NEWS t“: ANALYSIS
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`BIOBUSINESS BRIEFS
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`:1 MARKET WATCH
`
`Forecasting market share in the
`US pharmaceutical market
`
`Drug development is costly, and so drug
`makers need accurate estimates of sales
`
`potential. However, sales forecasts are
`often unreliable (Nat. Rev. Drug Discav.
`12, 737438; 2013). Here, we present an
`analysis of data concerning entry order and
`promotional spending from a large sample of
`drug classes, to estimate peak market share
`while controlling for product quality
`(see Supplementaginformation 81 box) for
`details of the data and analysis methods).
`The data sample included new molecular
`entities approved by the US Food and Drug
`Administration (FDA) between 1988 and
`2009. We ended the sample at 2009 approvals
`so that each assessed product would accrue at
`least 4 years of post-launch data on sales and
`promotion. To control for product quality,
`we focused on drugs for which the FDA
`granted a standard review (meaning that the
`drugs did not represent a significant advance
`
`over previous drugs) and that the French
`Transparency Commission classified as
`providing little or no improvement
`over previous drugs (see the Haute Autorité
`de Santé link in Further information).
`The sample comprised 29 second entrants
`to a particular drug class, 13 third entrants
`and 8 fourth entrants.
`
`To estimate the impact ofthe share
`of promotional spending, order of entry
`and time to market on peak market
`share, we used an ordinary least-squares
`regression to determine the coefficients
`in our econometric model, which is
`shown in FIG.
`I a. The dependent variable
`was peak share, which we defined as the
`maximum monthly share reached by a new
`entrant during the first 4 years on the market.
`The independent variables were the share of
`promotional spending, order of entry, time
`to market and whether further competitor
`
`drugs entered for second entrants. The share
`of promotional spending was calculated as
`the ratio of the new entrant's promotional
`spending to the total promotional spending
`from all products in the therapeutic area
`during the first 12 months post‘launch,
`including spending on physician or nurse
`detailing, advertising in journals, events
`and direct-to-consumer advertising.
`We measured time to market — relative to
`the most recent entrant on the market —
`
`in quarters. For a more complete description
`of the methods, identification strategy
`and alternative specifications, please see
`Supplementary information 51 (box).
`The main effects of changes in the
`assessed variables in the model were as
`
`follows. First, an increase of one percentage
`point in promotional share was associated
`with an increase of 0.46 percentage points
`in peak market share. Second, relative to
`a second entrant, peak market share was
`18 percentage points lower for a third
`entrant and 23 percentage points lower for
`a fourth entrant, even ifthey had the same
`promotional spending Third, for a second
`entrant, each additional delay ofone quarter
`led to a decrease of 0.9 percentage points in
`the peak market share. The impact ofa delay
`for a third or fourth entrant was smaller.
`Fourth, the launch of a third entrant reduced
`
`3 peak_share = 0.23 + (0.46x promotional_share)-O.18 x third)-O.23 xfourth)-(0.009 xtime) +(0.007 x time xthird)+(0.01 x time x fourth)-(0.06 x new_competitor)
`C
`U'lO
`Third entrant
`Fourth entrant
`b
`Socond entrant
`
`10 Predictedpeak
`
`shareofUSmarket(%)
`
`10"
`
`SO
`
`3 3
`
`0
`
`20
`
`40
`
`30
`
`50
`
`60
`
`Share of promotional spending (96)
`
`— 2nd entrant (2-product market)
`--- an entrant (3’-product market)
`— 3rd entrant — 4th entrant
`
`Base share
`(constant)
`
`~
`53% share
`of spending
`
`2—year
`delay
`Additional
`competitor
`Predicted
`peak share of
`
`peak share of 2nd entrant 7'
`
`Base share
`(constant)
`
`.
`19% share
`of spending
`
`Z-yenr
`delay
`Order
`of entry
`Predicted
`
`3rd entrant
`
`Base share
`(constant)
`
`24% share
`of spending
`
`Z—year
`delay
`Order
`of entry
`Predicted
`peak share of
`4th entrant
`
`"
`
`0
`
`10
`
`20
`
`30
`
`40
`
`0
`
`10
`
`20
`
`30
`
`40
`
`50
`
`Predicted peak share
`of US market (96)
`
`Predicted peak share
`of US market (9(a)
`
`'
`
`0
`
`
`
`10
`
`20
`
`40
`Predicted peak share
`of US market (96)
`
`Figure 1 | Forecasting the market share of drugs in the US market.
