Transcript Market Feasibility Study VitalSign: Wireless Heartbeat and Respiration Detector

Market Feasibility Study
VitalSign:
Wireless Heartbeat and Respiration Detector
Presentation Outline
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Technology Description
Potential Markets
Target Market
Financial Analysis
Conclusions
Technology Description
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Developed by Dr. Jenshan Lin and his colleagues
at the University of Florida
VitalSign utilizes a modified Doppler radar to
wirelessly monitor heart and respiration rates
Technology Description
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The small portable device employs low
power radio waves to determine vital signs
without attaching sensors to the body
The system monitors chest motion to
determine heart and breathing rates
Proven accurate within 3 meter range
Patent Pending
Technology Description
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Next generation working prototype the
size of a scientific calculator has been
developed
Goal is to integrate the technology into a
single chip
Potential Markets
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Technology applicable in various markets
Conducted market research in the
following three potential markets:
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Healthcare
National Defense
Cardiovascular exercise equipment
Potential Markets - Healthcare
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By 2011, the first of the 76 million babyboomer generation will turn 65 years old
Increasing demand on the healthcare
system
Opportunities for cost effective healthcare
solutions allowing doctors to function
more efficiently
Potential Markets - Healthcare
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Telemedicine - use of electronic information and
communication technologies to provide health
services when participants are geographically
separated
Remote patient monitoring is a key component
of telemedicine
Allows healthcare providers access to important
information regarding a patient’s medical status
between doctor visits
Potential Markets - Healthcare
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VitalSign provides additional convenience
Easily monitor patients with severe burns
or contagious diseases
Provides method to monitor babies
without the potential danger of wires
Potential Markets - Healthcare
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Barriers to Entry
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Only measures two important vital signs
FDA pre-market requirements for
groundbreaking (Class III) medical
technologies cover every aspect of product
development
FDA validation process will take up to 5 years
and cost at least $15 million
Potential Markets – National Defense
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Department of Defense (DOD) budget for 2006 is over $500
billion
VitalSign may fill the military’s need to provide troops,
conducting urban warfare operations with personnel detection
devices
Allows detection through barriers such as wood and concrete
when looking for enemy combatants
Potential Markets – National Defense
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Additional military detection applications
include :
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Military search and rescue on the battlefield or
during a natural disaster
Detection after biological exposure
Potential Markets – National Defense
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Barriers to Entry
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Notable challenges dealing with government
acquisitions bureaucracy
Competition from large defense contractors
developing technology that can provide more
data to the soldier than VitalSign
Potential Markets – Cardiovascular
Exercise Equipment
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Cardiovascular disease
(CVD) is the number one
killer of men and women
in the United States
Increased awareness of
the importance of proper
diet and exercise
Has created exceptional
growth in the exercise
and fitness industry
Potential Markets – Cardiovascular
Exercise Equipment
Potential Markets – Cardiovascular
Exercise Equipment
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Approximately 4.4 million treadmills were
sold in 2003 totaling $2.7 billion
Elliptical cross trainers experienced growth
of 41% in 2003.
Increasing popularity of heart rate
monitoring during cardiovascular exercise
to a target heart rate zone allowing for
maximum exercise efficiency
Potential Markets – Cardiovascular
Exercise Equipment
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Competitive Analysis
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Two primary products currently measure heart
rate while exercising
Handgrip Sensors
 Telemetric Chest Strap
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VitalSign has significant advantages over the
two currently available technologies
Target Market - Cardiovascular
Exercise Equipment
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Low barriers to entry
Ability to provide a revenue stream quickly
Technology can be integrated into the
next generation of cardiovascular exercise
equipment, providing convenient
monitoring of heart and respiration rates
Financial Analysis – Startup and
Operation Costs
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Investment of $2 million over the next 2
years is estimated for research and
development with zero estimated revenue
R&D is reduced to $250,000 in year 3 and
beyond
Marketing is budgeted at $1 million in the
first year of sales, which is then reduced
to $250,000 in the following years
Financial Analysis – Revenue Forecast
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Conservative forecast is to sell 200,000 units
during year three at a price of $8 each
Forecast sales to increase by 100% each year
for the next three years while the price will be
reduced by 10% each year
Equates to sales beginning in year three at
200,000 units and increasing to 1.6 million units
by end of year six
Revenue is projected to increase from $1.6
million to $9.2 million during the same period.
