Team:Shanghai United/Entrepreneurship
Business Plan
By Filters
Abstract
When we think about fatal diseases, we generally ignore chronic diseases. However, chronic diseases has threatened our health a lot. In fact, when people start paying attention to them, most of them has developed to the level of cancer. During the Medieval period, Aristotle demonstrated the increasing importance of human beings on the kidney from his two studies (Historia Animalium and De Partibus Animalium). Over time, people have learned and searched more about the kidney system, Chronic Kidney Disease is also classified as one of the top ten chronic diseases. In order to reduce the risk of uremia caused by the CKD ( chronic kidney disease), our subject aim to use engineered probiotics to alleviate the production and accumulation of PCS to prevent uremia.
Our business plan first introduces our project and team members, also our basic information, and the next part is our research method, such as what we did to develop our market and project. The following part is more specific, we divide it into two parts- macro & micro . In macro part, we analyze its policy, social factors, economic environment and technical factors. In micro part, we mainly analyze industry competition. Then we use SWOT analysis tools to analyze the external opportunities and threats such as our competitors,as well as our internal strengths and weaknesses. The next big part is the execution, future management, marketing strategy and business model are analyzed in details.
Our business plan also contains the detailed financial forecast and potential risks. The actual cost during our early stage like commodity production will be demonstrated very clearly, while in the later stage of our project, the cost of our various activities and manpower will also be listed. Finally, we also analyzed some external and internal risks to our project, such as the risk from the government and the market.
Background and Team Introduction
Brief introduction to the phenomenon
Nowadays, the occurrence of CKD is universal, and according to one of the top medical journals THE LANCET, it says that by 2017, the number of CKD patients in the world had reached 697.5 million, among which there are 132.3 million of Chinese patients with 9.5% incidence rate of CKD. In the other word, on average, one out of every 10 Chinese is suffering from CKD. What's worse, CKD is pretty detrimental to human bodies, such as significantly increasing the incident rate of getting heart and cerebrovascular disease. Based on such serious condition, we are motivated to find a way to cure this disease.
After researching on the current methods of treating CKD, we find that most of them, including reducing complications or using alternative therapies, such as peritoneal dialysis, hemodialysis and organ transplantation, are of high cost in the long run, which will certaily bring extremely serious economic burden to families and the society. Also, the core of these methord is to artificially filtrate poisonous substances in human bodies. Therefore, we hope to develop a new synethic microorganism to alleviate CKD with lower cost. To this end, we are making efforts to prevent the production of one of the most harmful toxic substances leading to end-stage CKD, para-cresol sulphate (PCS), through decomposing the raw material (p-cresol) used in the production of PCS and by taking the advantage of the billions of intestinal microflora which plays various roles in most of human body systems, such as immune system and digestive system.
After determinating our research topic, we move to put our idea into reality. To begin with, we divided our team into dry group and wet group. Our wet group is instructed by Dr. Cao at Xiamen University, who majors in pharmacochemistry and biology. They focus on culturing and studying microorganism. Our dry group team is led by Ms. He, Bachelor degree holder. We are from all over the China and share the common mission of treating CKD through synthetic biology.
Lastly, we want to share an encouraging word that gives us an original motivation to do this project: you may not have the knowledge of synthetic biology, but you must dare to think, dare to innovate, and have ambition; Just as a Chinese old saying goes, fortune is variant, so don't discriminate against a poor young man. We believe that the progress of science is the constant exploration of the unknown. Although we are only a team of high school students, we can still focus our eyes on the unknown territory.
Research Methods
In order to propel the progress of our project and make it more successful, we had done several things. First, to gain more expertise on our project, we interviewed Dr. Gaohua Yang from Chinese Academy of Science. Through the interview with him, we had a better understanding about subject-- engineering probiotics, knowing more about the nowadays market of engineering probiotics and its potential application in other fields. Besides, we also gained the knowledge about the benefits of engineering probiotics, helping us to better develop our products with more advantages.
