PRACTICE CASE #1

In order to determine the market size for your client, you must know the following pieces of information:

1. Prevalence of the Disease in the U.S.
2. Disease Segmentation
3. Diagnosis Rate
4. Treatment Rate
5. Pricing

After researching the insulin market, the following information was found. The prevalence of diabetes in the U.S. is approximately 20 M patients. Type I diabetes comprises 10% of the prevalent patient population, while the other 90% is comprised of patients with Type II diabetes. Of this affected population, nearly 100% of Type I patients are diagnosed, while only 65% of Type II patients are diagnosed. Furthermore, while 100% of Type I patients are treated with insulin, only approximately one-third of Type II patients are treated due to a variety of factors. Lastly, while the price and dose of insulin varies, your research has indicated that, on average, insulin therapy costs $80/month per patient. Your client has also indicated that pricing for the product they are developing would be in line with this.

1. Prevalence of the Disease in the U.S.: 20 M patients
2. Disease Segmentation
   • Type I: (20 M patients)*(.10) = 2 M patients
   • Type II: (20 M patients)*(.90) = 18 M patients
3. Effect of Diagnosis Rate on Prevalent Patient Population
   • Type I: (2 M patients)*(1) = 2 M diagnosed patients
   • Type II: (18 M patients)*(0.65) = 12 M diagnosed patients
   • Total: 14 M diagnosed patients
4. Effect of Treatment Rate on Diagnosed Prevalent Patient Population
   • Type I: (2 M patients)*(1) = 2 M treated patients
   • Type II: (12 M patients)*(1/3) = 4 M treated patients
   • Total: 6 M treated patients
5. Pricing and Revenue
   • ($80 month/patient)*(12 months) = ~$1,000 year/patient
   • ($1,000 year/patient)*(6 M treated patients) = $6 B/year
6. Market Capture
   • ($300 M/year peak revenue goal)/($6 B/year total market size) = 5% capture

There are many factors that can affect the success of your client’s product, however some of the key considerations are:

1. Efficacy
2. Safety
3. Convenience
4. Price
5. Onset of Action
6. Biologic Variability

Research into the first four areas revealed that the drug is indeed as efficacious as predicted in both short and long-term scenarios. Furthermore, the drug demonstrated strong tolerability and safety on a short-term scale, but long-term data was found to be lacking, particularly relative to injectable insulin which has had a long track record in the clinic. Lastly, while the price is comparable to current therapies on the market, the convenience of the product was limited due to the inhaler not being considered travel size by patients.

Ultimately, the research indicated that 5% market share was unlikely. Given the fact that the product did not improve upon efficacy or safety, the lack of convenience and lack of long-term safety data (relative to injectable insulin) was expected to severely limit use of the product.