Biotech Distribution Business PlanEML Capstone Project

Cameron Marlowcameronmarlow@yahoo.com

Georgetown UniversityFebruary 26, 2016

Entrepreneurship

Cameron Inc. ?

My Background

• Laboratory manager, Brady Urological Institute JHU• Sales representative, Protea Biosciences• Research associate, Clinical Validation Lab NIH• Director of cell center, Genetic Resources CORE Facility JHU• Director of operations, Indivumed GmbH• Scientist, Adaptimmune LLC

Statement of the Problem Scientists and researchers in the life sciences need better

access to resources such as biotech consumables to complete their work. A convenient method to save time and money would benefit the scientific community.

Proposal My proposition is to solve the need of supply chain management of biotech

consumables for smaller academic institutions and biotech companies. The concept, involves the commercialization and installation of vending

machines or automated retail Purpose of the study is to access if there is value in the market place for this

model.

Current Methods

P-Card

Internal Onsite Store

Freezer Program

Current Process Method Advantage Disadvantage

Purchase Order (P.O.) ControlledAccurate reporting

Time! Procurement mistakesPaper trailShipping costs

P-card or Credit Card TimeAccurate reporting

Limited fundsCategory purchasesFinance costs

Internal Store TimeNo shipping costsStore bulk discount

Limited SelectionDiversity of Vendors

Freezer Program TimeNo Shipping cost

No ControlTheftLimited Selection

Creating Breakthrough Products

Cagan, J., & Vogel, C. (2012). Creating Breakthrough Products: Revealing the Secrets that Drive Global Innovation (2nd ed.). FT Press

Identifying the Opportunity

• S.E.T. Factors• Product Opportunity

Gap• Product Opportunity

Statement

Understanding the Opportunity

• Value Opportunity• Actionable Insights• Product Attributes

Conceptualizing the

opportunity• Product Concept

Program Approval

• Protecting Innovation

Product Launch

• Product Refinement• Production

Prototype• Site of Launch

Fuzzy Front End

“Product = Useful, Usable, and Desirable”

Identifying the OpportunitySocial: How do researchers currently purchase consumables and is it painful? Purchase order, p-card (credit card), online, or onsite storeEconomic: R&D Budget or grant to purchase goods Funding can be limited or have need to be regulated more strictly Governmental regulation of funds to the National Institute of Health and the trickle-

down effect to outside institutions. Save time and money on consumables Public attention to research area (Cancer, HIV, Dementia, etc.) Technology: Emerging, existing, or lack of technologies Vending machines haven’t been used for biotech consumables Similar machines have been used for healthcare (i.e. scrub machines) Vending machines have been used in the auto industry to distribute safety

equipment.

Product opportunity statement: Using limited funds, institutional methods to buy consumables should align to save time and money while utilizing convenient access to new technologies.

Understanding the Opportunity Who is the customer?:

Johns Hopkins University; 5

Glaxo Smith Kline GSK; 3

Thomas Jeffer-son University; 2

University of Pennsylvania; 2

Moffitt Cancer Center; 1

Northwestern University; 1

Georgetown University; 1

N=15 80%

20%

Would Use the Vending MachineYes No

67%

33%

Rely on Vending Machine for Product

Yes No

Understanding the Opportunity

100% Participants said they had limited storage space

100% Participants agreed that if the vending machine was located in

another location or outside building they would NOT use it.

100% Participants have never used Amazon to buy lab products

100% Participants have used Thermo Fisher to buy lab products.

100% Participants must purchase through a procurement

department

Understanding the Opportunity

Participants who have access to an Internal Store:

60% Participants said they would like to see competing internal

stores.

100% Participants agreed that they would like to see a differentiation

of product stocked in the store.

Participants from Large Pharma:

Participants liked the concept because it offered control and security

of product.

Conceptualizing the Opportunity What is needed to start 1 vending machine in 1 facility?

How lean can the process be without sacrificing the concept?

Conceptualizing the Opportunity

5 Top rows Ambient Temp.

2 Bottom rows Refrigerated Temp.

Up to 8 Trays per row depending

on product size.

Additional Temp controlled “Will

Call” lockers.

Conceptualizing the OpportunityPlanogram of Biotech vending machine

Conceptualizing the Opportunity

Pricing

Products

Potential Revenue

$30,000 worth of product

Conceptualizing the Opportunity

Models of Business:

Become a distributor and self stock = $120,000 profit per year

• Disadvantage = higher risk

Rent space in the machine to biotech supply companies = $60,000 profit per year

• Rent trays $70 to $100 per month

• Advantage = no market research

• Advantage = Rely on companies to market their own product

• Advantage = No product loss

“Will Call” lockers = unlimited revenue, Just limited by size of the locker

Conceptualizing the OpportunityCost of entry and annual costs:

Conceptualizing the Opportunity

Areas not covered:

Salary?

Shipping?

Transport? Fuel? Refrigeration?

Rental Space?

Central Receiving?

Margin with key partners and contracting?

Contracting with Academic Institutions?

Contracting with Real Estate companies?

RISKs Contractual buy in, what is in it for the partnering body?

Power failure and loss of refrigerated product?

Equipment failure?

Vending machine access and hours of operation?

HAZMAT What happens if a reagent spills inside or outside of the

machine?

OSHA regulations?

Ability to stock alternative product?

Program Approval and Conclusions

Is Biotech automated vending a viable business?

Was the process of a business plan effective?

Questions?

