The business plan for BIOXIS Monophasic Hyaluronic Acid distribution in Russian Federation Moscow, 2018
MEDLUX This business plan was made to provide an analysis of the project of bringing BIOXIS brand of biopolymer cosmetic fillers to the Russian market. 2018 is a good year for bringing new products to the market. Due to changed registration requirements, some brands have reduced presence. Among them, there is Restylane which previously was in Russia. The business plan includes information about the initiator of the project, a review of the market for the import of cosmetic fillers, as well as the retail market for their application. Also, the business plan includes a marketing plan and 3-year forecasts of Cash Flow and P&L. Introduction Business plan
Company profile The initiator of the project is the Russian company , which has been operating for five years in the market of medical products for the cosmetology industry. The company operates on the territory of Russian Federation and in some CIS countries. The company sells products in Moscow region by itself and has a dealer network in thirty large cities of Russia, including the Far East. Company annual turnover in 2017 was about $5 Mln. Currently, the company works with the following products: ● Cellenis® PRP (Israel) ● Desobody (Italy) ● Royal Threads (RussiaItaly-Japan) ● Royal implants (Russia, at the registration stage) “Five years of market success”
ORGANIGRAMME The company organigramme is figured below: The company sales activity is based on the following principles: ● Dissemination of information about the products in the professional community ● Training in the use of cosmetic products ● Maintenance of stock of products for the fast fulfilment of orders of the dealers The company has two units responsible for the sales strategy – Marketing Department and Sales Department. The Marketing Department is responsible for the market analysis and promotion all over the country, including the marketing materials, exhibitions, learning seminars. There are four experienced specialists in the department. As the company is operating in the Moscow Region, it sells there the products directly without any dealers. In the other regions the company has about 30 dealers, working in such regions as: ● Saint Petersburg ● Ekaterinburg ● Kazan ● Krasnodar ● Rostov ● Samara ● Stavropol ● Ufa ● Novosibirsk ● Vladivostok ● Kazakhstan ● Ukraine ● Uzbekistan moreover, some other cities with a population of over a million people.
The key elements of successful sales cosmetology materials are medical representatives, who are keeping the contacts between the company and cosmetic/aesthetic professionals. The company has a number of its medical representatives in Moscow while the dealers have their representatives in their regions. Also, the company conducts training for medical representatives of its dealers. The company has an equipped warehouse for storing cosmetology products. Its area is 60 square meters. The air conditioning system can maintain the temperature in the warehouse in the range from +5 to +20 C. We use two ways of delivery in our business: ● In Moscow, the company works with Pony Express delivery service ● To deliver products all over the country, we work with two
The product registration The Product Registration procedure The Product Registration Procedure is presented in Figure 2: Generally, it takes about eight months to register medical products in Russia. The responsible state organization is “Roszdravnadzor” – Agency for Health Control. The Person responsible for the product registration Olga Gasymova
Market Overview Retail market volume The Total value of the Russian market of filler injections in 2017 was $535,4 Mln. This amount consists of the services value ($396 Mln., 76%) and retail filler turnover ($139,4, 26%). Three main regions with the biggest turnover are presented in Figure 3: Moscow, South Federal Region, and Volga (Privolzhsky) Federal Region. There were 50 different filler brands in the Russian market in 2017. Forty-one brand was registered in Russian Health Control Agency “Roszdravnadzor,” while the others were sold illegally through the private channels. Presence of the brands in the Russian market is floating from year to year. Nevertheless, there is one strong brand, always leading in Russia – it is Juvederm. Its retail price is one of the highest in Russia and is about €70 for 1 ml of filler.
