Yale (Life Sciences) 2014

YGCC Life Sciences Case Book
2014
© Yale Graduate Student Consulting Club
Full Version 1
Introduction
Welcome to the 2014 Yale Graduate Consulting Club (YGCC) Life Sciences Casebook!
This casebook was created with the intention of providing new practice cases based on the interview experiences
of recent YGCC members, and providing a look at real-world problems that healthcare and life sciences
consulting firms are currently helping to solve. There is also a selection of cases from other casebooks that can
be explored to delve deeper into the healthcare and life sciences industries. My hope is that readers unfamiliar
with this area can better navigate their understanding of this important business sector and can better orient
themselves in their exploration of relevant business problems.
Follow these general steps when practicing a case:
1.  Pair up with a partner. Assign one person as the interviewer and the other as the candidate
2.  Interviewer – take about 5 minutes to read through the case in your head. Then read the prompt to the
candidate
3.  Candidate – Note on paper important details from the prompt. Ask clarifying questions, then ask the
interviewer if you can take about 1 minute to draw up a structured problem-solving approach. Then talk
through your structure with the interviewer and ask for any additional information you think might be helpful
4.  Interviewer – Listen carefully to candidate’s structure and logic. Are there any crucial pieces he/she is
missing? Is he/she going down the right track? If not, try to lead the candidate in the right direction. Provide
additional information only when the candidate asks for them. Then go through the questions one by one,
providing the exhibits as appropriate
5.  Candidate – Take as much initiative as you can in answering the questions. Calculate whatever you think is
relevant
6.  At the end of the case, the interviewer should ask the candidate to summarize (“synthesize”) the case. The
candidate should give a very brief ~1 minute summary of his/her recommendations
For the interviewer, we have included a glossary of healthcare and life science-specific terms in the appendix.
Yale Graduate Student Consulting Club© ! 2

Acknowledgements
I would like to wholeheartedly thank past and present members of YGCC for their contributions, which have
been critical to the process of putting together this casebook:
v  Devin Noblin, Joydeep Banerjee, Garrett Cobb, Jonathan Graeupner, Nancy Tao, Jie Yang, Sarah
Bertino, Ellie Schmelzer, Raja Banerjee, and Pam Wang for advice and support in the development of
the cases and supplementary information
v  Yi Shao, Diana Hu, Andy Chen, Ramiro Nandez, and Zhiyuan Zhou for testing the cases and providing
invaluable feedback
All questions and comments are welcome by email at yale.grad.consulting@gmail.com.
I hope you find this casebook to be useful towards your consulting preparation, and best of luck in the
interview process!
Jonathan Chee
Managing Director of Content
Yale Graduate Student Consulting Club

Disclaimer
As the YGCC have limited experience and knowledge in the life sciences / healthcare fields, the definitions in the
glossary and in the cases should not be taken as fact. This represents a stepping stone towards expanding your
knowledge about this field should you wish to learn more.
The science, treatments, and drugs portrayed in this casebook also should not be taken as accurate medical
advice.
While these cases are based on recent cases that candidates received during interviews, they have been
modified and expanded from their original versions.

Introduction
Type of Case Firm

Type Name
Prompt
Interviewer should read this to the candidate
Additional Information (provided on request)

Information to be provided to the candidate. Usually contains information about client goals, client
business model, disease description, drug description, or patient descriptions.

Introduction
What factors should be considered?
Sample Issue Tree
An example of a structure that can be used to approach this case. There are many variations on
structures that could apply to a given case so do not be surprised if the candidate’s structure differ
from the example structure. A good structure should be MECE and logical. Also remember there are
always more than just one structure to solve the problem.
Profit
Revenue Costs
# of units Price / unit Fixed costs Variable costs
Cost/ unit # of units

Introduction
Section title
In italics will be example interviewer prompts. You can decide to change these prompts or
expand on them to alter the flow of the case.
Key takeaway points from a section will be underlined

Introduction
Summary / End of Case
Summation of the case
Recommendation / Rationale
Example recommendation. A good recommendation should pull from the course of the analysis.
Risks / Next Steps

There will always be risks involved and next steps to come with each approach. This is where the
candidate can demonstrate creativeness outside the scope of the original case.

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

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?

Case 1: CS Med (Medical Device)
Type of Case Firm
Commercialization Health Advances
Prompt
Our client is CS Med, a medical device start-up company. CS Med built a new biopsy needle
attachment, AccuBiop, which is integrated directly into needles. This device exploits differences within
breast cancer masses for greater accuracy to decrease the need for a second biospy. AccuBiop is
approaching FDA approval so the CEO has brought our firm on board to explore routes to
commercialization.
Client Goals
-  CEO wants to achieve $1M in profit as soon as possible to recoup R/D costs, but does not want to
sell the patent for AccuBiop or the company
CS Med’s Capabilities
-  CS Med mainly invested in R/D for the AccuBiops.
-  AccuBiop would be the first revenue stream for the company
-  The company does not yet have the manufacturing infrastructure make needles, or the experience
to sell/market/distribute a product
Biopsy Needles
-  Currently sold around $200 per needle and are disposed after one use
-  Estimated market size is 200k biopsies/year.
Sample Issue Tree
How to Commercialize
AccuBiop?
Market Potential Routes to

of AccuBiop Commercialization
Major Customer
In House Partnership
Size Players Preference
Speed Accuracy Price Profitability Feasibility Profitability Feasibility
Revenue Costs Time Experties Capital Revenue Costs
Sales / # of Per device

Manufacturing Distribution devices Upfront Operational
Marketing payments
Needle AccuBiop

Market Analysis
When asked about the market size, provide 200k biopsies/year.
If candidate request information about market trend and the potential market share for client
(related to current competition) Present Exhibit 1
What can be interpreted from this table?
Interpretations of Exhibit 1
1)  Total sales = market size (as given above). Market is saturated
2)  Costs are not particularly different between the companies on the market
3)  C1 and C2 are offering a lower price. Could have larger market share by competing on price
How could CS Med enter this saturated market?

Product differentiation
-Price
-Features
-Quality
A good candidate should recognize AccuBiop adds new features and would proactively ask if the
features fulfill unmet customer preferences
How would you analyze if the features AccuBiop adds are relevant?
-  Physician surveys for features
-  Interview experts in the field

Product Differentiation
Provide Exhibit 2
1)  Accuracy is the most important feature for the surveyed physicians so the AccuBiop adds
relevant value
2)  Physicians specifically value this at $100 extra per needle
Now that candidate realizes that AccuBiop can add relevant value, move to commercialization.
Commercialization
Candidate should have already thought of a few examples of commercialization styles, but if not
utilize this time to brainstorm potential ways to market.
-  In house à Produce AccuBiop + needles alone
-  Partnership à Work with another company to produce needles with AccuBiop
-  Licensing à A subtype of partnership where the intellectual property of making needles with
Accubiop are rented to another company to produce the needles with AccuBiop
-  Selling IP/Company (not an option from prompt)
Interviewer should ask the candidate to evaluate in house commercialization first

In House Assessment
To in house manufacture needles with AccuBiop, CS Med can make a maximum $10M
investment in manufacturing, storage/inventory, sales/marketing, and distribution. By year 2
this allows for the production and estimated sales of 10k needles with AccuBiops per year.
What other information is needed to calculate profitability for this approach?

