Cancer is one of the deadliest diseases in the world. It has a very high mortality rate; over 7 million people die from cancer every year (WHO). The only treatment for cancer is chemotherapy, but it is a dangerous process that has a low success rate in the later stages of the disease. Drugs and medicines available to the general population are expensive and inefficient (Masters et al. 793). However, Herbal LCC has made a breakthrough discovery with its latest product, which has proved to cure liver cancer in laboratory mice. This provides a great financial and humanitarian opportunity to build a business that would deliver the world’s first cure for organ-based cancer. The purpose of this business plan is to acquaint all potential investors with Herbal LCC’s plan for going global, including marketing, managerial, and financial strategies. The product is expected to have a 100% profit margin, with total estimated sales of 2 billion AED. The project requires an angel investment of 3,000,000 AED in order to conduct clinical trials, pass regulation barriers, and launch an effective marketing campaign.
Cancer is one of the top causes of death in the world, on the same level as strokes, respiratory diseases, and ischemic heart diseases. In 2012, over 8 million people died of cancer (WHO). While there is no cure in the later stages of the disease, chemotherapy is one of the few reliable ways of treating cancer in an early stage. That procedure, however, is highly invasive and causes irreversible damage to the body, effectively shortening a person’s lifespan by five to ten years (Masters et al. 794). Desperate people across the world spend their money on frauds and charlatans who offer fake promises of salvation but fail to deliver. Still, there is a cure.
Two years ago, research conducted by a small company run by Majid discovered that one of his painkillers cured 75% of lab rats affected with liver cancer. The product, “Herbal,” is a remedy based on natural ingredients and medicines. The product has passed initial trials on animals, achieving a 100% treatment success rate after being refined to treat cancer. A second stage of trials is planned. Herbal needs investors willing to offer support for the project and give a chance to millions of people around the world.
Approximately 3 million AED will be required to test and refine the product, pass through all the necessary regulatory procedures, and prepare a marketing campaign. Estimated benefits from this product are considerable, both in terms of money and in lives saved. The purpose of this business plan is to present the prospective cure to all and any potential investors who would be interested in becoming the first to promote a life-changing and profitable medical product that has no substitutes anywhere in the world.
As the name of the company suggests, Herbal produces medicines based on natural ingredients and herbs. It has the facilities to test and manufacture its products, and both processes are certified according to the relevant UAE laws and regulations for medical businesses. It is a relatively small enterprise that evolved from a family business. Its current roster, including the board of directors, the laboratory team, and the employees in the production line total 100 people.
Despite its modest size, the company has been a long-time participant in the medical market. Previously, the firm belonged to Majid’s father, who started the business. The company is known for producing herb-based analgesic medicines, such as Herbal, which was intended to become the company’s new product line before its capabilities for curing cancer were discovered. The UAE’s pharmaceutical sector is the strongest in the region, meaning that to survive for so long, Herbal had to show a certain degree of innovation, resilience, and business acumen.
Goals and Potential of the Plan
The purpose of this business plan is to attract potential investors to fund the company and help it develop this product that could cure cancer. The product’s potential is considerable as it would provide relief and salvation to millions of people suffering from an otherwise incurable disease.
Uniqueness of the Opportunity
Although there have been plenty of attempts to cure cancer, Herbal is the first product of its kind to show high rates of success. It has the potential of opening a new niche in the medical market and could completely monopolize sales until competitors could devise products with similar capabilities and in the same price range. Until that time, Herbal will be the only company in the world to provide cancer treatment that does not involve long and unhealthy sessions of chemotherapy.
Statement of Resilience
The resilience of a company is defined by its ability to plan for, recover from, and successfully adapt to various challenges in business (McKeever 34). Herbal’s resilience has been proven by its survival in a very competitive industry, both domestically and abroad. As it stands, our company is about to make a major breakthrough in the industry and will become a key player in the development and production of a medicinal cure for cancer. Our estimated key performance measures for profit margins are 100%.
Other KPI data:
- Estimated sales: 2 billion AED.
- Number of patients expected to receive treatment in the first year: 100,000.
- Number of full-time employees: 100.
- Income taxes to % of sales: 7.9%.
- Net assets: 20 million AED.
- Net debt: 6.7 million AED.
- Strengths: Revolutionary new product, potential for Blue Ocean Strategy.
- Weaknesses: Costs associated with research, potential for non-delivery.
- Opportunities: Creation of a new niche in oncological market.
- Threats: Potential competitors may analyze our product and develop similar medicines.
The target population for Herbal would be patients diagnosed with liver cancer in the beginning and advanced stages. Potential target populations, depending on the results of tests, would include other forms of cancer as well. Our product’s target market is not limited to one or several countries, as we are planning to ship our product worldwide, wherever it may be needed.
