Market Feasibility Study VitalSign: Wireless Heartbeat and Respiration Detector.
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Transcript of Market Feasibility Study VitalSign: Wireless Heartbeat and Respiration Detector.
Market Feasibility Study Market Feasibility Study
VitalSign:VitalSign:Wireless Heartbeat and Respiration Wireless Heartbeat and Respiration
DetectorDetector
Presentation OutlinePresentation Outline
Technology DescriptionTechnology Description Potential MarketsPotential Markets Target MarketTarget Market Financial AnalysisFinancial Analysis ConclusionsConclusions
Technology DescriptionTechnology Description Developed by Dr. Jenshan Lin and his Developed by Dr. Jenshan Lin and his
colleagues at the University of Florida colleagues at the University of Florida VitalSign utilizes a modified Doppler radar VitalSign utilizes a modified Doppler radar
to wirelessly monitor heart and respiration to wirelessly monitor heart and respiration ratesrates
Technology DescriptionTechnology Description
The small portable device employs low The small portable device employs low power radio waves to determine vital power radio waves to determine vital signs without attaching sensors to the signs without attaching sensors to the bodybody
The system monitors chest motion to The system monitors chest motion to determine heart and breathing ratesdetermine heart and breathing rates
Proven accurate within 3 meter rangeProven accurate within 3 meter range Patent PendingPatent Pending
Technology DescriptionTechnology Description
Next generation working prototype Next generation working prototype the size of a scientific calculator has the size of a scientific calculator has been developedbeen developed
Goal is to integrate the technology Goal is to integrate the technology into a single chipinto a single chip
Potential MarketsPotential Markets
Technology applicable in various Technology applicable in various marketsmarkets
Conducted market research in the Conducted market research in the following three potential markets:following three potential markets: HealthcareHealthcare National DefenseNational Defense Cardiovascular exercise equipmentCardiovascular exercise equipment
Potential Markets - Potential Markets - HealthcareHealthcare
By 2011, the first of the 76 million By 2011, the first of the 76 million baby-boomer generation will turn 65 baby-boomer generation will turn 65 years oldyears old
Increasing demand on the healthcare Increasing demand on the healthcare system system
Opportunities for cost effective Opportunities for cost effective healthcare solutions allowing doctors healthcare solutions allowing doctors to function more efficientlyto function more efficiently
Potential Markets - Potential Markets - HealthcareHealthcare
Telemedicine - use of electronic information Telemedicine - use of electronic information and communication technologies to provide and communication technologies to provide health services when participants are health services when participants are geographically separatedgeographically separated
Remote patient monitoring is a key Remote patient monitoring is a key component of telemedicinecomponent of telemedicine
Allows healthcare providers access to Allows healthcare providers access to important information regarding a patient’s important information regarding a patient’s medical status between doctor visits medical status between doctor visits
Potential Markets - Potential Markets - HealthcareHealthcare
VitalSign provides additional VitalSign provides additional convenienceconvenience
Easily monitor patients with severe Easily monitor patients with severe burns or contagious diseasesburns or contagious diseases
Provides method to monitor babies Provides method to monitor babies without the potential danger of wires without the potential danger of wires
Potential Markets - Potential Markets - HealthcareHealthcare
Barriers to EntryBarriers to Entry Only measures two important vital signsOnly measures two important vital signs FDA pre-market requirements for FDA pre-market requirements for
groundbreaking (Class III) medical groundbreaking (Class III) medical technologies cover every aspect of technologies cover every aspect of product development product development
FDA validation process will take up to 5 FDA validation process will take up to 5 years and cost at least $15 million years and cost at least $15 million
Potential Markets – National Potential Markets – National DefenseDefense Department of Defense (DOD) budget for 2006 is over $500 Department of Defense (DOD) budget for 2006 is over $500
billion billion VitalSign may fill the military’s need to provide troops, VitalSign may fill the military’s need to provide troops,
conducting urban warfare operations with personnel conducting urban warfare operations with personnel detection devices detection devices
