Historic drug sales data can help with market sizing. By examining sales trends over time you can gauge the attractiveness of the market entry. For patented drugs examining sales trends can be useful in predicting the market appeal of generic entry, and for unpatented drugs sales trends can also be useful to predict the market strength of drug classes or therapeutic categories (for example Premarin and estrogen replacement therapies).
Sales Channels — Where do People Fill Their Prescriptions?
Beyond simple sales trends it is important to gain information on sales channels. Knowing which sales channels are dominant for a given drug can help you determine alignment with your business model and commercial relationships, and this knowledge can also help you develop tactical partnerships to gain an edge on competitors.
The contrasting examples of Viagra and sildanafil (generic Viagra) illustrate variance in sales channels.
As you can see from the Viagra sales channel profile, a substantial proprotion of revenues come from mail-order sales. One might assume that the generic version will demonstrate the same sales channel distribution as the branded drug, but as seen below channels for sales of slidenafil differ greatly from Viagra sales.
By contrast, sildanafil (generic Viagra) sales predominantly come from physical pharmacies, with less than 1% of revenues attributed to mail-order pharmacies. This vital information can be critical in helping you decide on which channels to focus on for market entry.
Another example of sales channels can be seen with Lantus.The different payment methods, levels of reimbursement, and underlying medical conditions between branded and generic Viagra and Lantus are clear in the different sales channels for each drug. These distribution profiles can help you evaluate market entry opportunities and develop strategies and partnerships essential for success.
Payers — Price Elasticity and Bargaining Power
Another important factor in evaluating the attractiveness of a market is identifying and profiling the ultimate payers.
The sales channels, as described above, are important factors in understanding the path to market, and knowing which party or parties reimburse or pay for prescriptions can provide information on price elasticity, buyer power, and the need to adjust pricing or provide discounts.
As shown in the charts for branded Viagra and generic sildenafil, the majority of revenues for Viagra come from direct payment by patients or their family members, whereas generic sildenafil revenues are dominated by Medicare.
Prescriptions paid out-of-pocket may provide opportunities for consumer segmentation and price variability and experimentation due to the lack of a centralized payer. Medicare, by contrast, exhibits strong buyer power and limitations on pricing. However, locking in contracts with larger payers can be an effective way to secure predictable revenues.
Integrating Patents, Prices, and Litigation
DrugPatentWatch provides a comprehensive suite of tools to investigate market entry opportunities for pharmaceutical drugs, biologic drugs, and drugs in development. We also integrate objective sales data, pricing data, litigation, first generic entrants, and many other tools to help you make better decisions.