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BCG Medium Growth Strategy

Pharmaceutical Rare Disease

#Healthcare #Pharmaceuticals
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 15 minutes
Difficulty Medium
Source Chicago Booth
50 / 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.