Lost Patent
Practice this intermediate revenue case interview question from Kearney in the Healthcare sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.
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
- 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.
- Salesforce mainly sells to doctors.
- 20% of all doctors make up 80% of prescriptions.
- They consistently keep in touch with major HMOs.
- Dedicated salesforce of 150 people. On average a sales person is responsible for 100 doctors.
- The industry standard is one per 50 doctors.
- The rival company has the advantage of a bigger salesforce which can reach out to 35% of all doctors in the U.S.
- Our client’s reach is about 10%.
- 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.
- 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.
- 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.
- When the patent expires, our client will get about 6 months before generic drug companies come up in the market.