Nanotech

Proactive Consultants

N A N O T E C H�Non-Transdermal Patches

Target Market: India Launch Date: June 2011

Executive Summary

PEST Analysis

Legal Requirements

Entry & Local Marketing Strategies

Financial Requirements

Market Size & Growth Potential

Competition Evaluation

Strategic Plan

Management & Supply Chain

Nanotech Products

Non-transdermal Patches

Sleep Aid

Energy

Pain Relief

Weight Loss Anti - Aging

Passive medical devices that are activated by the interaction of molecular structures with the body’s own natural incident

Electromagnetic emissions.

Energy Drink Market Size

Source: www.istockanalyst.com

v  Energy drinks are non-alcoholic beverages which are intended to provide a quick burst of high energy to the consumer.

v  May be prepared with a composition of methylxanthines, caffeine, natural flavors, some herbal components or specific vitamins including Vitamins.

v  May also contain taurine, guarana, maltodextrin, ginseng, carnitine, inositol, glucuronolactone, creatine and ginkgobiloba.

v  Most products include artificial sugar.

v  The primary active component is generally caffeine.

Pain Relief Market Size

v  Indian pharmaceutical market accounts for 1-2% of the global pharmaceutical market in value terms and 8% in volume terms.

v  In 2007 it has grown by 12.9% to reach USD8.16 billion.

v  Market growth during 2007 was driven by a number of new product launches by both Indian and foreign companies.

v  The pharmaceutical market has grown at a compounded annual growth rate (CAGR) of 13% during the last five years.

v  The market size comprises of domestic consumption of bulk drugs and formulations and does not include exports of the same.

Sleep Aid Market Size

v  Sales for drugs targeting sleep disorders constitute close to half of total revenues, with another 29% coming from drugs that alleviate pain.

v  About 42 million sleeping pill prescriptions were filled in 2005 which is up nearly 60 percent since 2000!

v  Experts acknowledge that insomnia has become a cultural benchmark — a side effect of an overworked, overwrought society.

Anti-Aging Market Size

v  The global market for anti-aging products and services was worth $162.2 billion in 2008.

Weight Loss Market Size

v  Between $33 billion and $55 billion is spent annually on weight loss products and services, including medical procedures and pharmaceuticals, with weight loss centers garnering between 6 percent and 12 percent of total annual expenditure.

v  About 70 percent of Americans' dieting attempts are of a self-help nature. Although often short-lived, these diet fads are a positive trend for this sector as Americans ultimately turn to professionals to help them meet their weight loss goals

Source: www.themarketfinancial.com

Growth Potential

courtesy of www.bigcharts.com

v  By Year 2050, India will be the World’s 3rd Largest Economy

v  India has consistently improved over the last 17 years.

India is one of the World’s Top Investment Destinations

v  The Indian economy posted robust growth of 9.4% in 2006-07. Despite a sharp deceleration in the agricultural sector, the strong GDP growth of 2006-07 was mainly powered by impressive growth of 10.0% in industry and 11.0% services.

POLITICAL, Economic, Social, & TECHNOLOGICAL Analysis

v  No strict regulations for the product.

v  Network marketing has been legal in India since 2000.

v  India lacks related laws or guidance. They are still working on how to define pyramid scheme vs. true network marketing.

v  NM is expanding at a phenomenal growth rate while scams are worse than the U.S. or Singapore.

v  IDSA: an interface between the industry and policy-making bodies of the Government facilitating the cause of Direct Selling Industry in India.

v  Establishment of technological and research institute §  500 technological institutes & 1080 research

institutes for providing education to Indian students.

v  Positive Technical policy §  Opens door to import technology from foreign

countries for increasing agricultural and industrial developments.

v  High Growth Rate of IT in India §  35% growth rate, 2nd country after China who

is using internet at large scale for ecommerce , e-education and e-accounting.

v  Incentive for promoting technology §  100% income tax exemption for expenses

incurred in research of technology in India. §  State financial corporation is uplifting

domestic technology by supporting finance to domestic Industries.

http://economictimes.indiatimes.com/Analysis/Remove_policy_ambiguity_on_direct_selling_industry/articleshow/3483601.cms http://shiksha-mba.blogspot.com/2009/11/what-is-technological-environment-and.html

Political, ECONOMIC, Social, and Technological Analysis

v  The economic factors in India are improving continuously §  GDP - Among the growing economies of the world, India is second only to

China. The country's GDP has been growing at an average rate of 8.5% for the last 5 years. its GDP is expected to increase 7.5% in 2011

v  Domestic consumption fuelling economic growth §  India has the largest independent consumer market in the world. As compared to

other countries, India is relatively insulated to external shocks due to strong domestic consumption.

