To put some (fairly loose) numbers round it...treat these as illustration, not gospel...it's a simple projection, but gives a feel for the scale.
Description of inputs :
- Working from the $6b market size
- assume market growth of 5%
- the m&g advantage applies to cost of manufacture...it won't impact overheads, distribution costs, etc. this example assumes manufacturing costs are 25% of sales
- m&g is 100x cheaper, ie 1% of current manufacturing costs
- then need to project a market share...everyone will have a different view of these numbers, both in terms of ultimate market share and the speed of getting there. I think this is disruptive so it will get big and do it pretty fast...fwiw the numbers in this example are on the conservative side IMO...c'mon, it's 100x cheaper! But it does depend on how the savings are shared between the partner, ADO, and what gets passed on to the consumer.
- the share of savings that ADO capture. In this example I've assumed only 10%, which feels light to me. It translates to a royalty of 2.5% of sales
- discount rate for NPV calc of 10%
...and on that assumption set you are still looking at $600m of value.
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