Thorough analysis yields sound recommendation for potential product acquisition

Background

Senior management at a biotech company was considering acquiring a recently launched product. The product was competing in an orphan indication with little competition; but central to its commercial viability—and to the seller’s asking price—was its ability to move into a new indication. Because it was unclear how each of the key audiences would support this expanded use, bioStrategies Group was engaged to develop a product forecast.

Analysis

Based on a commercial evaluation, which included primary research with patients, payers, clinicians and KOL Guideline Committee members, we developed a series of observations that defined the product opportunity. Key findings included:

* Competitor products had an existing label in the expansion indication, while our product did not.
* These competitor products were less expensive and easier to administer.
* Clinicians articulated that payers had become much more restrictive in their approval of expansion patients.
* Payers confirmed they are approving fewer expansion patients for the competitor product, and were going to be similarly, if not more restrictive, in approving our product’s use.
* The number of patients across both indications was small.
* Patients were not persuaded by our clinical data to prefer our product over others.

Solution

We concluded that the product would not be able to adequately move into the related indication, and, in fact, would face difficult competition in its labeled indication. Given this, our peak-year forecast was less than 30% of the selling company’s forecast. Our central recommendation was to not move forward with the acquisition. Management agreed.

Result

Eight months later, the seller’s stock price plummeted after the product failed to meet expectations.