5 Must-Have Features in a Surgical Products Wholesale

Bioring SA

Executive Summary

Bioring SA produces niche-specific rings for cardiac valve repair. It has its main office in Lonay (CH) and maintains a small manufacturing and assembly plant in Lonay, Switzerland. Its products are to be sold through single or multiple distributors.

With competitive price and timely delivery, lookmed sincerely hope to be your supplier and partner.

• This business plan is part of our regular business planning process. We revise this plan every quarter and it is placed under change control.
• In the next two years we intend to develop two new products and to improve revenues.
• Our keys to success and critical factors for the next year are, in order of importance:
• Product approval: CE mark.
• Sales to dealers in volume.
• Financial control and cash flow planning.

The following chart illustrates highlights of our financial performance as projected for the next three years. Sales and profits should continue to grow.

1.1 Objectives

1. To give Bioring SA the market presence needed to support marketing and sales goals, and to attract distributors of new Bioring products.
2. To develop two new Bioring products by the end of year four.
3. To increase sales to reach $312,500 monthly sales by the end of year two, and $830,000 monthly by the end of month eight of year three. 
4. To control expenditures to serve the best dividends to the shareholders.

1.2 Mission

Bioring SA addresses the surgical repair techniques which are implemented in open heart surgery. This business is based on a product owned by the company, which is a cardiac implant more precisely called “Kalangos Biodegradable Ring.”

We intend to make enough profit to generate a fair return for our investors and finance continued growth and development in quality products. We also maintain a friendly, fair, and creative work environment, which respects diversity, new ideas, and hard work.

1.3 Keys to Success

 The keys to success in this business are:

• Marketing: either dealing with national distributors or with well-established international companies.
• Product quality.
• Product approval in Europe and USA.
• Management: products delivered on time, costs controlled, marketing budgets managed. There is a temptation to fix on growth at the expense of profits.

Company Summary

Bioring SA Company develops and manufactures cardiac biodegradable annuloplasty devices designed to restore a normal heart function. Its customers are cardiac surgery clinics who want prostheses that accomplish useful tasks with as little expenditure of time and money as possible. The company was incorporated in Switzerland in , after three years of previous developments.

2.1 Company Ownership

Bioring SA is a privately-owned Swiss operation. Raymond Andrieu, Bioring’s founder, is the majority owner. Several members of the board of directors also hold minority stock positions. The initial $642,500 share capital is increased by another $100,000 in April .

2.2 Start-up Summary

Our start-up expenses come to $258,500, which are mostly equipment, legal costs, patent costs and expenses associated with opening our first office and manufacturing facilities.  Another $384,000 is required in start-up assets. The start-up costs are to be financed by direct owners’ investment. The assumptions are shown in the following table and chart.

Start-up Requirements Start-up Expenses Legal $43,000 Stationery etc. $3,000 Brochures $0 Consultants $10,000 Insurance $20,000 Rent $25,000 Research and development $95,000 Other $62,500 Total Start-up Expenses $258,500 Start-up Assets Cash Required $29,000 Start-up Inventory $75,000 Other Current Assets $0 Long-term Assets $280,000 Total Assets $384,000 Total Requirements $642,500 Start-up Funding Start-up Expenses to Fund $258,500 Start-up Assets to Fund $384,000 Total Funding Required $642,500 Assets Non-cash Assets from Start-up $355,000 Cash Requirements from Start-up $29,000 Additional Cash Raised $0 Cash Balance on Starting Date $29,000 Total Assets $384,000 Liabilities and Capital Liabilities Current Borrowing $0 Long-term Liabilities $0 Accounts Payable (Outstanding Bills) $0 Other Current Liabilities (interest-free) $0 Total Liabilities $0 Capital Planned Investment Investor 1 $110,000 Investor 2 $110,000 Investor 3 $110,000 Investor 4 $93,750 Investor 5 $93,750 Investor 6 $62,500 Investor 7 $62,500 Other $0 Additional Investment Requirement $0 Total Planned Investment $642,500 Loss at Start-up (Start-up Expenses) ($258,500) Total Capital $384,000 Total Capital and Liabilities $384,000 Total Funding $642,500

2.3 Company Locations and Facilities

Headquarters are located in an office of approximately 4,000 square feet at Chemin d’Etraz 2, CH- Lonay, Switzerland.

The present office space is small. As we add employees, we will have to take on additional space. We expect space to be available in our present building. The office space will have assembly space on site and be equipped to handle shipping.

Products

Bioring SA addresses the surgical repair techniques which are implemented in open heart surgery. This business is based on a patented product owned by the company, which is the Kalangos Biodegradable Ring cardiac implant.

The Bioring biodegradable valvular heart ring (Kalangos mitral or tricuspid ring) has been developed and designed to diminish or reinforce the valvular orifices of the heart. The ring allows a normal growth of the valve in newborn and babies, avoiding stenosis and multiple surgical procedures.

The ring is dimensioned to the size and natural geometry of the valve, and it is manufactured with a specially designed biodegradable polymer called polydioxanone. Once implanted, through the regular absorption of the ring inside the endomyocardiac tissue by simple hydrolysis, the body creates (by reaction) a scar along the ring, characterized by fibrotic tissue presenting an improved resistance to elongation. Once the ring has been completely biodegraded, the rigidity of the fibrotic tissue of the scar is maintaining the valvular orifice at the desired dimension.

As the residual scar is made of the proper biologic tissues of the patient, there is no predisposition to infection, and furthermore, the scar is able to grow normally during the growth process of the newborn.

The Kalangos mitral ring is available in 11 dimensions, covering all phases of development and all adult sizes. The Kalangos tricuspid ring is also available in 11 dimensions. Sizers have been designed to help the surgeon surgeon to choose the right ring dimension.

