Breanne Hayes April 2008 MBA Graziadio School of Business and Management Pepperdine University
Elizabeth Passeretti April 2008 MBA Graziadio School of Business and Management Pepperdine University
Overview of Industry Value Chain: Consumer Health Products Cotton, Plastics, Chemicals, etc. Retailers: Pharmacies, Drug Stores, Supermarkets Wholesalers Consumers Incumbent Firms engage in R&D and Mfg to produce consumer health products and OTC pharmaceuticals NOTE: Incumbent firms compete fiercely for retailer shelf space! Market size: $480B Breanne Hayes, April 2008 MBA, Graziadio School of Business and Management Pepperdine University
Industry Analysis Industry Supply Chain Biotech Companies Hospitals / Pharmacies (39%) Patients (Consumers) Drug Wholesalers (61%) $52 billion market $67 billion market Raw materials, Lab equipment, Chemicals FDA Payers (Insurance) Physicians (Customers) Legend Value = Product Value = Knowledge Regulators/Gatekeepers Elizabeth Passeretti April 2008 MBA Candidate Graziadio School of Business and Management,Pepperdine University
The industry supply chain- what is the value added by each player in the chain Raw material Supplier Customer Manufacturer Distributor/Wholesaler Retailer
Value created and captured by each member in the value chain Adapted from: http://faculty.msb.edu/homak/HomaHelpSite/WebHelp/HomaHelp.htm Suppliers Manufacturers Distributors Retailers Consumers ROI Asset Intensity Profitability Value Added
The concept of PIE- Potential Industry Earnings Manufacturer has the biggest “pie” Retailer has the biggest “pie”
Oil & Gas Industry: Historical gas prices at the pump
Gasoline Value Chain: who gets what $1.34 $1.19
How big is the industry “PIE” and how is it split? Small pie Big pie Why ?
The concept of PIE- Potential Industry Earnings Industry Demand Opportunity Cost of Resources PIE Quantity Produced by the Industry
Nappies 11-13? Industry Supply Chain -raw material to customer How much Value is added by each member of the supply chain Concept of Industry PIE -How is the PIE split -How big is the PIE-- what determines the size?