emba strategic dilemma april 2009

This is part of a presentation made by my Executive MBA Team for our final Strategic Dilemma project, April 2009

The Company name has been omitted and some of the slides have been deleted, as the company we were working for had a non-disclosure agreement.

Virginia Commonwealth University Fast Track EMBA

Team 4: Joe Barnes Sue Brown

Clint Johnson Ailen Lacey Steve Morgan Tim Radmore

Faculty Advisor:Dr. R. Wood

Strategic Dilemma Proposal

Market Entry for (Company)

Science Background Company Overview Drug Development Competitors Market Entry Options Recommendation Summary Questions

Agenda

PROTEOMICS:"The study of the structure and

function of proteins, including the way they work and interact with each other inside cells."

National Cancer Institute

The Science

(Company)

A biomarker discovery company with a proprietary computational platform (algorithm)

MISSIONTo advance pharmaceutical development

by introducing computational bioinformatics services and

new technology

(Company) – What It Offers

A method to identify Possible diagnostic biomarkers Possible therapeutic targets for new drugs Possible toxic side effects of drugs Optimal dosage of drug

How? using computational bioinformatics combined

with laboratory validation

G

B

D E C

H

F

A

Protein Interactions

F

Finding more potential pathways/

interactions than competitors

I

JK

G

B

D E

H

F

A

MWP – Uniqueness

C

DISEASE

Protein J Causes Disease

F

I

JK

G

B

D E

H

F

A

C

DISEASE

F

I

JK

G

B

D E C

H

F

A

Protein J Causes Disease

DISEASE

F

I

JK

G

B

D E C

H

F

A

Protein J Causes Disease

I

DISEASE

F

JK

G

B

D E C

H

F

Protein J Causes Disease

A

Source: http://www.fda.gov/fdac/graphics/newdrugspecial/drugchart.pdf

Drug Development Timeline

Source: http://media.pfizer.com/files/research/pipeline/2008_0930/pipeline_2008_0930.pdf

Drug Development Pipeline - Pfizer

0

10

20

30

40

50

Pharmaceutical R&D ExpendituresInflation-adjusted (2002$) in Billions

R&D (2002$)

Industry R&D Expenditure Trends

Source: Tufts CSDD Approved NCE Database; PhRMA

(Company’s) Value Proposition

Risks and Rewards of Innovation

Drug development is costly, risky, and lengthy

Pfizer states one in many thousand new compounds generates revenue

R&D costs continue to increase

Increased success using (Company) can add substantial bottom line value to Pharmaceuticals

Competitors

Ingenuity Pathway Analysis

800-lb gorilla

Used by most large pharmaceutical companies

Referenced in over 1,400 publications

Web-based

Ingenuity Systems

Ariadne

Pathway Studio®

Not focused specifically on drug industry

Used by numerous research institutes

Referenced in approximately 200 publications

PC stand-alone application

GeneGo

MetaCoreTM

Newest of the “Big 3”

Gaining acceptance from large pharmaceutical companies

Referenced in approximately 200 publications

Web-based

Other Competitors

??? Subsidiaries of other companies

Primary focus is support

Not well established

Limited exposure to large pharmaceutical companies

Ingenuity

Ariadne

GeneGo Other Competitors

(Company)

Where does (Company) fit?

SellOutright

Market Entry Options for (Company)

We modeled what we believe are the most feasible options Option estimates reflect a 3-year product life (Company) executives can use the modeling tool to refine projections

Partner with Competitor

Hire Sales Consultant

New Stand-Alone

Business

Obstacles to Market Entry for (Company)

Proof of Concept

Dedicated Resources

Funding

Strategic Alliances

Competitors

Web Presence

Market Entry Options for (Company)

Lowest risk option

Quickest revenue recognition for (Company) Executives

Must complete “Proof of Concept” and publish results

Estimated revenue from sale: $13,000,000

SellOutright

New Stand-Alone

BusinessMarket Entry Options for (Company) Highest risk option – Must overcome all obstacles

12+ months to launch – No sales until year two

Competition may duplicate (company) functionality at any time

Healthcare Sales Consultant may reduce launch time/increase revenue

3-Year estimate of end-of-year cash position w/o Sales Consultant:

Yr 1: ($537,000) Yr 2: $701,000 Yr 3: $7,700,000

Hire Sales Consultant

Market Entry Options for (Company) Partnering with competitor allows (company) to leverage their

resources: Client portfolio Trained staff Web presence

Partner with Competitor

Industry Partner Portals Quicker launch than Stand-Alone option: 4 months vs. 12+ months

Fewer obstacles than SA, but POC is critical to attract Partner(s)

3-Year estimate of end-of-year cash position:

Yr 1: $2.9 million Yr 2: $10.7 million Yr 3: $22.4 million

Partner with Competitor

Financial Comparison of Market Entry Options

Scenario Year 1 Year 2 Year 3

Sell Business Outright $ 12,984,068 N/A N/A

Stand-alone Business $ (537,000) $ 701,000 $ 7,700,000

Hire Sales Consultant $ 632,508 $ 2,266,712 $ 10,073,015

Partnership with Competitor (Partner) $ 2,900,000 $ 10,700,000 $ 22,400,000

No scenario includes a revenue sharing estimate

Recommendation

Launch (company) as a pass-through service from Partner websites

Requirements Estimated $250k in capital Fully dedicated resources Credibility in the marketplace Licensing arrangement

GeneGo

(Company)

Other

Competitors

Ingenuity

Ariadne

Summary

Proteomics (Company) Drug Development Competitors Market Entry Options Recommendation