Session 1. Hospital Market Potential Estimate in China and its SFE Applications. Kelly Wang, ZS Associates, China Jon Wang, ZS Associates, China
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1 Session 1 Hospital Market Potential Estimate in China and its SFE Applications Kelly Wang, ZS Associates, China Jon Wang, ZS Associates, China
2 Hospital Market Size Estimate & Its Applications
3 % Value Share Market Overview Sales by Channel ( ) China is a hospital-based healthcare market The market is dominated by government-owned, public hospitals Outpatients largely fulfill their prescriptions in hospital pharmacies No comprehensive 3 rd -party hospital data available on the market (samples are available) 3 Source: Pharma Handbook 2010
4 Why should you care? Segmentation & targeting Hospital Market Size Sales force size & effort allocation Territory design Sales target setting But what is the market? Performance Management / KPIs Knowing hospital market size is essential to many sales force decisions 4
5 Defining the Market Indications Brands Value / PDOT* Molecules 100% or partial Market definition should reflect product strategy 5 * PDOT: Patient days of therapy
6 Sample Hospital Data Example - Sample Hospitals - - Master - Hospital Tier CPA SMI BJP Unique Total Total % of Hospitals Captured Tier 3 (Large) ,166 53% Tier 2 (Medium) ,400 5,688 25% Tier 1 (Small) ,680 4% Total 529 1,011 1,375 2,772 25,534 11% There are more and more data sources on the market now 6 CPA: China Pharmaceutical Association SMI: Sea Rainbow BJP: BJ PoleStar
7 Internal Product Sales (MM) Internal Product Sales (MM Unit) Sample Hospital Data Example 10 8 R² = rd -Party Product Sales (MM) 3 rd -party Reported Product Sales (MM Unit) Be sure to check 3 rd -party data to exclude hospitals that have less accurate data 7
8 Approach: General Example MOH Attribute MOH Value # Doctors 929 # Beds 1,682 Annual Diagnosis / Treatment Volume 2,297,298 Outpatient Drug Expenditure (000) 436,997 What is the mathematical relationship? Molecule RMB Sales ( ) Glimepiride 1,585,628 Metformin 2,263,998 Voglibose 823,600 Pioglitazone 1,369,648 Glipizide 606,441 Gliquidone 659,723 Glyburide 104 Gliclazide 2,264,635 Repaglinide 1,231,330 Rosiglitazone 834,207 Nateglinide 978,798 Acarbose 6,248,702 Total RMB 18,866,814 8
9 Approach: General Doctors Beds Patients Drug Revenues 9
10 Approach: Data Integration Example Hospital Databases Internal Sales & Target Hospitals MOH CPA SMI ZS Military Hospital Database Description Hospitals with internal product sales Hospitals targeted by the sales force MOH hospital database with profile data Sample hospitals with defined market sales data Sample hospitals with defined market sales data Collection of military hospitals with number of beds Same hospital but different name 10 Hospital Name Internal Sales (RMB) 华西医院 1,135,000 Hospital Name # of Beds 四川大学华西医院 4,029 Internal MOH Profile
11 Samples Market Sales (MM RMB) Sample Market Sales (MM RMB) Approach: Linear Regression Example R² = R² = ,000 1,500 2,000 2,500 Number of Beds Predicted Value F(number of IM beds, number of outpatients, outpatient drug income, inpatient drug income, etc.) 11
12 Approach: Linear Regression Example MOH Attribute MOH Value Relationship to Market Sales Contribution to Market Sales # Doctors 929 3,702 3,439,158 # Beds 1, ,324 Annual Diagnosis / Treatment Vol. 2,297, ,676 Outpatient Drug Expenditure (000) 436, ,032,697 Projected Market Sales Actual Market Sales from CPA x x x x = = = = 19,221,855 RMB 18,866,814 RMB The mathematical model will be different by city & hospital specialty segment 12
13 Approach: Segmentation Illustration 类别 Hospital Type 慢性病医院 Chronic 社区医院 Community 心血管病医院 CV 牙病防治院 Dental 皮肤病医院 Dermatology 糖尿病医院 Diabetes 耳鼻喉科医院 ENT 民族医院 Ethnic 综合医院 General Hospital 老年病医院 Geriatric 血液病医院 Hematology 传染病医院 Infectious Disease 妇产医院 Maternity 妇幼保健院 OBGYN 职业病防治院 Occupational Disease Prevention 肿瘤医院 Oncology 眼科医院 Ophthalmology 骨科医院 Osteoporosis 其他专科医院 Others 儿童医院 Pediatric 精神病医院 Psychiatric 医疗美容医院 Reconstructive Surgery 康复医院 Rehab 口腔医院 Stomatological 结核病医院 TB 胸科医院 Thoracic 中医院 Traditional Chinese Medicine 13
14 Approach: Projection Illustration Hospital 医院 Hospital Specialization 医院类型 City 城市 Beds 床位 Outpatient Visits 门诊人次 Outpatient Drug Income (000) 门诊药品收入 Actual Market Size 实际的市场规模 Estimated Market Size 评估市场规模 北京协和医院 General Hospital BJ , ,725 9,393,415 8,900,116 北京复兴医院 General Hospital BJ , ,771 2,939,233 3,395,512 北京大学第三医院 General Hospital BJ , ,243 10,987,378 7,951, 北京医院 General Hospital BJ , ,134? 7,214,047 北京中医医院 TCM Hospital BJ 0 222, ,520? 3,178,135 北京电力医院 General Hospital BJ ,518 25,572? 904,232 14
15 15 Not always right but still useful
16 Approach: Field Refinement Excel-based Provide business rules Let field management own the results Online-based 16
17 Common Mistakes Pay little attention to market definition at the beginning Exclude field force from the process Apply the methodology regardless of company needs More suitable for short-term planning Apply the methodology regardless of market situation Not applicable for under-developed markets (e.g. Biologics) 17
18 Reach Applications: Quick Win Total Uncovered Covered 100% ,801 20, ,580 20, % 60% 40% 20% 0% Decile 18
19 Workload (or sales,potential) Applications: Quick Win Territory Workload Distribution Illustration 3,200 2,800 2,400 2,000 1,600 1, Every dot is one territory Ideally, every territory should have about the same workload Before Realignment After Realignment % Territories Balanced: 33% 79% 19
20 Takeaways Understanding hospital market size is foundation to better sales force planning process More 3 rd -party data allow more accurate estimates Market definition needs to reflect company s strategy Field validation is crucial to better accuracy & ensure buy-in Link hospital market size to both resource and target sales allocation 20
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