Royalty Pharma Case Study

1. Using the sales forecasts for Tysabri presented in Exhibit A, and using the discounted cash flow model presented in Exhibit B, what do you think Elan is worth? It can be fairly realized that the proposed value of Royalty Pharma in regard to the share value of Elan and the Tysabri undermines / undervalues the growth potential and actual sales forecast of the company. At $11 per share and later on at the revised offer of $12.50, it can be said that these proposed values are not attractive and can be stringent on the actual growth potentials and profitability of Tysabri in the patented timeframe of 2020 / 2024. As seen in Exhibit A, different sales forecasts of Tysabri are projected, yet the chosen sales forecast to calculate share …show more content…
The results of the votes connote the lack of trust of shareholders to Elan’s management, particularly the CEO that may be brought by the accounting scandal, poor decisions and transactions that Elan has been previously engaged with. I take the side of Schuler that the best future for Elan company is to be sold for the highest bidder of the company. The offer of Royalty Pharma, in spite of its propaganda to project that the actual share value of Elan is misleadingly higher than $10.49 is obviously a negotiation tactic and an underestimation of the potentials of the company. This can be evidentially supported by the ongoing interests of RP to own the royalty streams of Tysabri by revising their price offers multiple times and encouraging the shareholders to vote against their own company, Elan. In the end, the result of the votes and the future of Elan and its shareholders are safely placed in the hands of Pirrigo company. However, what saved them all was the close winning tally of votes for the company in regard to the fourth initiative of the share repurchase program. The votes of the shareholders are certainly close to the trap of the hostile bidder, RP. In the end, the best of interests, intentions and increments has been