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To gain these capabilities, pharmacos can build them from scratch, partner with existing startups, or acquire them. Since its competitors are already several years ahead of OldPharma, OldPharma wants to jumpstart its biologicals program by acquiring BioFuture, a leading biologicals start-up based in the San Francisco area. BioFuture was founded 12 years ago by several prominent scientists and now employs 200 people. It is publicly traded and at its current share price the company is worth about USD 1 billion in total.
McKinsey study
OldPharma has engaged McKinsey to evaluate the BioFuture acquisition and advise on its strategic fit with OldPharma’s biologicals strategy.
Should OldPharma acquire BioFuture?
QUESTION 1: What factors should the team consider when evaluating whether OldPharma should acquire BioFuture?
Helpful Hints
Take time to organize your thoughts before answering. This tells the interviewer that you think about the problem in a logical way
Develop overall approach before diving into details
A good answer would include the …show more content…
There are two logical choices: OldPharma’s existing headquarters in Germany, and Biofuture’s current headquarters in San Francisco. OldPharma does not have any current biologicals facilities or operations in Germany, so new facilities would have to be built. How would you think about this decision?
A good answer would include the following:
Reasons for consolidating at OldPharma’s corporate HQ in Germany:
Better coordination with non-biologicals R&D at OldPharma
Better coordination with other business units of OldPharma (e.g., marketing, manufacturing)
Easier to intermix scientists in biologicals and traditional R&D units, and transfer any unique capabilities & knowledge
Overall easier to integrate BioFuture’s R&D capabilities into OldPharma
Reasons for consolidating in BioFuture’s San Francisco location.
Less likely to see flight of talent: many top scientists would likely leave rather than relocate to Germany
Easier to recruit and find top research talent in San Francisco vs Germany
Easier to retain the entrepreneurial spirit and culture of BioFuture
No need to rebuild e.g. manufacturing plants, research
McKinsey study
OldPharma has engaged McKinsey to evaluate the BioFuture acquisition and advise on its strategic fit with OldPharma’s biologicals strategy.
Should OldPharma acquire BioFuture?
QUESTION 1: What factors should the team consider when evaluating whether OldPharma should acquire BioFuture?
Helpful Hints
Take time to organize your thoughts before answering. This tells the interviewer that you think about the problem in a logical way
Develop overall approach before diving into details
A good answer would include the …show more content…
There are two logical choices: OldPharma’s existing headquarters in Germany, and Biofuture’s current headquarters in San Francisco. OldPharma does not have any current biologicals facilities or operations in Germany, so new facilities would have to be built. How would you think about this decision?
A good answer would include the following:
Reasons for consolidating at OldPharma’s corporate HQ in Germany:
Better coordination with non-biologicals R&D at OldPharma
Better coordination with other business units of OldPharma (e.g., marketing, manufacturing)
Easier to intermix scientists in biologicals and traditional R&D units, and transfer any unique capabilities & knowledge
Overall easier to integrate BioFuture’s R&D capabilities into OldPharma
Reasons for consolidating in BioFuture’s San Francisco location.
Less likely to see flight of talent: many top scientists would likely leave rather than relocate to Germany
Easier to recruit and find top research talent in San Francisco vs Germany
Easier to retain the entrepreneurial spirit and culture of BioFuture
No need to rebuild e.g. manufacturing plants, research