Ivy Business Plan

Business plan competition submission for a product that enables the patient to

  1. Tim Anderson
    Business plan competition submission for a product that enables the patient to
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    Ivy Business Plan
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    • 1. ivyBusiness Plan 5/10/2010
    • 2. Sam Cahill Tim Anderson Maura Slater Opportunity AnalysisIn addition to the medical procedures themselves, extended stays in a hospital may be associatedwith several negative experiences. Loneliness, disconnection, loss of identity, anxiety, and fear areillustrations of the types of feelings that are resultant from a hospital’s atmosphere. This may beespecially acute for children, but may be relevant to any patient undergoing extended stays in ahospital environment. Therefore opportunities exist to develop products which can alleviate thesense of negativity incurred in the course of a hospital stay.A common piece of medical equipment is the intravenous (I.V.) pole, to which a majority ofpatients are coupled to. As they are currently used, the typical I.V. pole is a very sterile utilitariandevice that is unattractive and unfeeling, yet an essential tool in a hospital which also serves as aconstant accompaniment to the typical patient throughout their stay. This omnipresent medicalapparatus provides an excellent canvas by which an opportunistic product can be implemented toimprove the hospital experience. The proposed Ivy system is an easily implementable device that can personalize the I.V. pole andre-establish a sense of individuality and identity to the patient (Figure 1). The hospitalenvironment can become less unfamiliar, more personalized, and may lead to improved mentalhealth of the patient. Functional Decorative • O2 Canisters • IV Pole • Medical toppers Charts • ivPole Pals Opportunity for Ivy  Decorate & Customize I.V. pole  Patient Individuality  Functional space for toys, electronics, memorabilia, etc. Page | 1
    • 3. Sam Cahill Tim Anderson Maura Slater Product SummaryThe Ivy is a modular system that is clipped simply onto the lower half of an existing I.V. pole. Itconsists of three base sections (stalks) and three display surfaces (leaves) that plug into the basesections (Figure 3). Each leaf has a different shape to accommodate for different types of toys orother objects a patient may place in them. Therefore the Ivy returns a sense of identity to thepatient because they are able to fully customize the product by putting their favorite toys andobjects on display. Since it becomes part of the I.V. pole, it follows the child wherever they go,ultimately creating a friendlier atmosphere for them (Figure 2).The primary components, the stalks and leaves, are molded plastic and a flexible loop piece thatholds cards and paper is molded santoprene, all of which can be recycled. The leaves can bereattached in a manner that allows them to hang downward so as to allow the healthcareprofessional more space as needed, or to store the product when not in use (Figure 4). Ivy is aretrofitted product which can snap onto current standard I.V. poles, requiring no other alterationnor does Ivy become a permanent fixture once attached. The present prototype is a genderneutral green color which should appeal to a broad spectrum of targeted consumers. Pendingproduct feedback, future color options may be available as well as extended the market segmentto include adult patients. Competitor & Market AnalysisWhile injection molding manufacturing may be costlier than vacuum forming, in general it is nota prohibitevely expensive process without technological hurdles. Additionally the raw materialsare reasonably inexpensive and many suppliers exist to provide materials. With these relativelylow barriers to entry, it is interesting to note that there does not appear to be any organizationwhich currently competes in the marketspace that Ivy is targeting. The vast majority of productsdesigned to attach to an I.V. pole are medical in nature (e.g. oxygen bottle holders) andpreliminary research has found only two firms with products that are more fun in nature andallow personlization of an otherwise standard I.V. Pole. However neither of these potentialcompetitors allow for the utility or customization that Ivy offers. Page | 2
    • 4. Sam Cahill Tim Anderson Maura Slater Product Place Promotoion Price • Ivy system for I.V. • B2B • Personal Stories • Est. $30 - $50 poles • Hospitals • Pictures • Volume discounts to • Currently Green • Medical • Online hosptials • Other colors are Suppliers/Vendors advertisement • Price premium for future possibilities • Medical Retailers • Industry/trade individual purchasers • Gender neutral • B2C publications • Hospital Gift Shops • Online retailingCurrently the Ivy product is not protected by a patent filing, therefore a reasonable and validconcern exists in regards to competing firms appropriating Ivy design elements into potentiallycompeting products.The primary method of distribution would be via business-to-business channels such as medicalsuppliers, vendors, and hospitals. Secondary business-to-consumer channels to explore would behospital gift shops and online retailing. The primary product promotion would not be directed tothe end-user, or their guardian, but rather to the healthcare providers. This would take placethrough industry and trade publications, tradeshows, personal