Secondly, we interview another expert, Dr. Tingxun Zu, from Gansu Center of Microalgae Engineering Technology. After the conservation, we have a clear idea about people’s consumption view, helping us to better create a product that would be more likely favored by people. In addition, we talk about the how to most effectively attract consumer, making a good strategy for our project selling.
Third of all, we conducted a survey to investigate about people’s awareness about chronic kidney disease (CKD) through a popular social media called WeChat. We received results from 274 participants, from different ranges of age. The results show that the general public lacks awareness for CKD, despite it being a common chronic disease in our society. Among these people, only 16% of participant knew CKD and details about it; however, the rest of them either never heard about it or just heard about it but not in depth. In addition, we also asked about the harm of CKD, and the results shows that many people are overly optimistic about CKD. We have asked about the ways of therapy that people would likely to accept to cure CKD (people can choose more than one way). The result has shown that majority of them would likely to visit doctors and receive surgical operation, which counts for 86.5% of them; 48.9 percent would like to take medicine. After knowing these data, we have a better understanding about the current situation of people’s awareness of CKD in our society. By analyzing these data, we not only knew what type of product would be potential successful, but we also confirmed our opinion that we should do this project in order to help those innocent people to know more about CKD and improve people’s health problem.
Market Analysis
Needs
Policy environment:
Economic More and more people are beginning to pay attention to the benefits of probiotics to the body, they will drink some foods containing probiotics as well, such as yogurt and kefir. However, there is no very clear evidence that engineered probiotics can alleviate or cure some diseases, so every country has rules and laws for foods containing engineered probiotics.
In America, FDA(THE UNITED STATES FOOD AND DRUG ADMINISTRATIPN）defines that in order to be an ingredient which can be added in a food , the probiotic must either be approved by FDA as a “food additive”, or be generally recognized as safe which is also known as “GRAS”. With respect to claims, while food containing probiotics can’t claim to treat or cure diseases, they can claim to “affect the structure any function of the body of man or other animals.”
In Brazil, ANVISA does not allow manufacturers to make any claim about the probiotic is good for the intestinal health unless it is proven by scientists. Therefore, in Brazil, it is common for companies say that their product is good at digestive health rather than focusing on the specific probiotic strains.
In European countries, there is no consistent definition of the necessary amount of bacteria present in a food or supplement to have a beneficial effect. In fact, there are at least three different views on the necessary CFU from different bodies. EU has the most strict health claims globally, since 2012, there was only a small fraction of the health claims submitted to probiotics
.
From this figure, we can discover that the interest in the term “probiotic”has been on the rise among European countries.
In Asia, governments have introduced similar regulatory claim structures which allow for an ingredient to be associated with a health claim principle.ion and disease reduction. However, the claims permitted for probiotics can vary substantially between countries. In China, regulations are tightening to ensure health are scientifically sound.
reference:
1,
Ivan Wasserman (2019) "Regulation of probiotics in USA "
retrieved from:
https://www.nutraingredients-usa.com/Article/2016/04/25/Regulation-of-Probiotics-in-the-USA-Food
social factors
When society develop step by step, people have higher and higher requirements for the quality of life. Teeth is a very good example，in ancient time, most people's requirements for life were to be able to eat and wear warmth. Teeth were not so important to them. But now people are pursuing healthy eating habits and a comfortable life. They will not let their teeth fall out and will choose to spend a lot to see the dentist. The same with the chronic diseases, with the quality of people’s life increase, their awareness of health will also increase. After they start to notice CKD, they are willing to find the methods to relieve.
The first point just now is that because of the development of society, people begin to pay attention to chronic diseases in their hearts. The second factor is the external factors.
There are various ways for people to receive information. When people want to learn about chronic kidney disease, they can directly search for chronic kidney disease-related information in the search engine. If our article about engineered probiotics can alleviate chronic kidney disease was seen by them. Which is very effective for us to spread engineered probiotics.
