Product Forecast and NPV Assessment to Evaluate Commercial Potential

Objective

To assess the commercial potential of a new drug product by forecasting its market performance and calculating its NPV, which measures the expected profitability and viability of the investment utilising our AI platform.

Methodology

1. Market Research:

  • Conduct a comprehensive market analysis to estimate the target patient population, market size, and unmet needs.
  • Analyse competition, current treatment options, pricing, and market trends.

2. Drug Product Forecasting:

  • Revenue Projections: Project revenues over the product’s lifecycle, considering factors like market penetration rates, adoption curves, pricing strategies, competitive landscape, market exclusivity and patent expiration.

3. Cost Analysis:

  • Development Costs: Include clinical trial costs, regulatory expenses, and other R&D investments.
  • Manufacturing Costs: Assess costs of production, packaging, and distribution.
  • Marketing and Sales Expenses: Estimate costs of promotional activities, sales force, and market access strategies.

4. NPV Assessment:

  • Cash Flow Projections: Calculate expected cash inflows (revenues) and outflows (costs) over the product’s lifecycle.
  • Discount Rate: Select an appropriate discount rate reflecting the risk associated with the project.
  • NPV Calculation: Use the discount rate to calculate the NPV of the projected cash flows, which represents the current value of the drug’s future earnings.
Outcomes / Impact

  • Go/No-Go Decision: Informed decision-making on whether to proceed with drug development or market launch.
  • Investment Justification: Clear financial justification for investments in R&D, marketing, and sales.
  • Strategic Planning: Detailed understanding of market potential to guide strategic planning and resource allocation.