Steven Spear, is always learning and improving. After all, when someone copies what you have in the market, they are coping the artifact of your past effort. According to Spear, "Today, sustainable competitive advantage has to be won by creating the internal capacity to improve and innovate – fast and without letup. Simply put, today's leading organizations outrace their competition by outlearning them."
Industry leaders...lead, and therefore can expect to be followed and copied. However, they have amassed significant learning opportunities in validating and capturing the market.
Transformational developments are swirling around in nearly every industry, and while it may be tempting to launch a follower product to ride the waves of a leader, without showing distinct differences in a product offering, these organizations will be facing an uphill battle.
How to spot Me-Too's:
- Limited Marketing: Typically, Me-Too's will issue a Press Release and slideware. The whole marketing strategy is designed to cast doubt in the market for organizations that are performing due diligence (i.e., RFPs) – a deliberate delay tactic designed to halt a market leaders momentum. Do they have a dedicated webpage with product screenshots? Does the product look unique or simply a competitor's product with a different logo? Do they have associated product sheets? White Papers?
- Not Industry Proven: Me-Too's often do not have any proven industry experience or knowledge due to their rush to enter the marketspace. Often their "customers" get their product at no-cost, and therefore no-risk, in order to secure an "unbiased" endorsement. Can they provide references? Case studies that show the effectiveness of their solution?
- Lacking Dedication: Is the Me-Too offering industry specific? Or is it just another product addition to their growing suite of applications? How will they be able to maintain focus within their organization with competing applications and associated customer demands?
- Unlimited Roadmap: Me-Too's are big on promises, short on delivery. An organization that promises with world should be treated with skepticism.
- Lacking Vision: Me-Too's are by their nature copiers, they will simply mirror existing functionality offered by competitors, and will lack a robust "vendor independent" integration strategy. Do they have open APIs? What is their vision of the future? Do they have compelling functionality not offered by anyone else?
Industry leaders are innovative companies dedicated to their customer's success and to getting their partners to the finish line. More than change agents, these leaders are focused on providing continuous business value momentum and exceeding customer expectations. Me-too's motivation is profit centric, looking to mirror industry leader innovations by carbon copying functionality and marketing—importantly, built without an in-depth knowledge or field experience—ultimately delivering limited business value.
Today, risk in clinical trials is playing a more visible role, giving the growing emphasis on risk-based management by regulators and industry's steady push for speeding therapies to patients. With this in mind, adoption of an industry proven solution provides the best no-risk option. At the end of the day what customers care about most is not who enters the race, but who helps them cross the finish line and achieve their goals. So organizations need to ask themselves "Which vendor is going to help me accelerate my processes and breakthrough ideas?" An innovative leader or a "Me-Too"? The answer is obvious.
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Sujay Jadhav, CEO of goBalto, has more than 20 years of experience at leading Silicon Valley software providers, with a life-sciences focus. Jadhav was most recently senior vice president of global corporate strategy and development at Model N, where he filled multiple roles, from corporate development to overseeing their life-sciences analytics and SaaS business unit. His career has also included strategic consulting at Booz Allen Hamilton, product strategy at CommerceOne and general management roles at Singapore Telecom. He received his undergraduate degree from the University of South Australia and an MBA from Harvard University.