The size of the market is important because you want to be able to sell enough of your product to recoup your investment and to continue to sell your product in order to invest more money in developing other products. Therefore, one needs a large market. However, determining the size of the market involves more than just looking at the number of patients that have "x" disease or the number of procedures performed.

The top four things you need to consider:

1) New market or existing market - A new market is one where there is no specific treatment for a particular disease or where one is changing treatment guidelines. An example of new markets would be orphan diseases and subtypes of cancers that don't have a specific drug treatment. When high cholesterol was first linked to heart disease, this was a new market with new treatment guidelines to treat high cholesterol.

Whether you are entering a new market or an existing market, both have its challenges. In the example of treating high cholesterol, this was a tough market to penetrate because you had to convince physicians through numerous scientific studies and key opinion leaders that high cholesterol was bad and the unknown long term affect of a new drug that had never been on the market out weighted the risk of high cholesterol.

An existing market has its own challenges in terms of the type of market and the existing competitors in the market. More details are discussed below.

2) Growing market or mature market - A growing market increases the market potential for your product. A good example of a large and rapidly growing US market would be the obesity market. Examples of mature markets in the US would be TB and malaria.

3) Satisfied market or unsatisfied market - It is harder to market a product in a satisfied market than in an unsatisfied market where doctors and patients are looking for products (i.e., for which there are unmet medical needs.)
An example of a satisfied market is a treatment for hypertension. There are many products on the market for hypertension. However, there are few products for resistant hypertension and therefore an unsatisfied market.

In addition, there are degrees of unmet medicals needs that must be examined. The more critical the unmet need the better potential for success in this market.

4) Current and future competitors - As I mentioned in my January newsletter, products not only have to demonstrate superior performance, but also prove better outcome and cost savings. Typically only two products can be successful in a particular market. If there are many competitors already in the market or in late stage commercialization, it will be a tough market to penetrate, be successful, and stay successful if you are not far superior to the other products. Even new markets where there may appear to have no competitors have competitors. In such cases the current standard of care or any alternative to the standard of care are considered competitors.

An example of an unsatisfied market would be the Hepatitis C (Hep C) market which I discussed in detail in my December newsletter. Hep C is an unsatisfied market because there is no cure, and the treatment regiment has poor efficacy and significant side effects. The drug Incevik™ was successful because the product had far better efficacy and shorter treatment regiment than the standard of care. However, Pharmasett's new drug may prove to provide a "cure" without the interferon that causes major side effects. This drug has the potential to be the next standard of care. A fourth company, Inhibitex has a Hep C drug that appears to have the same profile as the Pharmasett's drug but it's too early to tell. Incevik will lose significant market share once Pharmasett's drug is approved.

Any drug entering the Hep C market will have to be far superior to Pharmasett's and Inhibitex's drug. The existence of these competitors raises the bar significantly for greater efficacy with low side effects.

Contact me should you have any questions or need assistance in this area.

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The value proposition of the technology is important because it will determine whether the product can not only solve the problem of an unmet critical medical need but be far superior then what is currently offered. Customers need to feels they must use this product.

What do I mean by this?

As scientist, when we pitch to investors, we tend to focus on the science first and foremost and not a lot on how the technology can solve the problem and what it means to the customer and patient. Many times the technology lacks a clear application, or is not likely to be superior to the current product on the market.

Words like "faster" or "better" are used, without explaining what "faster" or "better" means in the context of solving a problem. These words are what I call "features" of a product. Features describe what the product does, whereas, "benefits" describe how it solves a problem better than what is currently available.

For example: This drug works faster (feature) because it has a short onset of action due to its mechanism ........ Compare this to: This drug has a short onset of action (feature) and starts to relieve pain in 5 minutes (benefit) compared to 30 minutes with other medications. The latter statement provides a brief description of how the technology works and how it solved the problem. For complex technologies, the challenge is to state, in a simple and concise manner, how the product solves the problem and what makes it far superior to what is already on the market. A layperson should be able to understand what you are saying.

Everyone claims their product works faster and is better. The real question is why should a customer use your product over another product, when the other product is also faster and better? What differentiates your product from the others? This is the value proposition of the product.

How do you come up with the value proposition? You need to conduct a competitive analysis of all products, currently on the market or in late-stage development that can potentially solve the problem. The analysis is based on the feedback from potential customers regarding where they see a critical problem or issue. This feedback comes from your previously conducted due diligence of physicians (via interview or focus groups) that was done before developing your product.

This analysis coupled with the due diligence feedback from potential customers is what will determine your value proposition and competitive advantage. Without it, you may be creating a value proposition that may not have a high priority or mean anything to your customer. It's a "nice to have" verses a "must have." "Nice to have" doesn't equate to using the product, but "must have" always do in today's environment.

