VC CONSULTING PRESENTS:

IN PHILADELPHIA
Healthcare’s New Silicon Valley
CATHY DING | VICTORIA MENG
 PITCH ROADMAP
Introduction & Market Overview

Strategy Pillar 1: Talent

Strategy Pillar 2: Policy Incentives

Strategy Pillar 3: Tech & Innovation

Conclusion & Financials

 PROBLEM &
OBJECTIVE

Problem: China Medical is lagging behind in their global

presence, potentially missing out on lucrative, untapped
markets and game-changing technologies.

Objective: Encourage China Medical to expand to the U.S.

market by opening a new headquarters in Philadelphia to
increase sales and growth rates
 US MARKET
OVERVIEW

▪ US Pharmaceuticals market has grown steadily for the past 5 years

▫ Projected to continue into 2021
▸ But unable to capture significant R&D savings
▫ Growth is driven by an aging US population
▫ The market is forecast to increase to $63 billion by 2021

▪ Potential for sector growth of Traditional Chinese Medicine

▫ 1 in 4 parents buy medications with natural ingredients because
they feel these are safer
▫ Parents are significantly more likely than nonparents to report
use of herbal and homeopathic remedies

▪ Opportunities in the New Health Economy

▫ Demand for personalized, patient-centered methods
▫ 41% of consumers want more access to health care information
 5 C’s: A high level
overview

Company Competitors Context

China Medical can A significant portion of Political:
leverage Philadelphia’s the market is controlled
by top US pharmaceutical ● Favorable public policies that
resources to attract
companies, but there are encourages entrepreneurial
world-class talent, gain a
opportunities in the growth in Philly
monetary advantage, and
develop cutting-edge natural medicines market. Economic:
technological solutions. ● High job growth and relatively
inexpensive living conditions
make Philly ideal
Customers Collaborators Social:

China Medical can increase China Medical can ● Emphasis on academic

sales by targeting large collaborate with top US advancement and life sciences
segments of the US research universities and research
population including city officials to create Technological:
millennial families and opportunities for ● Potential to create synergies
health-conscious baby innovation and job with local tech startups
boomers creation.
 SOLUTION: PHILADELPHIA
3 Pillars of our Strategy

World-Class Talent
Top Research Talent + Robust Retention
= High Employee Lifetime Value

Public Policy Incentives

Tax Abatement + Expansion Incentives
= Market Advantage from Cost Savings

Innovation & Technology

Infrastructure + Integrated Technology

= Optimized Consumer Experience
Pillar 1 | World-Class Talent
The Power of Philadelphia’s Human Capital
 Top Research Talent + Robust Retention
= High Employee Lifetime Value

High density of renowned universities

● 10+ Colleges within 45 miles: UPenn,
Swarthmore, Princeton, Haverford
● Incentives to retain STEM talent after
graduation
○ Visas for international students
studying data analytics
Unparallelled life sciences talent pool
● Nation’s #1 city for diversity in STEM
● 20% of workforce employed in healthcare
● 1 out of 6 US doctors have had medical
training in Philly
Research
● 15 world-class institutions
● Partnerships with inner-city universities:
○ Drexel X Schuylkill Yards & Pennovation Center
 Top Research Talent + Robust Retention
= High Employee Lifetime Value

67% of Philadelphia students state they want to stay in

Philadelphia post-graduation

#1 in Brain Power Influx (STEM Magnet City)

● 30,408 students from moved to
City Average Rent
Philadelphia post grad
○ (-149 New York, -5,682 Boston) Philadelphia $979

NYC $2,070 (+1,091)

Low Rent Incentives
● Lowest living costs of any major city on Washington D.C. $1,310 (+331)
the East Coast Boston $1,660 (+681)

Programs to promote talent retention

● Nonprofits like Campus Philly launch
large-scale campaigns to engage college
students in local recruiting
 Top Research Talent + Robust Retention
= High Employee Lifetime Value

Original Tactic: China Medical’s Early Internship

Programs
● Philadelphia has a $2 million grant to provide
for summer job opportunities for students
○ This can be used to subsidize interns
● Gain a recruitment presence at top colleges
● Early diversity internships promotes
innovation in STEM

