7 Factors Life Science Professionals Miss When Analyzing the Market Landscape
With billions of dollars on the line, a thorough analysis of the market landscape for your life science product is of utmost importance. Entering new markets is a high stakes hurdle for life science companies. Wouters et al. estimates that it costs an average of $1.3 billion to bring a new medicine to market.
Compounding the problem is that a single product may have multiple potential indications. What condition should your therapy treat? Who are the existing and potential competitors? How will your product be different from those already on the market?
All of these questions are critical, and you can answer them by analyzing the market landscape.
What is a market landscape analysis in life science?
A market landscape analysis is a comprehensive view into how your product could fit into the existing landscape for a given condition. A market landscape focuses on a variety of factors including those related to the disease itself, key stakeholders (i.e., patient demographics, clinicians), existing and potential competitors, the current setting of the treatment, market size, regulatory and clinical environment, and potential pricing for the therapy.
Conducting a successful market landscape
A business school professor of mine used to say that he would rather our research papers be an inch wide and a mile deep than a mile wide and an inch deep. In other words, our research should be comprehensive with a narrow focus.
Below are some of the key factors we recommend looking at when conducting a thorough market landscape analysis.
Clinician Interest: It is imperative to know the likelihood of adoption of a new therapy. Insights from clinicians who treat the condition will gauge the potential level of interest as well as identify potential pitfalls such as side effect issues and costly tests or staffing requirements. Conducting in depth interviews with as few as 8 to 10 clinicians is sufficient for this purpose.
Product Differentiation: Your product does not stand a chance against the competition unless it demonstrates its uniqueness. Even “me-too” therapies should have some advantage over available products in aspects such as patient population, tolerability or ease of use. We suggest you analyze all relevant approved products along with those in phase 3, to see how your product would compete in a particular indication.
Product Revenue: Because medical product development has tremendous cost, you must project the potential revenue of your product. Insurance reimbursement is a critical factor especially when dealing with oncology products where gains can usually be measured in months of life.
The most common cost-effectiveness analysis is the incremental cost-effectiveness ratio (ICER), which expresses a comparison of an intervention or strategy to an alternative strategy. Another way to measure the value and potential price you can charge is the cost per quality-adjusted life year (QALY), which quantifies improvements in survival while also accounting for differences in quality of life associated with different strategies.
Market Profitability: There are a number of ways to gauge market profitability. One way is to go through analyst reports and company statements on existing products. It is also critical to build potential adoption models for your product.
Such models are necessary to determine if there is sufficient demand for the treatment in a given market. We have run across products where the market feels existing treatments satisfy the need and there is very little potential profit due to multiple generics already on the market.
Entry Barriers: Without exception, every product has some type of key barrier to entry. A key barrier to entry includes products who already have market dominance and meet existing needs. Other barriers include economies of scale, capital requirements, switching costs, patents, access to distribution channels, cost advantages independent of scale, and government policy.
Even in the case of a COVID-19 vaccine, there have been issues of storage and side effects which have posed potential hurdles, even for a product of such critical need and high demand.
Market Growth: Is the market static or quickly developing? Considering the fact that it takes around five years for a product to move through phase 3 clinical trials to full FDA approval, it pays to be astute as to whether the market is growing or will remain static. Catching a developing market in its infancy can pay huge dividends for your product as it can benefit from being the first to market.
For example, cystic fibrosis (CF) was a huge unmet need. Vertex Pharmaceuticals (VRTX) commercialized four medicines including Symdeko/Symkevi, Orkambi, Kalydeco, and Trikafta/Kaftrio and sales moved from $580 million in 2014 to $6,206 million in 2020. Vertex believes their therapies address 90% of all CF patients. The company is pursuing genetic therapies to address the remaining 10% of people with CF. Clearly, the need and the growth have been huge.
Distribution/Clinician Population: The target population and distribution of the clinical population is a huge consideration in launching a new product. Do you need to focus on a single speciality or multiple specialties? The number of sales personnel, medical science liaisons, and awareness activities needed should be figured into your analysis. Is the condition treated by several hundred physicians or virtually every physician in a country. When you consider the siloed nature of medical specialties and their required activities to build awareness the cost can quickly escalate. Every speciality has their oawn trade shows, publications, guidelines, and associations.
The list above is by no means all-inclusive, but analyzing those factors will help your team clearly justify go/no-go decisions. A thoughtful market landscape analysis can avoid many of the common pitfalls Snowfish has seen over the past 20 years.
Snowfish supports new product planning teams and helps life science companies make decisions based on impartial analysis. Snowfish integrates business, clinical knowledge, and analytics to help companies reach their full potential. Please feel free to reach out to us.