Investment Due Diligence

Joint Venture with market leader or niche player?

Situation
  • Our client, the head office of an international pharmaceuticals company, had been in discussion about establishing a joint venture with the market leading Chinese company in the segment for several years, but the negotiations where making limited progress.
  • To assess whether to continue discussion or start evaluating new partners and / or business models they wanted SSCO to conduct a stakeholder analysis and evaluate alternative types of partnership candidates.
Approach

To understand the motivation of different players SSCO conducted detailed interviews across the value chain addressing:

  • Strategic priorities
  • Distribution capabilities
  • R&D pipeline

Based on early project findings the project scope was expanded to discuss partnership opportunities with other types of companies. SSCO’s support included:

  • Identification of leading emerging companies in the segment
  • Management meetings to understand their strategy and views on different types of partnerships.
Result
  • Combining the findings from several interviews it become clear that there was a disagreement on the benefits and commercials risks of a potential JV.
  • SSCO presented a number of recommendations of how to address the risks perceived by the partner.
  • At the same time our client also started evaluating partnerships with different types of companies, where the potential conflicts would not exist.