20% of the large number is still a large number so I think that's a fantastic way I like that hug Market size [Music] yeah hi everyone this is a video run through for the slim chance in the Pharma dance case this is a great product launch case incorporating a good mixture of Quant brainstorming and qualitative reasoning uh my name is Chris mccream I'm going to be the interviewee and with me is Ben Wilson who will be uh interviewer um so yeah I'll just give a quick intro of myself and then I'll pass it over to
Ben um so as I mentioned my name is Chris uh I work in energy infrastructure m&a at a company called Energy re in New York and prior to that I was with bcg's New York office uh for three years uh my last year I was a project leader in the climate and sustainability practice and uh yeah before my time in management consulting I worked as an engineer in the oil and gas industry over to you Ben excellent thanks Chris and this is Ben Wilson I'm currently a director with Alvarez and marcol primarily supporting federal government
clients prior to that spent a summer with E paron and their digital infrastructure group I had a short stint with the Army as a spilling and spent about 10 years prior to grad school with a uh large consulting firm and I will be again as Chris reference playing the interviewer today Chris we have a great case are you ready all right let's do it excellent um so medx Innovations our client is planning to launch slim Vora a new weight loss drug expected to compete with the likes of OIC and other glp1 targeting weight loss drugs
the drug has been working its way through research phases for years at a total cost of about 8 billion to MedEx and the Pharma giant has hired your firm to help design and launch to maximize return on the investment how would you help medx launch this product okay great question um so so just to make sure I understand everything uh the client is medx Innovations and they have a weight loss product called slim Bora that is in the R&D phase right now but it sounds like they're going to be launching imminently uh the R&D costs
to get this ready for the market were $8 billion so our question is you know we're we're helping Medics launch the product um sound right you got it spot on all right mind if I ask a few questions no please do okay great so I guess first off just to make sure I understand exactly what they do and the business model it sounds like MedEx develops the drugs and manufactures them and then they Market them to the doctors and P patients who who purchased them is that kind of right right shame okay correct understanding yeah
they they hit all three parts of it perfect um next i' I'd love to just understand the objectives for the launch a little bit like do they have any specific goals or or things like a payback period yeah so menx Innovations aims for the drug slim Laura to achieve a payback period of about five to 10 years that's kind of the target timeline for it and potentially become the industry leader in the weight loss drug market so they want to challenge uh giants like the oix with that payback period still in mind got it okay
that's really cool and I guess lastly just just to confirm I'm assuming we're only focusing on the US market right correct yeah that's our that's our primary purview currently okay sounds good mind if I take a minute to just get my thoughts together please okay um so I have a structure here with three main buckets that I'd like to talk you through um the first one is Market position and value proposition uh the second one is price and financials and then lastly we have distribution and marketing um so just to give a bit more details
on each of these that first bucket of Market position and value prop um the first thing really is understanding the market like what is the state of it for this product right now how many customers are there uh what kind of growth Trends are are we seeing but can we expect going forward um next is really the story that we can tell about the product itself and the value proposition so really what makes this different than competitor products like how fast it works or just how it works in general like what kind of pharmaceutical mechanism
uh or things like side effects or benefits that kind of stuff and then lastly in this first bucket is the customers like once we have that that value propped down uh we'll better know what customers to segment or like how we think about that men or women age categories like lifestyle and health status like patients with diabetes or ongoing illnesses that kind of thing um and yeah really really ideally you you want to sell to to Value right and command a price premium in the market especially if if our goal is as you say to
be a market leader right um competing on Price is something that would be a last resort um yeah and that takes us to the second bucket of price and financials so we really want to understand the pricing structure in the market like how elastic or inelastic is the market and then also that that piece about payback time the 5 to 10 year Break Even Target we just want to understand the relations with um you know the elasticity and how many how many customers we need to get to be able to to hit that Target and
then lastly distribution and marketing So within this last bucket I'm thinking first about what channels we have um I'd want to think about our existing channels um I'm assuming we have a really good relation ship with a lot of Distributors already and and channel access we just need to know which of those are best fit for this product specifically and then there might be some new channels to consider since this is a like a kind of new and Innovative product maybe there's a social media angle we can work here um and then the last piece
is really marketing spend just want to think about how we best invest marketing dollars considering that channel mix how much and and the timing like maybe you want to phase it to invest more upfront to gain market share and then you kind of taper off marketing as you you gain that brand recognition um but yeah really I think I I'd want to start in the first bucket of that structure just um you know understanding the market position and and the state of the market currently yeah because I think that's a great approach to the problem
