Presentazione lavoro di consulenza per azienda

Range TTV DEALS TTV DEALS

The total transactions value (TTV) has 39.440 4 158.827 11

Bigger than US$ 5bn 26.132 13 40.175 18

US$ 1bn to US$ 5bn

more than doubled from 2013 32.060 109 31.304 117

US$ 50m to US$ 1bn 3.235 214 2.412 173

Smaller than US$ 50 m

Unknown 0 274 0 259

5

Source: Merger Market, IMAP research

• Tax Inversion

US income tax rate 39‐40% Actavis is a global pharma thanks to the

competitive advantage due to favorable

≅

Ireland income tax rate 13% tax system 6

• Portfolio deals

Sub‐critical business Products close to core business area

In

Out

• CMO Market expansion

To outsource the production To concentrate efforts and

of secondary products to investments on core

CMO. products 7

Revenue & Net Income trends

50.000,00

45.000,00

40.000,00 Last decade your turnover remained

35.000,00

30.000,00

$ higher than sector average

bln 25.000,00 Net Income

US 20.000,00 Revenue

15.000,00

10.000,00

5.000,00

0,00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Year Revenues (GSK vs. Average)

50000

45000

40000

35000

bln 30000

25000

$

US 20000

Downward trend in turnover from 2014 to today 15000

10000

You need something that could invert such trend 5000

0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Years 8

Industry GSK

Patents (GSK vs. Average)

2500 Your patents are less numerous than the average

looking all over world, but also only in US and Europe

2000

1500

patents Strong commitment in R & D activities

of

n° 1000 R&D investments (GSK vs. Average)

8000

7000

6000

500 5000

$mln 4000

US 3000

2000

0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1000

Years 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Industry (Worldwide) GSK (Worldwide) Years

Industry (US+EU) GSK (US+EU) Industry GSK 9

Average expenditure per year =933,57 million$

Standard deviation = 449.5 millions$

GSK expenditure per year=342.5 million$

You could invest more money in this strategy 10

• Deals with Biotechnology Company such as ID Biomedical and Corixa Corp.

• Deal with Novartis

• R&D investments

Allowed you to raise your strength in

the vaccines business

Your M&A strategy is consistent with market trends 11

• Variables overview

 More variability across firms than

over years

 M&A expenditure strongly follows

market trends. 12

• Regression results

 US$ 1mln spent in M&A in year X

+US$ 0.12mln revenue in X+1

 Probable synergy with number of

patents

 Std. Dev. of α confirms the stat_error

stat_alpha

i min ‐5857,46712 ‐16934,0139

max 30357,59039 19760,61358

heterogeneity highlighted 7702,372219 1,95245 E‐13

mean 13

8258,549183

std 3747,250551

• Regression results

 M&A have a little bit higher

influence on revenue

 Positive coefficient justifies

money spent in M&A by big

pharma companies 14

• Variables overview

 “Merger values” mean more than

doubled and bigger Std. Dev. with

respect to long run

Incoming of big deals 15

 M&A implies a decrease

of US$ 0.12 on share price

 Big deals can positive

influence the impact on

share price

 High revenues is better 16

17

• Similar vision

 To accelerate sales in emergent markets

 To amplify product portfolio

 Grow a balanced global business

 Deliver more products of value

 To simplify the operating model  To become a transnational company

 Introduction of a wide portfolio of branded

and generic products in key markets 18

• Complementary ideas & Different geographical areas

• You can help Lupin to enter in new

markets

• Lupin can help you to globalize towards 19

emergent market like India

• Business development

 Lupin brings new products to market each year by: To increase power and business development in

• in‐house product development global market

• licensing

• acquisitions and marketing alliances

 To be the partner of choice for product development

• R&D

Lupin is the fastest growing pharmaceutical company in Access to Lupin’s existing product pipeline and

India manufacturing expertise

 Vertically integrated

 Dedicated R&D facilities

• Patents To allow Lupin to sell the drug in other areas at a

Lupin is bound by an indian law that does not allow him higher price

to sell life‐saving drugs to an affordable price 20

• Portfolio deals

Lupin is the leader manufacturer To increase global and indian revenue

Since 1947

Lupin can sell Combivir Chance to sell legally this profitable drug.

