Estimate market size when you know growth per year

Question

Q. The relative five-year survival rate for ovarian cancer is 50%, (50% of patients diagnosed in a particular year will die in 5 years). In 2012, it was estimated that ovarian cancer occurred in 239,000 women and resulted in 152,000 deaths worldwide. What is the market size in 2017?

This is from a real business situation that I was trying to solve for myself. I made some assumptions and arrived at ~2.1 million patients. How would you solve the problem, and what assumptions would you make?

Answer 1

No expert by any means but this seems like a "fun" problem.

I would solve it by doing:

1) If survival rate is 50% in 5 years I assume that per year there is a 10% ppl dying from it.

2) If in 2012 there were 152,000 deaths relate to it must mean the size market in 2011 was 152,000/10%= 1.52M ppl

3) If we assume 239,000 ppl are getting OC and 152,000 are dying there is an annual increase of 87,000 ppl in the original market. - Which means roughly a 6% per year increase.

4) So a simple why to do it is to compound the growth over the following years: 1.52M*(1+.06)^6 which is roughly 2.12M ppl

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I would, however, add some "risks" and assumptions with this solution:

1) World pop. was roughly 7B is 2012 and in 2017 is 7.5B. That's more than 7% increase which will have an impact on results.

2) We are assuming the net between occurrence and deaths will remain the same which could be highly unlikely with medical and technical advances.

Answer 2

This is essentially a Present and Future value of an annuity disguised as a case problem. I won't be giving away the solution but you should read about the PV and FV formulaes and think about how to apply this here. Hint: the interest rate "i" for FV is essentially the growth rate you are assuming for the market.

Answer 3

In 2007, 304,000 cases (152000*2) were diagnosed. in 2012 it declined to 239,000.

Average annual decline rate - (((239/304)^(1/5))-1)*100 = 5%

2013 - 239000*0.95 = 227,050 cases

2014 - 227050*0.95 = 215,698 cases

2015 - 215698*0.95 = 204,912 cases

2016 - 204912*0.95 = 194,667 cases

2017 - 194667*0.95 = 184,934 cases

Adding all cases from 2013 to 2017 estimates total ovearian cancer patients diagnosed at 1,027,260 cases .

Just my logic...