§  Private domestic consumption accounts for more than 50% of the country's GDP and is one of the key factors driving overseas investments in the country

§  Income per capita: $884.75(2009)-->$977.41(2010) 10.5% increase!

FY05 FY06 FY07 FY08 FY09 FY10 FY11

Growth Rate 7.5% 9.5% 9.7% 9.0% 6.7% 6.5% 7.5%

Private Consumption Expenditure

$378Bi $423Bi $467Bi $534Bi $601Bi NA NA

Source: www.cmie.com

Political, Economic, SOCIAL, and Technological Analysis

v  Collectivism §  Extremely people-oriented, community conscious, large in-group §  Indian make their goals around people of the family/friends. §  Believe in long term relationships. Respect human relationships. §  Indians are known for their hard work vitality and dynamism, they enjoy working

as members of a group.

v  Value §  The spirit of competition is more in Indians as compared to Americans. §  Careless about the value of time.

v  Belief in natural treatment §  Treatment of health is not based only on the use of medications natural & herbal

healing (no chemicals inputs) §  Yoga - a spiritual and traditional practices §  Meditation - done though mind along with breathing exercises have a direct effect

on the body and helps in treating its various disorders.

http://www.healthaidindia.com/

INDIA is a great market to enter!

5 types of patches Network Marketing

No restriction on products

+ Network

marketing is allowed in India

People Oriented &

Acceptance of Natural Treatment

Positive Technological Development &

Strong Related Policy

Sustained Economy Growth &

Strong Domestic Private Consumption

4+4+5+4=17 17 ÷ 4 = 4.25

Legal Requirements v Approval needed

§ CDSCO (Central Drugs Standard Control Organization)

•  Ministry of Health and Family Welfare

http://cdsco.nic.in/index.html

Location: FDA Bhavan, ITO, Kotla Road, New Delhi -110002

Phone: 91-11-23236965 / 91-11-23236965 Fax: 91-11-23236973

http://cdsco.nic.in/index.html

Legal Documents (Product Registration)

Guidance Document on Common Submission Format for Registration of Medical Devices in India http://cdsco.nic.in/Guidance%20Document%20on%20Common%20%20%20Submission%20Format%20for

%20Registration%20of%20Medical%20Devices%20in%20India.Pdf

Plant Master

Covering Letter

Authorization Letter Form 40

Inspection/ Audit Report

Free Sales Certificate Schedule

Schedule DI

Power Of Attorney

TR6 Challan

LEGAL DOCUMENTS

Legal Documents - I v Cover Letter

§ Cleary specify the intent of the application. §  Provide important and relevant information.

v Authorization Letter § Original issue by Director / Company

Secretary / Partner of India Agent v Form 40 **

§  Performa prescribed in the Drugs & Cosmetics Rules

Guidance Document on Common Submission Format for Registration of Medical Devices in India

http://cdsco.nic.in/Guidance%20Document%20on%20Common%20%20%20Submission%20Format%20for%20Registration%20of%20Medical%20Devices%20in%20India.Pdf

Legal Documents - II v TR6 Challan **

§ Requite Fee •  USD 1500 – Registration of the manufacturing

Premises •  USD 1000 – Single device •  USD 1000 – Each additional device

v Power Of Attorney ** §  Authorization by a manufacturer to agent in

India shall be documented by POA executed.

Legal Documents - III v Schedule DI **

§ Undertaking as per the Performa prescribed in the Drugs & Cosmetics Act & Rules.

v Schedule DII v Free Sales Certificate

§  Issued by GHTF (Global Harmonization Task Force) member.

•  Enhancing patient safety •  Increasing access to safe, effective and clinically

beneficial medical technology around the world.

