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Small and Large Drug Companies Allocate Tens of Millions in Marketing Dollars to Generate Billions, Says Cutting Edge Information

RESEARCH TRIANGLE PARK, NC -- (Marketwire) -- 07/29/09 -- Drug companies spend an average $102.8 million annually in market outlays to support a typical billion-dollar blockbuster, according to a study by pharmaceutical business intelligence leader Cutting Edge Information.

To generate the billions of dollars necessary to fund new research, pharmaceutical and biotechnology companies of all sizes spend large sums of marketing dollars to build their brands. According to the study, large drug companies spend between $95 million and $154 million to market a successful blockbuster. Small drug companies can spend between $40 million and $121 million on marketing expenses for their blockbuster brands.

"Driving Successful Pharma Brands: Case Studies of Real Product Launches" finds that, regardless of a company's size, a brand team must spend heavily to build a successful product franchise. For drugs entering an already crowded market, these marketing expenditures can easily top $100 million. Advertising and promotion expenditures dominate spending for both large and small company commercialization plans. More than 60% of brands' average budgets go toward these critical activities to raise brand awareness. The rest of the marketing budget supports market research, market access, thought leader development and other medical communication activities.

"It is crucial that companies draw attention to their brands through a combination of marketing tools," said Eric Bolesh, research manager at Cutting Edge Information. "Otherwise, potential sales success will be lost on an audience who are unfamiliar with and uneducated about the brand."

Pharmaceutical industry critics often emphasize the significant marketing expenditures that drug companies make on advertising and other promotional activities compared to their annual R&D investments. The study finds, however, that brands' advertising and promotional expenses include providing samples to physicians, patient education costs and peer communication and education through speeches. The study provides individual brand budgets for each of these activities. Furthermore, brand budgets also support important health outcomes research that inevitably shapes future clinical development studies.

"Companies that fail to invest adequately in marketing their brands risk losing much of those brands' potential revenue," said Jason Richardson, president and CEO of Cutting Edge Information. "To reach their full potential, brand teams must be finely attuned to their products' strengths and weaknesses, including the realities of markets, clinical profiles and their capacity to support effective promotion."

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