Question B

Practice Case

After researching the insulin market, the following information was found. The prevalence of diabetes in the U.S. is approximately 20M 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 $300M/year.

See answer to Question B

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

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