`a | Econometric model of peak market share, with coefficients
`determined by ordinary least—squares regression. Peak share was
`defined as the maximum monthly US market share reached by a new
`entrant over the first 4 years on the market, and the share of
`promotional spending was defined as the ratio of the new entrant’s
`promotional spending over the first 12 months post-launch to the
`total promotional spending in the therapeutic area. We included
`indicator variables for third and fourth entrants (named third and
`fourth respectively), so for second entrants, third = fourth = 0.
`The variable ‘new_competitor' had a value of 1 if a second entrant
`
`faced a third entrant. b |The effect of promotional spending, delay
`and number of competitors on peak market share for a second entrant
`(left panel). third entrant (middle panel) and fourth entrant (right
`panel). c | Peak market share as a function of order of entry, share of
`promotional spending and launch of a third entrant (for a second
`entrant) for products launched 2 quarters (top panel) or 8 quarters
`(bottom panel) after the previous launch.The sales data are from the
`IMS Health US National Prescription Audit from IMS Health, and the
`promotional date are from SDI Health. For a more complete description
`of the methods, identification strategy and alternative specifications,
`see Supplementag information 51 (box).
`
`
`www.mature.comlreviews/drugdisc
`
`sul SEPTEMBER 2015IVOLUME14
`
`© 2015 Macmillan Publishers Limited. All rights reserved
`
`Argentum Pharm. LLC V. Alcon Research, Ltd.
`Case IPR2017-01053
`
`ALCON 2064
`
`

`

`the peak market share potential of second
`entrants by 6 percentage points; entry of a
`fourth competitor did not have a statistically
`significant effect on the third entrant.
`Given estimates of the value of reduced
`time to market, we can also calculate the value
`of a priority review voucher, which decreases
`FDA review time from about 10 months to
`6 months. Previous estimates of voucher value
`were based on the value gained by shifting
`existing sales earlier in time; however, we show
`that having an earlier launch also increases
`peak market share. For example, if the
`second entrant reached the market 4 months
`earlier, peak market share would increase by
`1.2 percentage points, or US$12 million in
`the peak year for a US$1 billion market (in
`addition to the value of shifting sales earlier).
`FIGURE 1b summarizes the determinants
`of peak share. The assumptions used for the
`baseline share of promotional spending were
`
`the average shares for the products in our
`sample (53% for a second entrant, 29% for
`a third entrant and 24% for a fourth entrant;
`see Supplementary information S1 (box)).
`For a second entrant (left panel), peak share was
`34%, assuming 53% promotional share, a 2-year
`delay in reaching the market, and a new
`entrant later. For a third entrant (middle panel),
`the peak share was 17%, because it was a later
`entrant and had less promotional spending.
`The peak share was 12% for a fourth entrant
`(right panel).
`FIGURE 1c illustrates the impact of
`promotional share, order of entry and the
`launch of a third entrant on the predicted peak
`market share of a second entrant. In the top
`panel of the FIG. 1c, the products are assumed
`to be launched 6 months after the previous
`launch in the market. In the bottom panel, the
`products are assumed to be launched 2 years
`after the previous launch in the market.
`
`Forecasting a drug’s peak market share
`is challenging. We hope that the model
`presented in this paper will give managers
`additional insights about the future success
`of investigational drugs.
`
`Stephane A. Regnier is at Novartis Pharma AG,
`Novartis Campus, 4056, Basel, Switzerland.
`David B. Ridley is at the Fuqua School of Business,
`Duke University, Durham, North Carolina 27708, USA.
` e-mails: stephane.regnier@novartis.com;
`david.ridley@duke.edu
`doi:10.1038/nrd4697
`Published online 14 August 2015
`The authors declare competing interests:
`see Web version for details.
`
`FURTHER INFORMATION
`Haute Autorité de Santé: http://www.has-sante.fr/portail/
`jcms/r 1506267/fr/le-service-medical-rendu-smr-et-
`lamelioration-du-service-medical-rendu-asmr
`SUPPLEMENTARY INFORMATION
`See online article: S1 (box)
`ALL LINKS ARE ACTIVE IN THE ONLINE PDF
`
`NATURE REVIEWS | DRUG DISCOVERY
`
` VOLUME 14 | SEPTEMBER 2015 | 595
`
`© 2015 Macmillan Publishers Limited. All rights reserved
`
`N E W S & A N A LY S I S
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