Environment
At present, the growth rate of World’s CKD medicines is fairly steady, especially for more effective treatments. The demand of CKD medicines are very high, specifically in China, as China has the world’s most CKD patients. It is known that all the current treatments could only delay the deterioration of the disease, so when the therapeutic process starts, it continues until the individual passed away. According to GBD Chronic Kidney Disease Collaboration, more than 97.8% of all CKD patients are in the stage1-3, meaning that they can still live normally but need to take pills regularly. Luckily, the GDP of China in the past few years showed an increasing trend (increased 6.4%), and as more people become willing to pay for the huge debts of their health, the future of CKD treatments industry is highly promising. The consumption level of citizens in Shanghai, Beijing, Guangzhou skyrocketed in the past decade. While leading the whole country’s economy, they have helped to create the basis for CKD medicine industry. The government, in addition, also invested significantly more money into developing specific drugs such as importing more advanced equipment from overseas as well as establishing collaborations with the elite scientists in various countries. Last but not least, loads of businesses and entrepreneurs are interested in investing in this industry, as the estimated market of CKD treatments is around 5500 billion RMB.
Technical factors
One of the biggest technology developments in recent years is the invention of AI, namely, artificial intelligence. This has helped the businesses save lots of man power and money in terms of repetitive works, as well as boosts the company’s efficiency to meet the high customer demands. In the field of scientific research, as the government provide the labs with more advanced equipment, scientists are now able to carry out in-depth research. In addition, as communication becomes more accessible, any new outbreaks in one country can immediately be shared with the rest of the world. This allows global teamwork, with more elite researchers working with each other, the progress of inventing new medicines and other treatments are much faster. However, the major obstacle is an uremic toxin named PCS, as it is also the start-point of our project. PCS, also known as p -Cresyl sulfate, is one of the most frequent cause of CKD. Because of their special chemical structure, they cannot be filtered out by our kidney. Most recent research has discovered the root producer of PCS are the bacterium living in our intestine, but there are thousands of distinct microorganisms present in our human’s intestine. The ones that are known to us are only about 3%, and the rest requires more advanced technology to study. Aside from chemical treatments, physical treatments also becomes increasing popular, including controlled diets and specific exercises, but it was much less effective than chemical treatments. In short, technology did indeed served an important role in developing drugs, but it is also a double-edged sword, not only expensive, but also causing severe environmental problems including potential leak of dangerous microorganisms into our natural environment.
Micro Environment:
This section mainly uses Porter's five-force analysis method to analyze the current market competition pattern.
The ability of potential competitors to enter:
For the market of probiotic medicine, there are the following competitors:
Local hospitals: If the probiotic medicine are released onto the market, the hospitals will find a way to copy the recipe then sell it to the public at the lowest price possible. Since behind the hospitals there are factories that can produce medicines at a large scale which can decrease the cost. The hospitals' main goal is to sell drugs to the public at a affordable price.
Leading chemical enterprises: Leading chemical enterprises are able to use their highly developed technology and proffesional team to recreate and develop our project. Thus, they might create a better medicide than might be at a relatively price.
Substitution capacity of alternatives:
At present, Haemodialysis and kidney transportation are the two main treatments for uremia and chronic kidney diseases. However, these two treatments are pricy and requires tremendous amount of time. Besides, they will bring physical and psychological pain, as well as kidney damage to the pateints. Instead, our product is painless and It will be of great help in the long-term degradation of water pollution, which will be irreplaceable by chemical degradation.
Vendor's bargaining power:
Because the probiotics we use in our manufacturing process are easily accessible , the supply of raw material will not become a problem for enterprises. Meanwhile, the engineering method is developed and produced by us alone, thus there will be no restrictions on our production and sales by suppliers.
The ability of terminal customers to bargain:
Our customers are mainly facing the chemical enterprises which produce drugs for treating kidney diseases. Thus, Fuguantang Ltd. will become our main customer target in the biopharmaceutical companies which produce this kind of drugs. Compared with other small companies, Fuguantang Ltd. will have a relatively large impact on our market. So far, according to our market research, we have a large number of potential customers, so that our market still has a certain diversity rather than a single monopoly structure. Therefore, the bargaining power of terminal customers is still within our control.