3.1 Product Description

 As of June , Bioring SA has 44 products to sell:

• Kalangos Mitral Biodegradable Ring: sizes 16, 18, 20, 22, 24, 26, 28, 30, 32, 34, 36.
• Kalangos Mitral Sizers: model size 16, 18, 20, 22, 24, 26, 28, 30, 32, 24, 36.
• Kalangos Tricuspid Biodegradable Ring: sizes 16, 18, 20, 22, 24, 26, 28, 30, 32, 34, 36.
• Kalangos Tricuspid Sizers: model size 16, 18, 20, 22, 24, 26, 28, 30, 32, 34, 36.

3.2 Competitive Comparison

There are already existing heart rings on the market: Duran, Carpentier, Puig-Masada, Cosgrove, but none of them produce a biodegradable ring. The major benefits of Kalangos rings when compared to existing products available on the market are:

• Avoiding multiple surgical procedures (newborn and babies).
• Lowering the risk of local infection.

And moreover, the ring is attached to a suture-needle system which makes the surgical procedure easier and faster.

3.3 Sales Literature

Bioring advertisements and sales literature are under development.

Bioring is registered on the Web page of the Chambre Vaudoise du Commerce et de l’Industrie. The company intends to have its own presenting page on the Web once the products have been CE marked. 

3.4 Sourcing

Bioring SA manufactures its own products, using its in-house development process. The raw materials are provided by a major chemical supplier, which delivers to Bioring SA a customized polymer.

An injection molding press has been specially designed and installed to inject the polymer into the proprietary molds.

All operations, including the packaging of the final product, are done in a controlled environment: class 100 clean room.

The list of suppliers is considered as proprietary information, which is not disclosed here.

3.5 Technology

Bioring Kalangos biodegradable rings have been internationally protected by patent. A Swiss patent application has been filed in , followed by a worldwide PCT application filed in . Copies are available.

A trademark application is in progress.

3.6 Future Products

The Kalangos biodegradable rings have ben developed following a market need and demand in pediatric surgery. Moreover the present existing rings are subject to very restrictive applications in neonate surgery in USA. This is due to the used material. As a result of this situation, a collaboration between a Swiss cardiac surgeon and a Swiss biomedical engineer led to the creation of Bioring SA. Together, they conceived a new concept which opens new perspectives in the field of cardiovascular surgery. This concept was tested as a prototype, and the achieved results motivated the partners to create the company in order to patent, develop, manufacture and commercialize the new cardiac implant. The long term strategy at five years is to penetrate 35% of the newborn market (40,000)  and 10% of the adult market (200,000). All together, this means around 35,000 biodegradable rings implanted per year.

The development of the biodegradable polymer may meet other very promising applications in the fields of cardiac and vascular surgery. We are presently in the process of writing the extension of the initial patent and testing the very first prototypes of new implants. No information can be given at this stage.

Market Analysis Summary

The market for annuloplasty rings is worth an estimated $250 million at end-user value in , and is projected to grow at 3% per year according to professional forecasts published in specialized issues in . Sources included The European Heart Institute and The National Center for Health Statistics in the USA.

Market leaders are Edwards Laboratories, Sulzer Medica, Medtronic. However, the industry is highly concentrated. The 10 major companies account for 95% of the total market.

4.1 Market Segmentation

The rings for annuloplasty belong to the heart valve repair industry.

We prefer a segmentation by addressed patients. This incorporates some of the product type differences, but in a more practical sense:

• The pediatric market, which is a potential market of 40,000 rings implanted per year.
• The adult market, which is a potential market of 200,000 rings implanted per year.

Market Analysis Year 1 Year 2 Year 3 Year 4 Year 5 Potential Customers Growth CAGR New-born and infant market 0% 2,000 6,000 10,000 14,000 18,000 73.21% Adult market 0% 2,000 10,000 14,000 20,000 22,000 82.12% Other 0% 0 0 0 0 0 0.00% Total 77.83% 4,000 16,000 24,000 34,000 40,000 77.83%

4.2 Target Market Segment Strategy

The following sections outline Bioring SA’s target market segment strategy.

4.2.1 Market Needs

We understand that our target market needs more than just standard rings covered with a polyester mesh. The need grew out of the special needs of neonate cardiac surgery. Our target customer wants to have this new possibility which they consider as a major improvement. There is a need for a high-quality prostheses which solves patient and surgeon problems. We don’t just sell a ring, we sell a new concept and a new surgical procedure.

4.2.2 Market Trends

Our market has finally grown towards more sophisticated technics of valve repair, where the surgeon will try to repair a portion a faulty valve. In the past years, he would have replaced the total valve. Fine repair of cardiac valve is the new trend.

4.2.3 Market Growth

According to The European Heart Institute, (Cardiovascular Device Update, August 98, page 2) the number of congenital heart defects treated in Europe in represented 24,400 procedures, which represent a rate of 48 surgical procedures per million. In , it is projected to perform 28,000 surgical procedures (50 procedures per million). This market is growing at a annual rate of 1.9%.

According to the same source, the heart valve surgery market has accounted 66,700 procedures in (131 procedures per million). In , it is projected to amount 84,000 procedures (150 per million), which represent an annual growth rate of 3%.

4.3 Industry Analysis

A recent article published in Cardiovascular Device Update, (December ), shows that the European and the U.S. market are practically the same size. The same issue of this paper indicated that the present potential U.S. market for cardiac abnormalities repair amounted $215 million per year, and that the congenital heart defects repair amounted for $149 million per year.

4.3.1 Industry Participants

The major players in this industry are international companies. It is a concentrated industry in which there are a few major players.

We are mentioning: Baxter Corporation (U.S.), Boston Scientific (U.S.), Cryolife (U.S.), Edwards Corporation (U.S.), Guidant (U.S.), Medtronic (U.S.), St Jude Medical (U.S.), Sulzer Medica (Switzerland).