stories, and online advertisements.Secondary channel sales could be utilized to address consumer demand in healthcare marketswhich are not served by dedicated pediatric facilities or otherwise those facilities that do notprovide the Ivy product. Further collaboration opportunities may exist with fund raisingorganizations who would raise funds to purchase Ivy products to be donated to hospitals.The estimated retail price would be between $30 and $50 per unit. However depending on actuallicensing agreements or manufacturing costs, these estimated prices may be amended. Pendinglicensing agreements, it would be reasonable to implement volume discounts to hospitals as wellas a price premium for individual businesses-to-consumer purchasing.The initial targeted end-user will be children staying in hospitals for an extended amount of timeor in a home care situation requiring the use of an I.V. pole. A future target market would beadults undergoing extended hospital treatment, home care, or hospice/palliative care. Childrenmay be more suspectible to unfamilar environments and more reliaent on creating a familiaratmosphere, therefore it is sensible to pursue this segment as the primary market target. Page | 3
    • 5. Sam Cahill Tim Anderson Maura Slater Internal • Low barriers to entry • No direct competition Rivalry • Easily imitatible device • No direct competition Competiton • Untapped product potential • iv Pole Pal • IV Pole Toppers Substitutions • Homemade devices • Do Nothing • A want, not a need yielding high buyer power Buyer Power • Low supplier power Supplier • Raw materials are commodities • Manufacturers compete on price Power • Many alternatives to productionBeing that Ivy will be employed in a hospital environment, there exists a potential need for theproduct to comply with FDA regulations in regards to approved materials and product design. Inaddition the product materials will have to be compatible with the standard operatingprocuedures used by a hospital for cleaning and sterializing products.Fundamentally Ivy is an optional “want” product and not necessarily an imperative necessity in amedical environment. As such buyers may be able to exert a large degree of control and with thecost of healthcare, which can lead to a reduction in extrenious expenses, demand may be difficultto predict. On the other hand because plastic raw materials are traded as commodities and thetypical plastic manufacturer competes on price, the suppliers may not have any significantinfluence in the supply chain.Current substitution products exist in the form of ivPolePals1 and IV Pole Toppers.2 Limitedresearch indicates that some I.V. pole personalization may originate from homemade devices.3 Ingeneral, though, preliminary resarch has not identified a breadth of substitute or competitive1 http://www.ivpolepals.com/2 http://hospitalfun.com/index.php?main_page=index&cPath=93 http://www.squirreltales.com/parents/decorate.html Page | 4
    • 6. Sam Cahill Tim Anderson Maura Slaterproducts in the marketspace, therefore it is reasonable to assume that there may be a high degreeof demand for the Ivy product.Situation Analysis • Children • Extended hosptial stays • Home care Customers • Adults (future market segment) • Extended hostpial treatment • Hospice/palliative care • Home care • ivPole Pal • Decroative I.V. figures • No additional utility • Limitied/no customization Competition • Hospital Fun • I.V. Pole Tooppers • Expensive • Limited utility & customization • Hosptials • Direct Sales Collaborators • Fundraising events • Medical suppliers/vendors • Nonprofit organizaitons • FDA regulations on approved plastics • Compatability with cleaning products Context • Sterlization procedures • Intellectual property requirements • Patent acquisition Company • License to existing medical vendors or injection modling companies Necessary Refinements & DevelopmentsThe current prototype is a handcrafted out of medium-density fiberboard (MDF) and coated withstandard formulated paint. Actual production models will be crafted in plastic by injectionmolding, therefore the molds for each component will need to be designed and manufactured.Moreover FDA regulations need to be investigated to determine if there are any regulatoryprotocols that specify the specific types of plastics to be used in a hospital setting. Even thoughIvy itself is not considered a medical device, the attachment of this product to an I.V. pole may, byextension, warrant certain product safety features that need to comply with a medical setting.Materials must also be chosen that have a reasonably degree of resistance to corrosive cleaners(e.g. bleach) that may be used to sanitize the product. Finally the design may have to be refinedso as to allow the complete cleaning of the product, i.e. no sharp corners which could allow thecollection of biological material. Page | 5
