Analytical Framework for Examining the Value of Antibacterial Products. 3.3 Private ENPV Estimates by Indication

04/15/2014

Figure 3 presents the estimated private ENPVs by indication for a new antibacterial drug.  As can be observed from the figure, the private ENPVs for both ABOM and HABP/VABP are lower than zero, indicating that expected returns from developing new antibacterials for the treatment of these indications are lower than development costs.  According to our model, the expected return to developing a new antibacterial for the treatment of CABP is highest ($37 million), followed by ABSSSI ($27 million) and CUTI ($22 million).  All of these figures assume no change in antibacterial drug reimbursement methodologies.


Figure 3: Estimated Private ENPVs by Indication for a New Antibacterial Drug (in $ Million)

Figure 3: Estimated Private ENPVs by Indication for a New Antibacterial Drug (in $ Million)

To assess the sensitivity of our private ENPV results to model parameters and assumptions utilized, we conducted a Monte Carlo analysis in which the point estimates reported in Table 4 were replaced by distribution of values (the probability distributions used and the applicable functional parameters are discussed in those sections applicable to the model parameter above).  Table 13 and Figure 4 present the results of this sensitivity analysis.  In the figure, the error bars correspond to the 90 percent confidence bounds.  As can be observed, there is wide variation in the estimated private ENPV values across the different indications.  The primary drivers for the observed wide range of results are attributable to the following model parameters in order of importance:

  • Total market size,
  • Real opportunity cost of capital, and
  • Total time to market.

Table 13: Private ENPV Sensitivity Results (Figures are in $ Million)

Indication

Private ENPV (in $ Million)

90% Lower Bound Mean 90% Upper Bound
ABOM -$18.8 -$2.7 $215.1
ABSSSI -$15.8 $27.1 $198.9
CABP -$17.6 $37.4 $330.0
CIAI -$18.0 $8.9 $222.5
CUTI -$16.3 $21.9 $213.0
HABP/VABP -$23.5 -$4.5 $126.7

Figure 4: Sensitivity of Estimated Private ENPVs by Indication for a New Antibacterial Drug (in $ Million) - Error Bars Represent 90% Confidence Bounds

Figure 4: Sensitivity of Estimated Private ENPVs by Indication for a New Antibacterial Drug (in $ Million) - Error Bars Represent 90% Confidence Bounds

 

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