Following is a case study that outlines a situation and provides you with some of the key issues and potential questions you may want to consider. Spend some time thinking about the situation and working through the structured problem solving process as you would in an interview. See if you can answer some of the "probing questions" the interviewer may ask you related to this case. Most importantly, be creative and have fun!

Biotechnology Case

• The client is a U.S. biotechnology company with one product on the market ($500MM in sales)
• Product is used by dialysis patients; target audience is nephrologists
• In 6 to 12 months, company is planning on introducing a new product to the market
• New product is for cancer patients; target audience will be oncologists
• There is one major competitor for the current product; if new product is introduced within a year, there will be no competition for at least one year
• Current sales force is comprised of 100 sales representatives
• Most reps joined company to be in an entrepreneurial environment
• Have been selling only one product for the past 5 years
• To successfully introduce the new product to the oncology market, the company will need to invest money in expanding its sales force

Your Task - The Business Problem

Help the client think through the question, "Should we invest money in expanding our sales force?"

Additional Industry Background

• The life of a patent is 17 years; however, most of this life is spent in the R&D and FDA approval processes
• Being first-to-market is extremely important to a new product's success Selling cycle: sales reps call on doctors to discuss products —> doctors recommend products to patients —> patients choose and buy products to use —> health plan or insurance company reimburses patients
• Cancer products are generally very expensive; however, most of the patient's out-of-pocket costs are covered by their health plan or insurance company
• To sell cancer products to oncologists requires experienced sales people with technical backgrounds (oncologists do not see sales reps easily) — it usually takes 6 to 12 months to recruit and train a new sales organization

Key Issues - Problem Decomposition

• What is the potential demand (in units) for the new product?
• How many cancer patients are there?
• How frequently will patients use the product?
• What is the recommended dosage per usage occasion?
• What unit price will the company be able to charge for the new product?
• How will price be set for the product in the marketplace?
• What is the size of the sales force investment which will be required to support the new product?
• What is the average annual cost of a sales rep?
• How many additional sales reps will be needed to successfully introduce and adequately support the new product?
• How many oncologists will need to be called upon?
• How often will each oncologist need to be called?
• What will be the average length of an oncologist call?
• Where is the point of diminishing returns for sales calls?
• How will potential demand be impacted by the number of sales representatives selling the new product?

Additional Considerations and questions

• How would you estimate demand for the new product?
• What approach would you use and what data would you want to see?
• How would you set the price for the new product?
• Is this product likely to be price elastic or price inelastic?
• What if there was competition for the new product?
• If the client decided to invest, should they go with one combined sales force (for both products) or two separate sales forces (one for each product)?
• What would you want to consider in deciding between one or two sales forces?
• How similar are the two products and target audiences?
• Are the two target audiences located in geographic proximity to each other?
• Will the new product distract sales reps from selling the current product (or vice-versa)?
• What will be the likely impact of each alternative on employee satisfaction?
• If they went with one combined sales force, how would you determine how much sales effort should be spent on each product?
• What other sales channels (other than direct) might the company want to consider and why?
• What other factors might be important to consider in making these decisions?
• Strategic direction of the company
• Financial situation (cash flow, capital availability, etc.)
• Current sales organization structure and reward system
• Potential barriers to entry for new competitors
• Other investment opportunities (i.e., opportunity cost)

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