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A. INTRODUCTION
1. THE COMPANY
2. DENTAL TREATMENT OBJECTIVES
3. DENTAL DISEASE
B. THE MARKET FOR DISEASE TREATMENT
1. AT-RISK POPULATIONS
2. MARKET SEGMENTS
3. PRODUCT DELIVERY VEHICLES
A. DENTAL TREATMENTS VARNISHES, SPECIAL
TREATMENTS AND RINSES, ETC.
B. ORAL HYGIENE PRODUCTS CONTAINING SPECIAL
EXTRACTS
C. OTHER FOODS PREPARED FOODS
4. COMPETITIVE PRODUCTS FOR DISEASE CONTROL
C. ANTI-DISEASE AGENTS
1. VEGETABLE EXTRACTS
2. SPECIAL CHEMICALS (SC)
D. PRODUCT DEVELOPMENT
1. VEGETABLE EXTRACTS
2. SPECIAL CHEMICAL PRODUCTS
3. COMBINATION TREATMENTS
E. STRATEGIC PARTNERS
1. FAMOUS UNIVERSITY
2. CONSUMER PRODUCT COMPANIES
F. MANAGEMENT
G. FINANCIAL PROJECTIONS
APPENDIX A MARKET SEGMENTS AND ECONOMIC IMPACT
FIGURE A1: DISEASE TREATMENT BY INCOME AND AGE
FIGURES A2- A5: EFFECT OF NEW DISEASE TREATMENTS
BY PATIENT AGE
APPENDIX B. - OTHER RELATED PRODUCTS
TOOTHPASTE
MOUTHWASH
A. INTRODUCTION
1. The Company
DTC is a Washington corporation founded to develop and bring to market
products that will substantially reduce the incidence of dental caries throughout
the world.
DTCs core technology includes special chemicals (SC) and vegetable extracts
developed at the laboratory of Dr. Walter Smith at FAMOUS UNIVERSITY. Products
based on these will be integrated with patient education and food-based
remedies to provide the broadest benefit to the most people at the lowest cost.
Dr. Smith has developed the science behind these products with the support of
Dental Treatment Service (DTS).
To profitably exploit the results of its R&D program and to reinvest those
profits in broadening its contributions to public health.
3. Dental Caries
Dental Caries, tooth cavities to the public, is found in virtually every human
population on earth. It is a slow-onset disease caused primarily by a small group
of bacteria. The predominant species associated with dental caries is
Streptococcus mutans (S. mutans, which is part of the normal flora in the mouth.
It is harmless until it reaches high concentrations in the plaque near the tooth
surface and is then fed carbohydrate or simple sugars. Metabolism of these
substrates elicits the secretion of lactic acid that attacks the mineral component
in the tooths structure resulting in dental cavities/caries. Diet, the ecology of
the mouth, and the resistance of the host all influence the development of caries.
The disease can be mitigated in infected individuals by changes in any of these
factors.
Caries is a good first choice for DTS studies because this slow-onset disease is
well understood and no cure has yet been delivered to date. Dental caries is
caused primarily by a common oral bacterium, Streptococcus mutans . When S.
mutans finds conditions that favor it over other oral flora, it will increase its
numbers relative to other organisms. When this occurs within dental plaque at
the tooth surface it creates conditions that lead to caries. When the host
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No of
customers
% at risk
% using
herbs
% using SC
(millions)
Potential
Revenues
$ millions
Children under 6
years old
20,020
37%
13%
6%
34,486
Children between
6 and 18
42,852
56%
36%
9%
133,740
Mothers
58,343
65%
41%
6%
154,909
Other adults
103,957
65%
37%
5%
242,484
Elderly
31,702
21%
13%
2%
25,660
All groups
256,874
56%
33%
5%
591,278
The expected users are weighted more heavily toward the low-income groups.
This may be an advantage for the vegetable formulations, which can be delivered
as lower cost confections, over the more expensive SC treatments. Additionally,
the appeal of natural products has high value in markets made up largely of
people with discretionary income. These data and conclusions are shown in
Appendix A, Figure A1, Caries Treatment by Income and Age.
Because caries is a slow-onset disease, the effects and full benefits of new
treatments and prophylaxes will be delayed by some years. Much of the current
dental expense goes for treating cumulative damage that has accumulated over
many years. We estimate that the health improvements from new products will
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lag their introduction and use by 5-10 years. However, once these new habits
are adopted the benefits also accumulate over long periods as shown in
Appendix A, Figure A2.