Legal Documents - IV v Inspection / Audit Report

§  Latest copy carried out by Notified bodies / National Regulatory Authority.

Notes: Soft Copy of the Plant Master File ** may submitted

along with the application. ** Refer to Appendix

Import Duties v Harmonized Tariff Code (HTS)

§  3005.10.90 •  Duty – 10%

http://www.cbec.gov.in/customs/cst-0910/chap-30.pdf

Competitor’s Evaluation v Companies v Products

Network Marketing

v No. 1 Amway §  turnover 800 crores = 8 billion dollars ( 10 crores = 23,32,627.85 US Dollars ) §  16.9% market share

v No. 2 Avon §  turnover 180 crores =1.8 billion dollars §  3.8% market share

http://in.answers.yahoo.com/question/index?qid=20080615230715AAwxvwi http://www.business-standard.com/india/news/amway-dabur-to-sweat-it-out-over-vitamins-dietary-supplements/357463/

How to join… Amway

v Start-up price §  Rs 995 = $ 22.2 §  All Product Handbook §  A set of 2 CDs

•  Opportunity CD •  Product CD

v Buying products regularly

v Start-up price §  A little more than the price

of a lipstick

http://www.amway.in/Articles/Article.aspx?pid=3e3b6905-209e-442e-b8a8-9a0980241c6s&ctg=CompanyProfile

Energy Drink Market

Red Bull Power H Others

Energy Drinks (Total turnover Rs 500 cores)

Product Red Bull Power Horse

Others (AmwayXL, Bullet, etc.)

Market share

60% 22% 18%

Country Base

Australia Australia Vary

Price $2/250ml (Rs95)

$2/250ml (Rs96)

Distribution/Strategy

Buzz-Marketing

HoReCa 60% Retail 40%

Retail, Direct Sell etc.

Nanotech V.S. Traditional Energy Drinks

Nanotech Energy Patch Energy Drinks

Caffeine-Free Drug-Free Stimulant-Free

Caffeine Stimulant

http://www.thehindubusinessline.com/2003/01/02/stories/2003010202060600.htm http://marketingpractice.blogspot.com/2008/08/red-bull-it-gives-you-wiings.html http://www.citeman.com/4318-market-size-for-energy-drinks-in-india-is-growing-rapidly/

Popular Pain Relief Products

v Ayurveda §  Ayurvedic Medicine

v Herbal Oil, Cream etc. §  Zandu Balm (under Emami)

•  65~67% Market share •  $0.5 ~ $1.5 (Local Price) •  $ 2 up ( Online for Worldwide)

http://business.rediff.com/report/2010/sep/27/dabangg-moment-for-zandu-balm.htm

Products that similar to Nanotech

v Salonpas v Ben Gay v Tylenol v Icy Hot Only Online

Beauty Industry

v Hindustan Lever, Ltd § Market share vary (average 30~55%) §  250+ personal care products from H to T

•  $8 ~ $15

http://www.hul.co.in/ http://en.wikipedia.org/wiki/Hindustan_Lever_Ltd

Beauty International

v Market share around 23% v 30 million dollars on local manufacturing

since 1994 v YES to fairer and younger looking skin” or

“Against inside cell damages.” v “Fairness” is the most important thing for

Indian women

http://www.loreal.co.in/_hi/_in/maybelline.aspx http://www.indiatogether.org/manushi/issue145/lovely.htm http://www.nytimes.com/2007/05/30/business/media/30adco.html?_r=1

Weight loss v Phentramin-d (no need doctor’s

prescription) §  60ct $67 §  120ct $127 §  180ct $157 §  360ct $314 §  540ct $471

v Thermo Phen Phen §  100ct $29.99

both claim to reduce appetite and enhance metabolism

Global “Entry” Strategies Strategies Entry sopport

Trade (Export) Strategy

Very traditional and well established form of operating in foreign market

Licensing Strategy -Valuable product and unique technology

-Loyalty fee

Foreign Investment Strategy

-Long-term participation

-Reduces investment of both money and management

Network Marketing -Not a traditional, but a powerful strategy

-The consultant gets a chance to do business without any investment -The end customers get genuine product

