This pharmaceutical market model case study [real world, sanitized model]
is based on a patented chemotherapy drug cocktail for a
specific type of cancer.
The first step in developing a market model
is to figure out which regions of the world we are targeting
with our marketing campaign and sales force. We then
need to figure out our target market, as defined by a drug
label or product application, and derive the total number of
people that might make use of the product. In this
case we started with the total regional populations
downloaded from census organizations and then
cancer epidemiology across the individual regions, as best
we could, to come up with a useable population. At
that point we examined the various treatment options,
competitive and non-competitive,
available and applied some basic computations to figure out
how large our market population really is.
In this instance, we are focusing in on
cancer treatment response rates or survival rates.
Other life-threatening disease models often use death rates
to calculate markets and revenues.
The targeted patient group for this specific
drug cocktail is comprised of second line and beyond
treatment candidates. The market model illustrated on
the right is a
very small portion of the 2nd line patient population available
for treatment. There are quite a number of user inputs
required for this model. Many
of these inputs are garnered from empirical data and
industry experts. This type of on-the-fly modeling is
great for management needing to make quick changes without
the need to track the effects through the modeling system.
The changes propagate automatically.
Once we determine our expected peak market
share, we need to establish the rate at which we attain this
peak market share [uptake] and what market environmental
issues enhance or degrade our market share over time [i.e.
patent expiration, early stage competitive products].
we need to account for individual markets coming on-line on
varying launch dates as illustrated in the image on the
Often times there are multiple sources of
market data. Many times market data for the identical
regions do not match. In these cases SG Systems will
set up simple checkboxes within the models allowing quick
and easy switching between data sets.
The market model is the first of many
important steps in constructing accurate product valuation
models. The next step is to set-up our