Market Size by Age: Confused !

Question

Hello

This is a follow up question on Nutripremium case, reason I am not posting it under the case is because I want to understand the general concept of market sizing. The case requires to size the market of different target groups: pregnant women and Cancer patients as well as Diabetics in China so I am trying to lay out my equations before I plug in numbers, In general:

#Pregnant Women:

Population X % adults (between 18-45) X % female gender X Probability of getting pregnant/year = # of pregnant women / year

Question: Why the solution multiplies by the number a women spends being pregnant in her lifetime ? what is the need for that? (i.e. Population X % female gender X Pregnancy months / Life expectancy; and it seems they are assuming that a woman can have a probability of getting pregnant = 100% regardless; % of time spent in pregnancy is not the same as Probability of being pregnant )

Note: % adults (between 18-45) could use even age split with age expectancy ~75 and get the %

#Cancer Patients (same applies for diabetes):

Population X %patients diagnosed with Cancer / year (could be split by age groups to make it more granular)

Why multiplying by the % of time a patient spends with cancer in their lifetime? (i.e. Population X %patients diagnosed with Cancer X Number of years with Cancer / Life expectancy)

I have never seen it in any other case where the calculation involves % of time spent having a disease ? However, I am trying to construct my equation using conditional probability but it is making it more complicated

Many Pharma-Drug market entry case assumes directly % of people with disease/year and not % of time spent having a disease in a lifetime ... (example: BCG case on their website)

I appreciate it if someone can elaborate on the concept behind using the time spent living with cancer or pregnancy ...

Thanks,

Answer 1

Hi Kass,

For patients living with cancer the reason you want to know about time spent with the disease is because the size of the market depends on how much you can sell. The amount of drugs you can sell depends on the length of time the patient has the disease.

I will say this is a highly unusual approach but there are 2 ways to look at it

Median life expectancy when diagnosed with the cancer (This is very simplistic as in reality it depends on the stage of the cancer, when you diagnosed it and how aggressive it presents etc.)
Median time taken to recover (more relevant for highly treatable cancers such as Breast cancer )

To calculate market size in this case you would need

Incidence rate of cancer
- Number of new people being diagnosed with the cancer annually
- Number of existing patients annually
Combine the 2 to get the market size

Hope this helps,

Udayan

Answer 2

Hi there,

Great question! Since you're doing a market sizing exercise, it's much harder to figure out % of population at any given time with the disease. Rather, you have to figure out the time spent because this gets you a better estimate of the population with it at any given moment.

for example, if you can say the whole population, average lifespan, AND average time with the condition, you can figure out what % would have it at any given time. Hope this helps :)

P.S. On a slightly negative note, you can see exactly here why my pharma companies don't cure diseases, but spend their energy addressing symptoms. Addressing symptoms for the rest of someone's life is much more lucrative than curing the disease altogether once!