Allows detection through barriers such as wood and concrete Allows detection through barriers such as wood and concrete when looking for enemy combatantswhen looking for enemy combatants
Potential Markets – National Potential Markets – National DefenseDefense
Additional military detection Additional military detection applications include :applications include : Military search and rescue on the Military search and rescue on the
battlefield or during a natural disasterbattlefield or during a natural disaster Detection after biological exposureDetection after biological exposure
Potential Markets – National Potential Markets – National DefenseDefense
Barriers to EntryBarriers to Entry Notable challenges dealing with Notable challenges dealing with
government acquisitions bureaucracygovernment acquisitions bureaucracy Competition from large defense Competition from large defense
contractors developing technology that contractors developing technology that can provide more data to the soldier can provide more data to the soldier than VitalSignthan VitalSign
Potential Markets – Cardiovascular Potential Markets – Cardiovascular
Exercise EquipmentExercise Equipment Cardiovascular Cardiovascular
disease (CVD) is the disease (CVD) is the number one killer of number one killer of men and women in men and women in the United Statesthe United States
Increased awareness Increased awareness of the importance of of the importance of proper diet and proper diet and exerciseexercise
Has created Has created exceptional growth in exceptional growth in the exercise and the exercise and fitness industryfitness industry
Potential Markets – Cardiovascular Potential Markets – Cardiovascular Exercise EquipmentExercise Equipment
Potential Markets – Cardiovascular Potential Markets – Cardiovascular Exercise EquipmentExercise Equipment
Approximately 4.4 million treadmills Approximately 4.4 million treadmills were sold in 2003 totaling $2.7 billionwere sold in 2003 totaling $2.7 billion
Elliptical cross trainers experienced Elliptical cross trainers experienced growth of 41% in 2003. growth of 41% in 2003.
Increasing popularity of heart rate Increasing popularity of heart rate monitoring during cardiovascular monitoring during cardiovascular exercise to a target heart rate zone exercise to a target heart rate zone allowing for maximum exercise allowing for maximum exercise efficiencyefficiency
Potential Markets – Cardiovascular Potential Markets – Cardiovascular Exercise EquipmentExercise Equipment
Competitive AnalysisCompetitive Analysis Two primary products currently measure Two primary products currently measure
heart rate while exercisingheart rate while exercising Handgrip Sensors Handgrip Sensors Telemetric Chest Strap Telemetric Chest Strap
VitalSign has significant advantages VitalSign has significant advantages over the two currently available over the two currently available technologiestechnologies
Target Market - Cardiovascular Target Market - Cardiovascular Exercise EquipmentExercise Equipment
Low barriers to entryLow barriers to entry Ability to provide a revenue stream Ability to provide a revenue stream
quicklyquickly Technology can be integrated into Technology can be integrated into
the next generation of cardiovascular the next generation of cardiovascular exercise equipment, providing exercise equipment, providing convenient monitoring of heart and convenient monitoring of heart and respiration ratesrespiration rates
Financial Analysis – Startup Financial Analysis – Startup and Operation Costsand Operation Costs
Investment of $2 million over the next 2 Investment of $2 million over the next 2 years is estimated for research and years is estimated for research and development with zero estimated development with zero estimated revenuerevenue
R&D is reduced to $250,000 in year 3 R&D is reduced to $250,000 in year 3 and beyondand beyond
Marketing is budgeted at $1 million in Marketing is budgeted at $1 million in the first year of sales, which is then the first year of sales, which is then reduced to $250,000 in the following reduced to $250,000 in the following yearsyears
Financial Analysis – Revenue Financial Analysis – Revenue ForecastForecast
Conservative forecast is to sell 200,000 Conservative forecast is to sell 200,000 units during year three at a price of $8 eachunits during year three at a price of $8 each
Forecast sales to increase by 100% each Forecast sales to increase by 100% each year for the next three years while the price year for the next three years while the price will be reduced by 10% each year will be reduced by 10% each year
Equates to sales beginning in year three at Equates to sales beginning in year three at 200,000 units and increasing to 1.6 million 200,000 units and increasing to 1.6 million units by end of year six units by end of year six
Revenue is projected to increase from $1.6 Revenue is projected to increase from $1.6 million to $9.2 million during the same million to $9.2 million during the same period. period.
