Building a Commercialization Budget You Can Confidently Defend

By Dora Bibila

In the long and arduous journey to bring innovative medicines to patients, many significant cross-functional processes must be defined and executed with the intention to work in sync, minimizing distraction, and achieving the stated goals. Building your commercialization plan and corresponding budget is one of those complex processes, especially in emerging or pre-commercial companies. The hurdles include:

• Commercialization itself is not a department but a mindset and ethos focused on all the steps over many years to reach the patient
• In emerging companies, the future departments may not exist yet, or when they do, they may have multiple assets or objectives to manage
• Tools and frameworks for budgeting may not exist at the corporate level, so the roll-up can be a challenge
• Data on the steps needed to build a multiyear plan and benchmarks on costs are not readily available
• To build next year’s annual budget, you need a sense of the entire plan as investment today, impacts tomorrow
• Stakeholders for the budgeting process vary from your internal team, functional colleagues, executive leadership, and, importantly, the Board of Directors (BOD)

With all of this in mind, developing your long-term and annual biopharma asset’s commercialization budget can be a yearly trial by fire. As seasoned commercialization experts at Corval, we share our insights, whether you use a comprehensive commercialization planning platform like Corval or build your budget the old-fashioned way in Excel and PowerPoint.

The questions are inevitable: Do we need to spend this much? Do we need to spend it now? WHY?

A strong, defensible budget is a key pillar of biopharma business planning. Being able to answer the Board’s questions and get your budget approved – or trim it down in the least painful way possible – begins long before you start refining final numbers. Here are some considerations regarding how to build a long-term multiyear and annual biopharma commercialization budget you can confidently defend.

Tie every budget item to your business strategy.

Cross-functional collaboration is the lynchpin of biopharma business planning. A model where department heads come to the budget meeting like gladiators prepared to battle for every dollar they can get doesn’t work.

To bring your asset to market, everyone needs to understand the disease and the market to agree on the strategic roadmap and what will move the company forward this year.

If you plan to launch a new treatment for a well-known condition like diabetes in five years, the focus may be more on commercial activities, marketing, and market access. But if your treatment is a first-of-its-kind therapy for a little-known condition, medical affairs may be the priority to focus on a disease education campaign. A commercialization roadmap guides you to the appropriate activities for your unique situation.

Budget planning starts with this strategy and the corresponding strategic objectives for your lead asset. If you can’t show stakeholders, including the Board, how a line item moves the company forward in pursuing those goals, that expense starts looking more like a “want” than a “need.”

The priority of each strategic objective will shift depending on what stage your asset is in and new data that emerges. Building a comprehensive commercialization plan will help you focus on the right investment at the right time so all aspects of the plan are moving in alignment. Knowing the big picture in the long run (over multiple years) will help define what you need to include in the annual budget. With the long-range strategy in mind, the annual budget is adjusted based on the latest developments in the asset’s clinical development program and timelines or specific annual budget targets dictated by senior management and funding cycles.

Many companies find it helpful to start by prioritizing the strategic objectives for the year based on where they are on the roadmap and deciding what portion of the budget should be allocated to each one. Others prefer to build from the bottom up with itemized costs rolled up per activity. Aligning with the strategy is critical to building a plan and budget.

With your strategic objectives in mind, it’s time to ask each functional area to develop and submit its department budget, right? Sorry, but no. That’s actually one of the most inefficient things you can do.

When biopharma commercialization strategies fail, it’s often because the various players are each working from their own set of assumptions, which are not aligned. When each department head sequesters themselves in their own functional silo to plan out what they want, they have no idea what’s happening in all the other silos and will likely have a different view of success. It’s hard to reconcile what’s best for each department into a single budget driving what’s best for the business (or asset), plus many interdependencies are lost.

Before departments or leaders work on their individual budgets, everyone needs to sit together around the table (or Zoom) and discuss an integrated cross-functional plan to accomplish the strategic objectives for the asset.

Work systematically through your strategic objectives. What must medical affairs do this year to advance Strategic Objective One, and when? What does marketing need to do? How about market access? How will each team work together? If these departments don’t yet exist, leaders that are present need to work with external experts or a trusted tool like Corval to guide them in building the multiyear, then annual plan.

At the end of this exercise, everyone has a holistic view of what needs to happen this year to move the strategic objectives forward – and a more realistic idea of where their department’s budget and activities fit into the whole picture. At this point, alignment on the commercialization plan is possible, and the story can be told to others.

Prioritize business activities along a commercialization timeline.

If the first question you need to answer in your biopharma budget defense is “Why,” the second is “Why now?” Your Board wants to keep costs as low as possible. Once you’ve made your case for why a line item is in the budget, be prepared to explain why it needs to happen this year.

Because you tied your line items to strategic objectives and planned them along a multiyear commercialization timeline or roadmap when the Board says, “Sorry, not this year,” you can articulate the potential risks of not funding the activity. For example, waiting to launch a market education campaign for a little-known condition could mean lower market demand when the asset launches, leading to a lower revenue curve and, more importantly, patients who are not served.

Your roadmap might not save investments from being cut or delayed. But it will help you prioritize activities so you can cut strategically. It will help you articulate the potential risks of deferred investment so the Board can decide with eyes wide open.

Anchor your biopharma budget in market realities.

After successfully defending why investments belong in the budget and should be made now, there’s only one thing left to articulate: Why this much?

In most companies, you rely on your team leads’ expertise to understand industry benchmarks for how much activities cost and on quotes from vendors or consultants for the fair market value of their proposed investments. A pre-populated source like the Corval platform can also assist in calculating headcount and operational expenses based on benchmarked data.

Remember that your Board will want to keep the budget as lean as possible, so incorporate potential savings such as economies of scale. Have market data available to defend estimated costs.

Collaboration is critical to building a defensible budget.

To avoid that deer-in-the-headlights feeling when your Board questions your budget proposal, be prepared to articulate:

• How each line item supports the strategic business objectives for the asset
• How the proposed budget represents an integrated cross-functional plan
• Why now is the best time to make this investment (and the potential consequences and risks of delay)
• Why this amount is appropriate based on market realities

Corval makes the process exponentially easier, removing the guesswork, facilitating collaboration, and supporting decisions with logic built on decades of successful launches.

See how Corval can help set your strategic objectives, build a multiyear commercialization plan tailored to you, and create clarity around what to do (and what to spend) every step of the way.