2014 Ygcc Life Sciences Casebook Preview

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YGCC Life Sciences Case Book 2014 © Yale Graduate Student Consulting Club

Preview Version

1

Table of Contents Case #

Title

Firm

Type

1

CS Med

Health Advances

Commercialization

2

Ear X

Health Advances

Commercialization

3

NeoFactor

Trinity Partners

Market Entry

4

LT Neuro

Trinity Partners

Market Entry

5

O’ Care

Trinity Partners

Acquisition

6

Ultimate Bandage

Trinity Partners

Market Entry

7

C Difficile Vaccine

ClearView

Pricing

8

IBD Products

ClearView

Market Size Estimation

9

Boreal

L.E.K.

Profitability

Yale Graduate Student Consulting Club© !

2

Estimation Practice Estimation Prompts To help with your preparation, below are a collection of prompts used from previous interviews or based on similar interview questions Before starting, you should take a look at various outside resources to guide your approach Some suggestions are: •  •  •  • 

Case Interview Secrets by Victor Cheng (Amazon) Guesstimation by Lawrence Weinstein (Amazon) Framework for McKinsey, BCG and Bain estimation cases (Youtube) Estimation podcasts (Firmsconsulting website)

Example Estimation Questions: How many HPLCs are sold annually? How many PCR machines are sold annually? What is the amount of floss used in America? How many new braces (teeth) are installed per year? How many new glasses are prescribed per year? How much contact solution is sold every year in America?

Yale Graduate Student Consulting Club© !

3

Case 4: LT Neuro (Multiple Sclerosis) What factors should be considered? Sample Issue Tree

Launch oral drug for treating MS?

Market

Size

Trends

Profitability

Share

Competition

Revenue

Volume

Treatment Frequency

Yale Graduate Student Consulting Club© !

Implementation Risk

Costs

Price

Fixed Costs

Clinical Trials

Capital

Operational

Variable Costs

Costs / unit

# treatment sold

4

Case 5: O’ Care (Orphan Drug) Type of Case

Firm

Acquisition

Trinity Partners

Prompt Our client wants to acquire O’Care (OC), a small biotech company. Most of OC’s products are in development in the preclinical phase, but OC does have a single revenue stream. This revenue is from sales of OC1, the only FDA approved orphan drug to treat Disease X. Disease X is an inherited disease that affects 1/20000 among children at the age of 9 and younger. Negotiations with OC have led to a price of $60M. The client hires you to access whether they should acquire OC or not.

Additional Information (provided on request) Client Goal (Interviewer should emphasize this) -  The board will approve the deal only if the acquisition can breakeven in 5 years. OC Business Model: -  OC develops orphan drugs in house, but OC1 is the sole revenue stream. Other preclinical drugs can be considered mainly R&D cost within the 5 years. -  Contracts with a third party for OC1 manufacturing and distribution/sales/marketing. Client Business Model: -  Develops several classes of pharmaceuticals in house, but wants to expand to orphan drugs. Manufactures all drugs in house. Same external distribution/sales/marketing channels as OC.

Yale Graduate Student Consulting Club© !

5

Case 5: O’ Care (Orphan Drug) Exhibit 1: Profitability Comparison

Exhibit 2: Price Sensitivity

100% 80%

45%

30%

70% 60% 50%

40%

65% 30%

40% 30%

25%

20% 10%

15% 5%

15%

15%

0% OC Client Finance Finance Structure Structure Yale Graduate Student Consulting Club© !

Net Profit Distribution Production R&D

Market Penetration

Percent of Revenue

90%

35% 30% 25% 20% 15% 10% 5% 0% 25

30

35

40

45

50

Price/patient/year (in 000 dollars)

6

Glossary of Terms Healthcare is a rapidly developing sector of the global economy. This glossary serves as a starting point with a collection of terms to make the cases more approachable. However, it must be noted that during an actual interview, be cautious with the terms you use unless you fully understand them. The YGCC are not experts in this field so the terms contained within this glossary are simplified definitions. We highly recommend further research on your part should you decide to engage in this industry.

Pharmaceuticals – the umbrella term for substances that have a biological effect to manage or treat a disease Small molecules – chemically derived pharmaceuticals that are generally much smaller and less complex than biologics Biopharmaceutical / Biologic – biologically derived pharmaceuticals. Biologics are generally more complex than small molecule pharmaceutics. Examples include recombinant insulin (diabetes), interferon (HCV), and antibodies (commonly used for specifically targeting cancer). Medical Devices – Devices used for a therapeutic use. The most easily recognizable are pacemakers (control cardiac rhythms) Clinical Trials Process – FDA based approval process that pharmaceuticals must pass through before being sold to the general. There are many more caveats to explore so visit the FDA website for detailed information 1) IND – Investigational New Drug. Before entering the clinical trial process, a company must file an application that contains chemical analysis of the pharmaceutical and usually safety tests in animal subjects 2) Phase I – Generally the first studies in humans to test safety 3) Phase II – Larger scale trial for safety in a target population and efficacy 4) Phase III – Larger scale trial to test safety and efficacy 5) NDA – New Drug Application. Once the clinical trial process is complete, the company files an NDA to ask the FDA for approval. If approved, the drug can enter the market Yale Graduate Student Consulting Club© !

7

Additional Life Sciences Cases McKinsey & Company Title

Source

Case #

Magna Health

McKinsey Website

NA

Suger Magnolia Hospital

Columbia 2006

5

Heartcorp

Columbia 2006

10

Meditest

Columbia 2006

15

Health Care in Canada

Columbia 2007

7

Vitamin Manufacturer Entry into China

Kellogg 2001

36

Old Pharma

London 2013

NA

Apollo Medical Labs

McCombs 2007

2

APC Nutrition

McCombs 2008

7

US Healthcare

Michigan 2005

5

Pharma Acquisition

Michigan 2008

12

Medical Device

Ross 2005

43

Diabetes Testing

Ross 2007

17

Drug Store Profitability

Ross 2007

18

Pharma Acquisition

Ross 2008

12

Universal Healthcare

Sloan 2011

52

Nutracorp

Wharton 2005

5

Mini Case 1

YGCC 2012

23

Yale Graduate Student Consulting Club© !

8

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