Strategies to determine pricing potential of an early asset

A client had an in-licensing opportunity for a product in development to treat osteoarthritis. The client required a early asset pricing analysis to look at the product’s pricing potential in order to determine whether the product would be an acceptable investment.


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Objective 1:

Find pricing potential for an early-stage product

Pharmacological treatments of osteoarthritis are, by and large, cheap and generic (opioids and intra-articular steroid injections). Therefore any pricing potential would need to come from the asset’s ability to charge a price premium for clinical advances.

The asset had shown promising levels of advance over existing treatments in clinical trials so far, and the potential licensor had suggested a price which it thought the asset would be able to charge. Our client wanted to see whether this was viable or not.

Key customer insight required

Pricing potential for an in-licensing opportunity.

Challenges

Too early and expensive to carry out full-scale pricing market research.

Objective 2:

Assess key assumptions’ impact on pricing potential

Being an early stage product, there was uncertainty around some key assumptions. Among these were:

  • Which endpoint to use: NRS or WOMAC.
  • Level of the endpoint.
  • Launch year.

In addition, there were several potential indications for the asset, including delaying interventions such as knee surgery. The client needed to know what the pricing potential would be in each indication.

Key customer insights required

Price sensitivity to key assumptions and indications.

Challenges

Quantifying the impact of key uncertainties across many different indications using traditional pricing market research could risk respondent fatigue due to requiring a long questionnaire.

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