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[somatropin (rDNA
origin) for injection]
BUSINESS PLAN (COLOMBIA) IPSENs PRODUCTS
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9. COMPETITORS FOR Dysport
HOW CAN WE GROW IN THE NEAR FUTURE?
Growth in the Human Growth Hormone market in Colombia is being driven by:
1. Expansion in the number of approved indications.
2. Promoting physician awareness of price differences between products may drive the uptake of less
expensive less well-known products
3. Brand differentiation through innovations in delivery technology will be a critical success factor
4. New products in the market such as recombinant human IGF-1 (rhIGF-1 replacement therapy). It has
been estimated in the United States that Primary IGFD can be 1.5 times more common that HGH
deficiency.
DRUG NAME
PHARMA
COMPANY
PRODUCT
INTERNATIONAL
PRICE (Aprox)
LOCAL PRICING
STRATEGY(1)
Botox ALLERGAN Type A Toxin
100 I.U.
not known
100 I.U.
not known
Myobloc
ATENA
NEUROSCIENCES
Type B Toxin
2.500 I.U.
not known
2.500 I.U.
Not known
Figure. The main competitor
in Colombia for the
Dysport(tm) product is
Botox from Allergan.
BUSINESS PLAN (COLOMBIA) IPSENs PRODUCTS
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4. BUSI NESS ORGANI ZATI ON
OUR MISSION
To improve health, quality of life, longevity and medical support by providing innovative solutions to hospitals, clinics,
medical centers and patients
OUR VISION
To consolidate the new company as one of the two leading supplier for HGH by 2008
OUR SHARED VALUES
HONESTY : to generate trust and confidence.
LOYALTY : Preference by the customer.
QUALITY : In processes, products and services.
CUSTOMER SUPPORT : Financially, scientifically, technically and humanely .
COMPETITIVENESS : To be the second leading supplier in Colombia.
General accounting, payroll, and cost accounting will be contracted with a specialized firm in charge of preparing
balance sheets, profit and loss statements, and other financial reports. Responsibilities also will include analyzing
trends, costs, revenues, financial commitments, and obligations incurred to predict future revenues and expenses.
Reports organization's finances to management, and offers suggestions about resource utilization, tax strategies, and
assumptions underlying budget forecasts.
Business organization is being updated to date in conversations with the Shareholders.
BUSINESS PLAN (COLOMBIA) IPSENs PRODUCTS
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5. RI SKS ANALYSI S
We operate in a rapidly changing environment that involves a number of risks, some of which are beyond our control.
Some of the risks that would interfere with operations while achieving goals and sales objectives are:
RISKS POSSIBLE RISKS PLANNED STRATEGIES AND RESPONSES
Internal
To loose trained personnel and to start a new hiring
process again.
To start a new human resource satisfaction
program.
To hire a new Sales and Marketing Manager
in charge of stimulation and coordination of
sales force.
To hire additional sales persons to make
appropriate technological and scientific
transfer among sales force.
To establish commercial and financial
policies for credit, payment terms and a
follow up schedule of invoices.
Demand
Products may be found to be ineffective or to have
harmful side effects
Our revenues are dependent on reimbursement from
third-party payers who could reduce their
reimbursement rate
To enhance communications IPSEN for
QA/QC and clinical documents.
To discuss risks with IPSEN about
reimbursement in other Latin American
countries and to establish follow-up activities
monthly.
Supply Price increases in HGH
To be effective in the importation process and
to discuss together with IPSEN marketing
and sales strategy to make a long term deal.
To discuss with IPSEN batch production and
release times to coordinate deliveries and
product availability.
Competition
Growing and new competition may reduce our
likelihood of market success
Competition from non-approved uses and generic
drugs could reduce our sales growth
To discuss with professional societies,
practice management groups, private
foundations and organizations involved in
endocrinology diseases to publish guidelines
or recommendations to the health care and
patient communities.