Filler import to Russia The fillers import CAGR from 2014 to 2017 was about 44% The market share of the brands in 2017 is presented in next Figure 0 20 40 60 2012 $20,7 Mln. 2013 $21,1 Mln. 2014 $19,7 Mln. 2015 $36,2 Mln. 2016 $43,4 Mln. 2017 $58,3 Mln. 01--05.2018 $14,1 Mln. CAGR +44% Juvederm Regenyal Stylage Jalupro Others Belotero Teosyal IAL-System Yvoire Filorga Princess Restylane Meso-Xanthin
The import of brands in 2016-2017 years is presented below: 0 5 10 15 20 Others $4,5 Mln. Stylage $0,5 Mln. Hualual $0,7 Mln. Princess $0,8 Mln. Filorga $1,5 Mln. IAL-System $2,0 Mln. Belotero $7,0 Mln. Restylane $8,1 Mln. Juvederm $18,5 Mln. 0 10 20 30 Others Jalupro $1,0 Mln. Stylage $1,1 Mln. Regenyal $1,4 Mln. Meso-Xanthin $1,8 Mln. Restylane $2,0 Mln. Princess $2,2 Mln. Filorga $2,7 Mln. IAL-System $2,7 Mln. Teosyal $5,1 Mln. Belotero $5,9 Mln. Juvederm $26,5 Mln. As one can see in the Figures above, Juvederm was the biggest importer of fillers with $18,5 Mln. In 2016 and $26,5 Mln. in 2017 while Restylane left the market in 2017. Competitor’s fillers import prices Keeping in mind the increase in imports by 44% in 2017 it is clear that many other brands have entered the market (with a small share of each). We calculated the input cost of fillers on the Russian market basing on imports in 2018. The deliverables are presented in the tables: JUVEDERM
RESTYLANE TEOSYAL BELOTERO
STYLAGE PRINCESS The average price of the fillers is €31, as it is presented in this figure 0 10 20 30 40 Average €31 JUVEDERM €38,1 RESTYLANE €24,9 TEOSYAL €31,6 BELOTERO €32,9 STYLAGE €39,3 PRINCESS €22,0
Calculation of the purchase price of BIOXIS fillers, which make possible entering the Russian market As can be seen in Figure 5, Juvederm, Belotero, and Teosyal together have 2/3 of the market. The brand that supplies fillers to Russia at the highest price is Juvederm. Therefore, we take as a basis the cost of Juvederm and calculate, at what price it is possible to sell a new filler in the market. When calculating the price, we assumed that the new filler is of high quality and is supplied to Russia by a wellknown company. The figure shows the calculation of prices. The following assumptions were used in the calculation: The retail price should be 15% lower than that of Juvederm. At the time of the appearance of goods on the market, the discount for dealers from the retail price should be at least 30% to interest them in the transition to new products. Therefore the retail price should be no higher than € 59.5, and the price for dealers - € 41.7. We go further: when you import into Russia, medical products are subject to customs duty at a rate of 6.5% of the value of the goods. Also, all goods imported into Russia are subject to VAT - 18%. Number of specialists The number of medical specialists using cosmetic fillers is presented in the table 1. Distribution of consumption of fillers is shifted towards cosmetology. The number of injections of cosmetic fillers by types of consumers is shown in the graph in Figure 10. The greatest number of injections (52.2%) is carried out in cosmetology clinics. On the second place - beauty salons (36%) and in third place - the procedures conducted by private specialists.
Marketing Plan The company has the following plan to bring BIOXIS fillers to the market. As the company has the strongest positions, including direct contacts with clinics in Moscow, the product will be presented first of all in this region. We plan to participate in two industry exhibitions held in the city: ● VII National Congress “Plastic surgery, aesthetic medicine and cosmetology”, 2018, the month of conducting - December ● SAM-Expo 2019, the month of conducting - January ● INTERCHARM Professional 2019, the month of conducting – February In parallel, the company will conduct training seminars for specialists in the cosmetology industry, including for employees of its dealers. Also, publications in the professional press will be sponsored, as well as the positive reviews of opinion leaders The costs of preparing marketing materials are presented in table 2. The costs of advertising and promotion are presented in Table 3:
The first year marketing costs are presented in Figure 11, total marketing expenses of the 1-st year are €78127. 0 2 500 5 000 7 500 10 000 12 500 1 2 €5 444 3 €7 486 4 €9 936 5 €3 403 6 €5 444 7 €10 617 8 €2 722 9 €7 486 10 €8 575 11 €7 486 12 €2 722 €6 805 Cost of Developing Marketing Materials Cost of Promotions Strategy
Assumptions and P&L Statement 2019 0,3 2020 2,2 2021 2,7 263 907 2 186 658 2 737 093 Turnover 7 500 58 000 66 000 QTY Most part of the 2019 there will take a process of the product registration. Therefore The purchase Forecast
Profit & Losses Statement forecastwww.masterplans.ru