Financial Analysis - Price and
Income Elasticity
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The market for all cardiovascular disease (CVD)
monitoring equipment is generally price elastic
Since VitalSign is a complementary product it is
more elastic to the price of the complementary
product
Large increases in the price of cardiovascular
exercise equipment will severely impact the
sales of our product
Demand is income elastic
Financial Analysis –
Break-Even Analysis
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Operational Costs during the first year of
commercial availability (2008) are estimated at
$670,000
The 6 year (2006-2012) total cost of product
development, operational expenses will be
approximately $12.7 million with revenue
totaling $19.7 million
Resulting in six year net profit of approximately
$5.3 million
Break-Even Analysis
$12,000,000
Total Costs
Total Revenue
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$0
Year 1
Total Costs
Total
Revenue
Annual Profit
Total Profit
Year 2
Year 3
Year 4
Year 5
Year 6
Year 1
$973,000
$0
Year 2
$1,083,000
$0
Year 3
$1,150,000
$1,600,000
Year 4
$1,770,000
$2,880,000
Year 5
$2,870,000
$5,440,000
Year 6
$4,935,000
$9,792,000
($973,000)
($973,000)
($1,083,000)
($2,056,000)
$450,000
($1,606,000)
$1,110,000
($496,000)
$2,570,000
$2,074,000
$4,857,000
$6,931,000
Pro Forma Financial Data
Profit & Loss Projections
Total Sales
Less: Cost of Sales
Gross Profit
Year1
Year2
Year3
$
- $
- $ 1,600,000
$ 20,000 $
35,000 $ 480,000
$ (20,000) $
(35,000) $ 1,120,000
Year4
$ 2,880,000
$ 960,000
$ 1,920,000
Year5
$ 5,440,000
$ 1,920,000
$ 3,520,000
Year6
$ 9,792,000
$ 3,840,000
$ 5,952,000
Operating Expenses
Business development payroll
Research payroll
Rent
Utilities
Legal Expenses
Licenses & fees
Advertising/Promotion
Travel
Payroll taxes
Lease expenses
Other Misc expenses
Total operating costs
$
$ 750,000
$ 12,000
$
3,000
$ 15,000
$ 10,000
$
$
5,000
$ 150,000
$
5,000
$
3,000
$ 953,000
$
50,000
$ 750,000
$
12,000
$
3,000
$
15,000
$
15,000
$
10,000
$
25,000
$ 160,000
$
5,000
$
3,000
$ 1,048,000
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
400,000
250,000
25,000
5,000
15,000
15,000
40,000
55,000
130,000
10,000
5,000
950,000
$ 500,000
$ 250,000
$
25,000
$
5,000
$
15,000
$
15,000
$
50,000
$
65,000
$ 150,000
$
10,000
$
10,000
$ 1,095,000
Total costs
$ 973,000
$ 1,083,000
$ 1,150,000
$ 1,770,000
$ 2,870,000
$ 4,935,000
Profit before Interest and taxes
Interest expense
Taxes Incurred
$ (973,000) $ (1,083,000) $
$
- $
- $
$
- $
- $
450,000
-
$ 1,110,000
$
$
78,750
$ 2,570,000
$
$ 246,750
$ 4,857,000
$
$ 1,214,250
Net Profit(loss)
$ (973,000) $ (1,083,000) $
450,000
$ 1,031,250
$ 2,323,250
$ 3,642,750
200,000
250,000
25,000
5,000
15,000
15,000
20,000
35,000
90,000
10,000
5,000
670,000
300,000
250,000
25,000
5,000
15,000
15,000
30,000
45,000
110,000
10,000
5,000
810,000
Conclusions
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Numerous Possibilities for VitalSign
Fitness Equipment Industry is most viable
 Technology needs only minor changes.
 Industry is growing
 Nothing exists that can compare.
Technology is definitely feasible
Questions