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structuring question

Case structure and frameworks issue tree pharma revenue
New answer on Jun 25, 2023
3 Answers
807 Views
Anonymous A asked on Jun 17, 2021

Hi everyone,

I came across this question in a case book and was wondering what sort of opening structure would be best here, since the revenue changes by product segment are only presented to the candidate after the initial structure is presented. How would you go beyond revenues = qty x price for this question?

our client is a multinational pharmaceutical and biologics company. The client has a portfolio of drugs for major disease areas, including cancer, cardiovascular, and gastrointestinal diseases, to name a few. The client has experienced a decline in revenue over the last 18 months, and is fearful of further declines, especially given that its most commercially successful drug, which treats acid reflux disease, will be going off of patent in May of next year. What are the areas they should look into to change the course of this trend?

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Ian
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replied on Jun 17, 2021
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Hi there,

Really important to have a strong structure here:

Improve Existing Business/Products

  • Identify which major products are declining in revenues
    • Figure out why
      • Price changes by us
      • Price changes by competitors
      • Volume changes - product comparison
    • Resolve
      • Adjust prices
      • Invest in mitigating measures (further R&A, better marketing/branding, etc)
  • Identify which major products are not declining in revenues
    • Figure out how to increase revenues further (i.e. milk your cash cow more)
      • Adjust prices
      • Invest in revenue-generating measures (further R&A, better marketing/branding, etc)

Build out new revenue streams - accelerate existing pipeline

  • Increase FDA approval timeline (leverage covid-acceleration knowledge here)
  • Increase FDA approval odds/chances
  • Increase time-to-market upon approval
    • Setup production early
    • Begin marketing early/fast
    • Establish distribution channels

Build out new revenue streams - begin R&D on new drugs

  • Those with:
    • Big growing markets
    • Lack of existing drugs/remedies
    • Similar to what we currently produce (i.e our expertise)
    • Good margins

Build out new revenue streams - buy

  • Other companies
  • Other patents
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Anonymous replied on Jun 27, 2021

Few thoughts:

First of all you'll need to break out quantity and price into the different drugs and categories like desease and patent protection.

Once you know where the problem stems from (e.g. a specific desease), you can understand the root causes by going a level deeper. E.g. does the decline come from a decline of a specific desease - then you can look at number of patients in the market and market share, is it broadly distributed over the all products - then you can dig into marketing spend per dose, etc...

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