4.3.2 Distribution Patterns

Distribution channels are of two types:

• Distribution through a national dealer.
• Distribution through a large multi-national company.

The cost of marketing a new class III device is becoming a serious barrier to enter a market. For bioring type of company, the best choice is to deal through national dealers in Europe and a major company in USA.

4.3.3 Competition and Buying Patterns

In the high-end specialty market, particularly in our niche, features are very important. Our target customer is not making selections based on price. The high-tech, innovative aspect, the easy-to-implant aspect, the reduced time of procedure, the anatomical shape, the physiological process and the clinical results are more important than pricing.

4.3.4 Main Competitors

In the field of cardiac surgery prostheses, the general trend is to develop anatomical and physiological mimetic implants. The ergonomy of the implant is also important.

In the field of pediatric surgery, as previously mentioned, there is no real competitor. Therefore the strategy of the company is to enter the market together with a well-known market leader, to avoid to be considered as a weak company by the market leaders.

In the field of adult surgery, the company will benefit of the presence on the market of the chosen distributors for pediatric surgery. In this field, our main competitors are: Edwards Laboratories, Sulzer Medica, Medtronic.

Strategy and Implementation Summary

Our strategy is based on serving niche markets well. What begins as a customized product, tailored to the needs of a local pediatric cardiac surgeon, can eventually become a niche product that will fit the needs of the pediatric cardiac surgeons worldwide. Our marketing infrastructure is built to reach our customers across broad geographic lines. Our products are designed to fit the need of the international cardiac pediatric surgeons community, as the market presence requires to fulfill with regulatory rules which are quite costly.

5.1 Marketing Strategy

Our marketing strategy is based on:

• Fulfillment with regulatory requirements: EC mark and FDA approval.
• Publication of clinical data in recognized international papers.
• Exhibition in the major congresses.
• Advertising in international papers.

We intend to participate in May in the 3rd World Congress of Pediatric Cardiology and Cardiac Surgery in Toronto, Canada, where we are showing our product for the first time to the world community.

In September, we intend to participate to the joint meeting of the European Association of Cardio Throracic Surgeons and the European Society for Thoracic Surgery where our consulting surgeon, Dr. Kalangos, is publishing clinical data.

5.1.1 Positioning Statement

For discriminating pediatric cardiac surgeons who want to benefit from the latest advances with polymer technology, Bioring offers superb anatomical design combined with state-of-the-art technology. For surgeons addressing cardiac adult surgery, unlike other non-biodegradable rings covered with polyester mesh. The Kalangos biodegradable ring, made of polydioxanone, offers an excellent resistance to infection. Polyester mesh is known to be an excellent support for bacterial growth.

5.1.2 Pricing Strategy

In the high-tech products market, pricing is based on the level of other similar products, already on the market. The European end-user market price for a standard cardiac ring is around $1,250. We intend to introduce Kalangos biodegradable ring at the same level of price. Price to distributor is $625, which provides the distributor enough margin to take care of its national market.

5.1.3 Promotion Strategy

The long-range goal is to create enough visibility to achieve the best penetration possible on the different markets.

We are intending to do it through:

• Scientific publications: a clinical study is published in September in Lisbonne.
• Advertising in specialized surgical journals: one European, one U.S.
• Cardiac surgery congresses and industry trade-shows: May in Toronto.
• Private clinical support and conferences by our consulting surgeon, who has accumulated strong experience.

5.1.4 Distribution Strategy

The distribution strategy is to:

• Either through national distribution in Europe, and other parts of the world, and a company in USA.
• Or a large multinational company covering the worldwide market, on an exclusive basis. The exclusivity would have price, estimated to $2 million USD.

5.1.5 Marketing Programs

Our most important marketing program is CE mark approval. Philippe Le Goff is in charge of it, assisted by Raymond Andrieu and A. Kalangos. This program should be completed for the 1st of June . This program will allow us to sell our ring in Europe. Achievement should be measured by receiving a CE number, which has to be printed on all packaging of the products.

Another key marketing program is the European distribution network. Raymond Andrieu is in charge of it, and most of European distributors should be appointed for July . Achievement should be measured by signed agreements in the different countries.

The next important milestone is the FDA approval process. Raymond Andrieu will be in charge of it, with a budget of $ 200,000 and a milestone date of the 1st of December . Achievement should be measured by receiving the official FDA approval document. This process is intended to be done in close collaboration with the U.S. company in charge of distributing the product in USA.

5.2 Sales Strategy

The sales strategy has been forecasted as follows:

Sales in Europe

In each European country a distributor has been chosen. By signing a distribution agreement, he has to order a minimum quantity of products to be sold in his country. This quantity is to be reviewed each year. He will at first develop the pediatric market, then the adult market. Each distributor is supposed to have a team of salesmen or saleswomen who are in charge of visiting cardiac surgeons in the country. Each salesperson is in charge of several hospitals in one area of the country. In a country like Germany, the distributor should have five or six salesmen or women to cover the country. The distributor should have enough products on the shelves to serve the needs of the country. The salespeople would sell products to public and private hospitals and clinics where cardiac surgery, either pediatric or adult, is performed. Large countries like Germany or France should have around 400 rings permanently on the shelves of the distributor. Invoicing to hospital, delays of payment of hospitals, shipment to hospitals, rings freely deposited in hospitals are under the management of the distributor.

Sales in USA

Once the U.S. distribution channel is chosen, the sales strategy will be discussed together with the U.S. company. It does not differ fundamentally from Europe. The major difference is the the U.S. sales team may belong to the U.S. distributor, or be independent from the U.S. distributor.

Sales in Other Parts of the World

It is intended to act as in Europe: nominate a local distributor who is able to have easy access to the cardiac surgeons community of his country.

