Team J
Akash Gandhi Jessica Minarolli Jessica Dominic Shaishav Desai
Elias Roman Shekhar Gurnani Rutuja Ajgaonkar
Table of Contents
Overview Business Recommendations Swot Analysis Risk Analysis Competitive Landscape Financial Metrics Conclusion
Overview
Enthuse, a global healthcare company, is a highly respected and well organized company which consistently ranks as one of the “Most Respected Companies” annually. The company’s reputation is based on high quality products, innovation, and customer focus. Enthuse values are guided by their credo.
Goals
Expand Portfolio Launch a new knee replacement
product Capitalize on Market Demand Enthuse plans to achieve this through
acquisitions, continuous innovation, and product development.
Business RecommendationsProduct Development Buy with Consultants
Hiring orthopedic specialists as consultants Consumer RelationshipQuality Assurance Increases market share by .9%Lower cost than either licensing option
Other Alternatives
In House with No consultantsLowest development
costDesign and Quality
would be weakerNo increase in market
share
LicensingLicense with a company for
further developmentOption to buy for 240 Million
in 2018No control over design and
developmentNo increase in market shareReliability
Total Product Development/Acquisition Costs
In house w/o consultants
($671M)
In house with consultants ($1,058M)
License to outside
company (buyout in
2018) ($1,192M)
License to outside
company through
2018 ($1,194M)
0
200
400
600
800
1000
1200
1400
Costs in MM
Business Recommendations
Pricing Strategy
$4500 with no price increase from taxes.Increase of 3% per year After bearing the excise tax our selling price
actually is $4,396.50 Price slightly higher than previous years but
still cheaper than the average competitor
Market Share impact with price options
*Passing the excise tax decreases market share by .4%
$4000
1.4% Market share
$5000
1.2% Market Share
$4500 No change in Market share
Net Sales with Price Options
2016 2018 2020 2022 20230
500
1000
1500
2000
2500
$4,000 $4,500 $5,000
Years
Net Sales
Business RecommendationsMarketing Strategy Premium strategy
Target surgeons, hospitals, health care professionals, and non-clinical stakeholders
Health Care Reform and Affordable Care Act
Increase of market share of .75%
Business RecommendationsSales Force Strategy
Direct RepresentativesExclusivity- Better then CompetitorsBeneficial to Doctors and Hospitals Better earnings and sales
Units sold: Direct vs. distributor
2016 2017 2018 2019 2020 2021 2022 20230
50
100
150
200
250
300
350
400
Direct Rep.Distributor
Supply Chain Strategy In House
Better for Public RelationsAdding new jobs improving economy Advancement of EmployeesSustain total control of manufacturing
processProduct Development in-houseQuicker turnaround time
Business Recommendations
Subsequent Decision Points In 2018 new competitor enters market
Impact on market share
Change the pricing strategy?
Change the marketing strategy?
Subsequent Decision Points Keep Marketing Strategy flat at premium Keep pricing at $4500
Products already proven with high value Medical market continues to grow Shows confidence in our product
SWOT ANALYSIS
Internal
Strengths-Developing internally-Ability to design product with specifications,
functionality, material choices, etc..-Use of consultants gives insight to target specific issues for patients
needing product.
Weakness- Low initial market share.
- High upfront costs.
Top 3 Risks
Removing resources from the development of
other products.
Keeping the pricing and marketing strategy the
same when a new competitor enters the
market.
Losing a year of revenue due to the longer R&D time.
Competitive Landscape
Simmer – Leader in musculoskeletal health care30% of market shareCurrent Lawsuits
Inflictus – Focuses on revision and partial knee 20% of market share
Market Outlook: Positive World demographics are shifting
towards older populationsBetween 2000-2050
Life expectancy in developing regionsGrows from less than 20% to 34%
An increase in the life expectancy combined with lifestyle related disease, increases demand for medical devices
Sensitivity Analysis
Make Vs Buy (Net Income @ $4500)
Cumulative Net Income with Changes to Development
In H
ouse
no
cons
ultan
ts
In H
ouse
Con
sulta
nts
Licen
se (b
uyou
t in
2018
)
Licen
se1650170017501800185019001950 1921 1898
1741
1823
Different Development Options
Net Income(in MM)
Cumulative net income with changes to price and Marketing
4000/Basic
4000/Prem
4000/Prem Plus
4500/Basic
4500/Premium
4500/Prem Plus
5000/Basic
5000/Premium
5000/Prem Plus
1650 1700 1750 1800 1850 1900 1950 2000
Net Income in $MM
(In Dollars)
Market Share
NPV Changes with Different Options
$4000/Basic
$4000/Prem
$4000/Prem Plus
$4500/Basic
$4500/Prem
$4500/Prem Plus
$5000/Basic
$5000/Prem
$5000/Prem Plus
620 640 660 680 700 720 740 760 780 800 820
NPV
IRR changes with Different Price and Marketing options
$400
0/Bas
ic
$400
0/Pre
m
$400
0/Pre
m P
lus
$450
0/Bas
ic
$450
0/Pre
m
$450
0/Pre
m P
lus
$500
0/Bas
ic
$500
0/Pre
m
$500
0/Pre
m P
lus28
29
30
31
32
33
34
35
IRR in %
Differences in NPV and IRR between Direct and Distributor Strategies
Direct Distributor*745
750
755
760
765
770
775
NPV
Direct Distributor*32.4
32.6
32.8
33
33.2
33.4
33.6
33.8
34
34.2
IRR IN
%
*With the Distributor Strategy we lose 1% market share and less sales than direct.
In House US 3rd Party US 3rd Party outside US748
749
750
751
752
753
754
755
756
757
758
Net Present Value
Changes in NPV and IRR with Supply Chain Strategies
Conclusion
In house development with orthopedic consultants
$4500 price option with bearing the excise tax
Premium Marketing Strategy Direct Representatives In House supply chain strategy Keep price and marketing strategy flat in
2018 Increase market share from 19% to 21.4%
Thank You Any Questions?