Revenue Side
-Expected units sold – 10k needles
-Expected price - $300 per needle (max doctors will pay via Exhibit 2)
Cost Side
-Expected fixed cost - $10M investment
-Expected variable cost - $30 for needle and $20 for AccuBiop (candidate should ask for)
Profit
Revenue:
(10k needles) ($300/needle) = $3M per year
Cost:
Investment: $10M
Variable Cost: (10K needles) ($30/needle + $20/AccuBiop) = $500K per year
Year 1 Profit = ($10M), Accumulated Y2 Profit = ($7.5M)

Gain $2.5M/year. Will breakeven year 5 and reach the goal of $1M profit by year 6

Partnership Assessment
During this analysis, Company 3 has approached CS Med for a partnership. As the 3rd
largest player in the market, Company 3 is looking for ways to improve market share by
diversifying its product. For producing the needle with AccuBiop, CS Med would receive a
royalty per needle, but will have to pay for and manufacture each AccuBiop
How much can CS Med charge per AccuBiop to reach its $1M goal in profit in Year 1?
Assumptions: All other costs (represented by cost/needle in the in house approach) will be
covered by Company 3
Calculation
Example Company 3 Partnership - assume all needles are converted to needles with AccuBiop
(Goal) < (C3 partnership revenue for AccuBiop) – (C3 partnership costs)
(Goal) < (C3 needles sold) (price per AccuBiop) – (C3 needles sold) (cost per AccuBiop)
$1M < (40k needles) ($x per AccuBiop) – (40k needles) ($20 per AccuBiop)
$1M< 40k ($x-$20)
~$25/needle with AccuBiop < $x – $20
~$45/needle with AccuBiop = $x
In this case, $45 per AccuBiop will lead to the profit goal within one year. Given the survey from
Exhibit 2, physicians are willing to pay as much as $120 more for better quality, $45 should be
easily acceptable.
The CEO of CS Med would now like to hear a summation of your findings and a
recommendation of which way to commercialize the AccuBiop
CS Med should form a partnership with Company 3 to bring the AccuBiop to market. Within the first
year, CS Med can reach the $1M profit goal by working with the 3rd player in the market and
charging $45 per AccuBiop. In house manufacturing would be the slower approach, also requires a
substantial financial burden on the company ($10M) that a start-up like CS Med may not want to
incur.
Risks
Regulatory Approval AccuBiop still needs to complete regulatory assessment before
commercialization and should be aware of this risk
Competitive response of other players If the other companies could produce a similar needle
improvement, this would lower the value of our product and could hurt the market share of our
partner.
Adoption Rate If AccuBiop needles are not adopted quickly enough, competitors would have more
time to develop a similar product and to enter the market.

Next Steps
Negotiate Deal Terms A good candidate would note that the terms of the partnership were dictated
by Company 3. The high value of the device to physicians should allow CS Med the leverage to
negotiate better terms or partner with other companies. Terms could include a higher price per
AccuBiop or an upfront payment.
Increase manufacturing of AccuBiop needles By fulfilling the physicians’ need for accuracy, CS
Med’s partner has the potential to increase market share. CS Med should prepare to increase
production of AccuBiops to meet the demand beyond a given partner’s market share.
Evaluate Other Partnerships An insightful candidate might suggest partnering with two or all three
companies because this would maximize the “#needles sold by partner”. However, the firm would
have to perform an analysis to see if working with multiple partners would be more profitable than
an exclusive partnership.

Exhibit 1: Biopsy Needle Market Exhibit 2: Physician Survey
Market 1 to 3 ranking
Price / Cost / Units Rank the following features:
Company Share (by (1 highest)
needle needle Sold
units) Higher Accuracy? 1
Company 1 $180 $30 35% 70k Faster Speed? 3
Company 2 $180 $30 35% 70k Price? 2
Company 3 $200 $35 20% 40k How much are you willing to pay more for Extra $ / needle
Higher Accuracy? $100

Others $190 $30 10% 20k
Faster Speed $20
Willing to switch over to a new needle with % yes response
Higher Accuracy? 80%
Faster Speed? 10%
Lower Price? 30%

Case 2: EarX (Ear Infection Vaccine)
Type of Case Firm
Commercialization Health Advances
Prompt
Global Pharmaceutical (GP) researches, manufactures, and sells medical products throughout the
world. GP is seeking new products to compliment its existing vaccine division. GP approached the
small biotech, Ear-X, to license its ear infection vaccine (EX1), which is currently at the end of clinical
trials. Ear-X is mainly a R/D company and thus has no manufacturing or distribution capabilities. The
current negotiated deal structure is $200M upfront and $15 per vaccine in royalties to Ear-X. GP has
hired our firm to analyze if this deal is acceptable.
Client Goals
-  GP wants to breakeven on the $200M payment within a year after launching in the US market
Ear Infections (make sure the candidate understands this portion)
-  Common in children 4 years old and younger
-  Poor hygiene and high child-to-child contact are the main risk factors for spreading the infection
-  Normally a self-resolving (goes away without treatment) condition but the infection is painful to the
child
EX1
-  EX1 will be an elective (non-mandatory) vaccine. Parents must ask for the vaccine or physicians
suggest vaccination. Must be administered by a medical professional

Sample Issue Tree
Licensing EX1
External: Market for Internal:

EX1 Profitability
Size Competition Trend Revenue Costs
# Children have Disease Customer Fixed

ear infection Preferences Regulation Units Sold $ per Vaccine Variable Costs
Prevalence Costs
Child to child price Level of pain

Hygiene contact Upfront Royalties EX1

Market Analysis
Since EX1 would be the first type of treatment for ear infections, there are no competitors or
detailed customer information. How would you begin to determine if there is a market for
this vaccine?
-  Survey of pediatricians or experts in the field

-  Survey of parent satisfaction with current care
Surveys
Four surveys of pediatricians have already been performed by our client (Exhibit 1).
•  The four surveys do not come to a consensus on value of the vaccine
•  There are positive correlations with a higher pediatrician willingness to prescribe the vaccine,
acceptable price for the vaccine, and prevalence of infection
•  A polarization of the customer base may exist where a certain segment experiences a higher
prevalence of infection
•  Division of city or suburban neighborhood does not seem to be relevant

Brainstorming
How could you segment the population to identify a patient group that is more affected by
ear infections?
Remind if needed major risk factors described in the prompt are hygiene and child-to-child contact
Risk Factors
- Hygiene
- Awareness
- Family income and habits
- Child-to-child contact frequency
- Difference in childcare options (daycare/school/homecare)
- Frequency for common activities (swimming/other classes)
- Family size
Market Composition
If childcare is not brought up, interviewer should prompt: What are different forms of childcare
and how could they affect the prevalence of ear infections? (Brainstorm)
-  Parents, Relatives, Other full-time caregiver
-  Daycare, School
In the first 3, the child would have less contact with other children, whereas the child would have
more contact with other children in daycare or school. Show Exibit 2 to confirm the effect on
infection rates.
Deeper analysis of the original surveys reveals that the patients in the 3rd and 4th survey all
went to daycare or school and ¾ of these parents would vaccinate
Market Size
Estimate the number of children in daycare or school that would be vaccinated
Candidate would need to come up with a reasonable % of children that go to daycare or school
Example structure
(US pop.) (life expectancy ~80 years) (ear infection ages) (% daycare or school)
(% would vaccinate)
(320M people) (1/80 years) (first 5 years) (1/2) (3/4) = 7.5M children vaccinated
Candidate now has enough information for a profitability evaluation
Profitability Calculation
Candidate can use price set in survey of $50 and should ask for the cost of vaccine production ($15
per vaccine)
Revenue
(# children vaccinated) (vaccine price per child)
(7.5M children) ($50 per child) = 375M
Cost
(Upfront) + (# children vaccinated) (EX1 cost + Royalty cost)
(100M) + (7.5M)($30) = $325M
Profit
Year 1 = $50M, $150M per year afterwards

Our client wants to know if they should accept to the terms of the currently negotiated deal.
Recommendation
Yes, licensing EX1 would allow for a profit of $50M within the first year (more than the goal of
breaking even within the first year) and then $150M per year afterwards. By analyzing physician
surveys, we were able to identify a segment of the population with high infection rates and a higher
need for EX1.
Risks
Physician opinions While some physicians see the value of our vaccine (surveys 3 and 4), other
physicians clearly do not (survey 1 and 2). Physicians who would not prescribe our vaccine would
affect our sales. Our estimation for the market penetration in school/daycare could be affected.
Competitive response Since this is a large potential market, competing vaccines should be
expected to enter the market when our patent expires.