5.2.1 Sales Forecast

Our sales forecast assumes no change in costs or prices, which is a reasonable assumption for the last few years.We are expecting to increase sales from $2.5 million (4,000 rings) to $10 million (16,000 rings) the second year. The growth forecast is very high, but we are developing new products. We expect growth of the pediatric market, where the product is really needed. We are not projecting significant change in the product line, or in the proportion between different lines.

Sales Forecast Year 1 Year 2 Year 3 Unit Sales K. Biodegradable Ring 4,000 16,000 24,000 Other 0 0 0 Total Unit Sales 4,000 16,000 24,000 Unit Prices Year 1 Year 2 Year 3 K. Biodegradable Ring $625.00 $625.00 $625.00 Other $0.00 $0.00 $0.00 Sales K. Biodegradable Ring $2,500,000 $10,000,000 $15,000,000 Other $0 $0 $0 Total Sales $2,500,000 $10,000,000 $15,000,000 Direct Unit Costs Year 1 Year 2 Year 3 K. Biodegradable Ring $35.00 $35.00 $35.00 Other $0.00 $0.00 $0.00 Direct Cost of Sales K. Biodegradable Ring $140,000 $560,000 $840,000 Other $0 $0 $0 Subtotal Direct Cost of Sales $140,000 $560,000 $840,000

5.2.2 Sales Programs

The company will mainly sell outside Switzerland, which is representing a very small market. It intends to develop persistent efforts to generate the distribution through major names in each country.

The company is the world’s best Surgical Products Wholesale supplier. We are your one-stop shop for all needs. Our staff are highly-specialized and will help you find the product you need.

It intends to hire a marketing and sales executive, and a clinical director by . Both positions will support international sales, by training the sales team, assisting them with key customers, and participating in international meetings.

5.3 Strategic Alliances

We have been contacted by several major U.S. companies, (Medtronic, St Jude), who are interested with our product line. In case they would wish to distribute the products worldwide, we would have to negotiate a fair fee for international exclusive distribution (U.S. $2 million), as well as the different involvements of both parties concerning regulatory affairs, marketing, clinical studies.

We would need to understand the real interest of these companies: do they wish to buy Bioring on a middle-term plan? At what price? What do they intend to do with Bioring’s manufacturing facility? The board is of the opinion that a fair offer from one of these companies should be seriously studied.

5.4 Milestones

The accompanying table shows specific milestones, with responsibilities assigned, dates, and budgets. We are focusing, in this plan, on a few key milestones that should be accomplished.

Milestones Milestone Start Date End Date Budget Manager Department Initial Swiss Patent Deposit 7/1/ 7/1/ $0 Andrieu Management Setting up manufacturing facility 5/1/ 3/1/ $450,000 Andrieu/LeGoff Managment PCT extension of the patent 9/1/ 11/1/ $10,000 Le Goff R & D Hiring of production staff 10/1/ 10/1/ $0 Andrieu Production Product technical development 5/1/ 3/1/ $0 Andrieu/Le Goff R & D CE mark approval 4/1/ 6/1/ $15,000 Le Goff R & D European distribution network 5/1/ 7/1/ $0 Andrieu Management FDA approval process 10/1/ 12/1/ $200,000 Andrieu Management USA distribution network 6/1/ 12/1/ $0 Andrieu Management ROW distribution network 9/1/ 3/1/ $200,000 Andrieu Management Totals $875,000

Management Summary

Bioring SA is slow to hire new people, and very loyal to those who are hired.

Immediate personnel plans call for increases from five to seven people two years from now. The increase is needed to support the effort to move on a real international base.

Management style reflects the participation of the owners. The company respects its community of co-workers and treats all workers well. We attempt to develop and nurture the company as a community.

6.1 Organizational Structure

Raymond Andrieu, president, is responsible for overall business management.

Philippe Le Goff, consultant, is responsible for product development, quality insurance and CE mark approval. He closely collaborates with Raymond Andrieu.

Afksendiyos Kalengos, cardiac surgeon, is responsible for the final presentation of the product, its adequation to the clinical needs, and clinical studies. He closely collaborates with Raymond Andrieu and Philippe Le Goff.

Danielle Collomb, assistant to the president, is responsible for relations with furnisher, orders to furnisher and all administrative current workload.

Marlyse Bertholet and Marie-José Raposo are producing the products. They report directly to Raymond Andrieu.

6.2 Management Team

The company is managed by:

Raymond Andrieu: chairman of the board, CEO, and founder. He has been working for 25 years in sales and marketing with international companies after a first experience in manufacturing vaccines. He has been acting as production engineer, sales manager, clinical director, marketing executive and president of several international companies including Roger Bellon Laboratories, (Rhône Poulenc), Edwards Laboratories, American Hospital Supply Corporation, Ausonics Corporation (Nucleus Group), Dornier Medizintechnik GmbH, Cardicorp SA, Cambridge Biotech Corporation, Hancock Jaffe Laboratories, Bioracs SA. He owns an MSc in Biochemistry and is graduated biomedical engineer. He is a 52 years old Swiss citizen, married, three children.

Afksendiyos Kalengos: assistant pediatric and adult cardiac surgeon in Geneva University Hospital. He has also been nominated professor in foreign universities. He is presently following an MBA program during his free hours. He is considered as the reference surgeon in pediatric cardiac surgery in Switzerland. He developed the original idea together with the founder. He has a Ph.D.,  is 41 years old, a Swiss citizen, married and has two children.

Philippe Le Goff: chemical engineer, has a Ph.D. from Polytechnique School in Paris, where he ranked second and his wife as the “major” (first rank). He participated to the final development of the polymer synthesis. He is consultant to major pharmaceutical companies, where he is mainly in charge of the approval of the new synthesis pilot production for drugs by the regulatory authorities (CE and FDA). He is also in charge of developing industrial production based on pilot production and approval by authorities. He is a 38 years old French citizen, with Swiss residence approval, married with two children.

