Acorda Therapeutics just announced that a drug that generated $266 million last year in revenues from helping patients with MS might now be useful for patients who suffered strokes. And, they are commencing research to see if the same drug can also help patients with cerebral palsy.
It kind of reminds me about how Merck realized that their drug for an enlarged male prostrate could also be used by men to reduce or reverse male pattern baldness. That drug, Propecia, consistently gave the company an additional $400 million in revenues on an annual basis.
Same product + new use + new customer = more revenue
And, quite a nice way to earn new revenue with a much higher margin, since all of the fixed R&D costs have already been paid!
Hollywood knows how to do this, as well. Think about how movies first come out in theatres, then they are released on DVD, on-demand cable, hotel pay movies, airline viewing, online, Redbox and Netflix, It is still the same movie, but with a different use pattern by a different customer.
A friend of mine once called the process putting old wine in new bottles.
And it works not only for products based upon intellectual property, but also for many types of physical products and services. The key issue to identify is the benefit derived from what is being sold. And then, figure out how to extend that benefit to new uses by new customers.
In the pharma examples, it is all about additional medical benefits for additional conditions resulting from use of the same drug. In Hollywood, it is catering to unique consumer benefits resulting from convenience, time and location in a structured way that has minimal cannibalization of the other platforms.
What is the core benefit of your product or service? Think harder – the core benefit is often not what you have always thought! Now give serious thought how to deliver that benefit in different ways to new customers. Not only more revenue, but also much higher margins, may be waiting.