    • 7. Sam Cahill Tim Anderson Maura Slater Next StepsChild Life Specialists with Rainbow Babies & Children’s Hospital (University Hospitals, Cleveland,Ohio) were approached and provided an opportunity to evaluate the Ivy prototype. Their valuablefeedback indicated that the product would have great potential and integrate well with thedominant logic of their services, i.e. provide a familiar and friendly environment for childpatients. Based on this positive feedback, additional research should be gathered from otherhospital organizations so as to corroborate this anecdotal feedback. Additional prototypes mayneed to be constructed as the maximum market size is determined. The additional steps are asfollows: 1. Construct additional prototypes 2. Obtain feedback from other regional children’s hospitals 3. Modify device, as needed, based on feedback 4. Investigate buying practices for pediatric hospitals a. Are non-medical purchases done via vendor or is there a budget to allow autonomous discretionary purchases b. Initiate contact with suppliers and vendors and investigate future opportunities 5. Determine materials compliance 6. Obtain permission to allow patients to utilize the Ivy product for a short-term time frame a. Patient interaction may involve regulatory compliance or other special permission to be investigated 7. Final modification of design based on healthcare professional and patient feedback 8. File provisional patent for final design 9. License product to collaborating firm or approach manufacturing firms as appropriate 10. Investigate product use for adult market segment Business ModelThe intended business model is to acquire a utility patent then license the design to a medicalsupply company or other firm currently manufacturing injection molded products. Ivy is a uniqueproduct without any current competitors; therefore it may stand to reason that a medical supplycompany would be unwilling to take the risk of manufacturing the device without a clearprecedent of a similar product in the marketplace. Therefore it is prudent to consider alternativebusiness models, the primary of which is to collaborate with injection molding firms (eitherdomestic or international) and provide the capital expenditure to create the required molds aswell as secure production capacity with the manufacturing firm. By assuming the manufacturingrisk, medical vendors may then be inclined to stock the product and incorporate it into theircatalog. Additionally it may be sensible to also consider how direct business to business and Page | 6
    • 8. Sam Cahill Tim Anderson Maura Slaterbusiness to consumer selling operations should be managed. To that extent advertisement bysocial media outlets (e.g. Facebook) may create brand awareness among internet consumers.Being that many virtual and offline medical support communities exist, an advertisementcampaign focused on these groups may initiate a grassroots advertisement campaign for Ivy. Some healthcare organizations may be experiencing financial burdens which would reduce theprobability of them purchasing Ivy products. As a result, it would be sensible to collaborate withfundraising organizations that would raise the funds necessary to purchase the Ivy productswhich would subsequently be donated to the recipient healthcare facility.The current product will primarily be target toward children however adults would be asecondary market to investigate. With an increase in an aging population (e.g. Baby Boomers)there is potential for a market segment that would appreciate the customization and utility of theIvy product. Consequently future development and licensing of an adult Ivy product will beconsidered. Financial ProjectionsTo mass produce the product, it is estimated that Ivy would require four individual molds at anestimated cost range of $30,000- $50,000. The raw material variable cost is projected to be $5 perunit. Monthly selling, general, and administrations costs would be roughly $50,000 in the earlystages (Table 1).The company may require an initial significant investment, the primary spending of which wouldbe to secure a patent for Ivy. Additional expenditures include performing feasibility studiesbeyond Rainbow Babies and Children Hospital. This would necessitate traveling to other topchildren’s hospitals in the country and provide them with prototypes to test the functionality ofIvy as well as any affect on a child’s emotional well-being. This would also provide additionalmarketing data by which production units can be better estimated.If Ivy is to be manufactured and sold by the company, then the prices will be differentiated basedon bulks sales or individual sales. Otherwise the company may license the product and receiveroyalties on sales from the manufactures and/or distributers. Page | 7
    • 9. Sam Cahill Tim Anderson Maura Slater Figures and TablesFigure 1 - Ivy Displaying YouFigure 2 - Ivy in Use Page | 8
    • 10. Sam Cahill Tim Anderson Maura SlaterFigure 3 – Pieces & PartsFigure 4 - Ivy in Storage Page | 9
    • 11. Sam Cahill Tim Anderson Maura SlaterTable 1- Financial Estimations Initial Projected Income Statement Price $30 $50 Units1 4,425 4,425 Sales2 $132,750 $221,250 Variable Costs3 $22,125 $22,125 Contribution Margin $110,625 $199,125 Fixed Cost5 $40,000 $40,000 Selling, General & Admin $50,000 $50,000 Gross Profit $20,625 $109,125 1. Units estimated as follows: Approximately 59 children’s hospitals in the U.S. with an average of 430 beds. Assuming that 75% of all facilities will acquire an average of 100 Ivy products yielding an estimate of 4,425 units. This estimation excludes potential sales to non-children’s hospitals as well as other healthcare facilities therefore may be a conservative estimation. 2. High and low price points are speculation and further market research data is needed. 3. Estimated total raw material costs are $5 per unit 4. Costs of injection molds and tooling Page | 10
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