Best Practices in Healthcare Commercial Assessment

Bill Lief discusses best practices in healthcare commercial assessment with Guidepoint Director of Healthcare Research, Ashlee Dunston.

Primary research is an effective tool to determine whether your preliminary hypotheses about a product and market are valid, and to identify important market dynamics that should be considered.
– Bill Lief, President, Accelerated Rx Analytics, LLC

After a distinguished career on the manufacturer side, Bill now consults with numerous companies on evaluating new healthcare opportunities as well as optimizing new products and established healthcare brands. His best practices approach to commercial assessment leverages knowledge gleaned from a network of current and former industry experts and practitioners. Bill has found working with Guidepoint, a leading expert network firm, to be an agile and efficient approach to finding the latest, most robust insights to inform his work.


Q: Tell me about your experience with healthcare commercial assessment.
A: I have been involved with evaluating health care products on the manufacturer side for the last 25 years. While I was in my most recent commercial research leadership role, my team supported between 100 – 200 such assessments annually. I also have experience in commercial assessment from leading a Business Development team as well as working in Brand Management and New Product Marketing roles.


Q: What considerations do you find to be most important when commercial assessments are conducted by or for a healthcare manufacturer?
A: Well as you know, a great deal of effort and focus from management are required to consummate a transaction. Once that happens, it might take years to build a substantial brand which generates significant income. In order to justify the investment and the human capital involved, it is critical to be able to crystallize the sustainable value proposition of the asset for management and clarify what its upside potential could be with a well thought out life cycle strategy. Clear articulation of the investment thesis is critical.


Q: What do you consider best practices in conducting healthcare commercial assessments?
A: Some practices I have found to be valuable include:
Early triaging of whether the key driver of the assessment is commercial, pre-clinical, clinical or intellectual property is a first step to consider. You can frequently make more efficient use of organizational resources by first tackling the area with the largest uncertainty. It is not uncommon to discover that the first hurdle you encounter is a deal-breaker and other functional areas are not as central to making the investment decision.
Look at what the financial analysts who follow the target company have to say about the asset and how they evaluate its revenue stream. They have probably spent more time thinking about the asset than you have and can provide new perspectives for you to consider.
It is important to quickly perform enough research that you are able to internalize how the market operates, understand why particular products are selected for specific patient profiles, and identify where there are unmet needs. You want to get to the point where the logic behind the treatment algorithm becomes so second nature that you can begin to anticipate how the algorithm would change with a new innovation.
Get to an understanding of what the target product’s story is, which features drive prescribing interest and why, as well as what aspects, if they were found to be different than expected, would fundamentally change the value proposition.
Anticipate likely future competition and what its role would be vis-à-vis the asset you are evaluating. Look at the hepatitis C virus (HCV) space and how important it was to be aware of the product pipeline in that category.


Q: Is there a best way to initially structure a commercial assessment?
A: I try to approach it like a puzzle where you already know where some of the pieces fit. To provide a framework for the puzzle, it is efficient to start with a blank forecasting model linked to a blank profit and loss statement or pro forma. Then, you can quickly fill in the pieces of information you already have such as epidemiology, market volumes over time, cost of goods, competitive promotional spending levels, etcetera, and can more easily see where your information gaps are.
The next level of information you can populate into your forecast are analog models and presumptive data as placeholders. Utilizing this approach underscores which variables are or could be driving transaction value. Then, focus on the primary and secondary research that allow you to complete the forecast model and profit and loss analysis to round out your understanding of the asset.