Five years after acceptance of the new caries prevention products the annual
dental expense per patient is expected to drop by 15%, or $10 Billion/year from
of the current rate of $60 Billion/year. After ten years the US dental expense
should be about half of present levels, representing a savings of $30 Billion per
year. These projected savings are summarized in Appendix A, Figure A3 A5.
1. At-Risk Populations
The population groups in the United States for whom caries treatments are most
beneficial are:
High Risk Groups from certain segments of the population, such as Native
Americans, may have greater caries problems for cultural reasons.
These groups are also reliant to some extent on public health services for
dental care.
High Socioeconomic Group parents want the latest and greatest for
their offspring.
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2. Market Segments
Children up to 12 years old Treatment can begin once the child gets
teeth.
a. The characteristics of this segment are:
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APPENDIX A, Figure A1, Caries Treatment by Income and Age, describes the
size of each population segment and estimates the potential use of the most
promising caries treatments for each.
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Toothpaste
Toothbrushes including electric and sonic.
Floss
Mouthwashes & rinses (OTC)
Chlorohexidine (Prescription)
Fluoride treatments
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That means to succeed a company must either have a monopoly on the raw
material supply, or patent the particular ingredients. When the raw material is
widely available, as it is in DTCs case, the commercial viability of vegetable
remedies depends on purifying, identifying and patenting the key active
ingredients.
The steps in creating value for the vegetable products are as follows:
a.
b.
c.
d.
e.
f.
g.
For a product with me-too claims to reduce cavities, the estimated time-tomarket from this point in the development cycle is about 2 years.
If claims are to made for eliminating S. mutans and prevention of caries the
following additional development steps are required.
h.
i.
j.
k.
l.
D. PRODUCT DEVELOPMENT
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1. Vegetable Extracts
This opportunity is based on DTS obtaining the rights to research done by Dr.
Smith on discovering natural products with cariostatic activity. Dr. Smith has
logically selected a group of 200 herbs for screening which are known in Rural
traditional medicine as having anti-infectious activity. This activity includes both
direct attacks on bacteria and yeasts and indirect stimulation of the immune
system to protect against microbial attack. Some of them have been tested for
anti-cancer uses by a company in San Diego, which is farming the best
candidates.
Thanks to Dr. Smiths test the evaluation of some of these vegetable extracts is
well advanced, and one of them, called SC1, has shown promising anti-caries
activity. Based on this work a company has formulated an experimental
toothpaste containing SC1 and has shown that the anti-bacterial activity was
stable for six months at room temperature.
If we pursue the vegetable approach there are several steps that must be taken
to evolve this science into a business.
unique
-
These are included below in Figure P1 - Vegetable Product Production Flow Chart.
PRODUCT CLAIMS
DTC;s initial R&D goals are to find a formulation that is proven to selectively kill
the major cariogenic bacteria. This would allow DTC to claim greater efficacy
than current anti-caries products. This differentiation is important and valuable
in the Companys competitive business environment.
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E. STRATEGIC PARTNERS
1. FAMOUS UNIVERSITY
To help its research results become products to benefit the society. To do this,
the university will assist business ventures in a best effort mode.
In return, the university will seek a return for its support of its research. This
can take the form of an up front licensing fee (and royalties) from profitable
licensees or some other arrangements for start-up organizations. Recently the
university adopted a policy to take an equity position in start up companies in
exchange for licensing fees.
The university allows its employees to take part in a start-up as founding
scientists, board members and consultants. Founders shares in the company
are allowed for university employees if approved by a committee to review
conflict of interest.
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Assumptions:
Figure A1: Caries Treatment by Income and Age
a. In low income groups oral hygiene is worse, so the fraction of people at
risk in those populations is higher than the average.
b. Mothers are more aware of the need for dental care because of their
concern for their childrens health. Therefore mothers will be more
frequent users of treatments than other adults.
c. Low income groups will use proportionately more inexpensive OTC
products to reduce caries than more affluent people.
d. Higher income groups will be substantially greater buyers of premium
dentist-applied caries treatments.
e. Children and the elderly will prefer vegetable candies to toothpaste and
rinses. Adults will have the opposite preference.
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COMPANY
Colgate-Palmolive
Proctor & Gamble
SmithKline
Beecham
CheesebroughPonds
Church & Dwight
SALES (millions)
$475
444
181
136
71
393
1,700
PERCENT (%)
28
26
11
8
4
23
100
Colgate and Crest saw sales growth from 1998 of 5.3% and 8.7% respectively. I
could not find figures for other toothpaste brands.
