The Extreme Entrepreneurship Tour

Posted by: Chris Palmeri on October 23

A voice boomed from out of nowhere. “There I was hating my life, because I hated my job,” said Arel Moodie as he began walking down the aisle of the auditorium at the John Adams Middle School in Santa Monica, Calif.

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Moodie was a telemarketer, selling car insurance, he said. Then he had a revelation after speaking electronically over the phone to a deaf customer. There was so much more he could do with his life. He became a motivational speaker, one who teaches young people that anything is possible, that they can become entrepreneurs.

Moodie was speaking on behalf of the Extreme Entrepreneurship Tour, an 18 city blitz of California sponsored by the state’s community college system and small business development center. There are eleven dates left through November 18.

For the hundred or so wanna-be Donald Trumps that turned out on Oct. 22, the tour was an evening of high-fives, hugs, even a dance contest. And prizes like business plan development software.

Moodie pitched a Web site called startabusinespledge.com, which encourages young people to sign up to pledge that they’ll start a new business 2009. It also provides inspiration and tips for entrepreneurs.

Other young entrepreneurs, such as Prashanth Mysoor, founder of environmentally friend e-tail site generationorange.com, spoke.

Why take this tour on the road during the Great Recession? “I want to be my own stimulus package,” Moodie, 25, said while nibbling a tuna sandwich during a break. “When everyone’s seeing no hope, I see opportunity. You have a better chance of making a million in a downturn. You can plant roots, while everyone else is running.” Then it was time for him to run back on stage.

United's Idea for Holding Down Health Costs

Posted by: Arlene Weintraub on October 23

United.jpeg Last year, UnitedHealthcare introduced the Diabetes Health Plan, designed to award financial incentives to employees who do a good job of managing their diabetes. The idea has caught fire: after three companies pilot-tested the program in 2009, including General Electric, 15 more employers signed on to offer it next year.

Employee-benefits experts say this trend is likely to continue. "It's an area of focus among national medical players," says Dean Hatfield, senior v.p. at Sibson Consulting, the human-resources consulting unit of the Segal Company.

The Diabetes Health Plan waives co-pays for diabetes drugs and other treatments--provided participants adhere to treatment guidelines and they agree to be tracked to ensure they are compliant. United says patients are tracked quarterly based on their claims data. Those who don't follow the plan's requirements are kicked out and put back into their employer's regular plan.

Discounts, especially on drugs, can be a powerful incentive to stay healthy, Hatfield says. "The number-one reason for not refilling a prescription is that you feel better," he says. "Why pay $25 if you feel fantastic? If your health plan gives you the drug for free, you have no reason not to take it."

Programs such as the Diabetes Health Plan could make up for the shortcomings in standard "disease management" plans. Earlier this decade, disease management was all the rage, with several companies offering health coaches, and incentives such as coupons for drugs and discounts on gym memberships. But it wasn't clear those programs were really helping employers hold down the costs of covering chronically ill workers. A 2005 study published in the journal Health Care Financing Review examined disease management programs for diabetes, depression, chronic heart failure (CHF) and asthma. The only programs that produced a reliable return on investment were those aimed at CHF.

Part of the problem with cookie-cutter disease management is that there are no ramifications for patients who don't comply. Employees may be given guidelines to follow, but they're voluntary, and no one is watching them to make sure they stick with it. The United plan adds that element.

The health insurer and the companies that are pioneering the plan will be collecting data over the next couple of years to determine how well it's working. But Dr. Robert S. Galvin, GE's chief medical officer, can already envision implementing similar plans for other chronic conditions. "What do you have in the workforce? Lots of asthma. Even back pain," he says. "Our intention is to expand this. We need to incentivize employees to get healthy."

Amgen Takes Bone Drug Delay in Stride

Posted by: Arlene Weintraub on October 19

AmgenLogo.jpegDrug company executives--and their investors--used to dread the prospect of the U.S. Food & Drug Administration delaying approval of a new product. Nowadays, however, such delays seem par for the course. Take, for example, the news on Oct. 19 that biotech giant Amgen received a "complete response" letter on its experimental osteoporosis drug, Prolia (scientific name: denosumab). Amgen will have to provide more information about the drug before the agency will approve it. Investors had been expecting Prolia to be a long-awaited blockbuster for Amgen, and they pushed the company's stock up 30% over the summer to just north of $60. News of the delay was barely a blip: shares traded down just a percent or two the morning of Oct. 19.