Next Steps
Marketing:
Increase marketing and education of physicians about the vaccine The major driver for the sales
will be physician prescriptions. Informative material about the benefit of our product in school/
daycare situations as part of marketing will be necessary.
Direct to consumer marketing Parents who have children with high ear infection rates would value
this vaccine and this could help if their physicians do not want to prescribe the vaccine.
Explore other global markets Ear infections should be common outside of the US as well and
should prove to expand the market size by several magnitudes.
Examine other opportunities:

Consider acquiring Ear-X While licensing is the major option analyzed here, a similar analysis could
be performed on the value of acquiring Ear-X. Benefits include a lower payment in the long run and
consolidation of the R/D team into our client’s R/D department to better prepare for competitor
vaccine entry.

Exhibit 1: Pediatrician Survey
Survey 1 Survey 2 Survey 3 Survey 4

Would you prescribe EX1 to No (90%) No (85%) No (5%) No (10%)
your patients? Yes (10%) Yes (15%) Yes (95%) Yes (90%)
What is an acceptable price for $25 (90%) $25 (85%) $25 (5%) $25 (5%)
this vaccine? (from Yes group in $50 (10%) $50 (15%) $50 (95%) $50 (95%)
previous question)
Prevalence of ear infections 10% 10% 80% 80%
Patient Neighborhoods Suburb City City Suburb
Exhibit 2: Childcare Type and Ear Infection Prevalence
School
Daycare % of children with

Parent at least one ear
Relative infection
Other
0 20 40 60 80 100
Case 3: NeoFactor (Growth Factor)
Type of Case Firm
Market Entry Trinity Partners
Prompt
Our client, NeoFactor, has produced a drug (NFD), which could be used as a preventative treatment for
two neonatal congenital diseases. In early studies, let’s assume this drug has the same efficacy and
potential in both diseases. However, NeoFactor only has enough capital and expertise to initiate a
clinical trial for one disease. Which disease should NeoFactor prioritize?
Disease 1 (D1)
-  Improper development causes errors in vision
-  Standard of care (most common current treatment, can be thought of as a “competitor”) is surgery to
repair developmental damage within 72 hours of birth and follow up appointments
Disease 2 (D2)
-  Slow development leads to weakness in lungs for the first year
-  Standard of care requires 1 year of hospitalization
NeoFactor drug (NFD)
-  Early detection of D1 and D2 already occurs for all premature births (earlier than 39 weeks)
-  NFD would be given in response to early detection of symptoms to prevent disease progression
Physician and Patient Opinions
-  Physicians would prescribe if the cost of NFD would provide a cost savings
Sample Issue Tree
Compare D1 and D2
External Internal
Company’s
Market Regulation Clinical trial approval Profitability Capability
Size Penetration Competitors (Standard of Care) Revenue Costs
Cost for Price Volume

Effectiveness treatment Convenience

Market Comparison
Candidate should want to analyze market size differences or identify patient populations
Provide exhibit 1 and prompt: What can be interpreted from this table?
Interpretation of Exhibit 1
1)  D1 and D2 occur at different prevalence depending on the time of birth
2)  Actual patient populations can be estimated using this table
Patients with D1: 10k+10k+16k = 36k
Patients with D2: 15k+5k+4k = 24k
D1 has a larger population by 12k
Market Penetration
What could potentially make a patient switch from the current standard of care / competitor?
(Brainstorm)
Patient Preferences
-Effectiveness:
-Efficacy of treatment
-Physician advice (expert advice)
-Attractiveness to use:
-Costs
-Convenience (treatment method, hospitalization vs. appointments; time for the treatments, and
so on)
Interviewer can provide the standard care information as long as the candidate want to
compare it with NFD in factors covered above.
Market Comparison
Effectiveness:
Assume the standard of care and the drug treatments are equally effective.
Physician’s advice is neutral at this moment.
Cost:
The standard of care for:
D1 – surgery and 2 yearly follow up appointments
D2 – hospitalization for 6 months
Interviewee should ask to clarify costs. Cannot give our expected price yet, but:
D1 - Surgery costs $1900 and follow up appointments are about $500
D2 - Hospitalization is $1500 per day
Calculate the cost to the patient for the current standard of care
D1 = $1.9k + $.5k + $.5k = $2.9k
D2 ~ $1.5k/day * 360 days/2 = $270K
D2 has a much more expensive “competitor”.
Convenience:
Candidate should identify D2 requires serious hospitalization while D1 only requires appointments.
A good candidate will conclude NFD would be more popular for D2 treatment given the
standard of care for D2 is more expensive, and time consuming.

Market Comparison
Based on the standard of care analysis, our team has predicted that 90% of D2 patients
would use NF1, whereas 50% of D1 patients would use NFD over the standard of care. What
is the potential profitability of each drug?
A good candidate should proactively ask the dose and price information to get revenue and cost.
Provide Exhibit 2
Same cost of production, longer dosage for D2
Profit per patient

[(price/week – cost/week)] (duration of treatment/week)
D1: [(2200-200)] (1) = $2k per patient
D2: [2200-200] (2) =$4k per patient
Profit
[(patient #)(% switching)] (profit per patient)
D1: [(36k)(50%)] (2k) = (18k) (2k) = $36M
D1: [(24k)(90%)] (4k) = (21.6k) (4k) = $86.4M
D2 is more profitable by ~50.4M

The engagement is over and our client wants an answer. Which disease should be
prioritized?
NeoFactor should invest in the clinical trial for D2. Although D1 has 12k more patients, the potential
costs savings to patients is predicted to cause a 90% adoption of NFD for D2 compared to 50% for
D1. Final calculations for profits predicts $2k more in profit per patient, which adds up to a
difference in $50.4M more in total profit per year.
Risks
Clinical Trial / FDA approval The results for NFD are still preclinical and as with the development of
most drugs, there is a high potential risk of failure. Client should gather more information regarding
the successful rate for D1 and D2.
Standard of Care Changes In the years needed for clinical trial approval to occur, the comparison to
existing treatments may be less favorable. This would especially be the case if a competitor enters
the market.
Physician / Patient Adoption The low prevalence of these two diseases necessitates informing
physicians about the potential of a new treatment. Otherwise, patient adoption will be low.

Next Steps
Commercialization Thus far the focus of NeoFactor has been on the clinical trial process. Given the
current limited finances, the client should consider different options to bring NFD to market (e.g.
licensing the drug to a larger company with manufacturing, sales/marketing, and distribution.
Marketing / Information Informing physicians of this option would be the most effective way to
increase adoption of this drug over the current standard of care.

Exhibit 1: Annual Prevalence of Diseases in Premature Births
Category <28 Wks 28-30 Wks 30-32 Wks 32-37 Wks

Population 30,000 50,000 80,000 240,000
D1 Prevalence 33% 20% 20% Rare <1%
D2 Prevalence 50% 10% 5% Rare <1%
Exhibit 2: Doses of NFD Per Treatment Group (Based on Pre-Clinical Data)
Disease Instruction Duration Price / Week Cost / Week

D1 Continuous Intravenous 1 week $2200 $200
Infusion
D2 Continuous Intravenous 2 weeks $2200 $200

Infusion

Case 4: LT Neuro (Multiple Sclerosis)
Type of Case Firm
Prompt
Our client, LT Neuro, developed a new oral treatment for Multiple Sclerosis (MS), which has passed
phase 2 of clinical trials. Before completing the rest of the clinical trial process, our client wants a
revenue projection for the drug in 2019, when the drug would hit peak sales. Specifically, the CEO
would like to see how soon they could breakeven on phase 3 trial costs.

