Assessing Potential Market Share for a New Drug: Part 14 of Valuation and Other Biotech Mysteries

[Ed. This is the fourteenth part in Wayne’s series. You can access the whole thing by clicking here. Please leave comments or questions on the blog and Wayne will address them in future posts in this series.]

In the previous post, we looked at epidemiology and pricing to estimate the market size for a new drug. As we continue to look at the potential rewards from successful drug development, we need to consider market share.

A new drug product which is being assessed will probably share its market with:

• currently approved drugs;
• some drugs currently at the same or later stage of development; and
• some drugs which are at an earlier stage of development. 

An assessment of market share is not static and should be continuously updated as new information becomes available. Until all of the Phase 3 data is available on a new drug, market share assessments are really guesstimates. Phase 3 data from two new drugs which were compared to either a placebo or an older standard of care, but not to each other, might not be sufficient to allow a winner to be selected. A major pharma licensing deal with a product that is two years behind might change your ranking of that drug.