Essay about Pills & Co

946 Words Dec 21st, 2012 4 Pages
PILLS & CO

1. Identify potential sources of synergy in the proposed acquisition of Star Genomics. Identify a set of problems that the acquisition may create. How can Pills & Co. address them? From the strategic viewpoint, does it appear to be a sensible acquisition for Pills & Co.?

Pills & Co is a pharmaceutical company that has over 100 years of history, over 57,000 employees and annual sales of $28 billion in 2010. Pills & Co concentration has been broad, researching a wide array of diseases. They have recently realigned their focus to the top 10 “priority diseases”. Star Genomics is a biotech company with less than 10 years of history. They have less than 50 employees, require public support and grants
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With the opportunity to refocus on top ten “priority diseases”, one being allergies, will help lead them to future earning potential. Event this refocus can take up to 10 year to kick off a new product through pipeline and to market. Layoffs and cutback will need to be initiated without some “short term” wins. * New and cutting edge technology being introduced by new acquisition of biotech company will jump start R&D. By working directly with genes, it can reduce screening time in half and reduce cost * Star Genomic does have an agreement with a top research University (licensing agreement) and has some items already in pipeline.

2. After much deliberation, Alex decided to proceed with the proposed acquisition bid. In your opinion, how much should Pills & Co. be willing to pay for Star Genomics?
This was the most difficult part of the assignment. It’s hard to derive at value for basically a startup company that has plenty of potential, no current profit and can add some synergy to another company. And to top it off, we are making calculation and decision based upon projections and possibilities. With this being said, I think the majority of the value falls within the synergies added by the acquired company. I think the hard dollars of Star Genomics is low but the soft potential (cutting operations cost, time to market, new technology, licensing and potential is high). On a low end, my

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