Multiple Sclerosis
-  An estimated 400k Americans have this disease, causing the brain and spinal cord slowly
damaged
-  Symptoms include difficulty of movement, speaking, and senses.
-  Diagnosis rate is at 80% of the estimated MS population. 90% of diagnosed receive treatment.
MS Treatment Market
-  No full cure, but medication allows for management of symptoms
-  Medication injections are the most common treatment. One oral treatment was introduced 4
years ago and gained popularity for convenience. Two oral drugs have just entered the market.
Client Information / Goals
-  Our client has experience with launching drugs, but is concerned about the appearance of two
competitors and how this will impact sales
-  Our client wants to break even on trial costs (in further detail later)
Yale Graduate Student Consulting Club© ! 36! 35
Sample Issue Tree
Launch oral drug for treating MS?
Market Profitability Implementation Risk
Size Trends Share Revenue Costs Capital Operational
Variable
Competition Volume Price Fixed Costs Costs
Treatment Clinical # treatment

Frequency Trials Costs / unit sold

Market Analysis
What is the potential treated patient population? (Target Market Calculation)
Provide number of people with MS, 400K in 2014.
Example structure –
(Patient population) (% diagnosed) (% receive treatment) = 400K x 0.8 x 0.9 =288K
If asked, the candidate can assume the patient population will track with population growth, but
should still remain around 300k by 2019.
A intuitive candidate should recall that client’s product is an oral drug and for share of the market for
oral vs injectable. Otherwise, as long as the candidate asks for the revenue information on the
overall market, provide Exhibit 1.
Interpretations
-  Oral drugs are gaining market share, but there is no information for 2019 (client goal year)
How many patients will be using oral medication in 2019?

One example to do the estimation is to assume the trend is expected to continue at a rate of
15k patients per year. (2014 oral treatment patients) + (rate)(5 years) = 75k + 75k = 150k
Candidate should recall total target market is about 300k and realize that oral treatments will make
up 50% of the market in 2019.

Market Analysis (continued)
A good candidate would not expect 100% market share capture and would ask what market share
we expect to capture given the other 3 existing competitors in the oral market.
What are factors that could affect our client’s market share?
-Product Comparison
-Efficacy
-Price
-Marketing
-Patient preference
-Doctor preference
Our client’s drug has been demonstrated to be significantly more efficacious than the older
competitor “Drug 1”, and is similar to Drug 2 and 3 in phase 2 comparisons. This
information was used to project customer adoption of our drug (Show Exhibit 2)
Candidate should be able to calculate projected market share
[(Drug 1) (Share taken) + (Drug 2) (Share taken) + (Drug 3) (Share Taken)] (2019 oral pop.)
[(40%) (50%) + (30%) (10%) + (30%) (10%)] (150k)
[20% + 3% + 3%] (150k)
39k patients are projected to use our drug

Profitability
With the expected patient population using our drug, how do you calculate profitability?
Revenue: Typical pricing for MS drugs are $4k/year/patient

(Price) (Volume) = ($4k) (39k) = 156M
Costs: What are the potential costs involved proceeding?

Fixed costs
-Phase 3 costs (mentioned in prompt)
-Drug launch costs
-Investments in expanding company capacity
Variable costs
-Manufacturing
-Sales/Distribution
After brainstorming, provide the following:
Phase 3 clinical trials and production changes will cost $80M, 30M, 20M, and 20M for
2014-2018. Drug launch preparation will cost 50M in 2019. Production/sales/distribution will
cost 60M/year.
Total fixed costs= $80M+$30M+$20M+$20M+$50M=$200M.

From 2019, the annual profit would be 156M-60M=$96M/year.
Year 1 = (104M) , Year 2 = (8M)
Candidate should note that breakeven on development costs would occur in roughly over two years
Should our client proceed with phase 3 clinical trials?
The client should proceed with phase 3. Launch of LT Neuro’s drug would coincide with an increase
of oral treatment usage to 50% of the MS treatment population. Additionally, market share analysis
has estimated that LT Neuro’s drug could capture 26% of the oral treatment market. The revenue
generated from this market share is $156M/year. Further projection of this revenue shows that the
drug would breakeven with clinical trial costs slightly over 2 years after launch and bring in 96M in
profits every year afterwards.
Risks
Clinical Trial Failure Phase 3 failure would undermine the current calculations
Competitive Response Existing injection treatment companies are experiencing a decline in market
share. They should be expected to also switch to oral treatments, potentially diluting our client’s
share.
Newly Emerging Drugs Similar to our client’s projected capture of market share, similarly effective
or greater efficacy drugs could sway customer preference away from our client’s drug.

Next Steps
Maintain Market Awareness: The potential profits from this product are based on capturing
significant market share, 26% of the oral market or 13% of the total market in 2019. Any changes
based on pricing adjustments by competitors or the potential entry of new competitors should be
paid attention to.
Expand Adoption of LT drug: Since the efficacy of LT1 is greater than the older oral drug (Oral Drug
1), the client should utilize effective marketing to draw even more market share from this competitor.

Exhibit 1: MS Patients by Treatment Exhibit 2: LT Neuro Adoption Projection
300 273 Percentage of

261 Patients Projected LT
249 237 oral treatment
250 225 treated by: Adoption
population
200 Injectable Oral Drug 1 40% 50%
Oral
150 Oral Drug 2 30% 10%
100 75
60 Oral Drug 3 30% 10%
45
50 30
15
0
2010 2011 2012 2013 2014

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.
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.

Sample Issue Tree
Interviewer should direct the interviewee towards synergy analysis first.
Acquire O’ Care?
Current Acquisition
Value of OC Considerations Risk
Market Competitive Culture

for Drug Profitability Synergies Intangible Response Regulation
Difference
Cost Revenue Brand Expertise

Competition Customers Revenue Costs Reduction Increase Name Patents
Production Distribution

Profit Analysis for OC
Candidate can start with by comparing the financial structure for OC and our client.
Provide Exhibit 1: Cost structures once candidate asks about cost/revenue issue.
What can be interpreted from this?
The R&D costs are very comparable, but our client’s in house production is a large cost savings
over OC’s approach. Our client also seems to have lower costs for distribution even though they
operate through the same third party.
Synergies
What are potential synergies for this deal?
-  In house production by our client of OC1.
-  Marketing/distribution/sales via the same channel could be renegotiated to lower costs
-  Streamline administration in management.
How would you analyze each potential synergy?

-  Direct comparison of production/distribution/administrative costs

Synergies
After investigating further, your team estimates that distribution cost of OC1 could be cut by
50% and production costs could be reduced 80%. What will be the cost savings and
resulting net profit on OC1 in dollar amounts?
Candidate should ask for total sales to calculate dollar amounts. 10M revenue per year
Profitability Comparison
Old Profitability Updated cost after Synergy
15%=R/D = $1.5M
25%=Production = $2.5M (1/5) $2.5M= $0.5M cost, $2M to profit
30%=Distribution = $3M (1/2) 3M= $1.5M cost, $1.5M to profit
30%=Net Profit= $3M
New Profitability
R/D = $1.5M
Production = $0.5M
Distribution = $1.5M
Net Profit = $6.5M
Candidate should remember that the goal is breakeven on $60M in 5 years.
Over 5 years, this equals $32.5M. Below the $60M

Synergies
At this point, do you think we should go with the deal?
No. Even with cost reductions from synergy, the net profit over 5 years will add up to $32.5M,
$27.5M short of the goal set by the board.
The candidate may reject the deal at this moment, but explain that the CEO wants to brainstorm
ways that we can use to make the deal attractive.
A good suggestion would be to renegotiate the purchase price closer to the $32.5M, but a good
candidate should notice that the revenue side of the profitability equation has not yet been
explored.
If not asked, can prompt the following: You’ve explored the cost side of the profitability
question, how would you expand the revenue side?
Revenue
-Volume
-Market Size
-Share / Penetration
-Competition
-Price

Market Penetrations
The 2013 revenue for OC is $10M. How many patients are using OC’s treatment?
Example structure –candidate needs patients’ annual expense for OC1: $40K/patient
# Patients under OC’s drug= Sales/average price= 10M/40K=0.25K patients.
What percent of the market has OC1 captured thus far?

If candidate did not ask, can remind Disease X affects 1/20k in children under 10
(US population / Life Expectancy) (0 to 9 years) (Incidence of X)
(320M/80) (10) (1/20k) = 2k
A market penetration of 0.25/2=12.5% for OC.

