How to Conduct a Target Market Assessment to Strengthen Your Portfolio
Bringing a drug product to market can be extremely lucrative, but the process can be cost-prohibitive if your organization makes missteps along the way. Biotech companies themselves also need to remain profitable.
One effective method to refine your product offering is strategic portfolio optimization. Leveraging this method, companies systematically select products to invest in from discovery to launch.
However, it’s important to select the right criteria to build your portfolio. According to an analysis on pharmaceutical portfolios written by Frank S. David, MD Ph.D., and Greg Belogolovsky:
“The problem is that most R&D portfolio planning approaches are primarily short-term budgeting tools, not strategic ones. Budgeting exercises are critical in pharma, but they do little to help companies objectively define their portfolio goals over broader time horizons and track performance against them.”
Instead, your organization needs to focus on strategic target market assessments driving toward long-term success, not just short-term budgetary milestones.
Learn more about how biotech portfolios have recently evolved, how your organization can conduct a target market assessment to choose robust products for trials and development, and how Acquis Consulting can help throughout the process.
The Evolution of Biotech Portfolios
Rather than using the standard approach of focusing on a flagship product or niche in the biotech market, more and more organizations are starting to branch out to various product markets. Companies are no longer working in isolation on a single product area, and instead have a portfolio manager who oversees several subsidiary companies across multiple market areas, technological scopes, and diseases.
This portfolio manager manages the subsidiaries and toggles between fundraising, product development, customer-facing movements, and commercial management to keep the entire suite afloat and develop the most profitable products within the suite.
This new approach has been recently adopted by companies including BridgeBio, Biohaven Pharmaceuticals, and others who have had fundraising success. It’s likely to continue growing in popularity, especially as venture capitalists continue to invest in new biotechs.
Rather than taking on the risk that a single company will succeed with their product or initiative, as in traditional biotech investing, investors can instead invest in a management team that will shepherd several developments at different stages.
While portfolio-based approaches can mitigate — or at least balance — investment risks in the biotech industry, risks still exist. Therefore, assessment of the strength of various biotech projects based on their short-term and long-term strategic advantages using a target market assessment is critical.
Target Market Assessment for Biotechs
Target market assessments are vital for any business. As the risks and rewards of making investments increase, the need for a strong target market assessment also grows.
Target markets are comprised of consumers who have a need for a specific product and are willing to pay a profitable price for it. Thus, a target market assessment is the art of identifying how your product fits into a specific market. This is different from spend analysis, which assesses your internal financial strength and may play a parallel role in determining investments and projects.
A systemic approach involves researching the general market, identifying key targets and buyer personas within the market to determine interest in a potential product, and confirmatory research to ensure there’s not a competitive product already fulfilling the existing need.
Biotech organizations researching the viability of a new product (especially one that will have a long or costly verification process) should assess the market to ensure demand is robust enough to be worth the investment.
These three key steps are foundational for a target market assessment:
1. Define the Ideal Market Through Market Research
Biotech firms will generally develop products that fall into either of these two categories:
- B2C products that consumers will directly purchase and use.
- B2B products that healthcare providers or other biotech organizations will use in the development of their own goods.
It’s important to define the target market based on both who will have the greater need for the product and which markets will be able to provide steady revenue once the product is developed. Without defining the consumer, you can’t determine the viability of a product, its future value, and if it suitably diversifies your existing portfolio.
2. Identify Gaps in the Market
Once you identify where there is an unmet need, the next step is making sure that the demand isn’t already being fulfilled. Competitors’ products may already be addressing the market’s need sufficiently enough that there’s no room for profit.
At this stage, it’s important to have a solid understanding of both what’s currently on the market and competing development projects that are likely to reach the market before yours.
3. Test the Viability of the Product
Now that you have identified gaps, the next step is to test if the market will respond favorably to your potential solutions or products. Forecasting models, target market feedback, and other predictive tools can help you identify which products get the best response before you begin costly development.
During this stage, you might revise your expected product, come up with new ideas, or dismiss the project entirely if it doesn’t provide enough profitability or diversity.
Market Assessments and Portfolio Management
Market assessments set the stage for your team’s ability to make strategic decisions. You can identify new markets if you’re determined to focus on a particular product or refine your product if you’re determined to focus on a specific market.
Expanding your portfolio either through new markets or new product types is an excellent way to make your portfolio stronger and better able to handle potentially risky ventures.
Partner With Acquis Consulting for Life Sciences Strategy Implementation
At Acquis Consulting, we’re here to help organizations conduct robust target market assessments so you can be sure your organization and portfolio are moving in the right direction. With thorough market analysis, you and your team are powered to get better results for your products and investments. Contact us today to learn more about our consulting services and to create the right strategy for your next venture.