Strategy and Implementation Summary
Our strategy is based on serving niche markets well. What begins as a customized product, tailored to the needs of a local pediatric cardiac surgeon, can eventually become a niche product that will fit the needs of the pediatric cardiac surgeons worldwide. Our marketing infrastructure is built to reach our customers across broad geographic lines. Our products are designed to fit the need of the international cardiac pediatric surgeons community, as the market presence requires to fulfill with regulatory rules which are quite costly.
5.1 Marketing Strategy
Our marketing strategy is based on:
- Fulfillment with regulatory requirements: EC mark and FDA approval.
- Publication of clinical data in recognized international papers.
- Exhibition in the major congresses.
- Advertising in international papers.
We intend to participate in May 2001 in the 3rd World Congress of Pediatric Cardiology and Cardiac Surgery in Toronto, Canada, where we are showing our product for the first time to the world community.
In September, we intend to participate to the joint meeting of the European Association of Cardio Throracic Surgeons and the European Society for Thoracic Surgery where our consulting surgeon, Dr. Kalangos, is publishing clinical data.
5.1.1 Positioning Statement
For discriminating pediatric cardiac surgeons who want to benefit from the latest advances with polymer technology, Bioring offers superb anatomical design combined with state-of-the-art technology. For surgeons addressing cardiac adult surgery, unlike other non-biodegradable rings covered with polyester mesh. The Kalangos biodegradable ring, made of polydioxanone, offers an excellent resistance to infection. Polyester mesh is known to be an excellent support for bacterial growth.
5.1.2 Pricing Strategy
In the high-tech products market, pricing is based on the level of other similar products, already on the market. The European end-user market price for a standard cardiac ring is around $1,250. We intend to introduce Kalangos biodegradable ring at the same level of price. Price to distributor is $625, which provides the distributor enough margin to take care of its national market.
5.1.3 Promotion Strategy
The long-range goal is to create enough visibility to achieve the best penetration possible on the different markets.
We are intending to do it through:
- Scientific publications: a clinical study is published in September 2001 in Lisbonne.
- Advertising in specialized surgical journals: one European, one U.S.
- Cardiac surgery congresses and industry trade-shows: May 2001 in Toronto.
- Private clinical support and conferences by our consulting surgeon, who has accumulated strong experience.
5.1.4 Distribution Strategy
The distribution strategy is to:
- Either through national distribution in Europe, and other parts of the world, and a company in USA.
- Or a large multinational company covering the worldwide market, on an exclusive basis. The exclusivity would have price, estimated to $2 million USD.
5.1.5 Marketing Programs
Our most important marketing program is CE mark approval. Philippe Le Goff is in charge of it, assisted by Raymond Andrieu and A. Kalangos. This program should be completed for the 1st of June 2001. This program will allow us to sell our ring in Europe. Achievement should be measured by receiving a CE number, which has to be printed on all packaging of the products.
Another key marketing program is the European distribution network. Raymond Andrieu is in charge of it, and most of European distributors should be appointed for July 2001. Achievement should be measured by signed agreements in the different countries.
The next important milestone is the FDA approval process. Raymond Andrieu will be in charge of it, with a budget of $ 200,000 and a milestone date of the 1st of December 2002. Achievement should be measured by receiving the official FDA approval document. This process is intended to be done in close collaboration with the U.S. company in charge of distributing the product in USA.
5.2 Sales Strategy
The sales strategy has been forecasted as follows:
Sales in Europe
In each European country a distributor has been chosen. By signing a distribution agreement, he has to order a minimum quantity of products to be sold in his country. This quantity is to be reviewed each year. He will at first develop the pediatric market, then the adult market. Each distributor is supposed to have a team of salesmen or saleswomen who are in charge of visiting cardiac surgeons in the country. Each salesperson is in charge of several hospitals in one area of the country. In a country like Germany, the distributor should have five or six salesmen or women to cover the country. The distributor should have enough products on the shelves to serve the needs of the country. The salespeople would sell products to public and private hospitals and clinics where cardiac surgery, either pediatric or adult, is performed. Large countries like Germany or France should have around 400 rings permanently on the shelves of the distributor. Invoicing to hospital, delays of payment of hospitals, shipment to hospitals, rings freely deposited in hospitals are under the management of the distributor.
Sales in USA
Once the U.S. distribution channel is chosen, the sales strategy will be discussed together with the U.S. company. It does not differ fundamentally from Europe. The major difference is the the U.S. sales team may belong to the U.S. distributor, or be independent from the U.S. distributor.
Sales in Other Parts of the World
It is intended to act as in Europe: nominate a local distributor who is able to have easy access to the cardiac surgeons community of his country.
5.2.1 Sales Forecast
Our sales forecast assumes no change in costs or prices, which is a reasonable assumption for the last few years.We are expecting to increase sales from $2.5 million (4,000 rings) to $10 million (16,000 rings) the second year. The growth forecast is very high, but we are developing new products. We expect growth of the pediatric market, where the product is really needed. We are not projecting significant change in the product line, or in the proportion between different lines.
5.2.2 Sales Programs
The company will mainly sell outside Switzerland, which is representing a very small market. It intends to develop persistent efforts to generate the distribution through major names in each country.
It intends to hire a marketing and sales executive, and a clinical director by 2002. Both positions will support international sales, by training the sales team, assisting them with key customers, and participating in international meetings.
5.3 Strategic Alliances
We have been contacted by several major U.S. companies, (Medtronic, St Jude), who are interested with our product line. In case they would wish to distribute the products worldwide, we would have to negotiate a fair fee for international exclusive distribution (U.S. $2 million), as well as the different involvements of both parties concerning regulatory affairs, marketing, clinical studies.
We would need to understand the real interest of these companies: do they wish to buy Bioring on a middle-term plan? At what price? What do they intend to do with Bioring's manufacturing facility? The board is of the opinion that a fair offer from one of these companies should be seriously studied.
The accompanying table shows specific milestones, with responsibilities assigned, dates, and budgets. We are focusing, in this plan, on a few key milestones that should be accomplished.