Why is market penetration so low?
-  Marketing – the rarity of the disease could make physician and patient awareness low
-  Financial – difficult to pay $40k per patient
- Insurance coverage – low coverage would make the cost of the drug difficult to pay
- Price – even with coverage, the copay may be too high
-  Patient Preferences –
- Alternative treatments/management drugs
- Patients may not want treatment if the disease is not too severe
Team has performed a price sensitivity analysis Exhibit 2

Candidate should interpret the lowering of prices should allow for a larger capture of market share

Market Penetrations
Our client’s CEO want to increase penetration to 40%. The CEO mentions that a total $1M/
year additional investment in production and distribution would cover the additional 550
patients. R&D cost will stay the same.
Could this change meet the financial goal?
Post Synergy Profitability

R/D = 1.5M
Production = .5M
Distribution = 1.5M
Net Profit = 6.5M
Post Price Change Profitability

Revenue
(Price/Drug) (# of treated patients) = (800) (30k) = 24M/year
Cost
(R/D) + (Production) + (Distribution) + 1M = 1.5M + .5M + 1.5M + 1M = 4.5M/year
Net Annual Profit = 19.5M/year
After 5 years, this is ~97.5M, more than the 60M acquisition cost

Should our client purchase O Care?
Recommendation/Rationale
Yes. O Care can be greatly improved by 1) synergies with our client’s existing operations 2)
modifying the pricing for this drug to increase penetration. This would allow for annual net profits of
19.5M, much higher than needed for the board’s approval. This would additionally provide our client
with an expansion into the orphan drug market.
Risks
Acquisition logistics: The client needs to consider how to reorganize O Care to adopt this altered
operations pipeline from an implementation standpoint. Specific points of concern are corporate
culture fit, management adjustment, and financing the deal.
Competitive Response: Although OC1 is the only treatment currently approved, treatment of this
disease is lucrative so other companies may consider entering this market.
Regulatory: The length of the patent on OC1 should be considered because this drug has been on
the market. Expiration of the patent would allow new generic competitors to enter the market at a
much lower price point.

Next Steps
Examine Disease X Patient Population: With only 40% market penetration even after cutting the
price in half, there must be other factors that could be examined that would encourage usage of
OC1 and thus increase units sold.
Expansion to International Markets: The analysis for this case mainly focused on a US population,
but other countries may have similar or even higher prevalence rates. These represent entirely
unexplored opportunities.

Exhibit 1: Profitability Comparison Exhibit 2: Price Sensitivity

100%
45%
90%
30% 40%
80%
Market Penetration
Percent of Revenue
Net Profit 35%

70% 65% Distribution 30%
60% Production 25%
30%
50% R&D 20%
40% 15%
10%
30% 25% 15%
5%
20% 5% 0%
10% 15% 15% 25 30 35 40 45 50
0% Price/patient/year
OC Client (in 000 dollars)
Finance Finance
Structure Structure

Case 6: Ultimate Bandage
Type of Case Firm
Prompt
Our client is the biggest bandage maker in US and wants to introduce a new product. The product
is a large bandage, named Ultimate Bandage (UB) that can be absorbed into the skin. This
increases healing time, but reduces scars. The CEO wants to analyze the market to decide
whether or not they should introduce the product.
Client Goals / Information
-  Client invested in R/D to improve bandages and would like to assess the commercial value
-  Client is hoping to capture more market share and ultimately improve profitability.
-  Currently holds 60% of the large bandage market
Product Information
-  Although there are many sizes of bandages, large bandages are relatively the same
-  UB is the first bandage that can be absorbed into the skin
Current Market
-  The overall large bandage market currently has a size of ~$1B and is stable.
-  No other company has a similar product to UB
Regulations
-  Assume the material is regarded as safe and regulatory approval is very likely.

Sample Issue Tree
Market Entry – New Product
External Internal
Market Competitor Revenue Cost
Cannibalization
Market Product Additional Sale
Growth Size Penetration Share Comparison
# old bandage Price

reduction New product
# new bandage
price

Market Analysis
Since the client is asking for a market analysis, candidate should ask about customers.
(If asked competitors, growth, and size covered in clarifying info)
Who do you think is the target customer? (Who do you think would use UB?)
Potential retailers would be a good suggestion, but redirect to end users
Candidate should come up with customer categories that make sense and then present Exhibit 1.
Athletes = 300M bandages
Construction Workers = 600M bandages
A good candidate would note that these different customer segments may have different needs that
could be fulfilled with the new product.
What features do you think athletes and construction workers would value?
How would you analyze this?
-  Price, healing time, scaring, itchiness, etc.
-  Perform a customer survey (Exhibit 2)
What can be interpreted from this Exhibit?
-Athletes rank features offered by the new product (faster healing time, low scarring) as the top 2.
CW rank price as the number 1 factor and do not seem too interested in faster healing / low
scarring.

Market Analysis
Based on this survey, the team has estimated that 50% of athletes and 10% of CW will switch
to a new product priced at $1.20. How do you think the market would respond to this product
introduction?
Internal
-Customers will switch from our bandage to UB (cannibalization of client’s products)
External
-Customers will switch from competitor bandage to UB (market share gain)
There will be some cannibalization of our product, but also a gain of market share by taking part of
the competitor’s share.
If candidate does not come up with this, try reiterating the following information. A percentage of
customers will switch to this new product. Our client’s market share is currently 60% and
competitors hold the other 40%. Market share for both should be changed in some way.
An insightful candidate would realize that depending on which number is larger (market share gain
or cannibalization) the launch of the product could be more profitable overall or less profitable
If there are two factors that could change, how do we compare this?
-Compare profitability between the two scenarios
-Compare revenue first and then costs

Revenue Analysis
Based on this survey and a price of $1.20 per bandage, the team has estimated that 80% of
the total athletes and 10% of the total CW will switch to a new product. Originally, the large
bandage is priced at $1 per bandage. How much revenue is gained?
Old Revenue
(Total bandages) (Client Market Share) ($1 per bandage) = (1B) (60%) = $600M
New Revenue
UB sold = [(Athlete bandages)(% switching) + (CW bandages)(%switching)]
[(300)(80%) + (600)(10%)] = 240M + 60M = 300M
300M * $1.2 = $360M
Regular bandage = (Total bandages) – (Customers switching to UB)

1B - 300M = 700M
Client Share of regular bandages = 700M (60%) = 420M
420M * $1 = $420M
*We assume our client’s share 60% is homogenous in each segment of customer.
New Revenue = 360M + 420M = $780M
Client can gain $180M in revenue
After revenue analysis is complete, candidate should realize that although revenue has
increased, costs changes have not been factored in.
Cost Analysis
What do you think will change with cost if we introduce UB?
Example:
Variable Cost
- Material cost increase (new material)
- Production cost increase (may need new manufacturing adjustments)
- Labor cost increase (may require more labor to produce both types of bandages)
Fixed Cost
- Investment in material, production or labor changes
Variable costs for the regular bandage were $2 per box. Variable costs for UB will have to be
raised to $7 per box. Additionally an investment of $50M will have to be made to reorganize
the production facilities. No other fixed cost before or after introduction of UB. For each box,
there’re 10 bandages for both regular and UB.
Old Costs
600M *0.2 = 120M
New Costs
(UB cost) + (regular bandage cost) + (investment)
(UB sold)(cost per UB) = (300M)(.7) = $210M
(Client share of regular bandages)(cost per regular bandage) = (420M)(.2) = $84M
Investment = $50M
New Variable Costs = $294
New Total cost = $344

Profitability Comparison
Old Profits
$600M-$120M = 480M
New Profits
$780M-$344M = 486M
Factor in investment
First year profit = 486M- 50M= 436M
Minimal increase in profits per year (6M) and factoring in the investment makes this a net
loss in the first 8 years.
Break-even time:
Investment/additional profit= 50M/6M=8.33 years.

