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Why Vaccination is Good Business for Big Pharma
When the executives of Big Pharma give sales projections for the next quarter, they get the numbers by summing up all the total sales projections from their Commercial Models. What are Commercial Models?
After understanding Commercial Models, you will see why vaccination is good business for Big Pharma. Commercial Models are usually waterfall chart that starts with the Total Population.
Let me illustrate with an example below. I will use Australia and diabetes as an example.
At the top, we start with the total population of Australia, which is 25 Million.
Then, we take the Prevalence of Diabetes in Australia. Prevalence means the number of Diabetic population in Australia. In the case below, it is 5.5%. Therefore the total number of diabetic patients is 1.375 Million out of a population of 25 Million.
Right below Prevalence, we have “Access to Healthcare”.
“Access to Healthcare” refers to the people who have access to a medical facility such as a hospital or clinic. However, not everyone has access to healthcare because some people live in underdeveloped areas without healthcare facilities. In the example, we use 80& with access to healthcare. Therefore, the total number of diabetic patients with access to healthcare is 1.1 Million.
The next row below is what we call the "Diagnosed" patients. The reason is that when a patient sees a doctor and complaints that they are tired all the time (which is a symptom of diabetes), the doctor may send them home without diagnosing the problem. Of course, I am simplifying it a lot here, but you get my point. In the example, we use 50% of successfully diagnosed patients, so now, there are only 550,000 diagnosed diabetic patients.
Then, the row after "Diagnosed" is "Treated". Some patients diagnosed with a disease are not treated because they choose not to take any treatments, or perhaps they decide to look for alternative healing methods. In the example, we use 70% as Treated, so now there are only 385,000 diabetic patients treated with drugs in Australia.
In the next row, we split the pie with the other Big Pharma. Here is where all Big Pharma sends Medical Reps to the doctor's office to influence the doctors to prescribe their respective drugs (as discussed in PharmaFiles #1).
This is the Pharma Commercial Model for every Drug. Ultimately, they develop strategies and tactics to increase their drug sales. For example, if their Drug has a small market share, they will focus on grabbing market share from the other competitors.
However, they are the market leaders with a vast drug market share. In that case, they will focus on activities that will increase diagnosis and awareness so that the flow of patients increases, like a waterfall to the bottom of the chart, thus increasing overall sales. This is why you sometimes see a billboard or TV advertisement that increases your awareness of symptoms and diseases, but they do not outright talk about the drugs.
Of course, I am using a very simplified version. An accurate Commercial Model looks much more complex, like the one below. Strategies and tactics are tied to every box to increase the final sales numbers.
Now that you understand the Pharma Commercial Models, let me explain why Vaccines are outstanding businesses for Pharma.
This is the Commercial Model for Vaccination. It is straightforward, and the activities are simply coercing the population to get vaccinated.