6.3 Management Team Gaps

There are two gaps in the planning process:

• The future distribution channel is still not yet established.
• We depend on our attorney to fight for unfair competition if it appears.

6.4 Personnel Plan

The personnel plan has been projected to cover the production needs over the considered period.

Two production people, working eight hours a day, five days a week, are able to manufacture up to 25,000 rings a year. If we add another team of two people, the production capacity reaches 50,000 rings a year.

The personnel table assumes 5% per annum pay raises. We already have a strong benefits policy with fully paid medical insurance for employees. We therefore expect very low turnover. A stock option plan is under study by our auditing company for Mr. Philippe Le Goff.

Salaries are generally in line with market pay for Lausanne and Geneva area, although our benefits are above standard market level, so we ultimately pay a bit more for our people than what might be considered industrial standard in the area. However, we are at the same level in our industrial area that local medical companies and biotech companies.

Personnel Plan Year 1 Year 2 Year 3 Production Personnel M. Bertholet $7,605 $36,000 $38,500 M.J. Raposo $7,125 $34,200 $36,000 Name or title $0 $0 $0 Other $0 $0 $0 Subtotal $14,730 $70,200 $74,500 Sales and Marketing Personnel R. Andrieu 80% $58,500 $78,000 $0 D. Collomb 20% $6,750 $0 $0 Clinical Director $0 $0 $60,000 Marketing Executive $0 $0 $81,250 Other $0 $0 $40,000 Subtotal $65,250 $78,000 $181,250 General and Administrative Personnel R. Andrieu 20% $0 $0 $102,000 D. Collomb 80% $27,000 $47,000 $50,000 CE mark consulting fees $0 $15,500 $2,000 FDA consulting fees $0 $0 $200,000 Other $2,115 $3,000 $5,000 Subtotal $29,115 $65,500 $359,000 Other Personnel P.Le Goff $0 $90,000 $100,000 Name or title $0 $0 $0 Name or title $0 $0 $0 Other $0 $0 $0 Subtotal $0 $90,000 $100,000 Total People 0 0 0 Total Payroll $109,095 $303,700 $714,750

Financial Plan

The financial picture is quite encouraging. Sales are projected to start slowly, but this is due to the necessity of receiving CE mark. We need a second round of financing in April to start the sales on the market. The company has financed all machinery and tools and does not have any credit line. The original investors have been financing the development.

We want to finance growth mainly through cash flow. Collection days is very important. We do not want to let our average collection days get above 45 under any circumstances. We must maintain gross profit margins of 90% at the least, and hold marketing costs to no more than 5%. We are planning to receive tax exemption from the Canton of Vaud, which means that only federal tax is due to payment on net profit (around 10%) in FY. In the following years the total tax rate will be 25%

7.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the following table. The key underlying assumptions are:

• We assume a slow-growth economy, without major recession.
• We assume that there are no unforeseen changes in technology to make products immediately obsolete.
• We assume access to equity capital and financing sufficient to maintain our financial plan.

General Assumptions Year 1 Year 2 Year 3 Plan Month 1 2 3 Current Interest Rate 6.00% 6.00% 6.00% Long-term Interest Rate 5.00% 5.00% 5.00% Tax Rate 11.67% 10.00% 11.67% Other 0 0 0

7.2 Key Financial Indicators

The following chart shows changes in key financial indicators: sales, gross margin, operating expenses, collection days, and inventory turnover.

7.3 Break-even Analysis

Our Break-even Analysis is based on running costs, the “burn-rate” costs we incur to keep the business running, not on theoretical fixed costs that would be relevant only if we were closing. Between payroll, rent, utilities, and basic marketing costs, we think the number shown in the table is a good estimate of fixed costs.

The Break-even Analysis shows that Bioring has a good balance of fixed costs and sufficient sales strength to remain healthy. The essential insight here is that our sales level seems to be running comfortably above break-even.

Break-even Analysis Monthly Units Break-even 38 Monthly Revenue Break-even $23,710 Assumptions: Average Per-Unit Revenue $625.00 Average Per-Unit Variable Cost $35.00 Estimated Monthly Fixed Cost $22,382

7.4 Projected Profit and Loss

We expect sales to hit $2,500,000 for this year. It should increase to $10 million by the second year of this plan, as net earnings increase steadily. Our high sales volume has lowered our cost of goods and increased our gross margin. This increase in gross margin is important to profitability.

Pro Forma Profit and Loss Year 1 Year 2 Year 3 Sales $2,500,000 $10,000,000 $15,000,000 Direct Cost of Sales $140,000 $560,000 $840,000 Production Payroll $14,730 $70,200 $74,500 Other $0 $0 $0 Total Cost of Sales $154,730 $630,200 $914,500 Gross Margin $2,345,270 $9,369,800 $14,085,500 Gross Margin % 93.81% 93.70% 93.90% Operating Expenses Sales and Marketing Expenses Sales and Marketing Payroll $65,250 $78,000 $181,250 Advertising/Promotion $0 $35,000 $50,000 Travel $6,000 $24,000 $35,000 Miscellaneous $13,500 $20,000 $30,000 Total Sales and Marketing Expenses $84,750 $157,000 $296,250 Sales and Marketing % 3.39% 1.57% 1.98% General and Administrative Expenses General and Administrative Payroll $29,115 $65,500 $359,000 Sales and Marketing and Other Expenses $0 $0 $0 Depreciation $72,000 $96,000 $96,000 Patent fees for PCT $10,000 $70,000 $70,000 Utilities $3,150 $5,400 $6,000 Insurance $9,000 $12,000 $13,000 Rent $33,300 $444,400 $45,000 Payroll Taxes $27,274 $75,925 $178,688 Other General and Administrative Expenses $0 $0 $0 Total General and Administrative Expenses $183,839 $769,225 $767,688 General and Administrative % 7.35% 7.69% 5.12% Other Expenses: Other Payroll $0 $90,000 $100,000 Consultants $0 $0 $0 Royalties Dr. A.Kalangos $0 $125,000 $493,750 Total Other Expenses $0 $215,000 $593,750 Other % 0.00% 2.15% 3.96% Total Operating Expenses $268,589 $1,141,225 $1,657,688 Profit Before Interest and Taxes $2,076,681 $8,228,575 $12,427,813 EBITDA $2,148,681 $8,324,575 $12,523,813 Interest Expense $0 $0 $0 Taxes Incurred $207,668 $822,858 $1,449,911 Net Profit $1,869,013 $7,405,718 $10,977,901 Net Profit/Sales 74.76% 74.06% 73.19%

7.5 Projected Cash Flow

We expect to manage cash flow over the next three years with $100,000 of new investment in April . This additional financing resources are required to finance the working capital.