Our client wants to launch a new product, UB, to capture more revenue and ultimately
increase profits. Should our client launch the UB?
I would recommend our client not to launch the product. The product does clearly have the potential
to draw in a good portion of the total large bandage market (300M or 30%). However, the costs
associated with this move end up cannibalizing our original profits. In sum, this move results in a
marginal increase of profit (6M) which is before factoring in the investment of 50M
(Candidate could argue the other way and say the gains of 10% in revenue would be significant and
the investment could be eventually paid back, but should be able to rationalize thoroughly)
Risks
Opportunity Cost Client would be the first large bandage maker to differentiate the market.
Competitive Response Other competitors could realize the potential for a differentiated product and
introduce their own product to take aim at our client’s market share

Next Steps
Maintain Market Awareness If differentiation does occur in this market, the client should consider
introducing the UB as a way to counter a loss of market share.
Lower Costs of UB The new product is over 3 times more costly to make per bandage. Reducing
this cost would allow for a better profit margin and could make the launch of this product more
viable. Similar reduction in investment would also make this approach viable.
Perform Price Sensitivity Analysis For this case the price for UB was fixed at $1.2. If the price could
be increased enough and still capture enough market share, the profitability calculation of this new
product would change.
Explore the opportunity with other sizes Only one size of bandage was analyzed. Other sizes could
have different customer bases that are more receptive to a new product or have a higher profit
margin with less material needed.

Exhibit 1: Total Large Bandage Use by

Customer Type (2013)
Office Others, 3% Exhibit 2: Feature Preferences

Workers,
7%
Customer
Construction
Athletes
Workers
Categories
Low Price 1 5
Athletes,
Construction Fast Healing
30% 3 1
workers, Time
60% Less Scars 5 2
Low Post Care 4 4
Less Itching 2 3
Ranked from:
1 (most important) to
Total = 1B large bandages 5 (least important)

Case 7: C. Difficile Vaccine
Type of Case Firm
Pricing Clearview
Prompt
Our client, a large pharmaceutical company, has been selling products since the 1980s. They cover
every area of pharmaceuticals, but their specialty is vaccine development. They are currently
developing a vaccine for overgrowth of the bacteria C. difficile. A major side effect of infection is
CDAD or C. difficile associated diarrhea, leading to dehydration and hospitalization. Their vaccine
has a 75% efficacy rate in the prevention of C. difficile overgrowth. Our client is looking to define
their target market and come up with an appropriate pricing strategy for the vaccine.
Client Goal
-  The client is optimistic about this vaccine and wants it to be a blockbuster (brings in $1B in
revenue per year)
-  Our client is mainly concerned about the potential of this vaccine
C difficile Infections
-  Affects children ages 0 to 4, pregnant women, and elderly
-  Can spread more rapidly from person to person
-  Current standard of care (current treatment) occurs in a chain of events. 1) Overgrowth of C. Diff,
2) hospitalization for diagnosis, and 3) antibiotic prescription.

Sample Issue Tree
Pricing
External Internal
Competition Customers/physician
Benchmarks Regulations Costs Target
preference
Standard of Effectiveness of the Time for the # of

Care Alternatives treatment treatment Target Revenue
vaccine
Prevalence Population

Market Size
How do we define the target population?
Interviewee should consider the potential at risk populations: Children, pregnant women, elderly
and try to estimate which would be the largest.
Otherwise prompt Which is the largest?

Example calculation assuming equal distribution and stable population
Children 0 to 4 = (US pop) (Life Expectancy) (first 5 years) = (320M)(1/80)(5) = 20M
Pregnant Women = (US pop) (Births per year) = (320M)(1/80) = 4M
Elderly = (US pop)(Life Expectancy)(65 to 80) = (320M)(1/80)(15) = 60M
The elderly are the largest at risk group

Besides age another risk factor for getting CDAD is person-to-person contact. How would an
elderly person be in close contact with others that have C. diff infections? (Brainstorm)
The environments:
Large family vs small family
Living at home vs living in elderly care
Social community vs isolated community
Urban areas vs country areas
High hospitalization rate vs low hospitalization rate
A good candidate should come up with a few of the above

Market Size
Our team has identified that 10% of elderly live in long term care and are the most affected
segment. If we assume a peak penetration rate of 75%, how much in minimum should we
charge per vaccination?
6M elderly live in long term care.

(Elderly Pop)(Long term care)(Peak penetration) = (60M)(1/10)(3/4) = 4.5M
Client goal is a blockbuster drug or 1B in revenue.

1B / 4.5M = $222 per vaccine
How do we determine if this a reasonable price?

Payers
-  Insurance companies
-  Elderly (patients)
-  Caretakers of elderly
Experts
-  Physicians
-  Nurses
-  Industry experts

Pricing
Instead of asking the patients directly, let’s determine the cost to a patient per year if left
unvaccinated as a “break even point” for the patient. What is the total cost to patients in
long term care if not vaccinated?
Can remind the candidate that the chain of events for CDAD treatment is 1) overgrowth of C. Diff,
2) hospitalization for testing, and 3) antibiotic treatment. Candidate should ask for the chances of
each event : 50%, 50%, and 66%
6M elderly live in long term care.
Long term care elderly with C. Diff overgrowth = (6M) (50%) = 3M
Patients who need hospitalization = (3M) (50%) = 1.5M
Patients who need antibiotics = (1.2M) (66%) = 0.8M
Candidate should ask for cost of hospitalization and antibiotics to calculate the cost per
patient
Hospitalization = $2k / day, requires 5 days = $10k per treatment

Antibiotic Treatment = $2K per treatment
Hospitalization total cost = (1.5M)($10k) = $15B

Antibiotic total cost = (0.8M)($2k) = $1.6B
Total cost = $16.6B

Pricing
Calculate the cost of c. difficile treatment per long term care elderly patient
Total cost = $16.6B

6M elderly patients in long term care
$16.6B in total cost / 6M elderly patients = $2.77K or almost $3K per person in potential cost
Ask the candidate to sum up the case

Our client wants an appropriate pricing scheme for a C. difficile vaccine in development.
Candidate can decide either way if this pricing is reasonable as long as they can defend their
answer.
To reach the prompted goal of a blockbuster product, the client should price the vaccine at $222
given our estimation of an elderly market size of 6M individuals. The alternative costs of C. difficile
treatment are near $3000 per year, significantly more than the vaccine price. Thus, we expect that
our client would find vaccine sales to be positive if they were to target the elderly population.
Risks
Patient Finances A $222 vaccine may still be expensive for elderly patients who may not be able to
afford such a costly preventative measure and renewing vaccination rates were not considered.
Insurer Finances Medicare would likely cover the cost of C. difficile treatment because of the need
for hospitalization, but this may not extend to a preventative vaccine. Especially considering the
vaccine success is actually only 75%, this would mean that there would be additionally associated
costs to include on top of the basic vaccine price.
Regulatory As this product is still in development, the approval process of the drug should be
factored into the decision to continue with this drug.

Next Steps
Cost Analysis Although the revenue side of this examination looks favorable, none of the
production, sales/manufacturing, or distribution costs were not explored in this case. There may
also be additional development costs since the clinical trial stage was not discussed.
Incorporate other potential populations The focus of this case was on the long term elderly
population, but elderly in general and children are at risk for this disease. Investigating other
potential target segments within these two age groups could expand overall sales.