Q: How does the analysis you perform for a marketed asset differ from what you would do for an asset in development?
A: Marketed assets can be analyzed differently than an asset in development because so much more is known about a marketed asset. If it is a pharmaceutical, the product already has a package insert so you have hard data on what can and cannot be claimed for the product. You can get a better sense of prescriber perceptions for a marketed product and how it compares to the competition based on usage experience. You can also look at the pricing history and see how the market has responded to the product’s value proposition in terms of access. Many of these aspects are still in flux for an asset in development.
With a marketed asset, the product’s primary demand trajectory often asserts itself soon after launch. It is a good starting point for determining what expected product sales are likely to be if current conditions stay constant. Then, you can evaluate the degree to which events or stimuli such as new indications, new outcomes data, different promotion levels, etcetera, might trigger “an inflection” in the product trajectory that would not have otherwise occurred. Often, the key to such assessments is bracketing the range of reasonable inflections.


Q: What value do you get from primary research that you are unable to obtain from other sources or secondary data?
A: Primary research is an effective tool to determine whether your preliminary hypotheses about a product and market are valid and to identify other important market dynamics that you might not have considered. It is an opportunity to obtain direct reactions to product profiles as well as an understanding of customers’ priorities in product selection. Primary research provides the ability to validate customer segmentations and to pressure test different product propositions and possibilities.
Personally, I find the use of expert networks to be an especially efficient way to conduct primary research in support of a commercial assessment. You can use the individual biographies to more precisely zero in on the profiles of experts you would be most interested in hearing from. You don’t lose time with the back-and-forth of trying to sign up advisors to consulting agreements, and you’re not committed to interviewing any more experts than you need. Furthermore, there are protocols for compliance, caps on payment amounts and reporting already in place that make it so much easier to conduct research for healthcare manufacturers.


Q: What pointers would you give on approaching live interviews for an assessment?
A: My preferred approach is starting out with an informed hypothesis about how a market operates, before I initiate interviews. Ample source data are available to derive an initial thesis using secondary information such as treatment guidelines, labeling differences, prescription drug trends, syndicated reports, etc. Those sources can help inform your picture of the market and lead you to ask better questions once you get to your primary research.
During the first few interviews, I usually concentrate on understanding how decisions are being made by the interviewees. Many of your most important insights will come from those first interviews and lead to changes in what you will ask in future interviews when you are more focused on the asset.
As you move forward and gain confidence in your market understanding, do not neglect to bring up seemingly conflicting observations from your secondary research or from other interviewees. Your interview subjects should play an essential role in resolving those contradictions.


Q: Do you find that research priorities are shifting between the major healthcare audiences: patients, providers, and payers?
A: They definitely are. It used to be the case that the prescriber was the dominant influence, but payers and patients have been growing in importance. It is no longer uncommon to conduct research with payers first, because if they restrict access to the brand or penalize it heavily in terms of patient out-of-pocket contribution, the practitioner and patient may not have the opportunity to experience the drug’s clinical benefits. In terms of patient insights, those have traditionally been most important for lifestyle products and drugs with consumer-driven demand. The importance of patient research in assessments has broadened due to the growing issue of prescription drug abandonment. As US consumers migrate to health plans where they have more financial skin in the game, there is a greater need to be certain that consumers are willing to pay for the benefit they are receiving.


Q: What issues do you think about when approaching evaluation of an asset that is set to launch a number of years in the future?
A: I take the view that the development, commercial and intellectual property risks for an asset are just part and parcel of the assessment. However, one thing I do wonder about is how the marketing environment for a technology might change between now, when I am evaluating it, and when it launches. For example, if the Accountable Care Organization (ACO) healthcare model gains further popularity, we might be facing more guideline-driven product selection, which has implications for both product spending and uptake. I am also struck by the recent bipartisan uproar over drug pricing and wonder whether that will lead to future changes to the healthcare environment.


Q: What final advice would you give to someone just getting started in healthcare commercial assessment?
A: Pay attention to aligning with the expectations and preferences of those on the receiving end of your final assessment. Try to get examples of previous assessments that were highly regarded. Philosophies vary on what an effective assessment looks like. Some clients want a very rigorous and structured analysis of development risk while others are content with a general sense of how the risk compares to other products at the same stage of development. At the end of the day the most important thing is to provide the assessment in a form that management can wrap its mind around.


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