7/31/2019 Maverick_Great Lakes Institue of Management_Jedi Knights
1/15
CORPORATE VENTURE
CAPITAL- Business Challenge for TheMaverick
Team Name Jedi Knights
7/31/2019 Maverick_Great Lakes Institue of Management_Jedi Knights
2/15
The client is a major pharmaceutical manufacturer with multibillion dollar sales globally.
It manufactures a variety of drugs and vaccines for an array of problems like inflammation,
immunology and metabolic diseases.
It produces consumer healthcare products like mouthwash and top-of-counter purchasedrugs.
The company in the recent past has taken over a chain of drug stores.
Drug pipelines are not able to keep up with the patent expirations.
a) The client wants a spur of innovation within the organization.
b) If the company lacks innovative edge, survival in the highly competitive
pharmaceutical industry would become difficult in the long-run.
High pricing pressure and tightening regulatory scrutiny in the face of economic turmoil.
7/31/2019 Maverick_Great Lakes Institue of Management_Jedi Knights
3/15
7/31/2019 Maverick_Great Lakes Institue of Management_Jedi Knights
4/15
Healthcare Adjacent
Total Growth Opportunity
Market Potential for futureconsolidation
Expected Returns
Absence ofDominant Playersor Market Leaders
Criteria for screening the segments
7/31/2019 Maverick_Great Lakes Institue of Management_Jedi Knights
5/15
Segment
U.S.Market
Size
Historical
Growth
Future
Growth
Market
Share
Number of
M&A Deals
Total
Opportunity
SegmentBanking
Index
Health Careand IT Sector 2300 11% 12% 12% 67 10.56% 3.82
Tele-Health
Devices 760 8% 7% 55% 12 3.15% 0.06WellnessClinics 1030 5% 4% 15% 5 3.40% 2.38
Point of CareDiagnostics 620 8% 18% 15% 26 15.30% 5.58
ClinicalResearchorganisations 5800 7% 8% 65% 43 2.80% 1.05
HealthcareTrainings 420 5% 6% 21% 5 4.74% 3.00
AccountableCareOrganisationSolutions 350 7% 21% 11% 22 18.69% 5.55
Assumption of Historical Growth of about 7% for Accountable Care Organisational -This is average of
historical growth of health care industry
Please see appendix C for formula
7/31/2019 Maverick_Great Lakes Institue of Management_Jedi Knights
6/15
Segment Future Growth Total Opportuinity Risk Expected Return
Point of Care Diagnostics 18% 15.30% 7.07% 13%
Accountable Care
Organisation Solutions 21% 18.69% 9.89% 14%
Health Care and IT Sector 12% 10.56% 0.71% 12%
Note: The Risk calculation is calculated based on future and historical growth.
Accordingly the Expected Return is calculated
Please see appendix C for formula and segment shortlist arrival
7/31/2019 Maverick_Great Lakes Institue of Management_Jedi Knights
7/15
Accountability Care Organizations:
o Tremendous growth and backing of the US Federal government.
o Gives the client access to the hospital and healthcare services segment.
o Provides good sales and promotion channels for their drugs in the future.
Point of Care Diagnostics:o Huge growth potential.
o The innovative products in ventured company in this segment will spur the innovation in
our client organization.
Health care IT software:
o This being a very lucrative segment, investments in this sector are growing at a doubledigit rate.
o Governmental investments of about $28.5 bn and its incentive programs has resulted in
explosive growth in this segment.
7/31/2019 Maverick_Great Lakes Institue of Management_Jedi Knights
8/15
7/31/2019 Maverick_Great Lakes Institue of Management_Jedi Knights
9/15
Weight of Health Care and IT Sector to be invested 60.00%
Weight of Point of Care Diagnostics to be invested 40.00%
Expected Return 14.40%
Risk 3.00%
Segment Classification CompanyPresent Revenue ( USMillion $(Dollars)
Expected Minimum NextYear Revenue ( US Million$(Dollars)
If Investing 10Million $ {Suggested diversion ofmoney across Portfolios}
Point of Care Diagnostics Alpha 13.09 15.45 2
Health Care and IT Sector Gamma 12 13.44 6
Point of Care Diagnostics Delta 0.1 0.118 2
Expected Investment to Grow( USMillion $(Dollars) 11.44
Please see appendix C for formula
7/31/2019 Maverick_Great Lakes Institue of Management_Jedi Knights
10/15
Delta:
Innovative Product development. This is an assumption that Delta manufactures a new POCD equipment which will aid blind diabetic patients to take care
of insulin intake and blood glucose level tests with voice playback
Investment required is less.
Huge opportunity of leveraging and takeover.
If the product fails, the client can conveniently absorb the small but talented staff .
