Project Alzheimer Care10 Financial Simulation 2

8/6/2019 Project Alzheimer Care10 Financial Simulation 2

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Alzheimer Care10Alzheimer Care10

Financial AspectsFinancial Aspects


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Context and business PlanContext and business Plan

Global Pharma market trends

Alzheimer disease facts Industry Comparables

The product

Sales objectives OPEX / CAPEX


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Worldwide Market TrendsWorldwide Market Trends

Asia-Pacific regions2040: Health Care needs 3X for 65y

Sales 4-7% 20132040: 65y

65y

PharmaceuticalMarket


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Alzheimer trends

Lancet dec 2005

4,6M new cases/y1case/ 7sec

Developed countries

2001 60%

2040 71%

Growth Rate 2001-2040

Developed Countries 100%

India, China, South Asia, West Pacific 300%


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Where do we stand ?Where do we stand ?

Most significant Industry CompetitorsMost significant Industry Competitors

Beta = 0.7

OPEX / Sales = 65%

CAPEX Dep / Sales = 9%

Median ValuesMedian Values


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Affected people in 2009 are approx 25Affected people in 2009 are approx 25 million people worldwide.million people worldwide.

ThenThen 42 million in 202042 million in 2020 and evenand even 81 million in 2040.81 million in 2040.

Avg treatment cost = 3000$ 40 B$ (35% MS)

Financing Strategy : 60 / 40 Bank(6%) ; = 0.7 CAPM 8.2%

Alzheimer Care10Alzheimer Care10

An unprecedented Alzheimer disease treatment.An unprecedented Alzheimer disease treatment. Until now, no cure forUntil now, no cure forAlzheimer's diseaseAlzheimer's disease

Our new product, by increasing the level ofOur new product, by increasing the level ofacetylcholineacetylcholine, stops the disease., stops the disease.

Strategy :Strategy : Grab 35% of the TAM (over the period)Grab 35% of the TAM (over the period)

Alzheimer Care10 ProjectAlzheimer Care10 Project


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Sales and Market shares forecastsSales and Market shares forecasts

Sales forecasts

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

2010201120 1220 1320 1420152016201720 1820 1920 2020 212022

Market shares

0.0%

10.0%

20.0%

30.0%

40.0%

2010201120122013201420152016201720182019202020212022

A Fast ramp-up

26%MS at growth

35%MS at maturity

Sales based

on 25Mu to42Mu TAM


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OPEXOPEX

OPEX as %sales

0.00%

500.00%

1000.00%

1500.00%

2000.00%

2500.00%

1 2 3 4 5 6 7 8 9 10 1 1

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

1 2 3 4 5 6 7 8 9 10 11

CAPEX adj

CAPEX

depreciation

CAPEXCAPEX


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Free Cash flowFree Cash flow

-80,000,000

-70,000,000

-60,000,000

-50,000,000

-40,000,000

-30,000,000

-20,000,000

-10,000,000

0

10,000,000

20,000,000

1 2 3 4 5 6 7 8 9 10 11

FCF

Cum FCF

As Industry specifics, Payback comes quite late, but steady.

Break-even

Pk down

Cash Inv


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Financial indicatorsFinancial indicators

WACC : 7.32% (60/40 CAPM 8.32).

Cash Investment : 70M$

IRR: 14.1%

Excess Return: 6.8%


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Sales, Opex, Capex sensitivenessSales, Opex, Capex sensitiveness

-10% Sales => IRR from 14% to 13.7%

CAPEX from 5% to 10% impacts IRR from 14 to 13.8%

OPEX decreases by 1% => IRR from 14.1 to 14.6%

by 10% => IRR from 14.1 to 19.1%

IRRimpact isrelatively

low

This is notPeanuts !!

What about delta WACC of 1%...What about delta WACC of 1%... IRR goes from 14 to 12%IRR goes from 14 to 12%


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Lessons learnedLessons learned

In Pharma industry, it is much more profitable to :

1. Get the cheapest money on the market (WACC lowered)

2. Reduce OPEX at max, by reducing R&D and other related expenses

In other words, reducing risks


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In the raceIn the race

Pfizer is having the lowest OPEX/Sales

Stock Value is 8 x 17.73$ = 141.84 B$ (48404 Sales)

Sanofi is second, having the lowestOPEX/Sales

Stock Value is 2.73 x 37.02 = 101.06 B$ (42642 Sales)

(Google Finance)

(Google Finance)

Documents

Project Alzheimer Care10 Financial Simulation 2