Pro Forma Cash Flow Year 1 Year 2 Year 3 Cash Received Cash from Operations Cash Sales $625,000 $2,500,000 $3,750,000 Cash from Receivables $1,414,063 $6,117,188 $10,328,125 Subtotal Cash from Operations $2,039,063 $8,617,188 $14,078,125 Additional Cash Received Sales Tax, VAT, HST/GST Received $0 $0 $0 New Current Borrowing $0 $0 $0 New Other Liabilities (interest-free) $0 $0 $0 New Long-term Liabilities $0 $0 $0 Sales of Other Current Assets $0 $0 $0 Sales of Long-term Assets $0 $0 $0 New Investment Received $100,000 $0 $0 Subtotal Cash Received $2,139,063 $8,617,188 $14,078,125 Expenditures Year 1 Year 2 Year 3 Expenditures from Operations Cash Spending $109,095 $303,700 $714,750 Bill Payments $333,104 $2,128,248 $3,167,861 Subtotal Spent on Operations $442,199 $2,431,948 $3,882,611 Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 Principal Repayment of Current Borrowing $0 $0 $0 Other Liabilities Principal Repayment $0 $0 $0 Long-term Liabilities Principal Repayment $0 $0 $0 Purchase Other Current Assets $0 $0 $0 Purchase Long-term Assets $0 $100,000 $200,000 Dividends $0 $0 $0 Subtotal Cash Spent $442,199 $2,531,948 $4,082,611 Net Cash Flow $1,696,864 $6,085,240 $9,995,514 Cash Balance $1,725,864 $7,811,104 $17,806,618

7.6 Projected Balance Sheet

As shown in the balance sheet in the following table, we expect a healthy growth in net worth. The monthly projections are in the appendix.

Pro Forma Balance Sheet Year 1 Year 2 Year 3 Assets Current Assets Cash $1,725,864 $7,811,104 $17,806,618 Accounts Receivable $460,938 $1,843,750 $2,765,625 Inventory $19,250 $77,000 $115,500 Other Current Assets $0 $0 $0 Total Current Assets $2,206,051 $9,731,854 $20,687,743 Long-term Assets Long-term Assets $280,000 $380,000 $580,000 Accumulated Depreciation $72,000 $168,000 $264,000 Total Long-term Assets $208,000 $212,000 $316,000 Total Assets $2,414,051 $9,943,854 $21,003,743 Liabilities and Capital Year 1 Year 2 Year 3 Current Liabilities Accounts Payable $61,038 $185,123 $267,111 Current Borrowing $0 $0 $0 Other Current Liabilities $0 $0 $0 Subtotal Current Liabilities $61,038 $185,123 $267,111 Long-term Liabilities $0 $0 $0 Total Liabilities $61,038 $185,123 $267,111 Paid-in Capital $742,500 $742,500 $742,500 Retained Earnings ($258,500) $1,610,513 $9,016,231 Earnings $1,869,013 $7,405,718 $10,977,901 Total Capital $2,353,013 $9,758,731 $20,736,632 Total Liabilities and Capital $2,414,051 $9,943,854 $21,003,743 Net Worth $2,353,013 $9,758,731 $20,736,632

7.7 Business Ratios

Our ratios look healthy and solid. Gross margin is projected to stay above 95%, and return on assets and return on equity are very sound. Debt and liquidity ratios also look very good, with debt to net worth running at respectively 0,34, 0,05 and 0,02. The projections, if we make them, are those of a very solid company. Industry profile ratios based on the Standard Industrial Classification (SIC) code , Surgical Appliances and Supplies, are shown for comparison.

Ratio Analysis Year 1 Year 2 Year 3 Industry Profile Sales Growth 0.00% 300.00% 50.00% 6.10% Percent of Total Assets Accounts Receivable 19.09% 18.54% 13.17% 25.00% Inventory 0.80% 0.77% 0.55% 15.90% Other Current Assets 0.00% 0.00% 0.00% 38.00% Total Current Assets 91.38% 97.87% 98.50% 78.90% Long-term Assets 8.62% 2.13% 1.50% 21.10% Total Assets 100.00% 100.00% 100.00% 100.00% Current Liabilities 2.53% 1.86% 1.27% 37.60% Long-term Liabilities 0.00% 0.00% 0.00% 20.20% Total Liabilities 2.53% 1.86% 1.27% 57.80% Net Worth 97.47% 98.14% 98.73% 42.20% Percent of Sales Sales 100.00% 100.00% 100.00% 100.00% Gross Margin 93.81% 93.70% 93.90% 47.70% Selling, General & Administrative Expenses 19.05% 31.98% 31.76% 28.20% Advertising Expenses 0.00% 0.35% 0.33% 1.60% Profit Before Interest and Taxes 83.07% 82.29% 82.85% 4.90% Main Ratios Current 36.14 52.57 77.45 2.03 Quick 35.83 52.15 77.02 1.35 Total Debt to Total Assets 2.53% 1.86% 1.27% 57.80% Pre-tax Return on Net Worth 88.26% 84.32% 59.93% 5.70% Pre-tax Return on Assets 86.02% 82.75% 59.17% 13.40% Additional Ratios Year 1 Year 2 Year 3 Net Profit Margin 74.76% 74.06% 73.19% n.a Return on Equity 79.43% 75.89% 52.94% n.a Activity Ratios Accounts Receivable Turnover 4.07 4.07 4.07 n.a Collection Days 56 56 75 n.a Inventory Turnover 3.15 11.64 8.73 n.a Accounts Payable Turnover 6.46 12.17 12.17 n.a Payment Days 27 20 25 n.a Total Asset Turnover 1.04 1.01 0.71 n.a Debt Ratios Debt to Net Worth 0.03 0.02 0.01 n.a Current Liab. to Liab. 1.00 1.00 1.00 n.a Liquidity Ratios Net Working Capital $2,145,013 $9,546,731 $20,420,632 n.a Interest Coverage 0.00 0.00 0.00 n.a Additional Ratios Assets to Sales 0.97 0.99 1.40 n.a Current Debt/Total Assets 3% 2% 1% n.a Acid Test 28.28 42.19 66.66 n.a Sales/Net Worth 1.06 1.02 0.72 n.a Dividend Payout 0.00 0.00 0.00 n.a