According to the World Health Organization (2017), more than 9% of the world’s population has cancer, meaning that the need for our product is sizable. That population keeps growing, as over 12 million new cases of cancer are diagnosed every year (WHO). Since the company’s goal is to go global, we will aim to address the majority of the target population.
The National Cancer Institute (NCI) has identified over 200 drugs that are currently used for cancer treatment (Masters et al. 797). The majority of these drugs, however, are considered second-line treatment for patients with advanced stages of cancer. Their effectiveness varies, but none could substitute for chemotherapy. Neither have the currently available drugs, whether alone or in combination, managed to achieve success rates above 30% (Masters et al. 798). This percentage falls even lower as the disease progresses. In addition, the majority of these drugs are expensive, making them unavailable for a good portion of the target population.
Estimated Market Share
The estimated market share for the first year is 20%. This number is driven by the fact that during the first year, our product will need to be tested and advertised. Patients and medical workers alike would be presented with the opportunity, and its effectiveness would need to be shown in practice. After the initial year, the market share is estimated to grow to at least 70% in three years. Once our competitors eventually provide alternatives to Herbal within a competitive price range, the market share is expected to drop to 50–60% and remain there due to our brand name becoming known as the progenitor of the original cure for cancer.
Location of Business
Our company is located in Abu Dhabi, UAE, a large city with a developed infrastructure. It also serves as one of the country’s major commercial centers. The city is home to numerous pharmaceutical and supporting industries, medical centers, and other related facilities.
Advantages of Location
Abu Dhabi is a major transportation hub, which will be beneficial once our company goes global. In addition, the UAE has established a variety of policies that promote business and entrepreneurship; thus, expanding the enterprise and going global would be met with fewer legal and logistical barriers than in any other location. In addition, the UAE practices high standards for quality education, meaning that it would be possible to find qualified personnel without having to invite specialists from other cities and countries.
Herbal has existed in a single location for several decades and has integrated itself into the city’s structure. It has been placed according to the local zoning laws and ordinances, and no zoning issues are expected. In the event of an expansion, several structures might be purchased that lend themselves to remaining in the same business zone.
As it stands, Herbal is operating as an LLC, which helps avoid double taxation of the company’s profits under the terms of pass-through taxation, which is common for the majority of countries operating under the rules and regulations of OECD. LLC structure protects the company’s assets and property, meaning that in a worst-case scenario, Herbal will not lose its means of production. This is akin to the corporate structure but has more flexibility, and tax processes are simpler and more straightforward (McKeever 112).
Transportation and Logistical Analysis
Abu Dhabi is a city with a well-developed transportation and logistics network. In addition, it has a large and well-developed health-care industry. The company imports various herbs and other medical ingredients from the countries of origin for the plants, but most of the medical equipment is acquired domestically. Transportation and logistics for the business involve bringing equipment and materials to the company and delivering the product to customers worldwide, which can be done by land, sea, or air. Since Abu Dhabi is a major trade hub and port, there should not be any transportation or logistical barriers to our company.
In order to be able to produce and export our product worldwide, Herbal would be required to comply with both national and international laws and provisions related to manufacturing, import, distribution, marketing, prescribing, labeling, dispensing, and pricing of pharmaceutical products (MSH). Additional regulations that the company would need to comply with involve licensing, inspection, and control of the production facilities. Medical legislation is an expensive and cumbersome process as numerous regulations must be followed in order to meet the standards for efficacy, safety, and quality (MSH). While countries develop their national legislative requirements toward medical products on their own, the majority choose to comply with the international regulations established by the World Health Organization. As the UAE is one of the major producers in the pharmaceutical industry, there is little difference between its national legislation and international law. In the UAE, all medicine-related rules and procedures are supervised by the Ministry of Health (Ghazal et al. 69). As it stands, Herbal can be made to comply with these regulations as it is a medicine based on natural ingredients and substances, does not have any psychotropic or narcotic elements, and is produced and supervised by a company with an excellent history of legislative compliance.
Herbal LLC is an LLC, and as such, all key management decisions are made by the owner. At the same time, there are several key members who oversee the development and production processes. These members are:
- Laboratory manager – in charge of the drug development team and all lab-related operations.
- Logistics manager – organizes the transportation and delivery sequences for the company, ensuring that the company is always stocked with materials and resources. The manager also oversees the delivery of the product to the customers.
- Financial manager – oversees all financial matters in the enterprise. These include financial reports, accounting reports, tax reports, and any expenses necessary for the continuation of the enterprise.
- Production manager – oversees production processes.
Herbal is a Limited Liability Company (LLC), a corporate structure where the members of the company cannot be held responsible for the company’s debts or misdeeds. It is a hybrid legal entity that shares similar characteristics with a corporation and a privately-owned company. In the future, Herbal has the possibility of becoming a corporation in order to include more shareholders in its shareholder pool (McKeever, 74).
