Medical Market Segmentation I-Corps@Ohio May 24, 2018 Michael - - PowerPoint PPT Presentation

I-Corps@Ohio May 24, 2018 Michael Austriaco Director, Business Analytics

Medical Market Segmentation

• Business Analytics is a dedicated CCI unit that functions as a

shared resource

• Purpose: provide key stakeholders with knowledge and tools to
• ptimize strategic decision making and mitigate investment risk
• Key functions
• Quantification of commercial potential
• Evaluation of competitive technologies, approaches, companies
• Identification of potential licensees/commercial partners

CCI Business Analytics

What We Do

Patentabiilty Marketability Technical Clinical Regulatory Coverage

(Reimbursement)

Risk Mitigation: Multifacteted

Sources of Risk Along the Commercialization Continuum

Market Opportunity

Everything is a Multibillion Dollar Opportunity

• Market opportunity can be defined in many ways – some lacking value
• Sensational headlines are ubiquitious, but often bereft of context, rationale
• Sophisticated customers will see through “fluff”
• Be prepared to defend your claims with thoughtful, relevant data

“Peripheral Vascular Stents Present Billion-Dollar Opportunity” “Multi-Billion-Dollar Opportunity – Disc Replacements Will Soon Surpass Fusions as Surgical Solution” “Global Obesity – The Ballooning Billion Dollar Opportunity for Controlling the Bulge” “Multi-Billion Dollar Opportunity in Hypertension is Progressing Well"

Market Opportunity

Patients

• Real-world examples of disease states with significant patient populations
• All valid, useful starting points
• However, topline data are insufficient to truly define most opportunities

An estimated 5.7M Americans ≥20 years of age have Heart Failure PAD affects ~8.5M Americans The 2010 worldwide prevalence

• f AF was estimated at 33.5M

Source: AHA Heart Disease and Stroke Stats, 2015

Market Segmentation

The Importance of Good Market Segmentation

• Indicates your understanding of an addressable target market
• Establishes your credibility
• Presentation
• Data sourcing
• Establishes a baseline for forecasts and scenario analysis
• Determines basis for marketing and sales plan
• Contributes to valuation for financings
• A critical first step in building a business plan; requires continuous refinement
• Triangulate from multiple data sources (no data are perfect!)

Market Segmentation

Dimensions

Market Opportunity

Patients Incidence Prevalence Stratification

Market Segmentation

Dimensions

Market Opportunity

Patients Incidence Prevalence Stratification Procedures Site of Service End Users

Market Segmentation

Dimensions

Market Opportunity

Patients Incidence Prevalence Stratification Procedures Site of Service End Users Payments Facility Professional

Market Segmentation

Dimensions

Market Opportunity

Patients Incidence Prevalence Stratification Procedures Site of Service End Users Payments Facility Professional Products Suppliers Type

Market Segmentation

Dimensions

Market Opportunity

Patients Incidence Prevalence Stratification Procedures Site of Service End Users Payments Facility Professional Products Suppliers Type Capital Equipment Installed Base Replacement Rate Disposables ASP Utilization

Market Segmentation

Is Bigger Always Better? The Case for Orphan Drugs

• Rare disease patient populations are defined in law as:
• USA: <200k patients (<6.37 in 10,000 based on US population of 314M)
• EU: <5 in 10,000 (<250k patients, based on EU population of 506M)
• Japan: <50k patients (<4 in 10,000 based on Japan population of 128M)
• Financial incentives by law include:
• Market exclusivity (USA 7 years from approval, EU 10 years)
• Reduced R&D costs (R&D tax credits, grants, waived fees)
• Significantly higher pricing and costs per patient per year
• USA mean cost of $112k (vs. $23k for non-orphan drugs)
• USA median cost of $66k (vs. <$5k for non-orphan drugs)
• WW orphan drug sales forecast to grow from ~$100B in 2015 to reach $178B by 2020
• 11.7% CAGR, double overall Rx market growth
• From 6.1% of WW Rx sales in 2000 to 20.2% in 2020
• Blockbuster potential: by 2020, top 20 orphan drugs are forecast to generate a minimum of $2.5B in WW

annual revenue, reaching as high as $12.7B

Source: EvaluatePharma, Orphan Drug Report 2015

Market Segmentation

Case Study: Drug Eluting Stents (Top Down)

U.S. CAD Prevalence = 16.3M

U.S. CAD Incidence = 4.9M 82.1% PCI = 1.01M 17.9% CABG = 220K 25.1% Undergoing Revascularization = 1.23M 96.5% Stented = 977K 3.5% POBA = 35K 23.7% BMS = 231K 76.3% DES = 745K

Note: Actual data is outdated, inaccurate and is shown here for example purposes only. Please do not reproduce

• r use for market modeling!

Market Segmentation

Case Study: Drug Eluting Stents (Bottom Up)

Note: Actual data is outdated, inaccurate and is shown here for example purposes only. Please do not reproduce

• r use for market modeling!

MDT = $247M JNJ = $240M BSX = $911M $2,025 $1,940 $2,120 U.S. TOTAL = $2.38B ABT = $905M $2,050 441K 127K 450K 113K U.S. TOTAL = 1.13M 1.4 stents/case

,

Revenues ASP Units

Utilization 808K DES Cases

Market Segmentation

Case Study: Osteoporosis

Source: Cowen and Company

Market Segmentation

Case Study: Osteoporosis

Source: Cowen and Company

Market Segmentation

Case Study: Renal Denervation

Source: J.P. Morgan

Market Segmentation

Case Study: Renal Denervation

Source: J.P. Morgan

Market Data

Suggested Resources

Takeaways

The Importance of Good Market Segmentation

• Viability of an invention requires an understanding of the

addressable market

• Defining the addressable market requires an understanding of

market segmentation

• Patients
• Procedures
• Payments
• Products