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Medium Investment Decision

ICEAP

#Healthcare
ProHub Comment

This case requires candidates to build a market sizing model for a medical device therapy, then strategically brainstorm ways to improve investment returns given competitive pressures from insurance payers. The case tests both quantitative analysis (calculating market opportunity) and strategic thinking (identifying value drivers and risks in healthcare innovation).

Estimated Time 15 minutes
Difficulty Medium
Source Duke
50 / 100
Your client, Device 3 Ventures is a US based venture fund that invests in attractive early medical devices technologies in hopes to quickly gain a positive ROI. Device 3 is evaluating whether to invest in a joint venture with the Mustard Clinic to fund a new therapy for acute pancreatitis (“AP”) called ICEAP. Device 3 wants to know if they should invest in this technology?

Clarifying Information

  1. Device 3 focuses on funding technologies that gain positive ROI within 3 years. Device 3’s strategy is to develop the technology to the point where a strategic buyer (i.e. Medtronic) would want to buy the technology from them.
  2. Acute Pancreatitis is a disease that can be deadly and can cause ER stays of up to months.
  3. ICEAP provides therapeutic relief by cooling the pancreas. It has been extremely successful at curing rodent AP, reducing mortality rates in AP from 90% to <10%. The technology is patented by Mustard Clinic.
  4. This therapy is a medical device, and the patient still needs to take additional drugs, etc to fully recover from AP.
  5. Medical Device manufacturers revenues’ rely on insurance reimbursements. The industry is highly competitive and innovation is a clear competitive advantage.
  6. Interviewees should keep in mind regulations in healthcare