Pallas Pharma: Is the Growth Worth What It Costs?
Marketing
medium35 min0 submissionsBain
Scenario
Pallas Pharma sells specialty pharma subscriptions in US. Growth has been strong and the board has asked whether it is profitable growth.
Marketing spends $23 M a month and acquires about 3,312 new customers in that time. Average revenue per user is $376 a month at a 75% gross margin. Monthly logo churn runs at 7.3%.
Roughly 78% of new customers come through paid channels; the rest arrive organically but are counted in the same blended figure. The CMO reports a healthy LTV/CAC and wants to double the budget.
Supporting data
spend
- new customers per month
- 3312
- monthly marketing spend m
- 23
- paid share of new customers pct
- 78
economics
- arpu monthly
- 376
- gross margin pct
- 75
- monthly churn pct
- 7.3
derived hints
- blended cac
- 6944
- payback months
- 24.6
- ltv gross margin basis
- 3863
- implied lifetime months
- 13.7
Your task
Advise the board. Your answer should provide:
- Analysis — CAC, LTV on a margin basis, the ratio, and payback in months. Show the working.
- Risks — what the blended number is hiding.
- Recommendation — scale, hold or cut, and where.
State any assumptions you make.
Ready to move forward? Up next: Verity Insurance: How Much Stock Is the Right Amount?Next question
How you'll be graded
80 points, 60% to pass.
- recommendation20
- market analysis20
- risk assessment15
- financial analysis25
Hint
Reveal suggested structure
CAC = spend / customers acquired. LTV = ARPU x gross margin x 1/churn. Judge on payback period and on unblended channel economics.