Global “Entry” Strategies Strategies Pros Cons

Export strategy Least effort approach to enter foreign market

Least development of market potential

Licensing strategy -Product customization -Avoiding potential risks due to unfamiliarity

-Potential loss of trademark, patent -May create a potential competitor

Foreign Investment

-A good way to occupy foreign market with unique technology

-Must share profits & relationship with partner -different standards

Network Marketing

-Minimum capital involved -Simple transaction -Powerful strategy -Everyone could be the top -No money investment, but profitable

-More people involved -Illegal way in some countries -Hard to start -Depends highly on the product quality

Global “Entry” Strategies Network Marketing is the best strategy to enter Indian Market: --Network Marketing is a strategy entering India market with

the maximum impact at minimum cost among all of other strategies

--It is a powerful tool with word of mouth marketing, no

advertsing budget --The consultant gets a chance to do business without

any investment, and the customers get the genuine product --A good way for a start business

Local Marketing Strategy v Product

§  Brand Name: Nanotech Inc. §  Type of Product: Improving health and

wellness §  Product Feature:

•  Non-Transdermal patches •  Patch for Energy, Pain, Sleep, Anti-Aging, and

Weight Loss •  FDA-Approved Class II Device

§  Appearance: form of a small patch, slightly bigger than a ‘quarter’ coin

§ Usage: Disposable and may be applied daily for up to 12 hours at a time

Local Marketing Strategy v Price

§  Premium Pricing Strategy •  High prices is interpreted as high quality product •  High prices reflect the exclusiveness of the product

§  Price Breaks: •  Volume quantity discounts are available to distributors

at $50 per pack for an order of 50 packs of the same product.

§  Target the middle-upper class •  Retail: $90+$15 (shipping) = $105

–  4705 rupees •  Wholesale: $70+$15 (shipping)=$85

–  3809 rupees

Local Marketing Strategy v Promotion

§  Direct/personal Selling §  Sales Promotion

•  Lifestyle Store •  Give a free trial/sample patch

§  No advertising as it does not fit company budget/structure

§  Testimonials: From people and show the celebrities that use it

§  Word of mouth: If the product is good it will sell itself

§  Have a athletes in India try it •  Cricket •  Field Hockey

Local Marketing Strategy v Place

§ Direct Distribution •  Goes from Distributor to Consumer •  Small stock of inventory

§ Distribution Center – Mumbai •  Have airport and sea port •  Metropolis

Distribution Center in India Consu

Nanotech

Management & Supply Chain v Organizational Structure

U.S Indian Distributor Assistant

Local Distributor

a a b b

Network Marketing

Supply Chain System

US Warehouse

LAX US Freight

BOM airport Bonded warehouse

India Distribution Center

Indian Online Website

Distributors

3 days

30-35 days

Logistic/Distribution v Mode of Transportation

§ Ocean •  U.S Freight Forwarder- takes 30-35 days

– Quarterly

§  Air •  Cargo Airline- takes 3 days

§ Rush •  Courier- takes 1-3 days

– USPS, Fedex, DHL, UPS

v Local §  Indian Post Office

Financial Requirements Total legal costs involved in setting up the business in India

20 days (min) INR 31,073 (max) = USD 692

Source: International Finance Corporation (2010). “Doing Business in India.” http://www.doingbusiness.org/data/exploreeconomies/india. Accessed on Nov 20, 2010

USD1 = INR44.90

Financial Requirements Product Registration Costs with Central Drugs Standard

Control Organization (CDSCO)

*One time fee while filing TR6 Chalan, unless if there are

additional medical device in different shape and size.

Source: Guidelines for Import and Manufacture of Medical Devices(2006),“Registration for medical devices for import” http://cdsco.nic.in/medical%20device%20A42.html. Accessed on Dec 4th 2010.

Item Total Cost Registration Fee* $1500 Registration of Medical Devices for Import*

Total $2500

Financial Requirements Total Promotion and Marketing Cost

Promotion and Marketing Cost Costs Free Samples 0 (at Distributor's

own cost) Training Seminars Free Marketing Materials (DVD, brochures, information kit)

Total $500

Financial Requirements Total Shipping/Transportation Costs Analysis

*Quotes obtained from The Ultimate Freight Management, Inc **Quotes obtained from Global Logistics Solutions (India) Pvt. Ltd.