I mentioned that the market has changes where only two products in a particular market can be successful. This is due to the rising cost of healthcare where government and insurance companies are pushing back on what they will pay for in terms of cost of care from healthcare providers, drugs, devices and equipment, and hospital care. This is why your value proposition and competitive advantage are so important. But in addition to your value proposition, you must also demonstrate outcomes and cost savings.

How do you demonstrate outcomes and cost saving?

Cost savings is not only defined by the cost of the product, but can also be defined as cost savings in terms of reducing mortality, morbidity and increasing the quality of life. For example: Vertex recently received approval for their Cystic Fibrosis (CF) drug called Kalydeco™ (ivacaftor). This drug is indicated for only 4% of the CF patients who have a specific genetic defect or mutation. The drug is priced at $294,000 a year per patient. At first glance one might ask, what is the benefit of Kalydeco and why would insurance pay for such an expensive drug?

For the insurance company, "Cystic fibrosis is life-threatening that has no cure, according to the National Institutes of Health. Kalydeco thins the mucus to keep airways from getting clogged and infected." The cost to treat patients with CF in the hospital every time a patient's airway gets clogged or infected in far more costly than $294,000 a year. The insurance company is saving money when a patient avoids going to the hospital. In addition, patients with CF tend to be sick more often and therefore out on disability. Kalydeco will also reduce the cost of workman's compensation and increase employee productivity.

Contact me should you have any questions or need assistance in this area.

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In today's environment, it takes a tall order to develop and launch a successful product. There are many things that need to be considered besides the topics I've discussed here. I mentioned that investors will look for a strong experienced team who've been successful in the past. But most start-ups or early stage companies will not have a full team of full-time employees (FTE) to evaluate the size of the market, the value proposition, the technology, IP, and regulatory because it's too expensive and the team members must be the right for the company culture.

The start-up team will usually comprise of the CEO, CSO, and co-founder/scientific advisor who are FTEs. However, the team is experienced enough to know what needs to be evaluated and hire experts or consultants part-time or as needed to evaluate the various areas mentioned in de-risking these areas. When the investors look at the team, they will look at the FTEs and the consultants to determine if all areas are covered. Investors favor teams that are lean and cost-efficient.

To determine the size of the market and to help communicate your value proposition/competitive advantage, the FTE team should hire an expert or consultant if the team doesn't already have this expertise. You want to get it right the first time around. The first impression of a product is a lasting impression.

Contact me should you have any questions or need assistance in this area.

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Researcher at Newcastle University, UK won a £5.8m embryo research program that aims to cure a group of inherited diseases by producing babies with genes from three different people - two women and one man. The researchers, acknowledge that "their work on mitochondrial disease is potentially controversial, because it produces changes in the embryo that would be passed on to future generations and because it could be seen as producing embryos with three parents." However, labeling the program as "three parents" is misleading "because more than 99.9 per cent of the maternal genes would come from the child's official mother. The remaining maternal DNA would come from another woman, an egg donor; these 37 genes control the mitochondria, microscopic power packs that provide all living cells with their energy supply."

Newcastle researchers are using eggs donated by women undergoing IVF treatment to investigating two techniques to prevent the transmission of mitochondrial disease from mother to child. Several thousand people in Britain suffer from serious mitochondrial disease (the energy source for cells) that can affect muscles, particularly in the heart and brain.

For the full story in the Financial Times, click here.

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This month was an extraordinary month with 90 funding deals of all types from seed money to series E both US and Worldwide. High tech healthcare companies are also included.

To really determine whether funding is picking up, I will be focusing on funds that are $1 million or greater in seed investment and series A or B (or the valley of death) that are pre-IPO. Even though VCs are investing, they continue to invest in their existing portfolio companies and less in new companies. Incubators, state funding, and business competitions are great for initial seed money but not enough to keep the company going long-term.

Partnerships and licensing deals with upfront payments and milestones will not be included.

Funding deals are in chronological order by date

$0 = No financial terms disclosed. For more information, read more....

Funding deals are in chronological order by date

$0 = No financial terms disclosed. For more information, read more...

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Acquisitions continue to be made for both medical device (17) and pharma/Biotech (9). There was one private equity purchase by CID Capital for Westone Laboratories. Consumer Product company Clorox is trying to expand into the medical area with two healthcare products acquisitions.

$0 = No financial terms disclosed. For information on specific companies, read more....

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About BioMarketing Insight

We help companies de-risk their product development process by conducting the business due diligence to ensure that it is the right product for the right market and the market potential for the product meets the business goals of the company. We can then develop marketing strategies to drive adoption for the product.

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