Regulations
Products may fail to receive necessary regulatory
approvals;
Pharmaceutical usage guidelines may recommend
lower use of our products (prescriptions).
If we become subject to significant legal action, we
may incur substantial costs related to litigation.
To discuss with practice management groups
related to endocrinology diseases to
guarantee prescriptions.
To protect ourselves from the cost of these
claims, maintain appropriate liability
insurance coverage in amounts and with
deductibles that we believe are consistent
with industry practice.
BUSINESS PLAN (COLOMBIA) IPSENs PRODUCTS
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6. FI NANCI AL ANALYSI S
We intend to address market opportunities and threats by developing a range of business strategies and new
formulations by innovator companies.
This new company businesses rely on a revenue model including sales revenues in 4 major cities in Colombia. Initial
revenues are realized from the HGH business unit. Subsequent revenues are from a combination of botulinum toxin
and other products completing each phase in market development.
Challenges for year 1 will be many. The Company will obtain regulatory approval from INVIMA, slow process that can
take from 3-6 months depending on documentation and procedure agility by our personnel. A partnership agreement
for the marketing, distribution and sale of this product will be negotiated with a supplier of HGH and botulinum toxin
products from growth metabolism and neuromuscular disorders.
Working capital has been and will be raised from angel investors. The company expects to complete raising its venture
capital in year 1 for a total amount of USD 62.000 for its initial activities. Based upon comparable technologies and
previous business models, projected revenue is USD 2 million in four years and to continue expanding markets up to
USD 2 million each year after year 5.
Our sales projections for the fiscal year ending December 31, 2008 are USD 2.4 Million. We look for an EBITDA of USD
781.974 and a net income for USD 508.233, assuming a normal scenario in sales, business investments and other expenses
(Exhibit 1).
The establishment of a well trained sales force, several business development projects as well as the establishment of
new business units will be the major cost drivers in year 1 and 2 representing a significant investment in the future that
need to be addressed more carefully.
The next figure shows the expected revenues from the leading compound HGH.
0
10
20
30
40
50
60
70
80
N
u
m
b
e
r
o
f
D
a
y
s
1st Year 2nd Year 3rd Year 4th Year
Turnover
Days sales in accounts receivable Days materials cost in inventory Days finished goods in inventory
Days materials cost in payables Days payroll expense accrued Days operating expense accrued
Our capital expenditure will reflects our continuing investment in marketing and sales and our continuing
implementation of advanced information technology systems.
BUSINESS PLAN (COLOMBIA) IPSENs PRODUCTS
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Besides investing in activities within sales and marketing and in production capacity, the new company is discussing the
possibility to establish a foundation to fight growth deficiency in our country (developing countries) making donations to the
new Foundation after year 3 and over a 10-year period. The amounts and capabilities of building this new Foundation are in
development.
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
1st Year 2nd Year 3rd Year 4th Year
Sales Gross Profit Operating Expense Income Before Taxes
The largest part of the increase in operating profit for year 1 is expected to be realized in the second half of the year,
primarily due to new product launches and the continued introduction of existing products in new geographical markets.
As significantly increased investments in sales and marketing and human resources capacity to be able to support the
continued successful roll-out of products as well as to ensure sufficient capacity to support the launch of new products
in the coming years. The worldwide market for short stature therapies is large and has grown at a healthy pace driven
by approval of growth hormone for new indications.
The new company is seeking top-performing, talented individuals who can contribute to our goal of improving
endocrine health.
You can view all financial details such as Income statement, balance sheet and cash flow projections in Exhibits 1, 2
and 3 in the next pages.
BUSINESS PLAN (COLOMBIA) IPSENs PRODUCTS
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STRATEGIC GOALS FOR HGH BUSINESS UNIT
1. To complete INVIMA registration for all product lines by December 2005.
2. Total revenues for USD 2.4 Millions in 4 years and USD 572.000 in two years.
3. To get 3 major Institutional accounts for HGH: Social Security Institute, SaludCoop
and Colsanitas taking at least 10% market share from the competition.
