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Putnam Case Interview

Terms in this set (27)

Market Entry Framework
- List 5 Factor to Consider and Describe Each
Market attractiveness
o Market size, market growth rate
o Indication specific factors (prevalence, incidence, demographics)

Competitive landscape
o How many competitors are there, market share, competitive advantages

Company capabilities
o Expertise, distribution channels, capital requirements, internal vs. external

Profitability
o Expected costs, revenue, breakeven

Strategic options
o Internal creation, partnership or acquisition
Merger and Acquisition Strategies
- List 5 Factors to Consider and Describe Each
Market attractiveness
o Market size, market growth rate

Competitive landscape
o How many competitors, market share, competitive advantages

Acquisition attractiveness
o Profitability, market share, synergies, differentiation

Profitability
o Breakeven, sufficient funds for acquisition, future revenues and costs

Strategic options
o Consider creating organically, licensing, etc
New Threat Framework
- List 4 Factors
- Size of threat

- Customer response

- Competitor response/market

- Strategic options
Decline in Profits Framework
- List and Describe 4 Factors
Drivers of profit
o Revenue (sales, price), costs (variable, fixed)

Customer needs and preferences
o Purchasing habits, brand perception

Competitors
o New competitors, existing competitors make changes

Market
o New technologies, new regulations
Pricing Framework
- List and Describe 3 Methods
Competitive Pricing
o How is our competitor priced? How does our performance compare?

Value-Based
o Economic value, clinical value (efficacy and QOL), and value over the cost of alternatives (procedures, hospitalizations, competing treatments)

One method: Estimate the patient population and find which percent of the population would be willing to pay for drug at different price points

Cost-Based
o R&D costs, Cost to produce, ideal profit margin, breakeven cost strategy
How does drug pricing vary by type of company?
- Big Pharma: Focused on "value", may price higher
- Traditional Generic: Sold at generic prices
- Disrupter Biotechs: Gain market share with price reduction
3 Key Questions for Pricing Cases
1. What's the objective of our pricing strategy? Win market share? High profitability? Etc.

2. Payers perspective (value partner)
- Assess value, comparative effectiveness, and health economics and outcomes

3. Physician and patient perspective
Market Sizing for Consumer Product (TVs, Drills, T Shirts)
- If it's a consumer product think light, medium and heavy user
o How many per consumer
- Think preference share among demographics
- If product lifespan is X years then multiply final number by 1/X to find yearly market
What are some key factors to consider with regards to the market sizing a disease indication?
Prevalence of Disease (number of cases alive)

Incidence of Disease (frequency of disease in a time period)
o Most important when disease rate likely to increase or decrease
Disease Segmentation

Diagnosis Rate

Treatment Rate
o What obstacles might affect this? Healthcare access? Hospital access? Symptoms that aren't apparent?

Pricing

Prescription vs. OTC

Competitor's Patent

Current Treatment Performance
o Efficacy, ease of use, reimbursement, tolerability
Commercialization Options (4)
- in house
- partnership
- licensing to produce
- selling IP/company
First Three Questions after Given Case
1. More info on Client Capabilities and their Goals
2. More info on Disease
3. More info on Market
How to market size the consumption of a product from a store?
1. Assumptions for:
- #Employees
- Hours open (& low, med high breakdown)
- # Products consumed per customer (&low, med, high breakdown)
- Time to produce product

1. Determine Efficiency = #Products/hr

2. Determine number low, med, high hours and multiply by (#Products/hr)

3. (Total purchasing hours) × (Nx) × (Efficiency)
How to Market Size a Disease Segment
1. Prevalence (TAM)

- Which populations (gender, age) will get this disease
- Prevalence of disease types/severity (Stage 1-4, Type 1 or 2 etc)

2. Diagnosis Rate (rare vs. common, symptomatic vs. asymptomatic) - SAM

3. Treatment Rates - SOM

4. Multiply by P (Price/Dose) and Q (Dose/Year)

Overall Structure: Prevalence x Diagnosis Rate x Treatment Rate
Estimate Number of Hospitals
# Hospitals = (US Population x % who get sick once per year × % who visit hospital) / (average hospital capacity per year x average hospital utilization rate %)


(300M × 20% get sick × 30% go to hospital) / (150 beds × 25 weeks × 80%) = 6000
Population of US:

Life Expectancy:

Num US Households:
320 million

80 years old

100 million
Households by Income
30% high income
50% middle income
20% low income
How many people per generation?

How many people per age group?
80 million

4 million
Market Potential For Two Regulatory Scenarios
Market Potential (MP) = Total Potential Customers (N) × Percent of Customers Buying Your Product (MS) × Average Selling Price (P) × Annual Consumption (Q)

MP = N × MS × P × Q

Probability of FDA approval = P(Phase 1) × P(Phase 2) × P(Phase 3)

Risk-adjusted Market Opportunity: Total Market Opportunity × P (Approval)
Profit Equation (and terms)
profit = total revenue - total cost = (unit price x quantity sold) - (fixed cost + variable cost)

Total Variable Costs = Quantity × Variable Cost

Fixed Cost doesn't rely on quantity
Break Even Formula
BEP=Fixed Cost /(Price - Variable Cost)

You can decrease BEP by decreasing FC (capital reqs, marketing, utilities, salaries), decreasing VC (cheaper labor or materials) or increase price.
What factors do you need to know in order to estimate monthly cost to treat disease X with therapy Y?
- Price per dose
- Monthly doses needs
- Hospital visits vs self-administered
- Reimbursement and coverage
- Generic options
- Prescription vs OTC
Market sizing for oral contraceptives in the US
How many women use BC?
Women ages 16-46 = 60M

What classes use oral BC?
Class Breakdown: 30%, 50%, 20% (focus on middle and upper)

How many use oral vs others?
Oral: 15%
Sterilization: 15%
Condoms: 10%
IUD: 5%
The Five Phases of Bringing a Drug to Market
Phase 1: Discovery and Development
Research for a new drug begins in the laboratory.

Phase 2: Preclinical Research
Drugs undergo laboratory and animal testing to answer basic questions about safety.

Phase 3: Clinical Research
Drugs are tested on people to make sure they are safe and effective.

Phase 4: FDA Review
FDA review teams thoroughly examine all of the submitted data related to the drug or device and make a decision to approve or not to approve it.

Phase 5: FDA Post-Market Safety Monitoring
FDA monitors all drug and device safety once products are available for use by the public.
Market Sizing for Vaccine
1. Ask for demographics (age, gender) for who would receive vaccine

2. Assume a certain percentage will have access to the vaccine (healthcare, medium or upper class) Multiply.

3. Assume a certain percentage will choose not to get the vaccine. Multiply.

4. Think of how many doses of vaccine. If it lasts 6 months multiply market size by 2. If it lasts 5 years multiply market size by 1/5.
If the case involves the launch of a product, what are the 3 other factors need to be considered?
Regulatory Approval

Clinical Trial Success

Patents Expiration
Four different kinds of regulatory status
Fast track
Breakthrough therapy
Accelerated approval
Priority
What are the advantages and disadvantages of working in a team?
Advantages:
Brainstorming/creativity
Improves communication skills
Pooling of resources and ideas
Avoids major errors
Sharing workload eases burnout
Diverse perspectives create innovation

Disadvantages:
Conflicts can occur
Requires scheduling of meetings
Decision-making process takes longer
Ineffective communication
Unequal contribution
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