This is a marketing strategy for a leading medical device company for a new product launch. This presentation won the Babson Marketing Case Competition - 2012 with prize money of $5000. 16 schools across the globe were competing in this competition.
for $1,500/month ($18,000 / year sunk cost encourages frequent use)(assuming 8-15 generators licensed in Year 1 = $320,000 – 600,000 @ $40k each· Receive payment for disposables ($1,000 value) only when insurance pays (reduces financial risk to hospital objection)· Low estimate: 12.5 treatments / hospital / month: assuming 50% reimbursement rate $3,125 income to hospital / month (shared between doctor and hospital). $0 gain/loss to us for disposables· High estimate: 1,040 treatments / hospital / month: assuming 50% reimbursement rate $260,000 income to hospital / month (shared between doctor and hospital). $0 gain/loss to us for disposables
What is the problem? Paradigm shift: Treating to Preventing Cancer Concerned stakeholders Providers – Doctors, Hospitals Limited time Low budget for capital investment Uncertain ROI Patients Awareness Payers Comparative costs Reimbursement policy
Benefits to Believers Patient Minimally invasive Reduced discomfort Providers Revenue stream compared to “wait and watch” May replace colonoscopy treatments Marketing opportunity on innovative treatment incompetitive environment for patients Payers Reduced long-term care expenses
Marketing Plan – Three PhaseApproachReaching out to different stakeholders at differentpoints in time in the course of next 2-3 years. Phase 1: (Months 0-8) Early Adopters/Influencers Hospitals Phase 2: (Months 9-16) Insurance companies Customers Phase 3 (Months 17-36) Mass markets (Hospitals, Clinics, etc.)
Phase 1 – Get the EarlyAdopters Get equipment in use at early adopters/influencer sites Academic teaching hospitals Leading edge practices Easier target because they keep up with journal publications andembrace innovation Marketing Plan License technology to hospitals Rent generator $1,500 / month Charge payment for disposables ($1,000 value) only wheninsurance pays. Assuming 50% insurance reimbursement rate Worst Case: $3,125 income to hospital / month Best Case: $260,000 income to hospital / month $0 gain/loss to Company for disposables
Phase 2 – The Blanket Leveraging benefits from Phase I Widespread success with early adopters Journal publications: GI Associations (PMC) Generating critical mass for insurance Insurance Companies (Goal: Blanket coverage) Citing cost advantages Assumption: 58k patients get surgery – Cost $1.16 Billion Set a bar for reimbursements Only for Low & High grade Dysplasia: Population 240k x $1500 = $360 Million Cost advantage – Potentially $800 Million Patients: Marketing partners AARP Healthy food providers Antacid
Phase 3 – Going Big! Insurance companies launch “Blanket” policies Launch to mass markets Increase license fees Procedures are fully reimbursed New segments: Towards community GIs Reimbursement guaranteed Easy to use and short duration process Proven results with large patient population Colonoscopy market replacement Thoracic surgeons Shrinking cancer market
Challenges Time required per sell Substantial initial investments in technologylicensing Efforts in changing the "surveillance" paradigmto "adoption" in GI associations magazines Making sure that it does not go in the hands ofcowboy doctors Cryotherapy: Competitive option if clinical trialsare done within time.
Summary Sharp thinking beyond razor/blade sales Three phase approach Phase 1 Build credibility with early adopters Reduce objections to investment & reimbursement Phase 2 Marketing partnership towards patients Leverage treatment experiences and journals to influenceinsurance reimbursement policy Phase 3 Go big Capture mass market