4. To hire 2 sales persons in charge of the new pharma product line and to redistribute
geographic zones.
BUSINESS PLAN (COLOMBIA) IPSENs PRODUCTS
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EXHIBIT 1. INCOME STATEMENT 2005-2008
Forecasted TOTAL
1st Year 2nd Year 3rd Year 4th Year 4 Years
Sales
Sales $187,200 $385,000 $765,000 $1,063,000 $2,400,200
Cost of sales $57,952 $126,600 $222,665 $373,080 $780,297
Gross profit $129,248 $258,400 $542,335 $689,920 $1,619,903
Expenses
Operating expenses $64,518 $132,690 $263,657 $366,363 $827,229
Interest $1,375 $1,375 $1,375 $1,375 $5,500
Depreciation $0 $250 $350 $350 $950
Amortization $1,250 $500 $1,250 $1,250 $4,250
Total expenses $67,143 $134,815 $266,632 $369,338 $837,929
Operating income $62,105 $123,585 $275,703 $320,582 $781,974
Other income and expenses
Gain (loss) on sale of assets $0 $0 $0 $0 $0
Other (net) $0 $0 $0 $0 $0
Subtotal $0 $0 $0 $0 $0
Income before tax $62,105 $123,585 $275,703 $320,582 $781,974
Please enter a tax percentage
Taxes @ 35% $21,737 $43,255 $96,496 $112,204 $273,691
Net income $40,368 $80,330 $179,207 $208,378 $508,283
Retained earnings-beginning $0 $40,368 $120,698 $254,905 $0
Dividends paid $0 $0 $45,000 $68,000 $113,000
Retained earnings-ending $40,368 $120,698 $254,905 $395,283 $395,283
Detailed Supporting Information
Cost of sales
Direct labor $29,952 $61,600 $122,400 $170,080 $384,032
Importation Process $23,000 $51,500 $75,565 $168,000 $318,065
Other costs $5,000 $13,500 $24,700 $35,000 $78,200
Depreciation: Enter the
numbers of years.
10 year Buildings $0 $0 $0 $0 $0
5 year Equipment $0 $250 $350 $350 $950
Interest: Percentages from
Data sheet
22.00% Long-Term $1,375 $1,375 $1,375 $1,375 $5,500
22.00% Short-Term $0 $0 $0 $0 $0
BUSINESS PLAN (COLOMBIA) IPSENs PRODUCTS
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EXHIBIT 2. BALANCE SHEET 2005-2008
Forecast
1st Year 2nd Year 3rd Year 4th Year
ASSETS
Current Assets
Cash and cash equivalents ($832) ($10,032) $18,558 ($2,579)
Accounts receivable $133,348 $232,055 $419,178 $582,466
Inventory $47,632 $83,244 $122,008 $183,985
Other current assets $0 $0 $0 $0
Total Current
Assets $180,148 $305,267 $559,744 $763,872
Fixed Assets
Buildings $0 $0 $0 $0
Equipment $5,000 $7,000 $7,000 $10,000
Subtotal $5,000 $7,000 $7,000 $10,000
Less-accumulated depreciation $0 $250 $600 $950
Total Fixed Assets $5,000 $6,750 $6,400 $9,050
Intangible Assets
Cost $0 $0 $0 $0
Less-accumulated amortization $0 $0 $0 $0
Total Intangible
Assets $0 $0 $0 $0
Other assets $0 $0 $0 $0
Total Assets $185,148 $312,017 $566,144 $772,922
Forecast
LIABILITIES AND 1st Year 2nd Year 3rd Year 4th Year
STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $0 $0 $0 $0
Notes payable $25,000 $25,000 $25,000 $25,000
Current portion of long-term debt $0 $0 $0 $0
Income taxes $21,737 $43,255 $96,496 $112,204