Appendix

Medical offices are busy places. The demand for service-based medical businesses like med spas, dermatologists, dentists, and urgent care facilities is growing. This means businesses are working harder than ever to provide safe, satisfactory experiences for clients and patients.

At many clinics, stocking the supply closet is a full-time job. With supply chain issues, quality concerns, safety regulations, and cost-effectiveness always at the forefront, finance and procurement teams must work smarter instead of harder to keep supply levels strong and consistent.

Software can make buying medical office supplies easier, even for businesses with several locations. Read on to learn ways to keep your top supplies in stock, mitigate issues with backorders, stick with your preferred vendors for critical items, and save money — all at the same time.

Download the free guide: Spend Analysis Toolkit

What is medical office supplies procurement?

Medical supplies procurement refers to the systematic process of sourcing and acquiring medical supplies and specialized equipment needed by healthcare facilities to provide patient care. 

Many activities help procurement teams get the best pricing and terms on their medical office supplies, including:

• Identifying needs and inventory levels
• Specifying vendor requirements
• Negotiating pricing and terms
• Managing contracts

Procurement is a critical function for medical businesses. It ensures healthcare workers have consistent access to high-quality, cost-effective medical products ranging from basic consumables like gloves and syringes to sophisticated diagnostic machines and life-support systems.

Effective procurement supports efficient healthcare while optimizing resource use. Good process contributes greatly to this overall performance and helps teams manage indirect procurement costs. While the traditional route for healthcare sourcing has been group purchasing organizations (GPOs), the model doesn’t always work well for smaller organizations. There are a few things a GPO won’t tell you about procuring through their contracts. 

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Medical equipment vs. medical office supplies

Medical businesses rely on access to the best tools and high-quality products to perform their roles well. Although these two categories work hand-in-hand, their procurement and budget management vary, as they serve different functions.

Medical equipment includes big-ticket items that are used often but purchased infrequently. 

• Medical equipment refers to durable items meant for extended use, such as MRI machines, patient monitors, and surgical instruments. This equipment is critical for diagnostic, monitoring, and therapeutic purposes. 
• This type of equipment often represents a significant investment for a medical office or healthcare facility. The procurement process for medical equipment involves meticulous acquisition plans. These plans include assessments of technological specs, long-term service agreements, and training for healthcare professionals who will operate them. 

On the other hand, medical supplies encompass items that the medical office consumes or uses for short-term processes. 

• Medical supplies include the products and consumable items that people use every day, such as gloves, bandages, syringes, and disposable surgical instruments. 
• Where equipment purchases are infrequent and carefully planned, consumables and supplies are used in large quantities. They need regular replenishment to ensure availability.

The differences in procuring these categories for a medical office stem from their usage patterns and cost implications.

• Both require careful supplier selection to ensure that products meet regulatory standards for safety and efficacy.
• Procuring medical equipment requires substantial upfront investment and consideration of long-term maintenance costs.
• Purchasing medical supplies involves managing ongoing expenditures and ensuring consistent stock. For high-volume supplies, teams must manage costs effectively through bulk purchasing agreements, volume discounts, and strategic sourcing.

What are the challenges in medical supplies procurement?

Ordering consumables for the medical office can be complex. Businesses must balance getting the right supplies (for instance, gloves that don’t rip at the thumb every time) and maintaining the supplies budget. 

Managing the process and maintaining visibility can also be tricky, especially for larger organizations with multiple locations or large sites with many different departments.

Often, medical businesses run into some common issues when procuring supplies for their locations, such as: 

Supply chain disruptions: Unexpected events like natural disasters, pandemics, or global situations can disrupt the supply chain, causing delays in the delivery of medical supplies and leading to shortages.

Regulatory compliance: Purchasing teams must navigate regulatory requirements to ensure all procured medical supplies meet local and international standards for safety and efficacy.

Quality assurance: Teams must ensure they purchase high-quality supplies that do not pose any risk to patients. This requires rigorous supplier vetting and thorough quality monitoring.

Cost management: Finance and purchasing teams face the perennial challenge of balancing the need for high-quality supplies with budget constraints. Fluctuating prices and the demand for emergency equipment purchases increase these concerns.

Vendor performance: Finding and maintaining relationships with reliable suppliers who consistently deliver high-quality products on time is vital. Strong vendor management policies enable this function.

Inventory management: Efficiently managing inventory levels helps avoid stockouts or excessive overstock. Both these scenarios can tie up capital, so adequate forecasting and planning tools are essential to procurement success.

Procurement management: Teams must have the tools to efficiently manage procurement activities like coordinating order intake, processing, and approval while ensuring timely fulfillment. Insufficient vendor reliability and product quality can make this process harder.

