When is it too late to launch a late entrant?
The answer is nuanced, but timing, differentiation and company scale are the critical drivers of success.
For products with strong differentiation — particularly in efficacy and/or safety — it may never be too late to enter. A compelling clinical value proposition can persuade physicians to switch, even for latecomers. However, the bar is high: Differentiation must translate into meaningful patient benefits and outcomes, not just statistically significant improvements on clinical end points.
For products that are more than two years behind the first-in-class product and lack clear differentiation, executives should carefully reassess further investment. If return-on-investment (ROI) projections are weak, it may be prudent to redirect development efforts toward targeted patient subgroups or alternative indications where there is unmet need or competitive intensity is lower. This consideration is especially important for smaller companies, which rarely succeed with undifferentiated late entrants.
In more challenging scenarios, partnering or out-licensing may offer a strategic path to unlock value while reallocating resources toward assets with higher potential in the portfolio.
To increase the likelihood of success, executives managing late entrants should consider the following six strategic actions:
- Assess differentiation and ROI early: Rigorously evaluate the product’s potential for clinical differentiation and expected ROI — especially if launch is more than two years behind a first-in-class competitor.
- Scale investment strategically: Right-size investment levels to reflect the increased difficulty of gaining market share.
- Prioritize efficacy differentiation: Focus development efforts on demonstrating superior efficacy, which remains the most compelling driver of prescriber adoption.
- Highlight safety advantages: Evaluate whether the product offers a more favorable safety profile — particularly in therapeutic areas where safety concerns heavily influence prescribing behavior.
- Don’t overweight convenience: Avoid relying solely on convenience-based features (e.g., dosing, administration route) to drive differentiation; while occasionally successful, this strategy rarely leads to market outperformance on its own.
- Consider strategic partnerships: Smaller biotech firms should explore partnerships or licensing opportunities with larger, more experienced companies to improve launch execution and long-term success potential.
A well-timed and clearly differentiated product can still perform strongly as a late entrant. But without meaningful advantages and adequate resources, the opportunity for success may quickly close.
Methodology
Definition of therapeutic class: A mechanism of action within a disease or group of diseases.
Definition of outperformance: Generating more U.S. sales in year five post-Food and Drug Administration approval, relative to the first entrant, than would be expected by industry-standard order-of-entry share expectations. In all analyses, products were only considered outperformers if they also generated at least $300 million in year-five U.S. sales.
Definition of differentiation: A clinically meaningful improvement from the first entrant in the class based on (1) head-to-head trials directly comparing efficacy or safety, (2) indirect comparisons of clinical data, or (3) broader attributes not requiring published comparisons, such as label enhancements (e.g., removal of black box warnings) or convenience benefits.
The authors would like to thank Katherine Taylor and Katharina Novikov for their important contributions.
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Endnotes
1See methodology box for definition of outperformance. Some of the products were not assessed for outperformance due to missing first-entrant sales data from Evaluate Pharma.
2With 30 unique products across these two groups.