Competitor & SWOT Analysis
Competitor
At present, there is no effective method to completely cure uremia or chromic kidney diseases. There are few treatments which can either alleviate the pain, or delay the onset of these diseases. The common treatments includes kidney transportation which is extremely costly and sometimes the demand of kidney is higher than it can be supplied. The other treatment is through Haemodialysis or Peritoneal dialysis but it is a repeatable process to filter the harmful material out of the kidney which might be costly and painful durign the process. However, we as a team, we try to create a whole new path within the market, we are trying to create medicines containing probiotics that will be able to become an alternative method instead of Haemodialysis. We believe that our new product will be able to be less time-consuming compared to the old methods used. However, we are not sure if our cost of product can be minimalized compared to Haemodialysis.
SWOT Analysis：
We will use SWOT to analyze the strengths, weaknesses, opportunities and challenges of enterprise competition. The so-called SWOT analysis, which is based on the internal and external competitive environment and competitive conditions, is to list the main internal strengths, weaknesses and external opportunities and threats closely related to the object of study, and arrange them in matrix form. Then, with the idea of system analysis, the various factors are matched and analyzed, and a series of conclusions are drawn from them. Corresponding conclusions, which are usually decision-making. S (strengths) is an advantage, W (weaknesses) is a disadvantage, O (opportunities) is an opportunity, and T(threats) is a threat. According to the complete concept of enterprise competitive strategy, strategy should be an organic combination of what an enterprise can do (i.e. thestrengths and weaknesses of the organization) and what it can do (i.e. the opportunities and threats of the environment). Specific analysis is as follows:
4.3.1（S：strengths）Probiotics themselves are harmless and some of them are even beneficial to human body. And Escherichia coli we used to develop our new sythetic microorganism is one of probiotics and are comfirmed to be safe to human body by a large quantity of researches. Also, the core of our method is to fundamentally prevent the production of PCS, a harmful toxin leading to end-stage CKD, while that of other traditional methods, such as peritoneal dialysis, are aimed at filtrating PCS to exclude it from our body after it has been produced. Thus, in the other word, the traditional methods are a temporary palliative with the exception of kidney transplant which still has a great possibility of transplant rejection that are especially harmful to human body.
4.3.2（W：weaknesses）： Biochemical treatment is an innovative way to deal with CKD, but it is not a perfect way: it certainly has some shortcomings. Because the synethic microorganism we have developed is targeted at reducing the production of only one of the possible posionous chemicals leading to the end stage of CKD - PCS, the effect of our product is limited compared with traditional methods - such as hemodialysis, which can filtrate many kinds of toxin accumulated in our body simultaneously at one time. Therefore, there is still a long way for our synethic microorganism to really have a control over the market and make great influence on the threapy of CKD. In addition, because we just started with insufficient capital support, we may be disadvantaged in the competition with large probiotics and health product enterprises when developing products, especially when in the development of our products. Furthermore, there is a limitation existing in probiotics : in order to take effect in human bodies, they need to be living, but actually, until now, their livability is still pretty low and increasing their livability is still a technical difficulty, which further add up the pressure on our product developing and marketing.
4.3.3（O：opportunities）： Current traditional mature treatment of the end stage of CKD, including kidney transplant, hemodialysis and peritoneal dialysis, are continuous renal replacement therapies, which are of high cost and liable to lead to complications. Therefore, there is an urgent need for new therapy, which makes space for our treatment using bioengineered probiotics. Also, so far, there are not any similar methods to ours that have been put into reality or market, which measns that there is little competition with our new microorganism and we can have a completely new market. Besides, the population suffering from CKD is very large and increasing, so the need for the curing method will certainly be greater and greater and sythetic microoraganism will certainly be a promising part of further development of the treatment of CKD.