Outcomes:

$14,500 saved in wages per summer intern

90% of students who intern at a firm later accept full-time offers

Pillar 2 | Public Policy Incentives
Leveraging monetary incentives to power growth
 Tax Abatement + Expansion Incentives
= Market Advantage from Cost Savings

21 City-approved business tax reduction programs,

the most among the nation’s 30 largest cities

10-year property tax abatement

(Ordinances 961,1130, & 1456-A)
▪ Abatement from real estate taxes if
improvements are made on commercial
properties
▪ Unlike other big cities, Philly offers a uniform
citywide property tax for all types of
commercial development
Incentives to operate in Keystone opportunity
zones (KOZ/KIZ)
▪ Can apply for $100,000 of saleable tax credits
▪ Up to 10-year reduction in income tax burden
 Tax Abatement + Expansion Incentives
= Market Advantage from Cost Savings

Job Creation Tax Credit

(Bill 020116)
▪ Can be applied against the Business Income and
Receipts Tax for up to $25,000 per job created
Workforce Development/Job Training Grants
▪ Philadelphia Works, Inc. can offer training grants
to offset eligible training expenses for
employees who are Philadelphia residents
Jump Start Philadelphia
(Philadelphia Code 19-4200)
▪ Exempts businesses that create at least 6 new
jobs in Philadelphia from paying the Business
Income and Receipts Tax during the first 2 years
▫ Also waived fees for licenses and
registrations
 Tax Abatement + Expansion Incentives
= Market Advantage from Cost Savings

Original Tactic: Subsidized Eco-friendly Showroom

▪ Provides China Medical with a space to engage
lucrative millennial consumers Case Study
▫ Search 3.0. and the future of retail
▪ Showroom will include:
▫ Indoor garden growing TCM herbs
▫ Test kitchen/ recipe demo space
▫ Lounge area
▫ Retail space
▪ High Performance Building Program
▫ Provides grants (up to $500,000) to help
with construction of high-performance
buildings
▪ Green Roof Tax Credit
(Chapter 14-600 of The Philadelphia Code)
▫ Up to 25% of the roof can be subsidized
up to $100,000
 Tax Abatement + Expansion Incentives
= Market Advantage from Cost Savings

3D Eco-Friendly Showroom Tour

Pillar 3 | Innovation & Technology
The role of Smart Cities in healthcare innovation
 Infrastructure + Integrated Technology
= Optimized Consumer Experience

Optimizing for Overseas Distribution

● $300M investment in Philadelphia’s Case Study
Port
● Only East Coast port served by 3
Class-1 railroads.
● 5 hr drive from 25% of the U.S.
Population
● International airport with 87 domestic
and 36 international destinations

Supply Chain Innovations

● Philadelphia based Osage Venture
Partners: investment in early stage
B2B analytics and artificial
intelligence based startups
focusing on supply chain
innovation
 Infrastructure + Integrated Technology
= Optimized Consumer Experience

$72 B Is the expected value of the Internet of Things in

related to the healthcare industry (CAGR: 26.2%)

TECH TREND PHILADELPHIA

MACHINE LEARNING Meetups, community innovation,

Oncora Medical

CONNECTED DEVICES MachineQ X Pennovation Center,

Comcast

WEARABLE TECHNOLOGY Drexel Wireless Systems

Laboratory, CPR Connect
 Infrastructure + Integrated Technology
= Optimized Consumer Experience

STEP 1: Acquisition
● Acquisition of Towerview Health
● Philadelphia based startup company that helps
consumers improve medical adherence
● Inform consumers when they miss pill intakes

John

STEP 2: CM Doctor & Me

● Add above technology to existing app
● Platform that helps track medicine intake
and client feeling after intake
● Allows consumers to be empowered by
being more in-control of their health
● Empowers doctors with the necessary data
to provide personalized care
Summary
Financial & Risk Analysis + Conclusion
 Financial Overview

273.532B CNY Market Capitalization (30%+)

6-6.5% Year to Year Growth

3 Specific Positive NPV Projects

96.56-101.25 CNY Stock Price (30-35%+)

