A national provider of health IT services asked us to evaluate the opportunity to enter the Phase IV clinical trials business by providing data collection/analysis services for ongoing and completed trials. The client wanted both an assessment of the size of the potential opportunity as well as the costs of developing the capabilities to serve this market. The client believed that “we can leverage our low cost healthcare information collection and coding, and our proprietary software systems in a multi-billion dollar market.”
Primary goals included the following:
- Determination of the applicability and value of the client’s existing skills and capabilities to the Phase IV clinical trials business
- Sizing of the potential opportunity – who are the most attractive customers in this segment with demand for our client’s services and who are the most attractive partners with complementary services
- A go or no-go decision on whether the client should invest in this opportunity
We developed a deep understanding of Phase IV clinical trial economics to assess the opportunity to leverage the client’s skills. This included in-depth primary research with big pharma, biotechs, and CROs to determine both key success factors and unmet needs/issues. We determined the customer segments where the client could profitably market its capabilities and sized the total opportunity.
We estimated a market opportunity significantly smaller than the client’s initial valuation (albeit still attractive) and developed a targeted entry strategy with emphasis on creating a differentiated competitive position. The client’s skills were most attractive for large, multi-site “observational” studies segment, that was a relatively small fraction of the total market but growing. Additionally, we detailed the required upgrades to the client’s proprietary backroom IT systems. Patient enrollment and epidemiology studies, both opportunities that the client had initially targeted, had limited attractiveness.