4.4.4（T：threat）：There are no enough researches or studies on the side-effects and long-term effects of probiotics, so a large quantity of high-quality clinical trials are needed to actually apply our bioengineered probiotic into clinical practice. (Buffie C G, Bucci V, Stein R R, et al. Precision microbiome reconstitution restores bile acid mediated resistance to Clostridium difficile. Nature, 2015, 517: 205–208 ) And there are already some of probiotics comfirmed to have certainl negative effect, which will certainly bring more uncertainty to our target microorganism. Besides, just as Professor Zu Tingxun, one of experts in health care industry we have interviewed, says, the efficacy of probiotics is not generally recognized and the quality of probiotics is also not widely trusted, while may largely increase the market risk of our product and makes us face the risk of promotion failure.
Execution
For a more effective execution, we decided to plan for our marketing strategy and
organization structure.
5.1 MARKETING STRATEGY
The marketing strategy we adopted is called 4P strategy, including product strategy,
price strategy, place strategy and promotion strategy.
5.1.1 PRODUCT STRATEGY
The degradation of uremia toxin para-cresol with engineered probiotics intestinal bacteria is a novel and not widely used method, and there are no relevant drug products on the market. Second this product adopted by the engineering probiotic intestinal bacteria is relatively safe and reliable, no long exists in the body of the small intestine, within a week can get rid of the human body, its decomposition efficiency is very high, can be treated effectively in the five problems in human chronic kidney disease is common, fully meet the needs of people in this regard.
5.1.2 PRICE STRATEGY
This new method of biodegradation is in fact cheaper in long term.Using engineering probiotic intestinal bacteria degrade uremia BHT is on the market has not yet universal, a novel method for the treatment of chronic kidney disease (CKD) current population widespread demand for this kind of drugs for the treatment of chronic kidney disease is very big, because the probability of people get chronic kidney disease is very high, so, this might involve need to engineering probiotic bacteria in the gut. Large-scale industrial production, once this engineering, probiotic gut bacteria into large-scale production, can push down its cost, thereby reducing the overall price of drugs.
5.1.3 PLACE STRATEGY
For the sales strategy of related products, we mainly divided into direct marketing and indirect marketing.
Direct marketing: Because now we are in an information age, so the market is very diversity, we will go to the with engineering probiotic intestinal bacteria in the treatment of chronic kidney disease need bigger cities to brand promotion and sales, and we also plan to chronic sick people in these cities have to test our products until it proved to be stable, and then we will be in the national wide range of promoting it. In addition, we will also use network marketing, through the creation of our brand website, WeChat official account, weibo and YouTube account, when our brand to improve the image, establish public relations, make the brand widely known, increase the customer's interest to inquire about related products.
Indirect marketing: Due to the lack of understanding of our products in the early market, it is difficult for us to promote our products in the traditional way. Therefore, after the product is launched, we will use WeChat official account as the only promotion platform of the company, and then we will cooperate with large medical and pharmaceutical companies with relatively mature market.
5.1.4 PROMOTION STRATEGY
For the marketing strategy of our products, we will be active in the various social media send push and products related to the price quotation, so that we can get more exposure, at the beginning of the promotion of our products, we will to buy our products provide relevant product discount free exclusive of medical services and a few years, for example, to buy the customer provide healthcare services of our products, we only charge related drugs, and the guidance of the drug use and early medical services are all free of charge. In addition, we will also attend some seminars at home and abroad to get more exposure, communication and learning.
5.2 ORGANIZATION STRUCTURE
In order to make our company run more orderly, our company is divided into 1 general manager and several departments -- Market and Customer Service Department, Finance Department, Resources and Design Department, and Human Resources Department. These departments have different responsibilities.
5.2.1 MARKET AND CUSTOMER SERVICE DEPARTMENT
This department is responsible for promoting the company's products, philosophy and mission, and finding new customers. It organizes all marketing and promotion related activities and is responsible for attracting the attention of target customers to the business industry. Make sales plan and record customer information. This department supports customers to have a simple and enjoyable experience with them before and after they buy and use the products and services, thus retaining customers and developing the business. Deliver customer service, promise and trust through email, the Web, SMS and social media.
