Numbers Matter

I am a huge sports fan and this time of year I am obsessed with the Chicago Blackhawks and Bulls.  I know exactly what their records are and how many more wins they need to lock up a playoff spot or finish with the best record in their conferences.  I know how many points each of the key players average per game and I hate to admit it but I even have a rough idea about where the teams stand on salary cap issues.

The real question is do we follow the numbers in the healthcare world, our professional environment, as closely as the sports we follow?  If you can’t quickly discuss the key statistics for our industry, perhaps it is time for a quick refresher.  One of the concerns is that the numbers floated in the literature are often a little confusing and because they are so big, they almost become meaningless.  I found the recent article in The Atlantic quite interesting and the visuals make these huge numbers easier to remember.

Let me try to tell you how I view the numbers in very rough terms so that, at least, you can have “quick” conversations that show you are engaged in the big picture.  First, as you know, the global population has passed 7 billion and the latest US population is at 313 million.  This means, we account for now only 4.5% of the world’s population and this percentage is going down due to a lower growth rate in the US and other more developed countries.

The Gross Domestic Product or GDP for the US is about $15.6 trillion and healthcare is about 16% of that number or $2.5 trillion.  An easier number to remember is that when divided by the population the cost spent on healthcare in the US is about $8,000 per person.  When looking at the attached article you can see we spend about double most other countries.

Going to the next level of spend, you can see the US pharmaceutical business is about $300 billion or about 12% of all healthcare.  The global pharmaceutical business is roughly $900 billion so the US is about a third of the world’s spend.  This percentage has been dropping over the years mainly due to the drastic increase in generics, which this year will be approximately 80-85% of the total prescription business.  It is still interesting that 4.5% of the world supports a third of the overall global spend.

Another way to look at the US spend on drugs is to look at the spend on a per person basis and that number is just under $1,000 per person.  That number compares to the global per person spend of about $125 per year.

The next set of numbers that are critically important to know are the ones for your specific market and your brand.  Now some thoughts on what should be known without looking at reports.  You should always know what your actual dollar sales plan is and how that compares to the previous year.  In addition, at any given time you should know the progress to the goal and if the plan has been modified to the latest estimate.  Too often, brand managers focus only on prescriptions and share and don’t talk in terms of dollars.  Keep in mind that prescriptions and market share can’t be taken to the bank, only money matters in this regard.  That said, the flip is also important.  It is critical that you can talk to the plan, the increase over the previous year and the market share in terms of prescriptions as well.  I like to talk about prescription data in terms of patients, as it becomes a little more real.  You should always have a feel for how many people are taking your drug.  A “rough” rule of thumb is that the number of patients on your drug is usually equal to your monthly prescriptions, if you have a chronic drug and the average script is for 30 days.  I know there are all kinds of variations but this is a good place to start.

These are just a few thoughts on how to get comfortable with the statistics of our industry.  It is also important to always test the numbers against each other to see if they make sense.  Divide your annual sales by your annual prescriptions and see if that matches up to the cost of a prescription. Try to have everything “tie in” and be able to explain the differences.

Numbers are very important if you want to be viewed as a true businessperson.  The perception is that if you know your numbers you probably have the rest of the business under control.  It is always interesting to me that the more senior the leader is in an organization the more aware they are of the numbers.  Something to think about.  Perhaps a goal for this “March Madness” season is to be as aware of your business numbers as you are of the numbers of your NCAA basketball bracket picks in your office pool!

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