Experience Curve

Experience Curve Calculator User Guide
Multidisciplinary Assessment of Technology Centre for Healthcare

Contents
Page ١. Contents and Introduction 2. How to use the MATCH experience curve calculator 3. Outputs of the web-based tool 4. MATCH Price Trends Research 5. Discussion
“What I find… interesting however is that MATCH researchers have modelled data and... Shown that prices are following very predictable curves. This raises some interesting thoughts of course”
C. Dufresne, Boston Scientific

Introduction
The experience curve is an empirical relationship that relates the price of a product or service to the amount of experience of making and / or delivering it to the market. The related “Learning Curve” was first described in 1936, where it was noted that the number of man-hours that were required to produce an aircraft reduced by a fixed percentage with each doubling of aircraft production in a number of different factories1. Boston Consulting group extended the relationship to all value added costs in the 1970s2. They used the term “Experience Curve” and found that when the market was competitive that the relationship applied to prices as well as costs. The Experience Curve” relationship describes the finding that the price of a product will decrease by a fixed percentage each time experience, measured by the cumulative volume of shipments, doubles. Typical values for the experience curve are in the range of 70 – 80%, meaning that the price will decline to 70 – 80% of its value each time experience doubles. In the field of healthcare technologies, barriers to entry, including those embodied in intellectual property, by regulatory requirements and by the various procurement systems that exist, are high, and it might be expected that markets may operate differently and that prices in the medical device sector may not follow the same trends. This ongoing research shows that the experience curve does generally apply to medical devices but that a number... [continues]

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