Analytical Framework for Examining the Value of Antibacterial Products. 5.1.13 Private ENPV Results


Based on the above model parameters and assumptions, the private ENPV for a new MRSA rapid POC diagnostic manufacturer is $329 million.  The positive ENPV indicates that the expected returns from developing such a diagnostic are greater than its development costs.  The robust pipeline for MRSA rapid POC diagnostics in the U.S. lends support to the estimated sizable returns (see ECRI Institute’s study for a list of rapid test’s for MRSA under development in the U.S.).  However, while positive expected returns might be true for the MRSA diagnostic market, the diagnostics market for other pathogens of concern such as fungal infections caused by for example Aspergillus may not yield a sufficiently high private ENPV to encourage development.

Similar to the antibacterial drug and vaccine analyses, we assessed the sensitivity of our results to our model parameters and assumptions by conducting a Monte Carlo analysis for which the point estimates 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).  This results in a large private ENPV range of $53.3 million to $435.4 million. The primary drivers for the observed wide range of results are attributable to the following model parameters in order of importance:

  • Real opportunity cost of capital,
  • R&D and clinical stage success probabilities,
  • Product launch success probability, and
  • Average expected price per test.

Given that the average private ENPV is sizable for a manufacturer of a rapid POC diagnostic for MRSA, production incentives are not essential in this case.

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