Gamma:
Business model is scalable and product licensing based.
We have assumed that this company is providing EHR service as well as cloud computing infrastructure to health careproviders including emerging Accountability Care Organizations.
Possibility of leveraging the Management expertise and sales force.
Alpha:
Generating recurring revenues in a highly uncertain disruptive technologies segment shows the competence of thisorganization.
Can instigate innovation in clients organization.
We are assuming that Alpha is into Point-of-care diagnostics where it is developing some clinical self-test apparatus.
Gamma can be treated as a risk free and profitable investment whereas Alpha would be a risky and higher value investment.
Therefore, our suggestion
To invest in a portfolio that gives maximum return and minimum risk, the client can invest in Gamma, Alpha andDelta with maximum investment being in Gamma.
7/31/2019 Maverick_Great Lakes Institue of Management_Jedi Knights
11/15
Each criterion is measured with 5 point scale. 5-Highest relevance to 1-Least
relevance except for Expected Return and Risk for which 5-Least risk to 1-highest
risk. Total score for each target company is arrived at by adding the individual
criteria scores weighted by priority.
Companies
Operatingsegments ( Priority
1) 5
Future growthopportunities (
Priority 2) 4
Innovation inProducts or
Services ( Priority3) 3
Expected Returnand Risk ( Priority
4) 2
Feasibility toLeverage
knowledge (priority 5) 1 Total Score
Alpha 5 3 5 3 4 62
Beta 3 4 4 2 2 49
Gamma 4 4 4 2 5 57
Sigma 4 2 2 1 4 40
Delta 5 4 5 3 5 67
7/31/2019 Maverick_Great Lakes Institue of Management_Jedi Knights
12/15
Health care IT software:
This market segment has the opportunity to enter into Electronic Health Record
(EHR) market which is poised to grow at 13.5 percent over the coming years.
EHRs may include a range of data, including demographics, medical history,
medication and allergies, immunization status, laboratory test results, radiology
images, vital signs, personal stats like age and weight, and billing information.
U.S. grants $1.2 billion for Electronic Health records.
Point of Care diagnostics:
After a brief slowdown in growth during 2009 to 2010, this segment is growing at a
very good rate of 8 to 9 percent.
Exciting innovation opportunities are present in this segment in various evolvingproducts like Theranostics, Blood Glucose testing, blood gas analyzers, cardiac
makers, cancer tests, fertility products etc.
7/31/2019 Maverick_Great Lakes Institue of Management_Jedi Knights
13/15
Total Growth Opportunity = Future Growth * ( 1Market Share)
Segment Banking Index: It is the index we have created which gives the best
number for Segment Selection. Higher the number the better the company for
segment selection
o Segment Banking Index = (Market Size * ( 1Market Share ) * Total
Growth Opportunity * Future Growth *10) / Number of M & A deals
Numerator gives the total opportunity with respect to the Potential
Market. Denominator is the number of M & A deals.
The result tells us how much we can consolidate the future
potential market
Risk, Expected Return CalculationsSegment Risk and Expected Return calculations are calculated
based on historical and future growth both considering equal
probability.
7/31/2019 Maverick_Great Lakes Institue of Management_Jedi Knights
14/15
Weights of shortlisted segments are calculated based on the criteria of minimum
roof risk of 3.00%.
Expected Portfolio Return = weight1*Return1 + weight2*Return2.
Expected Portfolio Risk = weight1^2*Variance1 +
weight1*weight2*covariance+Weight2^2*Variance2
Present Revenues for Alpha and Delta are calculated as follows
Gamma Total funding was $55 Million which generated $12 Million
where as Alpha first round funding was $60Million accordingly an
approximate revenue for the company was calculated. ((12/50)*60)
Delta was a start-up which was compared with respect to that of
sigma. An investment of $10 Million was taken as an example and was shown how we can
diverse our investments across the companies. Expected revenue was calculated
with the use of expected portfolio return.