Ocean Freight Air Freight (based on SQ airline)

Port Item Costs Airport Item Costs

Ocean Freight $1,984 45kg of products ($4.95/kg) $223

Handling Fee $65 Security ($0.15/kg with $15min) $15

Export AES Custom $85 Fuel ($0.90/kg with $15min) $41

Pier Pass $50 LAX Airport Cargo Transfer $25

Clean Truck Fee $35 Export Document $65

THC for 20' Non Haz Cntr $133 Export AES customs $85

Document Charges $35 Local Trucking Fee $160

Service Tax of 10.3% $17 Document Charges $35

Clearance Charges $125 Service Tax of 10.3% $4

Handling Fee $25 Clearance Charges $125

-‐ -‐ -‐ Handling Charges $25

$2,554 $802Total Total

Mumbai**

Financial Requirements Total Shipping/Transportation Costs Analysis

Ocean Freight

Container Dimension (LxWxH) 20’ x 8’ x 8’

Assumed No. of packs in 1 Container 252,700 (=38x14x475)

Ocean Freight Cost/container $2554

Import Duty Tax (10% of Product Value) $1,768,900

Ocean Freight Cost/Pack $7.00

Air Freight

Total Weight for Air Shipment 45kg = 99lbs

Assumed No. of packs in 45kg = 99lbs 198

Air Freight Cost/45kg $802

Import Duty Tax (10% of Product Value) $1,386

Air Freight Cost/Pack $11.00

Courier Service

Large Flat Rate Box Dimension (LxWxH) 12’”x 12’”x 5-1/2’”

Assumed No. of packs in 1 above Flat Rate Box 40

USPS Priority Mail Large Flat Rate Box (up to 20lbs) $55.95

Ocean Freight Cost/Pack $1.40

Assume: 1 pack weights 0.5lbs Pack Dimension (LxWxH) = 6”x6”x0.2”

Financial Requirements Total Channel/Distribution Costs

Item Cost/Unit Qty Needed Total Cost

Wholesale Price/pack

$70.00 240 (48x5 products)

$16,800

Recruiting Bonus

Up to $100 50 $5,000

Total $21,800

Financial Requirements Total Management & Operational Costs

Source 1: Commercial: Office Space/IT park for Rent in East Vidyavihar (2010). “Sulekha.com Classifieds & Yellow pages”. <http://classifieds.sulekha.com/mumbai/vidyavihar-e/rentals/commercial-office-space-it-park/adlistings.aspx>. Accessed on Dec 4th 2010 Source 2: Home fixed line plans from Airtel (2010). “Airtel India”. <http://www.airtel.in/wps/wcm/connect/airtel.in/airtel.in/home/foryou/broadband+and+fixed+line/fixed+line/tariffs/>. Accessed on Dec 4th 2010. Source 3: Salary Report for Clerk @ Jobstreet.com (2010). “Jobstreet.com”. <http://myjobstreet.jobstreet.com/career-enhancer/basic-salary-report.php>. Accessed on Dec 4th 2010

Source 4: Broadband Internet Plans in India (2010). “Airtel India”. <http://www.airtel.in/wps/wcm/connect/airtel.in/airtel.in/home/forme_newuser/broadband+and+fixed+Line/broadband/>. Accessed on Dec 4th 2010

Management & Operational items Costs/month

1Office Rental (500sqt) in Mumbai $1,115 2Airtel Fixed Line Bill $25 3Clerk (Fresh/Entry Level) Salary $190 Estimated Electric Bill $135 Estimated Water Bill $15 4Airtel Broadband Bill(2Mbps download speed)

Total $1,520

Financial Requirements Total Financial Requirements

Costs Amount (USD)

Total Legal Costs in Setting up Business in India

Total CDSCO Registration Fee $2,500

Total Promotion and Marketing Costs $500

Total Shipping/ Transportation Costs (1st batch, 240packs – using Courier Service)

Total Channel/Distribution Costs $21,800

Total Management & Operational Costs $1,520

Total $27,348

Balance Cash on Hand: $22,652

Strategic Plan to Launch Nanotech Patches into

Nanotech’s Vision and Mission

Our Vision

Our Mission To help transform health care

by bringing together the basic principles of science and technology for the purpose of

living life to its fullest!