Amgen applied for approval for Prolia in treating and preventing post-menopausal osteoporosis (PMO), as well as bone loss in some cancer patients. In August, an advisory panel to the FDA expressed some concerns about side effects seen in the trials, such as serious infections or cancers. The agency has not yet responded to Amgen's application for Prolia to be approved for cancer-related bone loss, but it did tell the company that it would need to do more studies to justify marketing the drug to prevent PMO. In terms of using it in patients who already have PMO, the agency merely requires more information, including some clarification on how Amgen plans to monitor patients after the drug is approved.

Amgen executives aren't providing details about how they plan to respond, except to say that they'll be able to provide the information on Prolia for PMO treatment quickly. "Amgen is fully committed to working with the FDA to make Prolia available to patients in the near future," said Roger M. Perlmutter, executive v.p. of R&D in a statement. The prospects for the other indications are up in the air, though Amgen is prepared to launch the drug as soon as it has a green light.

One reason Amgen's news is being treated more as a disappointment than a disaster may be that complete response letters have become somewhat routine in pharma. The FDA has stepped up its focus on safety, and its efforts to better understand side effects often cause it to miss its own deadlines for approving drugs.

And the FDA isn't just picking on Amgen. In the last few months, the FDA has fired off a slew of complete response letters to Johnson & Johnson--most of them asking for more information about side effects. CEO William Weldon says the industry needs to be prepared for more such scrutiny. "I do think more and more we’re going to see complete response letters rather than a decision made at the [expected] dates," Weldon said in a September interview with BusinessWeek. "There’s a need for industry to understand what is required by the FDA, and then make sure we’re doing the scientific work, the clinical trials, and everything else that’s going to answer the questions. As we all understand more and more what’s needed, the scientific rigor will get even better. So hopefully we’ll be able to meet the dates and get the approvals."

As for Amgen, analysts expect the delay to have a modest dampening effect on revenues next year. Christopher Raymond, an analyst for Robert W. Baird & Co., lowered his 2010 sales estimate for Prolia from $375 million to $295 million. He didn't change his "outperform" rating, nor did he lower his price target of $70 a share. In an October 19th report, he wrote, "we think PMO treatment issues are primarily procedural," and "we still anticipate a YE09 approval." Now the onus is on Amgen to prove he's right.

Dell's Do-Over: Can He Go Back to the Future?

Posted by: Cliff Edwards on October 16

Michael Dell's makeover of what once was the largest computer maker in the world has been characterized by fits and starts. Company insiders tell BusinessWeek he's been moving very quickly since he moved back into the CEO suite in 2007, while critics contend he isn't moving fast enough.

The real truth seems to be somewhere in between, but one thing is clear: Dell the company will face increasing pressure to transform itself even as sales in the pc industry improve. The latest quarterly figures from researchers IDC and Gartner show that Dell continues to lose ground to rival Hewlett-Packard. And Taiwanese maker Acer for the first time surpassed Dell to take the No. 2 position in global pc sales.

To be sure, part of the reason is that Dell has been trying to boost profits, and in doing so is much more willing to cede market share to rivals. The numbers show why: Back in 2000, when the average selling price of PCs was $1,469, Dell made $338 more than competitors on every one sold, according to researcher IDC. In 2008, when the average selling price was $849, Dell made $20 less than the industry average.

But in the cutthroat commodity pc business, scale is crucial to maintaining profits over the long term. The more pcs and servers you sell, the more you can squeeze suppliers to offer your company the best costs.

Coming out of the downturn, Dell is faced with maintaining that legacy business while trying to move upstream to more profitable businesses such as managing other companies' computers and datacenters, offering tech consulting and delivering cloud computing services. That means Dell will have to step up research and development, and acquire more companies that will help it achieve its goals.

Can they do it? Michael Dell thinks so. But it looks like he'll have his hands full over the next two or three years remaking the Austin (Texas)-based company.

Gucci's recession strategy

Posted by: Rose Brady on October 16

How do you sell luxury in a recession? If you're Gucci, you try to convince customers a handbag isn't just an accessory but an investment. My colleague, Paris bureau chief Carol Matlack, explains Gucci's strategy for the recession in a story in the Oct. 26, 2009 edition of BusinessWeek. This season, Gucci is giving top billing to a new purse called the New Jackie, based on a style carried by Jacqueline Kennedy Onassis. Price: $2,200 and up. Meanwhile, Gucci is downplaying its traditional GG bags. Thanks to the strategy, Gucci's sales in the first half of 2009 were down 3.7%. That compares with a 15% decline for the industry, according to consultancy Bain & Co. Read more about Gucci's strategy and let us know what you think.

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How are industries and companies positioning themselves for recovery? What should troubled businesses be doing to survive? BusinessWeek writers explore what is becoming known as The Reset Economy. We’ll look at smart strategies for growth and industries undergoing transformation, from autos to entertainment.

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