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A product pipeline is an assortment of products and services at various stages of development. At any given time, a company typically has many items in the pipeline. Some of them will make it all the way to production and begin to generate income for the company. Others will not prove fruitful and the company may abandon them. This term is particularly common in the pharmaceutical industry, where products can spend a decade or more in the pipeline.
One end of the product pipeline is the finished result. At the other end is the brainstorming that leads to a new product. Sometimes company personnel may meet to discuss a new invention, while in other cases, they may engage in discovery activity with the goal of finding potentially new compounds, as seen in the chemical and pharmaceutical industries. In this case, discovery may not be performed with a specific goal in mind, but to learn more about a compound to see if it has commercial applications.
As the development process proceeds, the product moves down the pipeline. Personnel contribute to many different stages of development, including the creation of different product versions and analysis to see if the product is sustainable or fits in with the company's stated mission. A pharmaceutical company could find a valuable new compound and push it through the pipeline only to find that the costs of production are prohibitively high and the compound would only serve a small number of patients, for instance. The company might decide to stop development because it wouldn't be a sustainable addition to the product lineup.
Testing is also an important part of the product pipeline. The company starts with a small group of testers and gradually expands over time to larger and larger groups. This allows it to test the product and the market; it may find that some testers respond better than others and could use this information to adjust the marketing campaign, for instance. Testing could also reveal that the product is not salable, a common issue with pharmaceutical development.
Companies need a tremendous amount of income to keep the product pipeline open. Investment into product development can be substantial, especially when one considers that not all products in development will make it to the open market. Each product that does manage to navigate the product pipeline must be profitable, so that it in turn can support other products in development.
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