Analytical Framework for Examining the Value of Antibacterial Products. 3.2.13 Total Market Size


As noted in Section 1.3, we obtained data on drug expenditures from IMS Health through FDA’s third party agreement.  Based on antibacterial drugs approved for the treatment of each of the six indications, IMS Health provided data on total sales of these drugs across all indications by formulation (oral or IV) for the years 2007 to 2011.  Using these data, we estimate market size based on 2011 sales in three different ways:

  • Estimate 1: Total sales of antibacterial drugs that are in the formulation of interest (i.e., oral or IV) labeled to treat the indication.
  • Estimate 2: Total sales of all antibacterial drugs in Estimate 1, plus other formulations of the antibacterial drugs in Estimate 1, plus any other antibacterial drugs (in any formulation) approved to treat the indication.
  • Estimate 3: Total sales of all antibacterial drugs in Estimate 2 plus any antibacterial drugs that compete with antibacterial drugs in Estimate 2 for treating other indications (i.e., if a drug included in Estimate 2 is also used to treat another indication, all other drugs used to treat that other indication are added to the total sales calculation for this final estimate).  Due to the extent of overlap among drugs used to treat these indications, Estimate 3 is the same across all indications considered ($9.23 billion).

The three estimates are intended to reflect differing visions of drug manufacturers as they consider potential market size.  The smallest estimate is for the drug and formulation specifically under development, which represents the most conservative or narrowly defined market vision.  The medium estimate represents the larger potential market for treating the same indications, but also reflects the possibility that the NME can be formulated for oral administration as well.  The largest estimate represents all potential antibacterial drugs with which the NME might compete if it can also be approved to treat other indications.  Table 10 presents the total market size estimates for each indication under consideration.  The lists of drugs used for each type of estimate are included in Appendix A.

Table 10: Estimates of Total Market Size, by Indication (in $ Million)

1 $2,720 $3,070 $2,290 $2,530 $5,760 $1,780
2 $2,950 $6,590 $7,970 $4,660 $6,540 $3,470
3 $9,230 $9,230 $9,230 $9,230 $9,230 $9,230

Source: (IMS Health, 2012)

For the model, we assume that the total market size for each indication has a uniform distribution with Estimate 1 and Estimate 3 constituting the lower and upper bounds, respectively. Additionally, Estimate 2 serves as our point estimate in the model.

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