Calculate the Revenue Opportunity (therapy specific)

This is a data-intensive module. To calculate your revenue opportunity, we need to access, or estimate information about: how many people have the disease; the diagnosis rate; proportion of patients treated; and what percentage of those treated might be treated with your therapy amongst other things. Make notes - there's a spreadsheet at the end that you can download to create your revenue model.

Who curated this Module

Dr Maria Botcharova

  • Corporate Strategy Associate, RELX Group

  • Previously Senior life science specialist, L.E.K Consulting

  • Science Editor and Journalist

 


 

1

Work out how many people have this disease

Market Size

The first thing to determine is how many people in the world have a given disease. We start with the number of people alive in the world and then follow one of two methods:

  1. What proportion of all of them have a disease (prevalence) OR

  2. What proportion of new people get this disease in any given year (incidence) along with what their life expectancy is afterwards.

 

If the disease is not known to shorten life expectancy, then assume that patients live to an average age for their geography. Whether you think in terms of prevalence or incidence can be determined by the characteristics of the disease (e.g. short-term diseases such as flu tend to be expressed in terms of their incidence), and ultimately what published data you are able to find. Make sure to check a couple of sources because some websites don’t make the distinction between these terms very clear, though they can make a huge difference to a revenue model!

Places to look:

  • Total global population (current and future), by country and age group:

  • Prevalence data (proportion of people with a given disease):

  • Incidence data (proportion of new cases of the disease each year) ii) life expectancy after diagnosis Together, these three data points can be used to estimate the total population living with a disease

2

Work out the diagnosis rate of the disease

Diagnosis Rate

Patients may not be diagnosed with a disease because their symptoms are insufficiently severe, they do not seek medical help, the disorder is difficult to diagnose, or other reasons. 


Please note that some studies that state information about the prevalence or incidence rate only consider those patients who have been previously diagnosed. In this case, the diagnosis rate should be entered as 100% because we have no information on how many people remain undiagnosed with this disease.


Places to look:

3

Estimate what proportion of patients are treated

Treatment rate

Patients may not be treated because their symptoms are insufficiently severe, they have co-morbidities that require more urgent treatment, their age or health factors may prevent treatment, personal choice, or other reasons.


Places to look:

4

Work out how many other treatments are out there

Current treatment options

This is important in order to understand the proportion of treated patients who might receive the new drug. 


Places to look:

Future treatment options

Check what might be coming in the pipeline, as by the time you get to market, this is likely to have an impact. 


Places to look:

5

Estimate when your product might be launched

Current treatment options

If you're currently in a pre-clinical phase, you're probably ~8-12 years from market launch. The following phases provide some idea of timelines:

 

  • Preclinical: ~3-4 years

  • Phase I: ~1 year

  • Phase II: ~2 years

  • Phase III: ~3 years

  • FDA approval: ~2-3 years

References:

* Drug Approvals - From Invention to Market... A 12-Year Trip

* The Drug Development and Approval Process

6

Estimate how long the drug will be patent protected

Patent protection

A patent typically protects your invention for 20 years. The patent lifetime is important because when a drug no longer falls under patent, the company that produces it loses its exclusivity. Other companies have the legal right to create ‘generic’ versions of the drug which have the same method of action but can typically be manufactured more cheaply. The revenue of the drug to its original creator typically falls steeply.

 

On the other hand, a drug should be patented sufficiently early to stop competitors from being able to replicate it. 

Drugs are often patented when the decision to move from preclinical to clinical development is made, because patients begin to trial the drug at this point. 

20 years might not seem like too long when a typical drug development timeline is taken into account. It may leave ~8-10 years or fewer of patent life after the drug is launched. 
 

7

Estimate the treatment cost per year

Patent protection

It can be difficult to find accurate values for treatment costs because prices vary greatly by disease area, dosing schedule and route of administration. The best route is often to find medications in the same disease area with similar characteristics (if they already exist) and use this as a proxy. Alternatively, disease areas of similar severity and therapeutic area may also work well.
 
Take note that the treatment cost should be the amount ultimately paid to the pharmaceutical company, rather than the amount paid by the patient in a pharmacy, which may be reduced due to an insurance plan. Places to look for drug costs include:

 

 

In order to find dosing and administration information for existing pharmaceuticals, the best source is typically Drugs.com.

8

Estimate patient complience

Patent protection

Patients do not always carry out their treatment according to the physician’s prescription. Some take a drug according to their prescription for a period of time, but stop taking it before the recommended time. Some only take a portion of their daily doses but for a longer period. Patient behaviour can vary greatly based on the dosing regimen of the drug, the discomfort experienced in taking it and the severity of their disease, as well as other reasons. Ultimately, the question to answer is: of the total medication doses that are prescribed, what proportion is taken? A reasonable estimate for this may be ~50% if no better data is available.

Places to look:

  • Discussions with clinicians and administrators - nurses for example (see our 'Effectively Engage Beneficiaries' module)

  • Academic papers

9

Populate your Revenue Forecast

Calculate the Revenue Opportunity

Download this revenue opportunity forecast, and populate it with your information to calculate the revenue opportunity associated with your opportunity. 

This project was joint-funded by the National Institute for Health Research (NIHR) Brain Injury MedTech Co-operative based at Cambridge University Hospitals NHS Foundation Trust and University of Cambridge. The views expressed are those of the author(s) and not necessarily those of the NHS, the NIHR or the Department of Health.

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