and a great place to start as well so um if I can provide actually some detail to to that first bucket so the company initially plans to launch its product in the US which is exactly kind of what you identified earlier um through your questions and they want to estimate the size of the market for weight loss drugs in the US uh in terms of annual revenue potential if you can help me with this um and also you know for reference a competitive drug called OIC which I know we had referenced previously costs about $1,000
a month so you can use that as a similar Benchmark awesome great mind if I take uh just a couple seconds to come up with an approach please all right thank you okay so I mean really I want to start with a top- down approach and we would start with the US population and then determine who is eligible for the drug um there's probably a few different criteria we look at to kind of go from our overall population to who is eligible and then from there we apply that annual price that we talked about we
would just use the OIC Benchmark does that sound okay excellent let's do it okay so let's let's start up top with the population um I'll just take 320 million as a as a nice round number if that works please um and then to to get that down to the the eligible group I'm thinking of two criteria the first would have to be um that they're adults um I'm assuming if you're if you're under 18 you're you're not eligible and then the other criteria would be that you're overweight um so just thinking about those two uh
let's let's take the adult population first so I guess you know if if I look at an average lifespan of say 80 years in the US you know 18 divided by 80 is somewhere between 20 and 25 um you know maybe I'll just round it to 25% for the sake of the math which would mean that 75% of the population are adults um so if I multiply that by by the 320 that gives us 240 million adults in the US um and then the next Factor would have to be who who's overweight and I I
don't have an exact stat but I think the numbers are fairly High um so I'll just say let's say 25% if if that sounds okay absolutely Fair assumption okay so I I guess 25% times 240 million brings us to 60 million overweight adults in the US uh which is a pretty big number uh so yeah at this point let's bring the pricing in so we talked about $1,000 per month um so if you multiply 60 million by a th000 per month that puts it at 60 billion uh a month and then 12 months in a
year um I guess 60 billion times 10 would be 600 that we add the extra the extra 20 or 120 on top so $720 billion doll per year is the market um which is that that's a big number I mean my my first thought is that this number is more of a ceiling it's you know what we'd expect the market to get to eventually I think now it's small uh much smaller than this and I'm sure it's going to grow quickly which makes it very attractive active um but I think the key will be to
to start out correctly with a very strong campaign so that we get the drugs into the hands of customers quickly and um you know hopefully we can we can grow our product as the market also grows yeah Chris you made some really good points here and I like the point about the ceiling this is the size of you know maybe in the next few years in the near future and certainly uh the share that everyone uh can attack but what immediately comes to mind is of that massive number you know what market share could our
client potentially look to steal in the first year first five years I mean what are your thoughts and thinking about that versus that large number yeah it's a good it's a good question um I mean I think ultimately it depends on what the competitive landscape is which I I'm not super familiar with yet but I think you know for a product launch in a new market like this in year one it'd be great to get 10% of the market um and then as you grow and gain brand recognition um you know by by year five
the growth rate can also be very variable and again it depends on what your competitors are doing but I think the range could be somewhere between 20% of the market to to 50% excellent and you know 20% of the large number is still a large number so I think that's a fantastic like that market size yeah yeah and I like that 10% Benchmark you used so I want to kind of move us to a bit of a a segmentation analysis so as part of the launch strategy medx has pulled the profiles of a number of
demographics I'm going to put a exhibit up on screen momentarily and I would like your help specifically in determining how uh the information should inform the company's approach to launching the slim Vora drug and please just give me a moment while I put this up on screen great I can see the screen um so we have a table called weight loss drug adoption across four segments uh and this is showing some data split by men and women uh for age uh obesity and percentage adoption on weight loss drugs and uh I also see a total
column at the end that tells us there are 32 million obese people in the US uh for the age groups that we're showing here um and on average 6% drug adoption which seem pretty low um so I guess first off that's telling me the adoption rate is very low now since we're in the very early stages of these drugs being available in the market um and I think we have a long way to go before we hit that market size that we looked at earlier um so I guess my first thought is it sounds like
it's a good time to enter you know the market is Young and it's growing um but let's let's get into some of the detail of the chart now so the the first two columns are showing the 20 5 to 35 age group for men and for women so I'm seeing 7 million obese men 7 and a half million obese women so pretty similar levels um but women are twice as likely to be on the weight loss drugs compared to men it's two versus 4% adoption rate um which is really interesting and if we move to
the these last two columns so this is the 35 to 45 age group uh it's 8 and a half million obese men 9 million obese women so again women are are are winning here by half a million again um and then we see 6% of men using the drugs and 8% of women using them so again there's this two percentage Point higher uptake among women um yeah so I guess my thoughts are we can see the market varies a lot by age group and it varies by gender which leaves a lot of possibilities on how
