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“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”
An international conglomerate company XYZ has the intention to expand its pharmaceutical operations into the US market. It has considered acquiring a mid-size American generic drug company to achieve its strategic goal.
Decision Frame
In addition to its financial and legal due diligence teams, company XYZ needed to include a small highly experienced technical team to assist in the evaluation of the target company’s manufacturing, product development and commercial capabilities. This would ultimately impact the success of its future financial growth.
Decision Option
One key marketed product was facing FDA recall due to unacceptable pharmacological data. Company XYZ needs to understand the alternatives to address this major issue and its potential impact on its near term revenue.
Despite the target company’s pipeline appearing to be rather robust, more detailed analyses are required to determine probability of success, projected launch time, and potential market value for each asset in the portfolio.
The manufacturing facilities are a mix of old and new equipment. Decisions need to be made in terms of large capital investment in short- and long-terms.
Methodological Approach
The expert technical due diligence team conducted a thorough review of all target company’s project development documents, including FDA correspondence, and interviewed employees to determine a more realistic projection of the pipeline success rate and feasible launch dates. Their potential commercial values were then assessed taken into account the competitive market place.
A pharmacologist expert reviewed all technical information related to the key product with regulatory issue. Historical literature searches were also conducted to better understand the original reference drug’s formulation and pharmacokinetic profile.
Recomemded Solution
The team produced a complete and revised timeline for the entire portfolio and provided a corresponding 10 year P&L based on new data.
It was concluded that the best and viable approach was to reformulate the drug in order to achieve its bioequivalence to the reference drug. This approach, however, would delay its launch for 2 years, thereby, impacting significantly the target company’s near term performance.
Visits were conducted at the manufacturing sites to determine the adequacy of the existing equipment, their ages and conditions to meet the FDA requirements, especially with respect to controlled substances. It was determined that some obsolete equipment needed to be replaced in order to increase productivity performance. This would require rather large capital investments to be allocated into the near-term budget.
