How would you estimate the market size in euro of Aspirin in Germany ?
taking into account that: 1)Aspirin is used both to reduce fever and to prevent Heart attack 2)the price is different if the Aspirin drug is branded Bayer or it is a generic version.
This was a question asked during a case interview to a friend of mine
In general, I agree with Houman approach, but let me share some additional thoughts on top of it - I believe it would make the estimation even more precise!
For the fever part:
-you may also want to incorporate the different probabiltiies of getting a cold across age groups (higher for children and older people than for "adults").
- regarding the pricing piece, you could also consider a division between branded aspirin (use Bayer as a proxy, but I guess they don't have 100% market share of branded aspirns) vs. generic ones; consider the market share for each
For the heart attack part:
- you're missing the last piece around how many tablets you need to use for each situation/person
I think you can approach to the problem by specifying segments. I think this would be a good approach:
1) Segment 1: Aspirin users for fever
2) Segment 2: Asprin users for heart attack
Your segment 1 can be calculated as following:
Number of users: Pop. of Germany * avg people who will be sick in a year * percantage of patient that can/ want to you use aspirin * how many time they are being sick in avg * how many package they will use per time in avg
1) Market share of Bayer * total number * price of buyer
2) Market share of the others * total number * avg price of others
For segment 2:
Pop of germany divided to 4 age group with respect to life expectancy and multiply each population group with a reasonable probabiliy for heart attack. this would be a total potential population under the risk of heart attack = Potential group
Potential group * percentage of people willing to use/ could use asprin= Total market for Segment B.
Pricing: Same as the segment 1
So, this would be my approach. I hope this will help.
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