Financial Analysis - Price and Financial Analysis - Price and Income ElasticityIncome Elasticity
The market for all cardiovascular disease The market for all cardiovascular disease (CVD) monitoring equipment is generally (CVD) monitoring equipment is generally price elasticprice elastic
Since VitalSign is a complementary Since VitalSign is a complementary product it is more elastic to the price of product it is more elastic to the price of the complementary product the complementary product
Large increases in the price of Large increases in the price of cardiovascular exercise equipment will cardiovascular exercise equipment will severely impact the sales of our productseverely impact the sales of our product
Demand is income elasticDemand is income elastic
Financial Analysis – Financial Analysis –
Break-Even AnalysisBreak-Even Analysis Operational Costs during the first year of Operational Costs during the first year of
commercial availability (2008) are commercial availability (2008) are estimated at $670,000 estimated at $670,000
The 6 year (2006-2012) total cost of The 6 year (2006-2012) total cost of product development, operational product development, operational expenses will be approximately $12.7 expenses will be approximately $12.7 million with revenue totaling $19.7 millionmillion with revenue totaling $19.7 million
Resulting in six year net profit of Resulting in six year net profit of approximately $5.3 million approximately $5.3 million
Break-Even AnalysisBreak-Even Analysis
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Total Costs
Total Revenue
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6Total Costs $973,000 $1,083,000 $1,150,000 $1,770,000 $2,870,000 $4,935,000 Total Revenue
$0 $0 $1,600,000 $2,880,000 $5,440,000 $9,792,000
Annual Profit ($973,000) ($1,083,000) $450,000 $1,110,000 $2,570,000 $4,857,000 Total Profit ($973,000) ($2,056,000) ($1,606,000) ($496,000) $2,074,000 $6,931,000
Pro Forma Financial DataPro Forma Financial DataProfit & Loss Projections
Year1 Year2 Year3 Year4 Year5 Year6Total Sales -$ -$ 1,600,000$ 2,880,000$ 5,440,000$ 9,792,000$ Less: Cost of Sales 20,000$ 35,000$ 480,000$ 960,000$ 1,920,000$ 3,840,000$
Gross Profit (20,000)$ (35,000)$ 1,120,000$ 1,920,000$ 3,520,000$ 5,952,000$
Operating ExpensesBusiness development payroll -$ 50,000$ 200,000$ 300,000$ 400,000$ 500,000$ Research payroll 750,000$ 750,000$ 250,000$ 250,000$ 250,000$ 250,000$ Rent 12,000$ 12,000$ 25,000$ 25,000$ 25,000$ 25,000$ Utilities 3,000$ 3,000$ 5,000$ 5,000$ 5,000$ 5,000$ Legal Expenses 15,000$ 15,000$ 15,000$ 15,000$ 15,000$ 15,000$ Licenses & fees 10,000$ 15,000$ 15,000$ 15,000$ 15,000$ 15,000$ Advertising/Promotion -$ 10,000$ 20,000$ 30,000$ 40,000$ 50,000$ Travel 5,000$ 25,000$ 35,000$ 45,000$ 55,000$ 65,000$ Payroll taxes 150,000$ 160,000$ 90,000$ 110,000$ 130,000$ 150,000$ Lease expenses 5,000$ 5,000$ 10,000$ 10,000$ 10,000$ 10,000$ Other Misc expenses 3,000$ 3,000$ 5,000$ 5,000$ 5,000$ 10,000$
Total operating costs 953,000$ 1,048,000$ 670,000$ 810,000$ 950,000$ 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 (973,000)$ (1,083,000)$ 450,000$ 1,110,000$ 2,570,000$ 4,857,000$ Interest expense -$ -$ -$ -$ -$ -$ Taxes Incurred -$ -$ -$ 78,750$ 246,750$ 1,214,250$
Net Profit(loss) (973,000)$ (1,083,000)$ 450,000$ 1,031,250$ 2,323,250$ 3,642,750$
ConclusionsConclusions
Numerous Possibilities for VitalSignNumerous Possibilities for VitalSign Fitness Equipment Industry is most viable Fitness Equipment Industry is most viable
Technology needs only minor changes.Technology needs only minor changes. Industry is growingIndustry is growing Nothing exists that can compare.Nothing exists that can compare.
Technology is definitely feasible Technology is definitely feasible
QuestionsQuestions