Page 221 - Grow from Within Mastering Corporate Entrepreneurship and Innovation

206 grow from within

for other applications, and the patent protection was solid. They
addressed concerns by focusing on those aspects of the project
that were well known, rather than focusing on what was new.
Moreover, the Cellular Therapies team spent time up front
rigorously understanding the cardiology market and design-
ing cogent business models. It validated the market opportu-
nity, explored payers and pricing and potential adoption rates
of comparable products, and assessed internal costs and
requirements for Baxter to manufacture, sell, and support the
product. As Uppal explained, “At Baxter, to garner funding,
you need to have a complete hypothesized business model up
front. . . . It’s of course chock full of assumptions . . . but you
continue to refine it over time.”
With a clear business model and initially successful clinical
trials in hand, Cellular Therapies began the internal sales process
to win support for the program, which proved to be more of a
challenge than the team had anticipated. While the company’s
heritage selling refills for dialysis equipment suggested the
power of the razor-and-razor-blade business model, the NTRI
team encountered skepticism regarding the model’s viability.
Each patient administration of the technology would require a
new cartridge costing upwards of $5,000—the “razor blade” of
the system. The analogous dialysis refill products retailed for
around $20. While the model was the same, it had a higher price
point than other Baxter disposables. This price difference caused
many people to discount the viability of the model, even though
it was the same razor-and-razor-blade model.
Baxter was still building its capabilities and penetration
within the health-care bio products markets, where high per-
use price points were more common than in Baxter’s traditional
markets. As a result, convincing people of the feasibility of the
business model and the likelihood of market acceptance proved
nearly as difficult as selling the company on the science. The