The toothpaste market has seen a shift over the last 10 years from standard
toothpaste products to premium products that provide tartar control, whitening,
gels, desensitizing, antibacterial and all natural ingredients. This has segmented
the market and provided the consumer an array of products for specific needs.
This has been good for toothpaste sales and, as shown above, sales are on the
rise. As a further example of this growth, the largest segment of this premium
category, the whitening segment, has seen sales growth since 1996 of 159%.
Projections are that toothpaste sales will continue to increase as producers
introduce more and more specialty products. Therefore, research and
development in the toothpaste business is very aggressive. New, active
components for these specialty products are in demand. As an
example, competitors are looking for materials that will compete with
Colgates new Total containing triclosan. This could be a good
opportunity for vegetable based antibacterials particularly for the all
natural segment.
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TOOTHPASTE COMPOSITION
Toothpaste is composed of several ingredients, each of which provides a
functional important component to the finished product in its effort to fight
cavities and periodontal disease. Below are the various functional component
categories with examples of the chemicals used.
1. ABRASIVES & POLISHING AGENTS
Abrasives are added to toothpaste to remove debris, plaque and bacteria
from the tooth surface. Polishing agents are added to polish the tooth
surface and improve appearance. Often these are the same component.
Materials used in toothpaste for these purposes include calcium
carbonate, sodium bicarbonate (baking soda), dicalcium phosphate,
sodium metaphosphate hydrated aluminum, silica, and sodium
pyrophosphate. Natural toothpaste use baking soda or sea salt. Many of
these compounds including baking soda have the added feature of
neutralizing acids that are produced by cavity forming bacteria.
2. ANTIBACTERIALS AND CAVITY FIGHTERS
These are components added to toothpaste to kill oral bacteria and to
reduce the formation of cavities. The leading substance added to
toothpaste to do this is fluoride. It is the most effective material as an
antibacterial and cavity preventor. It functions topically by inhibiting the
growth and acid formation of the bacteria. It functions systemically by
becoming part of the tooth enamel making it more resistant to
demineralization. It is a proven substance for cavity prevention and is
used widely in most toothpastes. It is added as sodium fluoride, stannous
fluoride and sodium monofluorophosphate.
Other compounds that fall into this category include sodium
dehydroacetate, zinc citrate, sodium lauryl sarcosinate, Neem, tea tree oil,
xylitol, chlorine dioxide, myrrh resin, mastic gum, thymol, eugenol,
eucalyptal, Echinacea, goldenseal and other natural plant extracts. A
recent antibacterial added to toothpaste is triclosan, a broad antibacterial
found in soaps. Triclosan is found in a new toothpaste introduced by
Colgate called Total.
3. HUMECTANTS
Humectants are materials added to toothpaste to keep it moist. They
include compounds like propylene glycol, glycerin, and sorbitol.
4. SWEETENERS & FLAVORS
These are added to improve the flavor of toothpaste. There are many such
substances added to toothpaste for this purpose. A few examples are
saccharin, sorbitol, peppermint, spearmint, wintergreen, cherry, cinnamon,
fennel, ginger, anise, as well as various natural extracts and oils.
5. EMULSIFIERS, STABILIZERS, & FLOW-AGENTS
Subatances in this category provide stability, smoothness and consistency
to toothpaste. They are sodium hydroxide, cellulose gums, hydrated silica,
carrageenan, and gum tragacanth.
6. DESENSITIZERS
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Toothpastes are offered that desensitize your teeth to hot, cold, acid, base, etc. A
line of such products is offered by Block Drug Company, Inc. under the brand
name Sensodyne. The desensitizing is done through the use of nitrate
compounds in the toothpaste formulation. Combinations of desensitizing and
whitening or gel formulations are available.
Enamelon is a toothpaste introduced in 1998 by a startup company called
Enamelon, Inc. This product addresses the issue of repairing cavities
through remineralization. The company offers a toothpaste that contains
fluoride and proprietary formulations of calcium and phosphate ions such that the
saliva concentration of these ions is enhanced to promote repair through
remineralization of decay sites. Some of this technology was developed within
the company and some was licensed from the American Dental Association
Health Foundation. The product and the company are doing very well. They are in
the process of offering other toothpaste and dental care products.
A new product from Arm & Hammer addresses nighttime breath. This
toothpaste contains zinc citrate that is to inhibit the growth of oral microbe
overnight thus preventing nighttime breath.