Case 8: IBD Products
Type of Case Firm
Market Size Estimation Clearview
Prompt
Your client is pharmaceutical company developing a product for mild to moderate (not severe)
inflammatory bowel disease (IBD). IBD is characterized by periods of bowel pain flare ups followed
by periods of normal bowel function. The two main products the client is considering is a drug and
an at home diagnostic test. The drug would help reduce symptoms of IBD and the home diagnostic
test would be used to help patients determine when to take drugs. The client wants your help to
estimate the size of both markets that they can capture.
Inflammatory Bowel Disease
-  Complex disease that has genetic and environmental risk factors.
Client Information
-  Client has full capabilities to manufacture, market, sell, and distribute both the drug and
diagnostic test
IBD Market
-  30 drugs are on the market or near approval
-  No at home diagnostics thus far

Sample Issue Tree
Drug vs Diagnostic Test
External Internal
Market Size Competition Revenue Cost

Regulatory
Approval
Population Prevalence Penetration

Market Size Breakdown
Candidate should start with understanding the patient pool
How would estimate the Market size for your client in term of IBD population?
-  Segment patients with IBD
- Severity (mentioned in the prompt)
- Different disease types (described as umbrella term in the prompt)
- Populations with higher prevalence
- Populations that seek treatment
The major forms of IBD are ulcerative colitis (UC) and Crohn’s disease (CD). UC is 1 in 1000
of the population and Crohn’s is 1 in 600. Severity can be broken up in both cases at a ratio
of 1:2:1 for mild: moderate: severe. 2/3rds of all patients seek treatment
Calculation
(US pop) (prevalence) (mild + moderate) (seek treatment)
UC = (300M) (1/1000) (3/4) (2/3) = 150k
CD = (300M) (1/600) (3/4) (2/3) = 250k
Total target population = 400k

IBD Drug
Launch of our client’s drug would be 1 out of 30 drugs on the market. The current average
price is $2000 per month and patients take the drugs all year.
What would be the total revenue generated from this approach?
Interviewee should check if they can assume 1/30 is the factor to divide the target population.
Market studies of our drug have demonstrated that because our drug has around average
efficacy and is entering late, market penetration is expected to be more closer to 1/40.
Calculation
Price per year = 24k/year
(Target population) (Market penetration) (price per year)
(400k)(1/40) (24k) = 240M/year

Diagnostic
Our client is also developing an at home diagnostic tool for IBD. This tool measure the level
of inflammation in a patients stool. Individuals would still need to be formally diagnosed by
a doctor by colonoscopy before use. Our client’s tool would help them to track their periods
of flare up at home. What would be the total revenue that could be generated from this
product?
Interviewee should be given the following information when requested:

Expected penetration is 80%. For the amount patients would need per month, our client
expects to charge $100.
Calculation
(Total Target Market) (Penetration) (Price per month) (months per year)
(400K) (4/5) ($100) (12) = $384M / year

Cost Comparison
Given a more favorable comparison in revenue for the diagnostic test, what other factors
would you need to consider before deciding on one product?
Competition
- Competitive response (for a drug, will be difficult to compete in a crowded market. For the
diagnostic other competitors could enter)
Cost Comparison
- Production (different costs for producing a drug vs producing a diagnostic)
- Sales
- Marketing (physicians vs direct to patient marketing)
- Distribution (pharmacy for drug, possibly retail stores for diagnostic)
Regulatory Barriers
- FDA approval for the drug
- Different approval process for a diagnostic (drug would actually need to be consumed or
introduced into the body)

Our client is interested in IBD interventions and has asked our firm to size the market
Findings
The total market size of IBD patients is estimated at 400k
The diagnostic tool would be the more favorable product to introduce judging by the revenue size.
Considering a total market size of IBD patients at 400K, introducing a new drug into a crowded
market would capture a very small fraction (1/40), especially when there are few distinguishing
features. The diagnostic tool instead provides an opportunity to explore the same large market from
the consumer side, which would make our client the first in an untapped market.
(The recommendation here could go either way, although more information supports the diagnostic
tool.)
Risks
Regulation Demonstration that the diagnostic tool would be efficacious is important.
Competition: Development of similar diagnostics by other players should be expected given the
large size of the market and the lack of competition compared to the drug market.

Next Steps
Expedite approval of diagnostic: Given the opportunity to expand into an unexplored market, the
client should try to be first to market.
Continuous improvement of the diagnostic The client should expect to see other companies look for
a way into this home diagnostic market. By improving the tool, our client could build a recognizable
brand name for the product.
Consider working with patient advocate groups One way patients share and distribute information is
through patient groups that share the same affliction. A strong marketing approach would be to
support and inform these groups of the availability of this tool.

Case 9: Boreal (Hair Care)
Type of Case Firm
Profitability L.E.K.
Prompt
Our client is Boreal, a large European conglomerate. Boreal has many product divisions including
home cleaning supplies, pet care, and hair products. The hair product division is made up of five
separate companies and is the least profitable division. Boreal has brought in our firm to examine
the division and suggestions for improvement.
Client Goal
-  Boreal wants to increase profits of the division
Hair Product Division
-  Operates all over Europe and is made up of 5 subsidiaries
-  These companies fall into the categories of hair care (multiple shampoo and conditioner
brands), hair styling (gels and styling creams), and hair transplants (surgical treatment for
baldness)
-  The first two categories sell products and hair transplants are a clinical service

Sample Issue Tree
Increase Profits
Profitability (segment for each company) Market
Revenue Cost Market Size Market Trend Competition
Service # of
Price services # of service Cost/service Growth Regulation
Marketing Service
Hours for operation/ Service

Brand Positioning Channels Locations Quality
Appointments

Profitability Analysis
Since the client has recognized the issue of profitability underperformance, candidate should ask
for information about the profitability of this division.
Provide Exhibit 1
What can be interpreted from Exhibit 1?
- Hair Care and Hair Styling companies seem to be operating with healthy margins
- The Hair Solutions (HS) seems to be struggling although the other hair transplant subsidiary
Fountain of Hair (FoH) is profiting.
Underperformance of the division could be attributed to HS
Why is HS underperforming comparing with FoH?

External (less likely since two subsidiaries are both in hair transplants)
-Hair Transplant Market
-Market Share
-Competition
-Growth Trends
Internal (more possible)
-Low Revenue (Key issue here)
-Price
-# of services
-High Cost

FoH Underperformance
The CEO of Boreal has set up a meeting with the heads of FoH and HS
-The head of HS says that her company specializes in high end clients
-The head of FoH says that his company specializes in low end clients
-Both say the potential market for hair transplants is about 3500 per year. They also provide
company information as requested (show Exhibit 2)
-  Candidate should note that while HS is the higher priced company, it has higher sales than FoH
-  Additionally, costs are relatively the same between the two companies.
-  Total sales (2500+800 = 3300) is covered by these two companies (~95% of the target market).
Why could HS have more customers? (Brainstorm)
Product Comparison
-  Quality
-  Price as surrogate for quality
-  Brand reputation
Customers
-  Preference
-  Perception
How would you test these reasons? Customer survey or otherwise ask the customers (Exhibit 3)

Customer Survey
How would you interpret Exhibit 3?
-  Total customer base skews from the 100k to 200k range and above. Very few customers are
below 100k
-  Customers of HS and FoH are mostly the same; the majority of customers make over 100k and
are the same age.
-  More customers using HS because it is perceived as higher quality and majority can afford that
premium.
-  Majority of budget customers would still pay 10k or more for a transplant
A good candidate would question if two companies are actually necessary. A single company
charging 10k would still capture the same number of the customers except for the 5% of FoH
customers (40 customers).
Can move to the conclusion of the case.

The CEO of Boreal has asked for our findings and recommendations
I recommend that our client merge the two hair transplant companies. This would maintain the
majority of our customers, and lead to an overall increase in profits as customers switch from the
low margin ($3k) budget company to the higher margin ($5k) company.
FoH has been struggling due to a mismatch between company strategy and customer need.
Although HS and FoH were intended to meet the needs of two customer segments, there is only
one pool of high end customers who mostly value the perceived quality of HS. A merger would
better align the hair transplant portion of our client’s business.
Risks
Reorganization costs and implementation As with any merger, restructuring of the companies will
have significant costs associated with implementation.
Employee layoff issue As the merge happens, potentially, a sizable number of employees will be
laid off, generating some publicity risks for the conglomerate.
Loss of greater customer base then estimated A major assumption is that if FoH is closed, the
majority of customers will switch over to HS. A smaller than expected switch would allow for the
entry of a budget company.
Next Steps
Marketing to convert FoH customer base In the near term HS should try to convert as many of the
potential FoH customer base (estimated at 800) to using their procedure to increase overall profits
Explore a low cost budget procedure A significant problem with the operations of FoH was that the
costs associated with a budget procedure are very similar to the HS procedure. In the long run,
developing a lower cost procedure with similar or greater margins could be well received by the
potential FoH customer base and would bolster profitability.