7/31/2019 Maverick_Great Lakes Institue of Management_Jedi Knights
15/15
The book Corporate Finance Eighth edition by Stephen A Ross, Randolph W Westerfield,
Jeffrey Jaffe, Ram Kumar Kakani
Internet site: http://thehealthcareblog.com/blog/tag/disruptive-technology/
Internet site: www.pfizer.com
Internet site: http://www.fas.org/sgp/crs/misc/R40834.pdf
Internet site: http://www.plunkettresearch.com/health-care-medical-market-research/industry-trends
Internet site:
http://www.epsrc.ac.uk/ourportfolio/themes/healthcaretechnologies/Pages/researchareas.aspx
Internet site: http://www.healthcareitnews.com/news/point-care-diagnostics-market-headed-
165b
Internet site: http://www.healthcareitnews.com/news/us-ehr-market-approach-5-billion-2015 Internet site: http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611
Internet site: http://pnhp.org/blog/2010/07/09/what-is-an-accountable-care-organization/
Internet site: http://www.kelsey-seybold.com/kelseycare/kelseycare-for-employers/pages/what-
is-an-accountable-care-organization.aspx
Internet site: http://healthaffairs.org/healthpolicybriefs/brief_pdfs/healthpolicybrief_23.pdf
http://thehealthcareblog.com/blog/tag/disruptive-technology/http://www.pfizer.com/http://www.fas.org/sgp/crs/misc/R40834.pdfhttp://www.plunkettresearch.com/health-care-medical-market-research/industry-trendshttp://www.plunkettresearch.com/health-care-medical-market-research/industry-trendshttp://www.epsrc.ac.uk/ourportfolio/themes/healthcaretechnologies/Pages/researchareas.aspxhttp://www.healthcareitnews.com/news/point-care-diagnostics-market-headed-165bhttp://www.healthcareitnews.com/news/point-care-diagnostics-market-headed-165bhttp://www.healthcareitnews.com/news/us-ehr-market-approach-5-billion-2015http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://pnhp.org/blog/2010/07/09/what-is-an-accountable-care-organization/http://www.kelsey-seybold.com/kelseycare/kelseycare-for-employers/pages/what-is-an-accountable-care-organization.aspxhttp://www.kelsey-seybold.com/kelseycare/kelseycare-for-employers/pages/what-is-an-accountable-care-organization.aspxhttp://healthaffairs.org/healthpolicybriefs/brief_pdfs/healthpolicybrief_23.pdfhttp://healthaffairs.org/healthpolicybriefs/brief_pdfs/healthpolicybrief_23.pdfhttp://healthaffairs.org/healthpolicybriefs/brief_pdfs/healthpolicybrief_23.pdfhttp://www.kelsey-seybold.com/kelseycare/kelseycare-for-employers/pages/what-is-an-accountable-care-organization.aspxhttp://www.kelsey-seybold.com/kelseycare/kelseycare-for-employers/pages/what-is-an-accountable-care-organization.aspxhttp://www.kelsey-seybold.com/kelseycare/kelseycare-for-employers/pages/what-is-an-accountable-care-organization.aspxhttp://www.kelsey-seybold.com/kelseycare/kelseycare-for-employers/pages/what-is-an-accountable-care-organization.aspxhttp://www.kelsey-seybold.com/kelseycare/kelseycare-for-employers/pages/what-is-an-accountable-care-organization.aspxhttp://www.kelsey-seybold.com/kelseycare/kelseycare-for-employers/pages/what-is-an-accountable-care-organization.aspxhttp://www.kelsey-seybold.com/kelseycare/kelseycare-for-employers/pages/what-is-an-accountable-care-organization.aspxhttp://www.kelsey-seybold.com/kelseycare/kelseycare-for-employers/pages/what-is-an-accountable-care-organization.aspxhttp://www.kelsey-seybold.com/kelseycare/kelseycare-for-employers/pages/what-is-an-accountable-care-organization.aspxhttp://www.kelsey-seybold.com/kelseycare/kelseycare-for-employers/pages/what-is-an-accountable-care-organization.aspxhttp://www.kelsey-seybold.com/kelseycare/kelseycare-for-employers/pages/what-is-an-accountable-care-organization.aspxhttp://www.kelsey-seybold.com/kelseycare/kelseycare-for-employers/pages/what-is-an-accountable-care-organization.aspxhttp://www.kelsey-seybold.com/kelseycare/kelseycare-for-employers/pages/what-is-an-accountable-care-organization.aspxhttp://www.kelsey-seybold.com/kelseycare/kelseycare-for-employers/pages/what-is-an-accountable-care-organization.aspxhttp://www.kelsey-seybold.com/kelseycare/kelseycare-for-employers/pages/what-is-an-accountable-care-organization.aspxhttp://www.kelsey-seybold.com/kelseycare/kelseycare-for-employers/pages/what-is-an-accountable-care-organization.aspxhttp://www.kelsey-seybold.com/kelseycare/kelseycare-for-employers/pages/what-is-an-accountable-care-organization.aspxhttp://www.kelsey-seybold.com/kelseycare/kelseycare-for-employers/pages/what-is-an-accountable-care-organization.aspxhttp://pnhp.org/blog/2010/07/09/what-is-an-accountable