Estimation Practice Estimation Prompts To help with your preparation, below are a collection of prompts used from previous interviews or based on similar interview questions Before starting, you should take a look at various outside resources to guide your approach Some suggestions are: • • • •
Case Interview Secrets by Victor Cheng (Amazon) Guesstimation by Lawrence Weinstein (Amazon) Framework for McKinsey, BCG and Bain estimation cases (Youtube) Estimation podcasts (Firmsconsulting website)
Example Estimation Questions: How many HPLCs are sold annually? How many PCR machines are sold annually? What is the amount of floss used in America? How many new braces (teeth) are installed per year? How many new glasses are prescribed per year? How much contact solution is sold every year in America?
Prompt Our client wants to acquire O’Care (OC), a small biotech company. Most of OC’s products are in development in the preclinical phase, but OC does have a single revenue stream. This revenue is from sales of OC1, the only FDA approved orphan drug to treat Disease X. Disease X is an inherited disease that affects 1/20000 among children at the age of 9 and younger. Negotiations with OC have led to a price of $60M. The client hires you to access whether they should acquire OC or not.
Additional Information (provided on request) Client Goal (Interviewer should emphasize this) - The board will approve the deal only if the acquisition can breakeven in 5 years. OC Business Model: - OC develops orphan drugs in house, but OC1 is the sole revenue stream. Other preclinical drugs can be considered mainly R&D cost within the 5 years. - Contracts with a third party for OC1 manufacturing and distribution/sales/marketing. Client Business Model: - Develops several classes of pharmaceuticals in house, but wants to expand to orphan drugs. Manufactures all drugs in house. Same external distribution/sales/marketing channels as OC.
Glossary of Terms Healthcare is a rapidly developing sector of the global economy. This glossary serves as a starting point with a collection of terms to make the cases more approachable. However, it must be noted that during an actual interview, be cautious with the terms you use unless you fully understand them. The YGCC are not experts in this field so the terms contained within this glossary are simplified definitions. We highly recommend further research on your part should you decide to engage in this industry.