To enhance human health and well being all over the world through nanotechnology

“One patch at a time.”

Nanotech Goal and Objective

Goal Objective

Nanotech patches to be accepted,

purchased and enjoyed by

everyone in India.

To become one of the top 3

network marketing companies in India within 3 years by increasing sales

30% - 50% per year.

Evaluation of Strategies Strategies Pros Cons

Export strategy Least effort approach to enter foreign market

Least development of market potential

Licensing strategy -Product customization -Avoiding potential risks due to unfamiliarity

-Potential loss of trademark, patent -May create a potential competitor

Foreign Investment

-A good way to occupy foreign market with unique technology

-Must share profits & relationship with partner -different standards

Network Marketing

-Minimum capital involved -Simple transaction -Powerful strategy -Everyone could be the top -No money investment, but profitable

-More people involved -Illegal way in some countries -Hard to start -Depends highly on the product quality

Optimal Strategy v Network Marketing Strategy with

distribution center in Mumbai

U.S Indian Distributor Assistant

Local Distributor

a a b b

Network Marketing

Timeline (January 2011 – June 2011)

Develop & implement accelerated market

entry and deployment plans

Prepare comprehensive business plan

Recruit key staff

USA & India

Acquire facility and

shipping mechanisms

LAUNCH PRODUCT JUNE 2011

Proactive Consultants

Angel Huang, Annie Ting, Cynthia Wang, Helen Miao, Pockey Wu, Jeffrey Shih, Oliver Hament, Peong-Tat Ong

Resources Articles / Reports v  Doing Business in India, 2010, Ernst & Young, India v  Doing Business in India, Strategic and Practical Considerations, January 2010, IVG Partners v  Doing Business in India, January 24, 2008, Citibank v  Transdermal Patches: What Pharmacists Need to Know?, The Pharma Review June 2006, Subal C. Basak v  India’s market Opportunities for imported fresh & processed foods, May 2009, Dept. Agriculture & Food v  Is the Health and Wellness Industry ‘Recession Proof’?, www.zpryme.com,

Resources Websites v  National Council of Applied Economic Research www.ncaer.org v  http://www.wikipedia.com v  http://www.wikiinvest.com v  http://www.nytimes.com v  http://www.ahrq.gov/ v  http://cdsco.nic.in/index.html v  http://cdsco.nic.in/Medical_div/General%20Formats.htm v  http://cdsco.nic.in/Guidance%20Document%20on%20Common%20%20%20Submission%20Format%20for

%20Registration%20of%20Medical%20Devices%20in%20India.Pdf v  http://www.fda.gov.tw/files/list/PMF_Checklist_en.pdf v  http://business.mapsofindia.com/india-company/pharmaceutical.html v  http://www.dare.co.in/news/others/indias-wellness-industry-seen-growing-30-35-percent.htm v  http://www.wyff4.com/r/25676048/detail.html v  http://www.tradeindia.com/manufacturers/indianmanufacturers/energy-drinks.html v  http://www.rediff.com/money/2006/may/24drink.htm v  http://www.rediff.com/money/2006/apr/19spec.htm v  http://medicinemadeinindia.com/siddha.html v  http://lifestyle.iloveindia.com/lounge/herbal-sleep-aids-8848.html v  http://www.herbalcureindia.com/products/wheat-grass.htm v  http://www.healthylivingindia.org/2010/06/ayurvedic-weight-loss-pills-dont-work.html v  http://www.made-from-india.com/Categories/Medicine_Health_Products/?page=8&vc=product&sortby v  http://www.cosmeticsdesign.com/Products-Markets/Anti-aging-prestige-skincare-market-set-to-return-to-growth

Appendix I

http://cdsco.nic.in/Medical_div/General%20Formats.htm

Appendix II

Appendix III

Appendix IV

Appendix V

http://www.fda.gov.tw/files/list/PMF_Checklist_en.pdf

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