-care-organization/http://pnhp.org/blog/2010/07/09/what-is-an-accountable-care-organization/http://pnhp.org/blog/2010/07/09/what-is-an-accountable-care-organization/http://pnhp.org/blog/2010/07/09/what-is-an-accountable-care-organization/http://pnhp.org/blog/2010/07/09/what-is-an-accountable-care-organization/http://pnhp.org/blog/2010/07/09/what-is-an-accountable-care-organization/http://pnhp.org/blog/2010/07/09/what-is-an-accountable-care-organization/http://pnhp.org/blog/2010/07/09/what-is-an-accountable-care-organization/http://pnhp.org/blog/2010/07/09/what-is-an-accountable-care-organization/http://pnhp.org/blog/2010/07/09/what-is-an-accountable-care-organization/http://pnhp.org/blog/2010/07/09/what-is-an-accountable-care-organization/http://pnhp.org/blog/2010/07/09/what-is-an-accountable-care-organization/http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://thesash.me/who-will-fix-the-ux-of-healthcare-a-3-trillio-44611http://www.healthcareitnews.com/news/us-ehr-market-approach-5-billion-2015http://www.healthcareitnews.com/news/us-ehr-market-approach-5-billion-2015http://www.healthcareitnews.com/news/us-ehr-market-approach-5-billion-2015http://www.healthcareitnews.com/news/us-ehr-market-approach-5-billion-2015http://www.healthcareitnews.com/news/us-ehr-market-approach-5-billion-2015http://www.healthcareitnews.com/news/us-ehr-market-approach-5-billion-2015http://www.healthcareitnews.com/news/us-ehr-market-approach-5-billion-2015http://www.healthcareitnews.com/news/us-ehr-market-approach-5-billion-2015http://www.healthcareitnews.com/news/us-ehr-market-approach-5-billion-2015http://www.healthcareitnews.com/news/us-ehr-market-approach-5-billion-2015http://www.healthcareitnews.com/news/us-ehr-market-approach-5-billion-2015http://www.healthcareitnews.com/news/us-ehr-market-approach-5-billion-2015http://www.healthcareitnews.com/news/us-ehr-market-approach-5-billion-2015http://www.healthcareitnews.com/news/us-ehr-market-approach-5-billion-2015http://www.healthcareitnews.com/news/point-care-diagnostics-market-headed-165bhttp://www.healthcareitnews.com/news/point-care-diagnostics-market-headed-165bhttp://www.healthcareitnews.com/news/point-care-diagnostics-market-headed-165bhttp://www.healthcareitnews.com/news/point-care-diagnostics-market-headed-165bhttp://www.healthcareitnews.com/news/point-care-diagnostics-market-headed-165bhttp://www.healthcareitnews.com/news/point-care-diagnostics-market-headed-165bhttp://www.healthcareitnews.com/news/point-care-diagnostics-market-headed-165bhttp://www.healthcareitnews.com/news/point-care-diagnostics-market-headed-165bhttp://www.healthcareitnews.com/news/point-care-diagnostics-market-headed-165bhttp://www.healthcareitnews.com/news/point-care-diagnostics-market-headed-165bhttp://www.healthcareitnews.com/news/point-care-diagnostics-market-headed-165bhttp://www.healthcareitnews.com/news/point-care-diagnostics-market-headed-165bhttp://www.epsrc.ac.uk/ourportfolio/themes/healthcaretechnologies/Pages/researchareas.aspxhttp://www.epsrc.ac.uk/ourportfolio/themes/healthcaretechnologies/Pages/researchareas.aspxhttp://www.plunkettresearch.com/health-care-medical-market-research/industry-trendshttp://www.plunkettresearch.com/health-care-medical-market-research/industry-trendshttp://www.plunkettresearch.com/health-care-medical-market-research/industry-trendshttp://www.plunkettresearch.com/health-care-medical-market-research/industry-trendshttp://www.plunkettresearch.com/health-care-medical-market-research/industry-trendshttp://www.plunkettresearch.com/health-care-medical-market-research/industry-trendshttp://www.plunkettresearch.com/health-care-medical-market-research/industry-trendshttp://www.plunkettresearch.com/health-care-medical-market-research/industry-trendshttp://www.plunkettresearch.com/health-care-medical-market-research/industry-trendshttp://www.plunkettresearch.com/health-care-medical-market-research/industry-trendshttp://www.plunkettresearch.com/health-care-medical-market-research/industry-trendshttp://www.plunkettresearch.com/health-care-medical-market-research/industry-trendshttp://www.fas.org/sgp/crs/misc/R40834.pdfhttp://www.fas.org/sgp/crs/misc/R40834.pdfhttp://www.pfizer.com/http://thehealthcareblog.com/blog/tag/disruptive-technology/http://thehealthcareblog.com/blog/tag/disruptive-technology/http://thehealthcareblog.com/blog/tag/disruptive-technology/http://thehealthcareblog.com/blog/tag/disruptive-technology/http://thehealthcareblog.com/blog/tag/disruptive-technology/