Practice Case #1 | Clearview

Your client is a mid-sized pharmaceutical company with an inhaled insulin product for the diabetes market. The client’s goal is to earn peak revenues of $300M/year in the U.S. and they have asked you to determine whether this sales goal is realistic by calculating the dollar value of the current insulin market and determining which factors will influence the success of the product.

Question A

What components do you need to know to determine the market size of this product? (click for answer)

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

Prevalence of the Disease in the U.S.
Disease Segmentation
Diagnosis Rate
Treatment Rate
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.

Question B

Using this information, determine the current insulin market size and the percentage capture the client must achieve in order to reach their peak sales goal of $300 M/year. (click for answer)

Prevalence of the Disease in the U.S.: 20 M patients
Disease Segmentation
Type I: (20 M patients)*(.10) = 2 M patients
Type II: (20 M patients)*(.90) = 18 M patients
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
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
Pricing and Revenue
($80 month/patient)*(12 months) = ~$1,000 year/patient
($1,000 year/patient)*(6 M treated patients) = $6 B/year
Market Capture
($300 M/year peak revenue goal)/($6 B/year total market size) = 5% capture

Question C

In order to evaluate how realistic a 5% market penetration is for your client, what factors regarding the inhaled insulin product do you need to consider and how can each of them affect the success of the product? (click for answer)

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

Efficacy
Safety
Convenience
Price
Onset of Action
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.

Question D

Considering all of the above information, do you feel that the client will be able to capture the 5% of the market they need to reach their current peak revenue sales goal? Why or why not? (click for answer)

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.