5.2.2 FINANCE DEPARTMENT
This department is responsible for ensuring the availability of funds, ensuring that the company has access to cash in a sustainable manner, and examining the intuition and carefully calculated judgment of employees. In order to make higher level financial management decisions, the department needs to produce financial statements. It also requires careful recording of daily bookkeeping, such as bookkeeping and payroll. It also requires the preparation of financial statements, including the periodic synthesis and finalization of this information in the income statement, balance sheet and cash flow statement. It is important to ensure the accuracy of financial work, so check the actual financial position and the information in the report regularly.
5.2.3 RESEARCH AND DESIGN DEPARTMENT
This department is responsible for designing products that can attract customers. The responsibility of this department needs to have strong imagination and creativity, and be good at discussing and cooperating with other members to come up with appropriate solutions, and be able to turn these ideas into a product and make continuous improvement to become a product that can be recognized by all. This department needs to investigate what kind of products customers need, and make a product that can meet the requirements of the public by considering the target group of the product.
5.2.4 HUMAN RESOURCES DEPARTMENT
This department is responsible for recruiting good people, training and firing them. The department works diligently behind the scenes to ensure that it operates efficiently. The department actively recruits, screens, interviews and recruits qualified candidates, evaluates employees' skills and tests their character to match the candidates with the right job. It creates and conducts training programs for new and existing employees, and works with department managers and supervisors to determine the training needs of employees.
Evaluation
Our ideal final product tends to be medicine instead of health care products. First of all, we need to have marketing research. This group is responsible for discovering needs and blanks in the market in order to have a “direction” for all the later procedures. This group should be approximately around 6-10 people. The total salaries for this group is around 8.4k-16k dollars per month. Second, our company needs an experiment department. This department is the main expenditure of the company’s whole finance because a successful medicine always needs years of development and thousands of time testing. The department needs tons of advanced testing equipment and necessities in a regular laboratory. They also need the raw materials for testing and making the medicine. This group requires at least 12 people. The budget for this department is not lower than 40k dollars per month.(This does not include the expense of buying advanced equipment. We may rent those from research equipment from other research centers. The average price of daily renting is about 750 dollars.) Finally, we need a promotion group (around 5 people) whose job is to promote our final project to the market including advertisements, offline popularization etc. Our budget for this group is around 10k per month. The taxes for our company is flexible because it is closely related to sales. According to the 2020 tax policy for pharmaceutical enterprises, the taxes for each company os around 11.7% of their sales.
Risk of our product is mainly from the market and government. First of all, the government may not approve our product. Nowadays, there are many probiotics in the market. Most of them are presented as health care products, additives in the diet, and some medicines. However, those probiotics are all not genetically modified. Our product may have large resistance put into the market because the government is very careful about all kinds of genetically modified products. To solve this, our companies will do many different types of testing and send the results and samples to different authorized organizations to verify its safety. The other risk is from the market. Since this kind of product is superbly special, there is a great potential that people may not use our product in the proper way. Under this situation, we can make this product as prescription medicine which is only accessible once patients have doctors’ permission and they are going to take this medicine carefully under instructions from their doctors.
Conclusion
As our society develops better and better, great changes have taken place in people’s ways of eating and entertainment. However, these changes will bring us great convenience, but also bring some harm. Just like our kidney’s health, diseases will gradually develop because of our unhealthy diet or staying up late. We hope that with our engineered probiotic, the rate of uremia caused by the CKD can be reduced. In the first part of our BP, we analyzed some macro factors, such as policy environment, economic environment etc. Then there are some other factors, such as industry competitors and the bargaining power. In order to get a more comprehensive understanding of the engineering probiotics market, we also searched a lot of pros and cons，we chose to use SWOT analyze method, from strength, weakness, opportunity and threaten to analyze the market of probiotic. The next part is our execution, we decided to plan for our marketing strategy and organizing future. The last part is our evaluation, in this part, we listed our cost and revenue. Through financial analysis, we found that our product will face to several threats. As a result, we summarized some potential risks in the future, such as government policy restrictions and public consumer psychology.
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