OHME BioTech - Research in the treatment of severe asthma
Background and Product Description
Many Biotech Startups and SMEs develop novel drugs for treatment of severe asthma. However, they lack medical competences and infrastructure regarding testing and researching efficacy for their developments. Additionally, many big companies in the pharmaceutical industry outsource the testing of drugs for asthma treatment.
OHME BioTech serves these companies with high quality testing, research services and its unique expertise in treatment of severe asthma. It has developed a novel system in order to test the effectiveness and reverse action of potentially new drugs. This system aims at minimizing risk of those drugs that are not yet approved. In addition, it operates an IT supported collaboration platform, which offers efficient and secure knowledge management, project management, reporting and communication to its customers.
OHME BioTech has established a strategic partnership, which allows them to offer their services at a very competitive price. It generates its contract-based revenues from short-term orders. Strategically, license based revenues shall be generated from long-term co-development activities with its customers in order to target a sustainable cash flow and foster growth. In addition, short-term contracts serve as first customer contact and feed long-term co-development relationships. The services offered by the collaboration platform foster tight customer relationship and customer retention.
Unique Selling Proposition
The USP is based on a unique expertise in the treatment of severe asthma, on high quality testing and on high research capabilities. These are all based on expertise from long term research in immunology and cell biology. Furthermore, The IT supported collaboration platform enables the customers of OHME BioTech to accelerate their business development due to instant and cost effective access to medical experts and facilities.
90% of the asthma drug market is highly saturated and is covered by best seller drugs of big pharmaceuticals. However, the remaining 10% niche represents 30 million people worldwide who require expensive treatment due to absence of a drug which effectively treats severe asthma. This niche is penetrated by Biotech Startups and SMEs, which lack medical testing and research expertise and thus outsource these activities.
Moreover, the financial crisis forces them to enter co-development partnerships. Total R&D expenditures had an annually growth rate of 11% and the outsourcing market volume was € 220 million in 2007.
The pharmaceutical outsourcing market is covered by two big companies, which have a market share of nearly 50%. However, the remaining 50% are shared among small companies each contributing less than 0.3% of total market. Hence, small companies compete successfully against the two leaders. OHME BioTech has a unique expertise in treatment of severe asthma and targets customer proximity with low prices. These aspects grant them a unique position in the market.
The main strengths of OHME BioTech are its unique expertise in treatment of severe asthma and its cost efficient infrastructure due to the strategic partnership. Its main weaknesses are the single area of competence in severe asthma and the un-predictable license-based revenue model. OHME BioTech faces opportunities due to the current financial crises, which forces Biotech Startups to enter co-development partnerships and a general trend to outsourcing testing and research activities. However, these opportunities are confronted by threats that have their origin in the publication of former research in severe asthma. Furthermore, there might be threats due to the academic activities of the founders as well as the unknown security of Biotech Startups.
Financial Analysis (Break-Even)
OHME BioTech will break even in the first quarter of the third year. These calculations are based on revenues generated from short term orders excluded all license-based revenue. In the fourth year, all investments are fully returned through the cumulated income. The cumulated revenues in the first 5 years will ammount up to € 3 million. From the beginning on fixed costs will be respectivly high at €330.000 per year while average costs per contract are low at € 5.500.
Based on the findings of the market research a Go-Decision is recommended. However, the establishment of many co-development partnerships is crucial for the success of this venture. It would guarantee substantial growth as well as a diversification of testing areas and research competence. Moreover, setup and operation of a sophisticated collaboration platform is a complex task and must be planned meticulously in order to avoid reverse effects.
Dr. Michelle Epstein
Dr. Oskar Hoffmann
Medical University of Vienna
VetWIDI Forschungsholding GmbH
University of Veterinary Medicine Vienna