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.