Aileen

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Allergan: The M&A Machine
Aileen
Posted on December 9, 2015 at 1:25 am
Finding growth, repositioning the business and being nimble in the dynamic pharma environment

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On December 13, 2015, Aileen commented on Oscar – Taking on Giants – Health Insurance 2.0 :

It’s really interesting to think about the long-term sustainability of Oscar. As you mentioned David, a large part of its success to date is because their existing member base is largely comprised of a younger, healthier demographic. I wonder how they plan to adjust as this cohort ages. Perhaps members will cycle out once they get married and sign onto their spouses’ employee insurance plan and Oscar will forever be serving the younger demographics.

I also wonder how successful they will be in terms of tapping into the largest market of employer insurance programs for growth in the future. Member growth may also entail Medicare/Medicaid patients in the US, which are some of the costliest and sickest patients for the healthcare system.

Ultimately in order to be successful and differentiated from the other existing payors, Oscar must be able to show tangible cost-savings to those it contracts with and serves. The additions of telemedicine and activity tracker are appealing for those who are already engaged in their personal health, but what really matters is how the nurses can deal with the sickest patients and incentivize good behavior for those who traditionally have have not been engaged.

On December 13, 2015, Aileen commented on The United States Postal Service: Snail Mail Forever :

It’s really interesting to consider how such an old establishment has been met with modern day challenges and the inability to adapt. I agree that privatization might not be the answer to the issues, but I’d be curious to get others’ thoughts on some questions:

1) Outsourcing of various services: The ownership of distribution warehouses, trucks and local employment staffing could be outsourced to new privately owned companies. Perhaps this could cut down on the amount of blocking and tackling required by the USPS to continue its operations. These outsourced companies could then hire a lot of the employees from USPS that would no longer be needed. Most importantly, it would stem the addition of new workers that would require pension benefits, one of the largest costs in its current operating model.

2) Do we even need the USPS? The only times I’ve had to use the USPS within memory is to mail the IRS tax forms / pay my taxes. With the other logistics providers such as UPS, Fedex and DHL, they arguably provide similar coverage and services for the country. The ubiquity of email has eliminated almost all necessity for standard letter mail. Could they possibly acquire certain assets that the USPS owns and provide a cheaper service to replace what USPS provided with some government subsidy for providing this discount service? This way, the USPS could completely liquidate all its assets, including the real estate, in order to invest the money for future pension funding and recoup some of the losses.

Regardless, it is quite a shame to see such a long standing institution struggle on its last legs.

On December 13, 2015, Aileen commented on Lululemon: From Niche Market Pioneer to Apparel Ubiquity :

A few things that I think about when evaluating Lulu’s operating model and business model:

1) Competition: While Under Amour and Nike are large giants competing for a slightly different customer base, there have been many alternate models that have emerged such as Bandier in NYC. They stock premium brands like Michi, Alo and Splits59 in order to target the very same customers as Lulu while also providing variety. There comes a point in the luxury athleisure segment where the proliferation of Lulu becomes dilutive to the brand. Everyone and their mother, quite literally, is wearing the same thing. While the chief designer may be critical of Nike, he must understand the importance of evolving and changing Ocean and Duke as the context changes as well.

2) Unhappy Employees: The attempt to build culture within the employees is important for a luxury brand like Lulu. Recently, there have been many articles written about the cult-like status of the store-level employees with extreme pressure to attend group exercise. Some articles have aired grievances very similar to the issues Nordstrom faced in its earlier days with off-the-clock required activities (group exercise, finishing work, etc.) that are not mandatory, but implicitly are to move up. We must remember that these are hourly wage workers and not salaried workers as well. It could be difficult to build this unique type of culture and sustain it in the long-term given its current HR practices.