to proceed um I think the the younger male group has the lowest penetration rate which which could indicate that there's some some great untapped potential here um but on the flip side it could also speak to some other Dynamic like maybe there's greater resistance to using the drugs among that that customer segment um another Avenue could be looking at the one with the highest penetration rate which is that older women Market uh and that that could speak to something like you know greater willingness to use the drugs or um you know maybe there's more room
for growth because of that reason uh yeah so my my mind is that it you know might make sense to to look at some things like price to see if there's Dynamics uh related to the customer segmentation yeah yeah because I think that's a fantastic place to go and you know I'll be curious to hear how the perspective of those kind of two trains of thought might differ or change as we work through the rest of the case um I'm going to move to a second exhibit I'm also going to provide you a bit of
information as I share that uh up on screen so should be able to see it and then you know the team is evaluating three different price points uh for slim Bora using OIC as an anchor price as we have been doing um OIC again is priced at $122,000 for one year you know $1,000 a month and the team is evaluating prices at 8,000 12,000 and 16,000 so you know kind of like just on ver just above and where they current price point is to help this estimate the team is run a model to estimate the
number of customers who would likely be served at each price point um can I receive your help in estimating the annual revenue and payback period for the company's initial investment of 8 billion in each of these pricing schemes and how should the company think about making this decision got it okay great this is this is really helpful information uh yeah why don't I just start walking through each of these um these scenarios individually so if we start on the left here with underpricing we're seeing 8,000 per customer with 100,000 customers so that gives us uh
800 million of Revenue uh and if we know the cost from before are8 billion if we take 8 billion doll of R&D span and we divide it by 800 million in Revenue that gives us that's that's 10 years exactly so that's the upper range of that uh that payback period we talked about um I should also point out I'm noticing this this $50 cost per customer um it doesn't change in any scenario so I might just ignore it now for the the sake of the analysis understood I think that's fair okay great so it looks
like underpricing will work but it's at the top end of the payback period um if we move to parody so revenue is it's 12K times 750 customers so that's going to give us I'm going to do 750,000 plus 150,000 so that gives us 900,000 if we do 8 billion divided by 900 oh 900 million sorry um that's a little less than 9 years it's not exact but I'll say a little bit less than 9 years so that the payback period is is is improved which is which makes sense um and then lastly premium pricing so
we're moving up to 16,000 with 600,000 customers so multiplying these out to 600 um plus 360 so we are looking at 960 million great so higher Revenue than all the others if we do 8 billion divided by 960 million um it's a little bit more than 8 years but that's the lowest payback period so to me it seems like you know if we look at the the Dynamics here the the elasticity between you know number of customers and price it makes sense to go for this premium pricing model um and we have the quickest payback
time here and I I also think it it makes sense to to compare this number um with the original Market size you know we we found a size of 60 million overweight adults in the US uh and here we're getting a payback with 60,000 so that's that's a very small fraction which is a great that's a great sign right um I think another Point that's coming to mind is I I think it probably makes sense to start out premium because you can always move your prices down Market if you want to or need to um
but it's way harder to go the other way and increase your prices yeah I think that's a fantastic Point especially that last one you know we we measure losses so much more aggressively as human beings than we do um you know receiving a benefit um I I me know I'd be curious we've talked about prices we've talked about customers and it's starting to look better and we're starting to identify perhaps a segmented price point where we could be viable but you know we haven't talked as much about the risks associated with this and I'd be
curious you know medx has already invested $8 billion in this product they're keeping a close eye on the risks of this launch how would your company or how would you specifically help identify and mitigate risks going into the market next year great question okay uh mind if I take a few seconds just to collect my thoughts please okay thank you okay uh so here's how I'm thinking about the risks um I'm really looking at what are what are the very tactical steps that need to get done for this you know this drug to make it
to Market and the steps that I see is first off there's all the Regulatory and the finalization of the R&D process getting your permits um there's going to be a campaign and marketing you need to manufacture and produce the drugs and then finally there's the the distribution and the logistics aspect of bringing those to your customers um so I think risks can show up in in any of those steps of the process but just talking through it um in that first the first batch of kind of regulatory and Drug risks um these would be any
final risks related to the product itself so like ideally this is all worked out in testing but you know maybe there's an Undiscovered side effect that comes in later that that kind of thing is really hard to mitigate but could show up um a more I think a more real risk is regulatory issues though that could be really big um I'm sure there are a lot of permits and filing that you need to do to shift from the R&D phase to the like sale of your product um so I think to mitigate any of the