Board of Directors
Herbal does not have a board of directors as of yet since it is an LLC operating under a sole proprietorship. However, it has the possibility of becoming a member-managed LLC, with partners and investors being offered a percentage of the company’s profits in return for investments that support the project. The members of a board of directors take part in all major decisions, such as company mergers, while department managers ensure the smooth functioning of their respective departments.
As it stands, Herbal LLC requires 3 million AED for additional trials, regulatory approvals, and a marketing campaign. The budget will be allocated as follows:
|Additional Trials||Regulatory Approvals||Marketing Campaign|
|Test batch production – 200,000 AED||Initial inspection fees and licensing fees – 10,000 AED||Contacting all major clinics to offer test batches of product for free or at a discount – 600,000 AED|
|Finding and compensating volunteers – 100,000 AED||Drug control lab tests – 100,000 AED||TV advertising – 200,000 AED|
|Data analysis and research – 100,000 AED||Halal certificate, valid registration certificate, CD for product artwork, approvals for TV, press, and internet advertising, etc. – 20,000 AED||Internet advertising – 130,000 AED|
|Additional tests – 100,000 AED||–||Radio and press advertising – 200,000 AED|
|Supplies and materials – 400,000 AED||–||Sponsoring independent research to prove the effectiveness of the medicine – 800,000 AED|
|Total: 900,000 AED||Total: 130,000 AED||Total: 1,970,000 |
Critical Risk Analysis
Potential Problems and Mitigation Strategies
Several critical risks to the enterprise include the rejection of the product by the market due to inefficiency, the appearance of a superior product within our price range, and force majeure events that could potentially lead to the discontinuation of business. There are several strategies that could mitigate these potential risks. The potential inefficiency of the product can be avoided by conducting thorough tests in order to ensure quality. The appearance of a superior product could be foreseen through market analysis, and the effects could be mitigated by improving our own product or lowering the price to make it more affordable to a larger audience. Lastly, the majority of force majeure events can be prevented through having contingency plans and adequate plant process-planning (McKeever 175).
Potential environmental risks to the enterprise include fire and flood. The possibility of fire is higher than that of a flood due to the enterprise being located in a country with an arid climate, a good distance away from the shoreline. The presence of fire-extinguishing systems will ensure that any damage caused by a sudden conflagration can be quickly isolated and kept to a minimum.
In the event that the product does not deliver the intended results as a cancer cure, it can be returned to its original design as an effective pain-killing medicine with additional anti-cancer properties. This approach could still earn it a niche market in the oncological industry.
Considering the expected rate of company growth, an IPO exit strategy would be optimal for Herbal LCC. This strategy suggests offering a portion of the company to the public market in order to ensure business continuity and with the intent of paying off investors who wish to exit the business. This model will be even more effective with Herbal shifting from an LCC to a corporation. As the company grows, the extra assets acquired from the expansions will become available to be sold on the public market, attracting more investors and shareholders in the process (Hsu 620). Investors who wish to withdraw their investments would be able to do so after the company assets are offered to the market within a one-month timeframe. In the event of Majid’s death, the ownership of the company passes to the next of kin.
- Acquire approval from Ministry of Health and perform drug tests involving human volunteers diagnosed with cancer – 4 months. This is one of the lengthiest parts of the project, as getting solid results in human participants requires time.
- Data processing and drug effectiveness analysis – 1 month.
- Acquiring all necessary permissions and complying with drug registry regulations – 1 month. At the same time, the company would be able to submit its documents to acquire permissions to export its product to other countries.
- Launching marketing campaign across the UAE – 1 month. Since the UAE is the company’s home country, it is logical that before going global, Herbal must acquire a local market.
- Launching drug production and distribution across the UAE – 1 month.
- Launching marketing campaign in other countries of the world – 3 months.
- Expanding to global markets – 2 months.
- Estimated time for going global – 1 year.
Ghazal, Rana Mohammed et al. “Barriers to the implementation of Pharmaceutical Care into the UAE Community Pharmacies.” IOSR Journal of Pharmacy, vol. 4, no. 5, 2014, pp. 68-74.
Hsu, Dan et al. “Entrepreneurial Exit Intentions and the Business-Family Interface.” Journal of Business Venturing, vol. 31, no. 6, 2016, pp. 613-627.
Masters, Gregory et al. “Clinical Cancer Advances 2015: Annual Report on Progress against Cancer From the American Society of Clinical Oncology.” Journal of Clinical Oncology, vol. 33, no. 7, 2015, pp. 786-809.
McKeever, Mike. How to Write a Good Business Plan. 13th ed., Nolo, 2017.
MSH. Pharmaceutical Legislation and Regulation. 2012, Web.
WHO. “Cancer.” World Health Organization, Web.