 Risk Analysis

RISK MITIGATION

Talent movement away from Incentives and early internship

Philadelphia programs to help retain talent

Global supply chain can be risky Leverage city’s existing

and costly infrastructure to optimize supply
chain success

Myopic targeting of the millennial Deliver to other segments through

segment in the U.S. non-TCM channels

Data driven technology leads to Use FTC data privacy best

privacy risk practices with double-ended
secure platforms

Public policies change against Other cost-savings channels can

company’s favor still be extracted
 SOLUTION RECAP

World-Class Talent
Top Research Talent + Robust Retention
= High Employee Lifetime Value

Public Policy Incentives

Tax Abatement + Expansion Incentives
= Market Advantage from Cost Savings

Innovation & Technology

Infrastructure + Integrated Technology

= Optimized Consumer Experience
Thanks!!
Any questions?
Appendix Slides
 APPENDIX:
Why Philly

Philadelphia New York City Washington D.C. Boston

Lowest cost of
living ✔ -- -- --
Lowest average
rent ✔ -- -- --
Has leading life
sciences industry ✔ -- -- --
Has highest job
growth ✔ -- -- --
Lowest state
income tax ✔ -- -- --
2 Class One
Railroads ✔ -- -- --
Recently upgraded
port ✔ -- -- --
 APPENDIX: Target
Consumer Segment

Newly informed
Excited Experimenters Millennial Families
Boomers

Customer
Segments

Older consumers who Younger consumers who are Millennials building families
Description generate the bulk of more open to non-traditional who value natural medication
pharmaceutical sales. forms of medicine. for their loved ones..

Value traditional Value novel experiences in Value health and safety of a

Expectations for
medication addressing a their purchase journey and product and minimize side
the Brand variety of conditions. willing to try new things. effects.
 APPENDIX: Improving
Attitudes towards TCM

▪ Trends in Homeopathic & Herbal Remedies -- Mintel

Report Nov. 2016
▫ Usage of homeopathic remedies skews younger
▫ Use is especially prevalent among those aged
25-34, with 68% consumer participation.
▫ Attracting older consumers (aged 55+) represents
a challenge for the industry.
▪ Homeopathic remedies have the strongest alignment
as a natural treatment, with 27% of adults making that
association.
 APPENDIX: References
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http://www.us.jll.com/united-states/en-us/Research/US-Ph
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http://www.us.jll.com/unitevmd-states/en-us/Research/US
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https://www.bdcnetwork.com/philadelphia-considers-mor
e-incentives-green-building
http://gsipartners.sbnphiladelphia.org/financial-incentives-
for-green-building-and-green-stormwater-management/
https://www.globalsign.com/en/blog/top-iot-trends-of-201
8/
https://www.phila.gov/commerce/Industries/AdvancedMa
nufacturing.pdf
https://www.fiercepharma.com/supply-chain/wuxi-to-bulk-
up-cell-therapy-manufacturing-philadelphia
http://markets.businessinsider.com/news/stocks/Machine-
Learning-Startup-indico-Announces-4M-FinancingRound-le
d-by-Philadelphia-based-Osage-Venture-Partners-101322017
5 ts/2016/08/philadelphia-business-taxes-incentives-and-exe
https://www.brookings.edu/research/connect-to-compete-
philadelphia/
http://markets.businessinsider.com/news/stocks/Machine-
Learning-Startup-indico-Announces-4M-FinancingRound-le
d-by-Philadelphia-based-Osage-Venture-Partners-101322017
5
http://www.phila.gov/commerce/Documents/Jump%20Sta
rt%20Philly.pdf
http://www.naceweb.org/talent-acquisition/internships/int
ern-to-full-time-hire-conversion-returning-vs-nonreturning-i
nterns/
http://www.us.jll.com/united-states/en-us/Research/US-Ph
iladelphia-Life-Sciences-Outlook-2017-JLL.pdf
http://www.phillymag.com/business/2017/12/20/philadelp
hia-best-city-diversity-stem-science-tech-math/
http://drexel.edu/medicine/student-life/life-in-philadelphia
/
https://www.strategyand.pwc.com/reports/critical-makeover-ph
armaceutical-companies
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