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Duncan joined Evaluate’s consulting team in October 2018 as an intern during his PhD in microbiology.
His focus is on quantitative projects including market and portfolio assessments, NPV/revenue forecasts, and indication prioritizations.
In this series, Evaluate’s consulting team discuss some of the key challenges that face the companies that they work with across the pharma space. Learn more about how Duncan Sweeney, Senior Manager, Evaluate Consulting & Analytics, works with pharma companies, biotechs, CDMOs and pharma software companies to help them understand their Total Addressable Market and support their portfolio strategy activities.
TAM, or Total Addressable Market analysis, is about sizing up the full universe of potential customers for a product or suite of products. In pharma, that means every patient who could, in theory, benefit from a drug or product, regardless of whether they will in the end. It’s the broadest possible view: if your drug targets a disease, every patient with that disease is part of your TAM. Of course, not all will end up using your product, but TAM defines the outer limits of your opportunity.
A TAM is really a starting point. That outer limit of potential reach for your therapy typically needs to be narrowed down to a more realistic audience, this is what we refer to as the Serviceable Addressable Market, or SAM. In most cases when we’re working with a client, we’re really developing a SAM, though we use the term TAM!
TAM analysis is crucial because it sets the playing field. It helps companies understand the full scope of what’s possible, whether you’re managing a portfolio, deciding where to invest, or planning expansion. If a company has multiple assets in the pipeline, TAMs help define realistic expectations and guide strategic decisions about which assets to pursue. That means it’s really important for directing portfolio strategy and it allows you to understand your product’s place in the broader market. As a new drug is coming to market, you need to have a realistic view of what your drug can achieve. TAMs can help to set these expectations for investors, which is important to know and benchmark, especially if seeking licensing deals. TAMs are not only useful for products in development, but they also play a large role for marketed products. TAMs allow you to do gap analyses – if you know the size of the product TAM and have sales then you know you are hitting let’s say 14% of that market. This gap analysis can highlight potential areas of weakness in your product or marketing strategy and lead to further exploration of the drivers behind the market penetration being achieved, what can you do to reach 20% or 30%?
The biggest challenge is getting unbiased, accurate data. While they might not always realize it, pharma companies often have internal biases. That’s fair, they’re naturally optimistic about their own products. But that can skew forecasts and lead to disappointment down the line – within the company and for investors, which is never good news.
Another challenge is defining the right funnel: for example, not every cancer patient is eligible for every treatment, so you need to understand the patient’s journey in detail. That’s not information that’s necessarily readily available to you as a drug developer. One way to do this is to conduct primary research with Key Opinion Leaders (KOLs) such as payers and physicians who will give you a view into the real patient journey and tell you whether they would be likely to pay for or prescribe your therapy. The issue here is that if KOLs know that the people asking questions are the drug’s sponsors, they tend not to be as upfront and honest as they need to be. It’s not deliberately misleading, it’s just difficult to give bad news to people working hard on an exciting – to them – new drug! And while it’s great to hear good news, setting unrealistic expectations does more harm than good in the long run.
I really believe that a third party – like Evaluate – brings objectivity. We don’t have a direct stake in the outcome, so we can ask the tough questions and deliver honest feedback, even if it’s not what the client wants to hear at the time. Using third parties to do this type of research is a worthwhile investment to avoid sinking further funds into an asset that may end up being a more expensive option than pivoting development based on market research.
Perhaps most importantly, Evaluate’s consultants also have access to a huge range of really detailed, interconnected datasets from across the Norstella group so we can benchmark across the industry and build out a comprehensive TAM. That means our analysis really stands up to scrutiny, whether it’s for internal decision-making or external licensing discussions. Ultimately, it’s about credibility and confidence.
Our approach is transparent and collaborative. We start by gathering all relevant data – clinical, epidemiological, market – and work closely with clients to understand their product and goals. That helps us to understand the types of KOLs we’ll interview. Then we use a combination of our data – such as epidemiology data – and publicly available sources, to really target the right patient populations and to understand the treatment algorithms and level of detail required by the client.
We then usually build a discussion guide in collaboration and set up primary interviews with the KOLs to gather additional insight. We use our proprietary databases and expertise to validate every assumption alongside these KOL responses. We’re clear about our sources and methods in all our reporting and we build dynamic models so clients can test different scenarios and update information as needed. Whether it’s a top-line opportunity assessment or a detailed financial forecast, our goal is to give clients a realistic, actionable view of their market.
Finally, we report back to the client in the format they prefer. That might be an opportunity assessment for an asset which combines all the analysis into a PowerPoint deck, or it might dive deeper and involve us building a tailored financial model – a sales or NPV forecast – based on the assumptions from the research. We remain flexible in terms of providing the client with what they need, in the format needed.
There are lots of small things, but I think the one that’s been most consistent, but which still surprises me, is the diversity of opinion within client organizations about how they define their TAM and opportunities. Often there are several conflicting opinions, all of which are valid in their own way but consider different perspectives, from upside and aspirational sales views to risk-based approaches. But the clients sometimes wouldn’t have realized that they were misaligned without having those conversations with us. Part of our job is to surface those differences and help clients reach a shared understanding so they can move forward in the same direction with confidence about their product or portfolio.
Evaluate’s custom analytics team help you to address unique commercial challenges. We answer key asset, portfolio, and corporate strategy-related questions, powered by the combined resources of Norstella. With access to extensive data assets and experience across therapy areas and modalities, we partner with you to provide the answers you need to drive success.
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