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Moisturizing Lotion-Business plan

Moisturizing Lotion-Business plan - Hemina Skin Rebuilding...

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Hemina Skin Rebuilding and Reconditioning Therapy: Treating Ichthyosis & Xerosis Heyde Lopez Monica Sanders Erin Sposato Business Report March 2005
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Executive Summary The proposal of a package of moisturizers for treatment of ichthyosis vulgaris has been shown to be unprofitable because of high ingredient cost. The package consists of three separate products which function differently but collectively to treat a common skin disorder. The equipment cost and FCI are $0.0765 million and $0.42 million, respectively. The TCI for the project is $0.499 million. Utilities and operating labor costs are $0.004 million and $0.240 million. Total annual product cost (TPC) is entirely dependent on raw material cost due to the extremely high cost of one particular ingredient, ceramide. The optimum formulation gives a TPC of $58 million/yr while a formulation of decreased raw material cost formulation gives $14 million/yr. These costs give a NPW of -$219 million and -$26 million for the optimum formulation and decreased raw material cost formulation, respectively, if sold at $50/package. When the package is sold at $90/package, the decreased raw material cost formulation has a positive NPW of $1.5 million. Even sold at the higher price, profit decreases per year. The package exists as a process in that there are steps to follow to reach the desired objective. A Pre-Shower Lotion is introduced to shed the dead skin layers that characterized the disorder. A Shower Gel is then offered to replace naturally-occurring components of the skin that are known to absorb water, both from the inside of the body and from the outside environment. The last product, an After-Shower Lotion, restores the lipid barrier present in the skin that works to hold moisture in the skin. Using these products in succession creates a system of restoration that will provide the consumer relief from the symptoms of the disorder. Hemina, Inc. is a small development company that has pledged to improve the physical state of ichthyosis patients nationwide. Experienced members of management have worked to create the ideal formulation of the package that will give hope to patients suffering with dry, scaly skin. The company intends on using consumer feedback and research to further develop the package. The package will be sold locally at $90/package, although lower prices were considered. Once the product is perfected, Hemina, Inc. expects to sell the formulation to a large company for nationwide sales. The formulation was created based on extensive understanding of the structure and function of the skin and its components. A diffusion model of chemicals into the skin was used to determine the relationship between the concentrations of a chemical that reaches the inner layers of the skin with the concentration that is applied. Active ingredients were chosen based on the desired function of the product. Complementary ingredients were added to give physical properties that are important when creating a consumer product. The manufacturing process was designed based on the phase properties of the ingredients. Cost analysis was then preformed to asses the product.
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