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Incremental innovations - what are the financial benefits?




The financial benefits of incremental innovation


This idea is already widely used by international pharmaceutical companies, and it is also already perceived as a good alternative for national companies.


Investments in incremental innovations vs. radical innovations


In general, investments in research and development of incremental innovations are much smaller than investments in radical innovations, as well as, the complexity and development time. As we saw previously, companies that know how to take advantage of the changes that are occurring in the registration routes through RDC 200, will be able to reduce investments in studies, if they manage to generate robust data to be presented in the dossier to support the registration in ANVISA of the drugs involved in the innovation.


Incremental innovations in many cases are characterized by extensions of existing lines of the company itself, which manages to take advantage of synergies in several areas, such as marketing and production investments. Synergies in marketing / promotion Incremental innovation projects bring great benefits in the oxygenation of the company's portfolio when well studied and validated, as we have seen in previous article, some suggestions for the development of a successful project. The promotional investment is also usually less in incremental innovations when compared to the launch of a radical innovation, since there is often already a promotional investment planned in the product line in which the incremental innovation will be inserted.


We also see as another advantage. The better use or the maximization of the existing sales force, in most cases, without the need to increase or create new teams.


Synergies in production


In cases where innovation does not require a new production line, it can occupy part of the idle capacity of existing lines, diluting fixed costs and improving the profitability of the product line as a whole.


Tax gains


Provided that it fits the necessary requirements, the company can also deduct the investments made in the development of the incremental innovation of the tax base of the company using the benefit generated by the Law of Good.


In short


If well structured, the development and launch plan for incremental innovations can generate many benefits for companies that use this strategy, bringing cost reduction, portfolio oxygenation and increased sales with direct impact on the free cash flow for the company.


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