All natural toothpastes are another premium category that is growing well. There
are numerous products on the market from a variety of marketers including Toms
of Maine as well as foreign producers. These products usually contain fluoride,
baking soda, peroxide and various natural extracts. Vegetable extracts are
promoted heavily by this market segment. A product called Enamel Saver
markets a sodium lauryl sulfate free toothpaste that contains xylitol in its place.
One natural toothpaste offers a product containing aloe vera that is suppose to
promote healing of gum and mouth sores.
A unique product is offered by a company named Body Electric of Colville, WA.
Their product is called Pristine. This is a tooth cleaning oil made from coldpressed essential oils of mint and almonds which are known for their antibacterial
properties. It does not contain any fluoride, abrasives, foaming agents,
sweeteners, emulsifiers or preservatives.
There are many toothpastes offered on the market, but most fit within
these categories. The flow of such products is expected to continue as
consumers become more educated on dental disease.
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MOUTHWASH
A. MARKET
Sales of mouthwash in 1999 were $677million. This was up from 1998 by 3.8%.
The top 5 leading brands were:
BRAND
Listerine
Private Label
Scope
Plax
Act
Other
Total
SALES
(millions)
$293
133
111
38
19
83
677
The mouthwash market has been growing but not a t the rate of that of
toothbrushes and toothpaste.
B. MOUTHWASH COMPOSITION
Mouthwashes contain fewer functional components than toothpaste, but they do
have some important key ingredients.
All mouthwashes contain some form of antiseptic or antibacterial. Over the
counter products usually contain alcohol, cetylpridinium chloride or methyl
salicylate as an antiseptic. They may also contain sodium fluoride. Prescription
mouthwash contains the antibacterial chlorohexidine.
Additional functional components in mouthwash are flavorings and colors.
Common flavorings include sweetness as saccharin, mint, spearmint,
peppermint, thymol, eucalyptol and vegetable extracts.
C. PRODUCTS
Mouthwash products generally fall into one of three categories based on the
market they are addressing. These three categories or market needs are breath
freshening, teeth whitening and dental hygiene.
In the category of breath freshening, mouthwash is marketed to people seeking a
treatment for bad breath. Listerine and Scope are examples of products that
address this market. These products contain antiseptics to kill bad breath forming
bacteria and a heavy dose of flavoring to temporarily cover bad breath. Research
has shown that mouthwashes have an immediate effect on bad breath but long
term they are not effective in eliminating the problem.
The mouthwash whitening market is relatively new. Products in this category are
SuperSmile mouthwash and products made by Polident. These products
contain antiseptics and flavorings but also contain baking soda and peroxide to
enhance teeth whitening. Their effectiveness is unproven.
Mouthwashes that attempt to improve dental hygiene are of greatest interest to
DTS and its business plan. There are several products on the market that claim to
remove plaque, kill oral bacteria, reduce gingivitis and improve overall oral
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health. PLAX is a mouthwash that is designed for used before brushing to loosen
plaque for easier removal on brushing. No information could be found on its
special active ingredients. Listerine and other major marketers of mouthwash
make a tartar control product that is suppose to reduce the formation of tooth
tartar when used regularly. Several natural mouthwashes are sold that contain an
array of natural substances such as vitamin C, vitamin E, Aloe vera, witch hazel,
tea tree oil (oil form the tree Melaleuca alternitolia) and numerous vegetable
extracts. These are claimed to kill bacteria, improve healing, reduce cavities and
reduce gum disease. As an example, natural products such as these are available
for companies like Toms of Maine.
A few unique antibacterial products are ANTI-OXIDANT and ClosysII.
ANTIOXIDANT is a mouthwash marketed as an immune system supplement to
boost the immune system to prevent gum disease. It contains vitamin C&E,
coenzyme Q, alpha lipoic acid, grape seed extract, selenium, Aloe vera, and a
proprietary delivery system. Its effectiveness is unproven. Closys II is a
mouthwash that contains chlorine dioxide as an antibacterial. Product claims are
that chlorine dioxide is more effective than other antibacterials.
To complete the review of mouthwash products, there are several products
marketed that are alcohol free and/or saccharin free. There are also
mouthwashes that are two phases to get the desired effect.
In general, OTC mouthwashes have been shown to have little effect on controlling
plaque and oral bacteria and they are no substitute for brushing. The one
positive in mouthwash is fluoride. A mouthwash that contains fluoride has been
shown to be effective in enhancing the protective effects of fluoride in
toothpaste.
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