unknowns there you really want to maintain good contact with all the Regulatory Agencies um make sure that they know that what you're planning to do and they have all the latest information so there's no surprises um and if we move to this campaign and marketing side uh I mean really we need to make sure as many people know about our drugs as possible um so you know we would we would be spinning up our typical Communications channels uh all the lines we have to doctors and health care providers make sure that's open and that uh
they have all the information that they need to communicate you know to the patients so whether that's some kind of a um like a marketing sheet about the drug making sure that our our messaging is really crisp and that it's doctor and patient friendly and they you know everybody understands what the the the benefits and potential side effects are um yeah and I also think most importantly it's really important they understand why it's a higher price point than competitors right I I think the messaging needs to be ultra crisp and clear here because we're charging
a higher price so you know the doctors need to communicate why it might be you know advantageous for a patient to do that um on the channel side I think we need to get in front of this with social media maybe influencers uh uh you know I think a risk here would be some of the top influencers might get locked in on promoting only one um so I think speed to Market here is just really key to make sure that you know um you're not locked out of like some of those key voices uh then
here on the production side of things I'd be thinking about our factories like do they do they need special equipment to produce these things um is there going to need to be time to ramp up on what new process is needed either from an equipment or just like a personnel and staff standpoint um I also know any time you're producing something new the first batch is going to have some issues so you know do we have time to to work out the Kinks before you know we're we're launching and getting to Market um and yeah
that's the kind of stuff all that needs to be to be worked out with the management of our production facilities just so there's no unexpected surprises yeah oh I'm sorry go oh sorry yeah I was going to say one one last bucket I can go through quickly is the distribution so like the logistics and shipping to get this to the customers so like can we bundle this into our existing Logistics and delivery services or is there another service we need um so I think we should discuss that with whoever is doing our our delivery services
right now so like again we don't have any unexpected surprises yeah I think that is a fantastic approach and you know I really want to emphasize I liked the point you made about uh communicating the value for the price especially as seeing some of these drug companies get pulled in front of Congress and having to communicate that value um probably too late in the game but one risk I wanted to bring up that's kind of been swirling through my mind and you know was not necessarily highlighted is you know the potential risk of saturation in
the market and at what point is this Market over invested I hear a number of companies jumping in with their drugs and usually feels like three to four big players big companies kind of gobbling up space is that a risk and you know what are your thoughts on hearing that yeah it's it's a good question um you know if if I think back to the adoption rates that we looked at in that second exercise it seems like there's a long way to go right we're we're looking at singled digigit adoption rates right now so I
mean yeah there must be a lot of companies looking at this and seeing the opportunity and there'll be you know many companies uh in addition to us who are piling into the market so that's to be expected um it's you know too soon to know how that's going to play out but I think really what it means is we have to go big early in in marketing spend and getting this to Market quick but I think we want to track data as much as possible and you know if if we're not seeing the kind of
uptake and growth that we want or if we see a competitor who is just uh you know ripping and and doing great in the market it it'll be important to just know that and revamp our strategy as we need to so yeah I think that's a fantastic perspective uh so Chris you have a meeting with the senior partner for a career development chat over coffee coming up and uh you know she happened to asks how the medic project is shaping up you know what do you tell her great can I take just 10 seconds to
regroup here please okay so final summary uh so we were asked to help medx Market its slim Vora weight loss product to maximize its return on an8 billion R&D spend and pay it back within five to 10 years um and we've done some great analysis and the picture we're aligning is aligning on is we should take a premium pricing Approach at uh at 16,000 per year that's the the cost of customers and that gives us the shortest payback of roughly eight years and given that we expect a fast growing Market we recommend moving very quickly
with this to bring it to Market as soon as possible and some of the risks of doing this would be you know we hit some snags on the way to launch since we're moving fast um like you know maybe we don't bring along all of the stakeholders that we need to be successful like a production facilities and Logistics providers and doctors so I mean I recommend as a Next Step checking into any lessons learned that we have from past launches to see what were the typical issues that uh that we need to be aware of
and make sure all that's top of Mind as we're we're moving quickly through this excellent Chris thank you very much fantastic case all right thanks hey everyone it's Kenton gesti here the founder of Rocket blocks thank you so much for watching this mock interview video I hope you found it informative and helpful as you are getting ready to prepare for your own interviews and hopefully Landing that job offer you are excited about we have a ton of great content on the rocket blocks Channel coming out on a weekly basis mock interviews mini lessons and chats
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