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Medium Revenue Growth Strategy

Lost Patent

#Healthcare
ProHub Comment

This case tests the candidate's ability to recognize that a well-established, efficient company facing patent expiration requires a revenue-maximization strategy, not cost-cutting. The candidate must shift focus from operational efficiency to strategic growth initiatives and demonstrate structured thinking about market dynamics, sales forces, and competitive positioning within a compressed timeframe.

Estimated Time 27 minutes
Difficulty Medium
Source Chicago Booth
43 / 100
Your team has been working with a major drug company on their future strategy. Their patent on a blockbuster drug, Zewal, will run out in less than a year. It currently generates half of their revenues, while 10 other drugs generate the other half of revenues. Their next blockbuster drug is still more than 5 years away from being ready and mergers are not possible. How can we help the company?

Clarifying Information

  1. The company is efficient and well-run. In fact, they have been cutting costs for the last few years and they are competitive with industry standards.
  2. Salesforce mainly sells to doctors.
  3. 20% of all doctors make up 80% of prescriptions.
  4. They consistently keep in touch with major HMOs.
  5. Dedicated salesforce of 150 people. On average a sales person is responsible for 100 doctors.
  6. The industry standard is one per 50 doctors.
  7. The rival company has the advantage of a bigger salesforce which can reach out to 35% of all doctors in the U.S.
  8. Our client’s reach is about 10%.
  9. The sales person’s compensation structure is dependent on the contribution margin of the drugs they sell. Each sales person has a portfolio of drugs with varying margins.
  10. The contribution margin for Zewal is the lowest. So far this strategy has worked as there is more pull for the drug than push required from the sales people.
  11. There is presently no single drug that has a similar chemical composition as Zewal, but doctors have been trying out a combination of drug regimen from a rival company.
  12. When the patent expires, our client will get about 6 months before generic drug companies come up in the market.
Mock Interview
Interviewer

Your team has been working with a major drug company on their future strategy. Their patent on a blockbuster drug, Zewal, will run out in less than a year. It currently generates half of their revenues, while 10 other drugs generate the other half of revenues. Their next blockbuster drug is still more than 5 years away from being ready and mergers are not possible. How can we help the company?

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
Practicing...
Score coming soon
Practice this case with AI Mock Interview

A pharmaceutical company faces the expiration of its blockbuster drug patent (Zewal) in less than a year, which currently represents 50% of revenues. With the next blockbuster drug 5+ years away and mergers off the table, the candidate must develop a strategy to maximize revenues before and after patent expiration.

Key Insights:

  1. This is explicitly NOT a cost-reduction case—the company is already efficient and competitive; the interviewer will redirect if the candidate pursues cost-cutting
  2. The case tests business judgment on revenue vs. cost trade-offs, requiring candidates to recognize that marginal revenue should exceed marginal cost when expanding sales efforts
  3. Candidates should identify multiple levers: expanding sales force reach (currently 10% vs. competitor’s 35%), improving marketing/advertising, and adjusting compensation incentives as the patent expires
  4. The 6-month window before generics enter post-patent expiration creates urgency for both pre-expiration revenue maximization and post-expiration positioning strategies
  5. Success requires recognizing the 80/20 rule in doctor prescriptions and the importance of HMO relationships as distribution channels