2.4 Market Analysis - Transcripts

Ross Jaffe: I think there are several common mistakes we see in the business plans we receive and in the presentation we get from entrepreneurs.  The first is entrepreneurs are sometimes too conceptual in their market analysis.  They're so excited about the technology and about the clinical state and what they're going to be able to do for the patients that they don't really focus as much on the details of how you actually analyze the market, understand the market, and thereby understand the business opportunity.  That often translates into on the market sizing often putting up some numbers that are based on the total market size, not really segmenting the market appropriately, and not really understanding what the true value you are capture can be.  We often see some big numbers very superficial analysis as opposed to the depthful analysis we'd like to see about which market segments are really going to benefit from the tech and how much value you can really capture from it.  Similarly on the market dynamics side they often make some big assumptions about how doctors practice medicine or how patients flow in the healthcare system.  They really don't do a patient flow analysis or a detailed stakeholder analysis and really understand the demographic treads reimbursement trends, referral patterns, how patients get to the doctor who's going to treat them, those types of issues, so its really important to spend some time really understanding the disease state.  I love it when entrepreneurs walk in and they seem to understand disease state as well or better than the clinicians who practice medicine.  Then you know that they really understand the market and how the medicine is practiced.

Ross Jaffe: I don't think it fundamentally changes the process, but it certainly puts a premium on having done very careful analysis about the cost effectiveness of the technology.  Going forward we're going to be in an increasing resource constrained system where a premium is going to be put on those technologies that can not only deliver better quality medicine but also reduce the cost of medicine, and so understanding the potential impact of the technology on both quality and outcomes, as well as on the economics of the treatment of the disease, its going to be very very important.  Understanding the dynamics among providers and payers and patients is really critical, … the environment we're in and the environment we're going to be in in the future really put a premium on really doing very depthful market assessment particularly on the market dynamics side.

Ross Jaffe: Each disease state has its own set of issues you've got to address, so you really have to customize it. There's no cookbook way of doing market analysis.  In general you've got to size the market and really size the segments of the market that … you're targeting with your technology.  And really understand both the number of patients and providers that are going to be the customers for it, and what the value that you can capture on that side, so you can get a sense of what the true market size is.  On the dynamic side clearly understanding demographic trends, understanding patterns of care and how they may be shifting or changing over time, how referral patterns work in this disease state, understanding how payers and patients and providers really think about the disease state are all incredibly important in making sure the analysis is done correctly.  But there's no cookbook way to do it, you've got to really figure out what are the critical issues for that specific disease state, and that specific technology in doing your analysis.