The Business Case for BHRT

Over the last few years, I have come across many compounding pharmacies who have focused on BHRT. The match with compounding is perfect: a natural alternative to mass produced HRT tailored to the individual patient.

BHRT is a perfect match between patient needs and compounding pharmacy’s strengths.

Behind the perfect match, there are some compelling statistics on why BHRT should be considered as a key strategy for business growth.

First some statistics:

  • There are 157 million women in the USA.
  • Of whom, 22.8 million are aged 45 to 54.
  • 89% of women go through menopause between 46 and 55.
  • 57%
    of women experience menopausal symptoms.
  • The median duration for therapy has been hard to find. But a recent JAMApublished study on the impact of hormone replacement ran a trial with 2 study groups for a median of 5.6 and 7.2 years. People did not stop their HRT after the study. I am using 7.2 years as the median for this analysis.
Total Market Opportunity for Menopause

To put the numbers in context, approximately 2.3 million American women go through menopause every year of whom 1.3 million will experience symptoms.

A typical compounded BHRT script price is in the range $50 to $70. If we take $60 as being an average, that equates to a $930 million new market opportunity being created every year. But a better measurement for a recurring business is total lifetime value. In the context of lifetime value, every year a total lifetime market opportunity worth $6.7 billion is decided upon. No doubt some of the opportunity gets missed or gets written as standard HRT or gets spent on other alternatives. But nonetheless, the opportunity is there and open to competing alternatives.

Lifetime Revenue

With a median therapy duration of 7.2 years, the lifetime value of each new BHRT patient is $5,200. Just adding 1 new BHRT patient every month will gain you an additional $3,600 per month or $43,200 per annum within 5 years. The lifetime value of these 60 patients will be $311,000.

Double the number of new patients per month and you double the outcome.

Revenue Upside

The average life expectancy for US women today is 84 years which means that many women spend around 50% of their adult life as a post-menopausal female. The menopausal transition takes around four years for most women. The median therapy duration of 7.2 years is probably low and will most likely extend for several additional years.

As, this analysis only considers BHRT prescribed for menopausal symptoms, the market and thus revenue opportunity is larger.

Revenue Churn

Most compounding pharmacies I have spoken to have new script to refill ratio of 50:50. In other words 50% of the business will repeat into the following year and 50% will churn. To grow even 5%, you will first have to replace the churned business and then add the growth. For a $2m business, that equates to adding $1.1m in new revenue in the subsequent year. If you could get your business to 60% refills instead of 50%, then the absolute revenue growth only needs to be $900,000 for the corresponding 5% growth to $2.1m.

In other words, if you can reduce your revenue churn by increasing refills, you make growth in each subsequent year just that little bit easier. You provide a revenue base from which to grow the business.

Why now?

In the past there have been concerns raised about using HRT to alleviate the symptoms of menopause. However a recent large study of 27,347 women in the US concluded that “Menopausal hormone therapy for 5 to 7 years was not associated with risk of long-term all-cause mortality.”

Among postmenopausal women who participated in 2 parallel randomized trials of estrogen plus progestin and estrogen alone, all-cause mortality rates for the overall cohort in the pooled trials were not significantly different for the hormone therapy groups vs the placebo groups (27.1% vs 27.6%; hazard ratio, 0.99 [95% CI, 0.94-1.03]). Details can be found on the JAMA website here.

The results have even gone mainstream in such publications as The New York Times.

Business Growth & BHRT

From a strategic perspective, BHRT ticks all the boxes. The market is potentially very large and growing. Done right BHRT is a low churn business offering a high rate of return. If satisfied, your customers will return and will refill for many years.

If your catchment area totals 100,000 people (both sexes and all ages), there will be approximately 7,400 women aged 46 to 55 with an average of just over 700 women going through menopause in any 1 year period. That equates to a total market of $3.8m annually or a lifetime revenue of over $27m. Of course you can’t get all of that, but even getting 1 additional BHRT patient per month will make a big difference to your business over time.

There are 2 main and complementary approaches to get more BHRT business.

  1. Educate patients about the benefits of personalized BHRT and provide a consultation.
  2. Get physicians to write BHRT scripts.

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