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Myers Pharma

HardCandidate-ledMarket entryMarket sizing

Case exhibits

5 exhibits for this case

Myers-exhibit-1

Myers-exhibit-1

Suggested case structure

Key question: What would be the potential sales in the first year across all European countries?

Diagram 1 : Case structure



Suggested steps ranked by priority:
  1. Market sizing: In this step, the interviewee must aim to establish the number of children likely to be affected by this disease.
  2. Sales Forecast: After estimating the market size, the interviewee would need to estimate the sales potential for the vaccine in the first year.
  3. Recommendation: Based on the market size and sales forecast, the interviewee must conclusively answer the key question that the client has raised.

1. Market Sizing

What would be the number of children across Europe who would be the potential recipients of this vaccine?

Allow the interviewee time to list out the factors that would impact the market size.

Information that can be shared if enquired:

    • All children between the age group of 2 - 16 years are potential customers as they are affected by this disease. 
    • The markets where the client is planning to launch the vaccine can broadly be divided into groups:
      • Countries with increasing population
      • Countries with declining population
    • The countries within the two groups do not have a uniform age distribution. We have information about the age distribution in these two groups.

Share Exhibit 1 and Exhibit 2 which gives an overview of the age distribution in the two groups of countries.

Share Exhibit 3 if the interviewee asks about the population of the countries in the two groups.

Share Exhibit 4 if the interviewee asks about information on rotavirus disease.

Exhibit 1: Population distribution - Countries with increasing population

 
 

 
 

Now the interviewee must try to estimate the market size.

Below would be the steps:

  1. Calculating the population in different age segments by calculating 'x' and 'y' for the two groups
  2. Calculating the population between the ages 2 to 16 years

To calculate 'x' and 'y', we need to equate the total of all age brackets to the total population in that group:

Equation for 'x'
2*(2x) + 2*(1.5x) + 4*(x) = 330 m
11x = 330 m
x = 30 m
Equation for 'y'
4*(0.75y) + 4*(1.5y) = 450 m
9y = 450 m
y = 50 m

After calculating 'x' and 'y', we can now calculate the population for the relevant age brackets in the two groups.

We do not have an age bracket of 2 - 16 years in our population distribution chart. So we need to assume that the population is evenly distributed within 0-9 and 10-19 year age brackets in order to calculate the population between 2-16 years of age.

If required, prompt the interviewee to make the assumption about the even distribution of the population within the 0-9 and 10-19 year age brackets.

Below would be the main points to keep in mind for this calculation:

  1. 2- 16 years represents a 15 year time span.
  2. This time span is spread across 0-9 and 10-19 year age brackets. These two age brackets together cover a 20 year time span.
  3. In both the group of countries, the population in the 0-9 and 10-19 year age brackets is the same.
  4. We have already made the assumption that the population distribution within an age bracket is even.

For countries with growing population

Population between 0-19 years (20 year time span) = 2 * x + 2 * x
Population between 0-19 years (20 year time span) = 4 * 30 = 120 m
Population between 2-16 years (15 year time span) = 120 m/ 20 * 15
Population between 2-16 years (15 year time span) = 90 m

For countries with declining population
Population between 0-19 years (20 year time span) = 0.75 * y + 0.75 * y
Population between 0-19 years (20 year time span) = 1.5 * 50 = 75 m
Population between 2-16 years (15 year time span) = 75 m/ 20 * 15
Population between 2-16 years (15 year time span) = 56.25 m

Total population between 2-16 years = 90 m + 56.25 m
Total population between 2-16 years = 146.25 m

Key insight
The total potential market for the vaccine in Europe would be ~150 m (146.25 m) customers.

2. Sales Forecast for Year 1

What would be the expected sales of the vaccine in year 1?

Allow the interviewee to list out the factors which would affect the sales like competition, percentage of customers likely to purchase the vaccine, government policies affecting uptake, etc.

Information that can be shared if enquired:

    • Currently, none of the other pharmaceutical companies have a similar product. 
    • The vaccine is administered in 3 doses at 6 month intervals. All the three doses together costs 100 € for the patient.
    • This course of the vaccine protects the children throughout their lifetime.
    • The customer pays after each dose is administered. However, the company plans to launch a pre-paid program for the doses in the subsequent years in order to encourage parents to take all three doses. The vaccine is not effective if only 2 doses are administered.
    • Although there are differences in purchasing power of customers across the various countries, for the purpose of this case it is assumed to be uniform. Therefore, the purchasing behavior would be similar across countries.

Share Exhibit 5 if the interviewee enquires about the average cost of treatment of the disease.

Exhibit 5: Comparison of treatment costs

 

Below would be some of the key inferences from the information shared:

  1. The information given about the probability of the disease occurring and the treatment cost would give an indication about the likelihood of purchase of the vaccine.
  2. Since the incidence of the disease is higher at younger ages, it would be a sound assumption to make that the parents of the younger children are more likely to purchase the vaccine.

If the candidate asks for information about the percentage of families with children who would buy the medicine, ask him/her to make a guesstimate backed by logic.

For this solution, we have assumed that the probability of the incidence of the disease can be a proxy for the percentage of customers who will buy the vaccine. However, any other assumption, backed by logic would also be correct.

No. of customers - 2 to 6 years age bracket:
Customers = 150 m / 15 * 5 * 45% = 22. 5 m
No. of customers - 7 to 11 years age bracket:
Customers = 150 m / 15 * 5 * 35% = 17. 5 m
No. of customers - 12 to 16 years age bracket:
Customers = 150 m / 15 * 5 * 10% = 5 m
Total customers = 22.5 m + 17.5 m + 5 m = 45 m
Total Sales = 45 m * 100 € 
= 4.5 B
 
€

A critical factor to crack this case, would be then take into account the vaccination schedule. The above number assumes that all the three doses are administered; however in the first year only 2 of those doses would have be administered. If the interviewee misses this step, prompt him/ her.

Sales in Year 1 = 4.5 B € * 2/3 = 3 B €

At this point, prompt the candidate to also calculate the sales after the initial launch and once the market stabilizes.

The key point to keep in mind is that once all the children (who are likely to purchase the vaccine) in the initial years have been covered, the new sales would come from children who turn 2, as all the older children would have already been covered under the vaccination program.


The number of children who turn 2 ( assuming the birth rates remain unchanged) can be calculated as follows:

New customers = 150 m * 1 year / 15 years
New customers = 10 m

Assuming that the incidence pattern of the disease remains unchanged and therefore only 45% of the parents  are willing to buy the vaccine:

Customers = 45% * 10 m = 4.5 m
Sales = 4.5 m * 100 € = 450 m € 


For the above calculation, the fact that only 2 doses are administered per year is irrelevant. This is because each year, the children entering the 2 year age bracket are likely to receive the 2 doses, and the children who have already received 2 doses in the previous year, they will receive the third dose. We have also assumed that no parents will pay for all three doses upfront. 

3. Conclusion

The candidate must now succinctly lay out the conclusion:

  1. The total potential number of customers is ~150 m
  2. The incidence of the disease is higher in younger children and steadily reduces. Therefore, it is likely that a higher percentage of children in the younger age brackets are likely to be vaccinated
  3. Given the incidence pattern of the disease, about 45 m children are estimated to be the potential customers in Year 1
  4. As only two doses are administered in Year 1, this would amount to a sale of 3 B €
  5. After a few years, the sales would stabilize at 450 m €