Revenue models and analysis used for competitive pricing and sales projections for the pharmaceutical and biotech industries.






Case Studies





Case Studies

  • Revenue Model

This pharmaceutical revenue model case study is an aggregate of three different chemotherapy products [real world, sanitized data].


Once we have a robust market model in place and we have a good level of confidence in its projections, we can begin to develop the revenue model.  In the case of pharmaceutical products, if the product being analyzed is in early stage development, we may not know the dosing schedule, amounts of the doses, or even the drug delivery method.  In these early stage cases we need to build a flexible dosage and pricing calculator.


Below is an example of a cycles/cancer patient calculator.  In this case the product that we analyzed had a targeted label for metastatic usage but may garner some progressing patients [stage III to stage IV] that needed to be accounted for and may actually receive approval for earlier stage indications.  Our calculator tells us that weighted average cycles/patient is about four-and-a-third.


Pharmaceutical makers have to set prices and sign contracts with a wide range of customers, including drug distributors and wholesalers, pharmacies, managed health care networks, and government agencies.


Our next step is to unearth what kind of revenues we would expect from a typical patient.  This step can get rather complex as we need to investigate our method of drug delivery, the manufacturing protocols, recommended dosage based on any number of criteria, and expected pricing structure.  Specifically, in the case, you can see that we are manufacturing two different vial sizes of the drug [80mg & 30mg].  Based on clinical research and the expected indications approved we have a dosage of 445 mg/square meter of body size per cycle.  The average body size in the region we have targeted is approximately 1.70 meters squared.  The calculator returns the average patient dosage per cycle as 757 mg which equates to nine 80 mg vials and two 30 mg vials of drug.  We have set the prices of the 80 mg and 30 mg vials at 290 EUROS and 150 EUROS, respectively.  We already calculated the weighted average cycles/patient at 4.32.  We get our expected revenue per patient at 12,565 EUROS in this region.





The calculated revenue per patient is a starting number.  We now need to project revenue changes over time due to competitive market forces, price erosion or price premium adjustments, patent expirations and the market entry of generics, and economies of scale.  Once we hammer out these effects on revenue, we can finish the revenue model and have a high degree of confidence that we are on the right track and can begin to integrate our projected revenues into our expense model.


Contact SG Systems for more information or to arrange a consultation.




Copyright SG Systems, all rights reserved. -7-1-5

Web site design, code, and hosting by Gunkie