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Stock your office with a complete medical office supplies list

To run a medical practice efficiently, you must have easy access to necessary supplies for the front office and patient areas. These supplies are essential for keeping the clinic or location safe, sanitary, and welcoming for guests. These supplies enable teams to serve clients with quality services and products. 

Depending on the type of medical business you run, you’ll likely need most or all of the supplies mentioned in these supply categories: 

Front office

• Pens and pencils 
• Notepads
• Appointment books or software
• Clipboards
• File folders
• Printer paper and ink cartridges
• Scissors
• Stapler and staples
• Tape dispensers and tape rolls

Consultation and exam room supplies

• Disposable gloves (latex, vinyl, or nitrile)
• Face masks
• Cotton balls 
• Patient gowns  
• Forehead thermometers 
• Stethoscope 
• Blood pressure cuffs
• Tongue depressors
• Syringes and needles
• Exam table paper rolls

Laboratory

• Urine collection cups
• Specimen containers
• Microscope slides and cover slips
• Lab coats and aprons
• Goggles or safety glasses
• Pipettes and pipette tips
• Test tubes, beakers, and flasks
• Centrifuge tubes
• Petri dishes
• Biohazard bags
• Chemicals and reagents for lab tests

Cleaning and sanitation 

• Disinfectant cleaner 
• Paper towels or cloth towels for cleaning surfaces 
• Trash bags 
• Antibacterial hand soap 
• Disposable mop heads or cleaning cloths 
• Sanitizing spray for equipment and surfaces 

Linens and towels

• Medical gowns for patients
• Exam table paper rolls or sheets  
• Patient drapes  
• Towels (hand towels, washcloths)  
• Linens for patient bedding (sheets, pillowcases)  

General use

• First aid kits
• Facial tissues
• Paper towels 
• Band-aids  
• Fire extinguisher  
• Hand sanitizer stations throughout the office  

Specialty-specific medical office supplies to consider

Specialty medical businesses often require specialized supplies. If you’re buying for a dentist's office, medical spa, dermatologist, or medical dispensary, certain specialty stock will be essential for your daily operations. 

Office supplies for dentists

Dentist offices require specialized procurement of consumables to clean instruments, sterilize surfaces, and provide single-use supplies for patient comfort. The supplies for these businesses are tailored to the needs of those providing dental procedures and hygiene practices, such as:

• Disposable gloves and masks
• Sterilization equipment and consumables
• Dental anesthetics and syringes
• Dental impression materials and accessories
• Composite resins and bonding agents
• Dental burs and drill bits for various procedures
• X-ray equipment and protective gear
• Saliva ejectors and suction tips
• Ultrasonic cleaners and solutions
• Endodontic supplies (files, sealers)
• Orthodontic supplies (brackets, wires, bands)
• Prosthodontic supplies (denture materials, cements)
• Fluoride treatments and applicators
• Patient bibs
• Chair covers
• Surface disinfectants

Dermatologist office supplies

Dermatology offices spend a lot of time creating a hygienic environment and safe practices for serving clients. This requires many specialty products and consumables designed to make procedures safer and more comfortable, including:

• Medical-grade skin cleansers and antiseptics
• Biopsy kits and disposable blades
• Light therapy devices for acne and psoriasis treatment
• Skin moisturizers and cleansers
• Acne extraction tools
• Sterile gauze
• Bandages
• Wound dressings
• Topical anesthetics and corticosteroids
• Skin patch test kits for allergies
• Prescription dispensing supplies
• Tools specifically designed for dermatological use
• Magnifying lamps for detailed skin examinations
• Medical waste disposal supplies

Medical spas

Medical spas combine traditional spa treatments with medical practice. They require specialized products to administer treatments, maintain equipment, and run front-of-the-house and retail operations. They often have specialty consumables needs, many of which must be sourced through specific and reputable vendors, such as: 

• Chemical peel solutions and neutralizers
• Essential oils
• Injectable fillers (e.g., Botox, Juvederm)
• Collagen stimulation tools
• Skin rejuvenation and tightening agents
• Medical-grade skincare products for resale
• LED light therapy devices
• Sterilization equipment for tools and devices
• Ultrasound or radiofrequency devices for skin treatments
• Permanent makeup machines and pigments

Medical cannabis dispensaries 

Many states offer patients with qualifying conditions access to therapeutic cannabis through medical dispensaries, also called alternative treatment centers (ATCs) in some states. These dispensaries differ from recreational businesses due to state statutes or regulations. They are run as a medical practice and follow strict consumption and distribution guidelines. However, they may have specialty office supply needs, including: 

• Child-proof packaging and containers
• Vaporizers, grinders, and other consumption tools
• Educational materials on strains and effects
• Labeling machines and labels
• Jars and humidity packs for storage
• Trimming scissors and processing equipment for preparation
• Testing kits for THC/CBD levels and contaminants
• Odor control systems to maintain a neutral environment
• Consumption tool cleaning products and accessories
• Branded packaging and sales supplies
• Cleaning supplies for processing equipment

Make medical practice equipment procurement easier with Order.co

No matter what type of medical business you run, supply quality and availability can make or break success. A procurement platform like Order.co unifies the procurement and approval process into one effective platform. It makes it easy for individual team members to order and reorder the products they know and love.

Order.co also helps buyers find replacements with their preferred vendor when items are out of stock. It aids finance teams in maintaining budgetary control and visibility to save money without compromising staff and patient experience. 

If you’d like to explore more ways to centralize and streamline the procurement of all your medical office supplies, check out our ebook, The Procurement Strategy Playbook for Modern Businesses. It’s full of strategies and tips to help your medical business improve its buying and procurement performance.

Contact us to discuss your requirements of Disposable Biopsy Forceps. Our experienced sales team can help you identify the options that best suit your needs.