PESTLINPESTLE IN:‐ Rating Implications of Key External Factors

CATEGORIES OF EXTERNAL FORCES

1. KEY EXTERNAL FACTORS – LIST

2. IMPLICATIONS OF EACH KEY FACTOR – IDENTIFY

3. IMPACT & IMPORTANCE –

RATING* TI TY DY RI

POLITICAL 1. Government Regulations and FDA Approvals 2. Elections Republicans vs Democrats 3. Influential (Politicians and Celebrities get Cancer or

Diseases) 4. Customers 5. Procurement Departments

1. FDA approval prolongs drug development 2. Republicans vs Democrats (Democrats favor Biotech funding by

71%) 3. Foundational Sponsorships for research 4. Understand the research and consumables needed to conduct

that Research 5. Getting department buy in ( I will make their lives easier)

1. L 2. L 3. L 4. H 5. M

1. M 2. L 3. L 4. H 5. H

1. H 2. L 3. L 4. H 5. M

1. M 2. M 3. H 4. H 5. H

ECONOMIC 1. Government Funding (Trickle Down) (Personal Experience in Cancer Research)

2. Venture Capital 3. Customer Purchasing /Ecommerce /Vending Machine 4. Staff

1. NIH >‐ EDU >‐ Biotech 2. ex. Shark Tank Who will buy in? 3. P card‐ / Club Membership / Ease of use (NO Purchase Orders)

Direct link to budget numbers 4. Level of staff members

M H H H

H H H H

H H H H

H H H H

SOCIAL 1. Advertising Google 2. Social Media (LinkedIn, Facebook, Twitter, Research Gate) 3. Trade Shows (AACR, ASCO, BIO etc.) 4. Customer Service Policy

1. Understanding google analytics. Must be top 10 in search 2. Required weekly update Stay current with consumer and research

trends) 3. Choosing the right research demographic (Customers) 4. Teaching employees how to handle difficult customers to keep

them coming back

1. L 2. L 3. H 4. H

1. H 2. H 3. H 4. H

1. H 2. H 3. H 4. H

1. H 2. H 3. H 4. H

TECHNOLOGICAL & INFRASTRUCTURE

1. Website Development E Commerce‐ (Amazon or Newegg model) Vending Machine (http://biotechvending.com/) Consumer Account control

2. Off Site Back up / Power Generators / Alarms

1. Developer Costs Web / Database / Maintenance Costs / Vending Machine

2. Disaster Control

1. H 2. H

1. H 2. H

1. H 2. H

1. H 2. H

ENVIRONMENTAL 1. Technology allows for Regulated Consumption and Customer Quality Control.

2. Financial Regulatory PI level and Sponsor Level 3. Warehouse Distribution workflow to Stock vending

machines 4. Vending Machine Placement

1. Principle Investigator (PI) has more control over research spending, Principle Investigator (PI) can control quality of Research and knowledge of Staff Activity

2. Financial Reporting for Grant funding 3. Institutional access / Storage of Product 4. Lobby of Academic and Industry partners / agreements

1. L 2. H 3. H 4. H

1. M 2. M 3. H 4. H

1. H 2. H 3. H 4. H

1. H 2. H 3. H 4. H

LEGAL 1. Form a LLC 2. Biotech Companies 3. Direct Manufacturers 4. Internal Stores

1. Form Inc. depending on company growth 2. Obtain contracts with Institutions to place equipment. Make

agreements with Realtor Companies that own the buildings 3. Form agreements for pricing 4. Threaten unfair business practices lawsuit

1. H 2. H 3. H 4. L

1. M 2. H 3. H 4. H

1. L 2. H 3. H 4. L

1. M 2. H 3. H 4. H

INTERNATIONAL 1. European Market? 2. Stock Foreign Products?

1. Has not been considered (Yet) 2. Product Quality Control and Actual Market for product

1. L 2. L

1. L 2. L

1. L 2. L

1. L 2. L

NATURAL RESOURCES 1. Biotech Companies (GE Health Care / VWR / Thermo Fisher Scientific) Direct Manufactures (Life Technologies / BioRad / Rockland ImmunoChemicals)

2. Specialty Products such as DNA Primers or Oligose pairs (Big Market) (JHU CORE store)

1. Discounts, Bulk Pricing, Retail Markup / Product Quality 2. How to Quality Control / Product expiration / Cold Chain

Management

1. H 2. L

1. H 2. H

1. H 2. H

1. H 2. M

Rating Implications of Key External Factors: From the rating of top ten external factors the following key uncertainty questions have been developed. 1. Political (Customers): “Customers” Who will be target demographic

and at what level? Is it the Technician, Principle Investigator, or Procurement?

2. Economical (Customer Purchasing): “Revenue” Can revenue generated self-support this venture?

3. Technological Infrastructure (Ecommerce +Vending): Will the cost be too high to obtain a solid infrastructure and how much support will be needed?

4. Natural Resources (Distributors): Will distributors embrace the idea for additional revenue with less than optimal margin?

5. Legal (Who’s on first): Can this business model be protected or should there be a huge push for secured space?

6. Economical (Venture Capital): Will the sharks buy in?7. Environmental (line of sight): Will Institutions or Building Landlords

provide space with line of sight? Rent?8. Social (Customer service): Can employees realize the value provided

and see the product through the customer’s eyes? 9. Environmental (Warehouse): How far away can a distribution

warehouse be located to provide same day delivery of orders? 10. Technological Infrastructure (Back up): Are additional costs too

infrastructure too high to insure stability?