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Case Study

AM-Pharma: Creating value (B)

By Jim Pulcrano, Tim Knotnerus, Marion Owczarczak-Fogli and Mohammed El Ansari

2 pages

February 2018

Reference: IMD-7-1949

AM–Pharma is a biotech company developing a medicine for patients with acute kidney injury. The case describes the company’s journey from inception in 2001 to a large deal with Pfizer in 2015. The aim is to discuss the value creation of AM-Pharma through its strategic decisions over time. It highlights the patient journey, company challenges, market size potential, and how the management team was able to raise multiple financing rounds from venture capitalists. It further provides the readers with a unique insight in the key risks and operational challenges of a biotech company and the value of an experienced management team backed by strong investors. The drug development process is inherently risky, long and expensive and the probability of commercializing a new drug is very low. The company’s CEO is the protagonist and the case is split in three parts to provide the readers with surprises and open strategic questions which are time related. The case is semi-chronologically and a patient story is intermingled to provide a different perspective on clinical trials, ethical dilemmas and the high unmet medical need for new therapies. The case ends with a valuation simulation, in which the readers can negotiate the AM-Pharma/Pfizer deal themselves.

Learning Objective

The aim of the case study is to evaluate the value creation of AM-Pharma strategic decisions over time.
The strategy diamond and Porter’s Five Forces will be applied as a tool for understanding the industry and the company’s strategy
The key success factors are also assessed for this challenging setting of a biotech startup
Role of Serendipity and management vision in opening new doors
Different exit options are discussed, highlighting pros, cons and what actually happened
How clinical outcome, and exit timing highly impact the valuation. The case will trigger discussions on the strategic options listed, and engage the students into exit negotiations simulation

Keywords

Strategy, Value Creation, Biotechnology, Entrepreneur, Start-up, Venture Capital, Deal, Negotiation, Mergers and Acquisitions

Settings

World/global, Netherlands
AM-Pharma, Manufacturing, Biotechnology
2001-2015

Type

Field Research

Available Languages

English

Related material

Teaching note

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This case study is part of a series

AM-Pharma: Creating value (A)
AM-Pharma: Creating value (B)
AM-Pharma: Creating value (C)

This case study is part of a series

AM-Pharma: Creating value (A)
AM-Pharma: Creating value (B)
AM-Pharma: Creating value (C)

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