Analytical Framework for Examining the Value of Antibacterial Products. 5.1 Rapid POC Diagnostic Private ENPV Model Parameters and Assumptions


For the purposes of modeling the decision-making process and expected returns for a rapid point-of-care diagnostic producer, we selected a new rapid point-of-care diagnostic designed to identify methicillin-resistant Staphylococcus aureus (MRSA) that can cause serious infections, such as skin or wound infections, pneumonia, or infections of the blood.  While community acquired MRSA is on the rise, in this analysis, we focused primarily on healthcare–associated MRSA infections, which occur in hospitals and nursing homes.  The selection of MRSA is based on the fact that there are 1) diagnostic tests on the market and under development for the infection and 2) published studies with MRSA-specific quantitative information that can be used in our modeling.

Table 21 presents the point estimates for the private ENPV model parameters and assumptions for the rapid point-of-care diagnostics for bacterial infectious disease.  The following sections discuss the basis for these estimates in further detail.

Table 21: Private ENPV Model Parameters and Assumptions for a Rapid POC Diagnostic for MRSA

Parameter Point Estimate
Real Opportunity Cost of Capital 11.0%
R&D Time (in Years) 2.0
R&D Cost $1,397,000
R&D Success Probability 33%
Clinical Trial Time (in Years) 2.0
Clinical Trial Cost $2,000,000
Clinical Trial Success Probability 80.0%
FDA 510(k) Application Review Time (in Years) 0.4
FDA 510(k) Application Review Cost $124,960
FDA 510(k) Application Success Probability 96.0%
Supply Chain Activity Costs $9,861,488
Time to generic entry upon FDA Approval (in Years) 3
% Reduction in Revenues due to Competition 50.0%
Total Product Life (in Years) 20
Average Expected Price per Test $76
Product launch success probability 60%
Expected Market Share at Peak-Year Sales 24%


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