Accrued expenses $16,973 $46,494 $126,923 $176,365
Total Current
Liabilities $63,710 $114,749 $248,419 $313,569
Non-Current Liabilities
Long-term debt $0 $0 $0 $0
Deferred income taxes $0 $0 $0 $0
Other long-term liabilities $20,000 $15,000 $0 $0
Total Liabilities $83,710 $129,749 $248,419 $313,569
Stockholders' Equity
Capital stock issued $42,550 $42,550 $42,550 $42,550
Additional paid in capital $21,270 $21,270 $21,270 $21,270
Retained earnings $40,368 $120,698 $254,905 $395,283
$104,188 $184,518 $318,725 $459,103
Total Liabilities
and Equity $187,898 $314,267 $567,144 $772,672
BUSINESS PLAN (COLOMBIA) IPSENs PRODUCTS
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EXHIBIT 3. CASH FLOW PROJECTIONS 2005-2008
Current Forecasted-Linear Regression Analysis
1st Year 2nd Year 3rd Year 4th Year 5th Year 6th Year 7th Year 8th Year
1 2 3 4 5 6 7 8
Net earnings (loss) $40,368 $80,330 $179,207 $208,378 $277,798 $338,088 $398,379 $458,670
Add-depreciation and amortization $1,250 $750 $1,600 $1,600 $1,775 $1,965 $2,155 $2,345
Net cash from
operations $41,618 $81,080 $180,807 $209,978 $279,573 $340,053 $400,534 $461,015
Accounts Receivable ($133,348) ($98,707) ($187,123) ($163,288) ($190,176) ($207,999) ($225,823) ($243,646)
Inventory ($47,632) ($35,612) ($38,764) ($61,977) ($57,543) ($62,162) ($66,780) ($71,399)
Other current assets $0 $0 $0 $0 $0 $0 $0 $0
Accounts payable $0 $0 $0 $0 $0 $0 $0 $0
Current portion of long-term debt $0 $0 $0 $0 $0 $0 $0 $0
Income taxes $21,737 $21,518 $53,241 $15,708 $31,460 $32,824 $34,187 $35,551
Accrued expenses $16,973 $29,521 $80,429 $49,442 $81,170 $96,002 $110,833 $125,665
Other current liabilities $0 $0 $0 $0 $0 $0 $0 $0
Dividends paid $0 $0 ($45,000) ($68,000) ($90,500) ($115,400) ($140,300) ($165,200)
Net cash from
operations ($142,270) ($83,280) ($137,217) ($228,115) ($225,589) ($256,736) ($287,883) ($319,030)
Buildings and improvements $0 $0 $0 $0 $0 $0 $0 $0
Equipment $5,000 $2,000 $0 $3,000 $500 ($300) ($1,100) ($1,900)
Intangible assets $0 $0 $0 $0 $0 $0 $0 $0
Net cash from
investments $5,000 $2,000 $0 $3,000 $500 ($300) ($1,100) ($1,900)
Short term notes payable $25,000 $0 $0 $0 ($12,500) ($20,000) ($27,500) ($35,000)
Long term debt $0 $0 $0 $0 $0 $0 $0 $0
Deferred income $0 $0 $0 $0 $0 $0 $0 $0
Deferred income taxes $0 $0 $0 $0 $0 $0 $0 $0
Other long-term liabilities $16,000 ($5,000) ($15,000) $0 ($15,500) ($21,300) ($27,100) ($32,900)
Capital stock and paid in capital $63,820 $0 $0 $0 ($31,910) ($51,056) ($70,202) ($89,348)
Net cash from
financing $104,820 ($5,000) ($15,000) $0 ($59,910) ($92,356) ($124,802) ($157,248)
Net increase
(decrease) in
cash ($832) ($9,200) $28,590 ($21,137) ($6,426) ($8,739) ($11,051) ($13,364)
Cash at
beginning of
period $0 ($832) ($10,032) $18,558 $13,542 $18,189 $22,837 $27,484
Cash at the end
of period ($832) ($10,032) $18,558 ($2,579) $7,116 $9,451 $11,786 $14,121