‘Life cycle management’ has become a popular term in the pharmaceutical industry. While the industry focuses on extending and improving the lives of patients, in this case the ‘life cycle’ involved is the economically productive life of a pharmaceutical product. That life begins with regulatory approval and, to a significant extent, ends at the point at which a generic competitor is able to enter the market and sell the drug at a lower cost. The length of that life is crucial in valuing the products of a pharmaceutical company and, where flagship products are involved, in valuing the company as well.
A pharmaceutical product’s life cycle is ultimately determined by the applicable law. In the US, the date of approval of generic competitors is directly tied to patent expiration for many (although not all) important pharmaceuticals. In the US, some pharmaceutical patents can be extended to recover time lost in the regulatory approval process. In addition, so-called ‘market exclusivity’ – designed by the US Congress to provide incentives for the development of new drugs – can extend product life irrespective of patent protection. The statutory basis for approval of generic products may also prevent approval of such products even where patents and market exclusivity do not apply.
