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BCG Medium Growth Strategy

Pharmaceutical Rare Disease

#Healthcare
ProHub Comment

This case requires candidates to build a growth framework for a pharmaceutical company and then apply financial analysis to determine acquisition needs. The structure challenges candidates to think about growth levers (organic pipeline, R&D, and M&A) while managing the quantitative modeling of NPV and revenue projections across multiple development phases.

Estimated Time 27 minutes
Difficulty Medium
Source Chicago Booth
38 / 100

Our client is a large pharmaceutical company with a strong business in “Rare Disease” (RD). Rare diseases are conditions that affect fewer than 200,000 people in the US. Historically, pharmaceutical companies have not invested significantly in Rare Disease, because it has not been cost effective to conduct research for such small populations.

Due to the fall off in the number of pharmaceutical blockbusters and improved regulation to make R&D cheaper for Rare Disease, pharmaceutical companies have begun to invest more in Rare Disease R&D over the last few years. Our client has hired BCG because it would like to grow its Rare Disease business.

How can the client double its Rare Disease business in 5 years?

Clarifying Information

  1. Our client is an industry leader with a track record of success. Its existing business is $2.5B, expected to grow at 5% per year.
  2. Rare disease market is $30B and is as profitable as “Big Pharma”.
  3. While research is relatively expensive, the government provides tax credits for drugs designated to treat rare diseases.
  4. Additionally, prices tend to be higher to make up for the upfront research investment. It’s also growing faster than Big Pharma.
  5. There are many small bio-techs that are attractive targets and there are also other big pharmaceutical companies that have rare disease divisions / assets. Assume each company has approximately $500M in revenues.
Mock Interview
Interviewer

Our client is a large pharmaceutical company with a strong business in "Rare Disease" (RD). Rare diseases are conditions that affect fewer than 200,000 people in the US. Historically, pharmaceutical companies have not invested significantly in Rare Disease, because it has not been cost effective to conduct research for such small populations. Due to the fall off in the number of pharmaceutical blockbusters and improved regulation to make R&D cheaper for Rare Disease, pharmaceutical companies have begun to invest more in Rare Disease R&D over the last few years. Our client has hired BCG because it would like to grow its Rare Disease business. How can the client double its Rare Disease business in 5 years?

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Structure Analysis Communication Business Sense Quantitative
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Practice this case with AI Mock Interview

A pharmaceutical company with $2.5B in rare disease revenue wants to double its business in 5 years. Through a structured framework considering existing drugs, new pipeline, and acquisitions, the analysis reveals the company needs to acquire approximately 3 mid-sized assets ($500M revenue each) to close the gap between organic growth (~$1.1B) and the target of $5B total revenue.

Key Insights:

  1. Growth frameworks in pharma must consider multiple levers: penetration of existing drugs, internal R&D pipeline advancement, and acquisitions
  2. Candidates must handle attrition rates and time-to-market for R&D phases when modeling future revenue contributions
  3. Linear growth assumption simplifies calculations; the case requires structured math to bridge shortfalls between organic and target growth
  4. Cross-functional considerations (regulation, reimbursement, FDA approval, patents) are critical success factors beyond the quantitative analysis