Team J

Akash Gandhi Jessica Minarolli Jessica Dominic Shaishav Desai

Elias Roman Shekhar Gurnani Rutuja Ajgaonkar

Table of Contents

Overview Business Recommendations Swot Analysis Risk Analysis Competitive Landscape Financial Metrics Conclusion

Overview

Enthuse, a global healthcare company, is a highly respected and well organized company which consistently ranks as one of the “Most Respected Companies” annually. The company’s reputation is based on high quality products, innovation, and customer focus. Enthuse values are guided by their credo.

Goals

Expand Portfolio Launch a new knee replacement

product Capitalize on Market Demand Enthuse plans to achieve this through

acquisitions, continuous innovation, and product development.

Business RecommendationsProduct Development Buy with Consultants

Hiring orthopedic specialists as consultants Consumer RelationshipQuality Assurance Increases market share by .9%Lower cost than either licensing option

Other Alternatives

In House with No consultantsLowest development

costDesign and Quality

would be weakerNo increase in market

share

LicensingLicense with a company for

further developmentOption to buy for 240 Million

in 2018No control over design and

developmentNo increase in market shareReliability

Total Product Development/Acquisition Costs

In house w/o consultants

($671M)

In house with consultants ($1,058M)

License to outside

company (buyout in

2018) ($1,192M)

License to outside

company through

2018 ($1,194M)

0

200

400

600

800

1000

1200

1400

Costs in MM

Business Recommendations

Pricing Strategy

$4500 with no price increase from taxes.Increase of 3% per year After bearing the excise tax our selling price

actually is $4,396.50 Price slightly higher than previous years but

still cheaper than the average competitor

Market Share impact with price options

*Passing the excise tax decreases market share by .4%

$4000

1.4% Market share

$5000

1.2% Market Share

$4500 No change in Market share

Net Sales with Price Options

2016 2018 2020 2022 20230

500

1000

1500

2000

2500

$4,000 $4,500 $5,000

Years

Net Sales

Business RecommendationsMarketing Strategy Premium strategy

Target surgeons, hospitals, health care professionals, and non-clinical stakeholders

Health Care Reform and Affordable Care Act

Increase of market share of .75%

Business RecommendationsSales Force Strategy

Direct RepresentativesExclusivity- Better then CompetitorsBeneficial to Doctors and Hospitals Better earnings and sales

Units sold: Direct vs. distributor

2016 2017 2018 2019 2020 2021 2022 20230

50

100

150

200

250

300

350

400

Direct Rep.Distributor

Supply Chain Strategy In House

Better for Public RelationsAdding new jobs improving economy Advancement of EmployeesSustain total control of manufacturing

processProduct Development in-houseQuicker turnaround time

Business Recommendations

Subsequent Decision Points In 2018 new competitor enters market

Impact on market share

Change the pricing strategy?

Change the marketing strategy?

Subsequent Decision Points Keep Marketing Strategy flat at premium Keep pricing at $4500

Products already proven with high value Medical market continues to grow Shows confidence in our product

SWOT ANALYSIS

Internal

Strengths-Developing internally-Ability to design product with specifications,

functionality, material choices, etc..-Use of consultants gives insight to target specific issues for patients

needing product.

Weakness- Low initial market share.

- High upfront costs.

Top 3 Risks

Removing resources from the development of

other products.

Keeping the pricing and marketing strategy the

same when a new competitor enters the

market.

Losing a year of revenue due to the longer R&D time.

Competitive Landscape

Simmer – Leader in musculoskeletal health care30% of market shareCurrent Lawsuits

Inflictus – Focuses on revision and partial knee 20% of market share

Market Outlook: Positive World demographics are shifting

towards older populationsBetween 2000-2050

Life expectancy in developing regionsGrows from less than 20% to 34%

An increase in the life expectancy combined with lifestyle related disease, increases demand for medical devices

Sensitivity Analysis

Make Vs Buy (Net Income @ $4500)

Cumulative Net Income with Changes to Development

In H

ouse

no

cons

ultan

ts

In H

ouse

Con

sulta

nts

Licen

se (b

uyou

t in

2018

)

Licen

se1650170017501800185019001950 1921 1898

1741

1823

Different Development Options

Net Income(in MM)

Cumulative net income with changes to price and Marketing

4000/Basic

4000/Prem

4000/Prem Plus

4500/Basic

4500/Premium

4500/Prem Plus

5000/Basic

5000/Premium

5000/Prem Plus

1650 1700 1750 1800 1850 1900 1950 2000

Net Income in $MM

(In Dollars)

Market Share

NPV Changes with Different Options

$4000/Basic

$4000/Prem

$4000/Prem Plus

$4500/Basic

$4500/Prem

$4500/Prem Plus

$5000/Basic

$5000/Prem

$5000/Prem Plus

620 640 660 680 700 720 740 760 780 800 820

NPV

IRR changes with Different Price and Marketing options

$400

0/Bas

ic

$400

0/Pre

m

$400

0/Pre

m P

lus

$450

0/Bas

ic

$450

0/Pre

m

$450

0/Pre

m P

lus

$500

0/Bas

ic

$500

0/Pre

m

$500

0/Pre

m P

lus28

29

30

31

32

33

34

35

IRR in %

Differences in NPV and IRR between Direct and Distributor Strategies

Direct Distributor*745

750

755

760

765

770

775

NPV

Direct Distributor*32.4

32.6

32.8

33

33.2

33.4

33.6

33.8

34

34.2

IRR IN

%

*With the Distributor Strategy we lose 1% market share and less sales than direct.

In House US 3rd Party US 3rd Party outside US748

749

750

751

752

753

754

755

756

757

758

Net Present Value

Changes in NPV and IRR with Supply Chain Strategies

Conclusion

In house development with orthopedic consultants

$4500 price option with bearing the excise tax

Premium Marketing Strategy Direct Representatives In House supply chain strategy Keep price and marketing strategy flat in

2018 Increase market share from 19% to 21.4%

Thank You Any Questions?