Exhibit 1: Hair Product Division Subsidiaries
Green
Subsidiary Name Blue Wash Sharp Styles Hair Solutions Fountain of Hair
Cleanse
Product Type Hair Care Hair Care Hair Style Hair Transplant Hair Transplant
Revenue 30M 45M 30M 25M 5.6M
Costs 6M 5M 5M 11.25M 5.2M
Exhibit 2: Transplant Company Comparison
Hair Solutions Fountain of Hair

Revenue 25M 5.6M
Transplants / Year 2500 800
Price per Transplant $10k $7k
Cost per Transplant $5k $4k
Fixed costs / Year $2M $2M

Exhibit 3: Transplant Customer Survey
Hair Solutions Fountain of Hair

>200k = 1000 >200k = 0
100k to 200k = 1450 100k to 200k = 640
Income
50k to 100k = 50 50k to 100k = 160
< 50k = 0 < 50k = 0
Age 40-60 38-57
Would you still purchase
Yes = 95%
this procedure if it was NA
No = 5%
$10k?
Major reason for Quality 90% Quality 5%

choosing this company Price 10% Price 95%

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

Glossary of Terms
CS Med (Medical Device)

-  biopsy – a medical procedure to take a sample of tissue from a patient for testing. In this case, this refers to
testing a breast mass for the diagnosis of cancer.
-  commercialization – ways to bring a product to market. In this case, the client does not want to consider
selling the company or the intellectual property so that leaves in house production or some form of partnership
Ear X (Ear Infection Vaccine)

-  self-resolving – a condition that the body can fix or “resolve” on its own.
-  licensing – an agreement between two organizations where one group will give the other permission to use
their technology or invention in exchange for a fee (royalty or upfront payment). In this case GP wants to
license EX1 and carry through the invention to the market.
-  royalties – a payment given to one company from another in payment of the right to use a technology. Usually
falls under a licensing agreement. In this case, the GP would pay Ear X for the right to use the technology of
producing an ear infection vaccine
NeoFactor (Growth Factor)

-  neonatal – newborn babies
-  congenital disease – a disease that develops before, at, or immediately (a few weeks) after birth. In this case,
D1 and D2
-  premature birth – a birth that occurs earlier than the “normal” 39 weeks
-  standard of care – the current, widely accepted method of treatment for patients with a certain disease

Glossary of Terms
LT Neuro (Multiple Sclerosis)

-  multiple sclerosis – a disease that affects the protective covers of nerves in the spinal cord and the brain. This
damage is what causes the symptoms
-  phase 2 clinical trials - see first page of glossary. In this case, it is mainly important to understand that there is
still one more phase of the clinical trial to complete which would take several years before LT Neuro could
enter the market with the new oral drug.
-  drug launch cost – beyond payment of research, development, and clinical trials; companies need to pay
O’ Care (Orphan Care)

-  preclinical phase – prior to beginning the clinical trial phases. See clinical trial description in the first part of the
glossary
-  orphan drugs – drugs that affect less than 200,000 patients per year
Ultimate Bandage
-  cannibalization – a company’s loss of sales of one product by the introduction of a new product. In this case,
the regular large bandage sales will decrease overall because of the introduction of the UB.

Glossary of Terms
C Difficile Vaccine
-  efficacy – the expected ability that a drug can be effective. In this case, the vaccine is expected to prevent
75% of C diff overgrowth and thus prevent CDAD
-  blockbuster – a drug that brings in $1B in revenue per year
IBD Products
-  Bowel – refers to the intestines and colon
-  IBD – inflammatory bowel disease. An umbrella term for conditions that affect the gastrointestinal tract
(especially the intestines and colon)
Boreal (Hair Products)

-  hair transplant – a surgical procedure where hair is transplanted from another part of a patient to the scalp as
a way to treat baldness

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
Boston Consulting Group
Title Source Case #
GenCo BCG Website NA
Eye Surgery Columbia 2006 14
Cure for Headaches Kellogg 2001 45
Orthopedics Ross 2005 10
Medical Glove Manufacturer Ross 2005 25
Hybrid Corn Ross 2005 33
Pharma Pricing Ross 2007 16
Eye Glasses Ross 2009 9
Bio-Product Growth Ross 2010 13
Antidepressant Sloan 2011 1
Always Fresh Sloan 2011 9
New Drug Sales Increase Sloan 2011 27
Pharma New Vaccine Sloan 2011 29
Global Healthcare Charity Sloan 2011 30
Global Health Sloan 2011 50
CPG Razors and Blades Wharton 2005 7
Rare Disease YGCC 2012 1
Medical Device YGCC 2012 19
Apoplexy
Club© ! Drug YGCC 2013 8
Yale Graduate Student Consulting 94
Bain & Company

Title Source Case #
Personal Care Co Bain Website NA
Drugstore Chain McCombs 2008 4
Small Drug Manufacturer Michigan 2008 6
Small Drug Manufacturer Ross 2008 6
Vitamin Co Ross 2010 15
Pharmacy in Supermarket Sloan 2011 5
Toothpaste Sloan 2011 19
Contact Lenses Sloan 2011 44
Laparoscope YGCC 2012 8

Yale (Life Sciences) 2014

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YGCC Life Sciences Case Book

Follow these general steps when practicing a case:

Yale Graduate Student Consulting Club© ! 2

Yale Graduate Student Consulting Club© ! 3

Yale Graduate Student Consulting Club© ! 4

Type of Case Firm

Additional Information (provided on request)

Yale Graduate Student Consulting Club© ! 5

# of units Price / unit Fixed costs Variable costs

Cost/ unit # of units

Yale Graduate Student Consulting Club© ! 6

Key takeaway points from a section will be underlined

Yale Graduate Student Consulting Club© ! 7

Risks / Next Steps

Yale Graduate Student Consulting Club© ! 8

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© ! 9

Some suggestions are:

• Case Interview Secrets by Victor Cheng (Amazon)

Example Estimation Questions:

Yale Graduate Student Consulting Club© ! 10

Market Potential Routes to

Speed Accuracy Price Profitability Feasibility Profitability Feasibility

Revenue Costs Time Experties Capital Revenue Costs

Sales / # of Per device

Yale Graduate Student Consulting Club© ! 12

How could CS Med enter this saturated market?

Yale Graduate Student Consulting Club© ! 13

Interviewer should ask the candidate to evaluate in house commercialization first

Yale Graduate Student Consulting Club© ! 14

What other information is needed to calculate profitability for this approach?

Year 1 Profit = ($10M), Accumulated Y2 Profit = ($7.5M)

Yale Graduate Student Consulting Club© ! 15

Yale Graduate Student Consulting Club© ! 17

Yale Graduate Student Consulting Club© ! 18

Exhibit 1: Biopsy Needle Market Exhibit 2: Physician Survey

Company 2 $180 $30 35% 70k Price? 2

Higher Accuracy? $100

Yale Graduate Student Consulting Club© ! 19

Yale Graduate Student Consulting Club© ! 20

External: Market for Internal:

Size Competition Trend Revenue Costs

# Children have Disease Customer Fixed

Child to child price Level of pain

Yale Graduate Student Consulting Club© ! 21

- Survey of pediatricians or experts in the field

Yale Graduate Student Consulting Club© ! 22

Yale Graduate Student Consulting Club© ! 24

Yale Graduate Student Consulting Club© ! 25

Examine other opportunities:

Yale Graduate Student Consulting Club© ! 26

Survey 1 Survey 2 Survey 3 Survey 4

Exhibit 2: Childcare Type and Ear Infection Prevalence

Daycare % of children with

Size Penetration Competitors (Standard of Care) Revenue Costs

•  Case Interview Secrets by Victor Cheng (Amazon)

-  Survey of pediatricians or experts in the field