21

Fixed amount of $1.094.400

$

Deal 285 40 24 4 .

formulation • $100.000, if we close the deal within 6 months

($50000 if within one year)

Six • $50.000 if each declared objective is satisfied by the

months agreement

support Step‐by‐step

Agreement evaluations

negotiations and

forecasts. No money requested for possible overtime

22

23

Università degli studi di Palermo – Corso di Laurea Magistrale in

Ingegneria Gestionale

Consulting Speech – Organizzazione Industriale e Strategie (del

Professore G.Perrone)

Consulting speech per il Business Game

Organizzazione Industriale e Strategie

Slide 1

Claudio Scimeca

Good morning, we are the Sicily Consulting Group, and we are here in order to present you the

committed analysis and our consulting proposal.

Slide 2

I am Claudio Scimeca, leader of this team and together with Emanuela Liga, expert of biopharma

sector, we are going to make a descriptive analysis of biopharma industry, followed by an overview

of GSK results in the last decade, with a focus on M&A strategies. After that, the econometric

specialist Riccardo Scimeca will support our work with econometric findings. Finally, I present you

Mirko Midili, our expert of M&A, who will explain in details the strategic acquisition we are

proposing to you.

Slide 3

Let’s start with the overview of the biopharma industry of the last decade with a focus on M & A

strategies. Firstly, we show some summary charts, in order to understand the evolution of this

market since 2005. These charts are based on a sample of 18 big pharma companies, in which we

include GSK. Here you can observe the average trend in sales and net income, assessed on big

pharma company. As you can see, the average revenue of the industry has grown much across

years, passing from less than 20billions to 32billions of dollars. The same thing doesn’t hold for the

Net Income, although it growth too.

Even the average investments in R & D have grown from year to year, and this was predictable if

you consider that R&D are core investments for this sector. Nevertheless, you can note less R&D

efforts in last 2 years.

Slide 4

Furthermore, we cannot miss a report of patenting activities. In particular, on the left side, we report

the sum of worldwide patents owned by big pharma companies, while, on the right side, you can see

the comparison between the total pharma patents in Unites States and in Europe. It is evident how

patenting activities is significantly more numerous in Europe every years. In particular, EU patents

represent, on average, 11% ot total patents, while US only 7%.

Slide 5

Now, let’s focus on the M&A strategies in big pharma sector. Firstly, we show you the number of

mergers performed by companies belonging to the sample. You can note how big deal activity was

quite absent until 2009, but in recent years you can count numerous big deals.

Another interesting thing is that, taking into account all the big pharma, the cumulative volume of

transactions has more than doubled from 2013 to 2014, thanks to numerous big deals (precisely we

count 11 transactions with value greater than 5billions of dollars). These data show that merger

strategies are changing in the last. Therefore, our focus has shifted in recent years, trying to

understand the reason of such trend.

So, I give the floor to Manuela, who will explain our findings.

C. Scimeca – R.Scimeca Consulting speech per il Business Game

Organizzazione Industriale e Strategie

Slide 6

Emanuela Giuseppa Liga

Investigating the market, we found out three main deal drivers which characterized recent M&A

strategies. Firstly, we have to talk about tax inversion phenomenon: US-based Bio-pharma

companies made deals in order to create tax-efficient M&A platform. The strategy is simple: tax

savings by shifting the US Company’s headquarter to a different country with a more favourable tax

system. In fact, we found that the US income tax rate oscillates between 39% and 40%, and it is

among the highest of OECD countries. It is not a coincidence that the market has seen numerous

Irish biopharma firms that bought US-based Company (for instance, Actavis deals with Forest

laboratories and with Allergan and now she is a global pharma thanks to the competitive advantage

due to favourable tax system, less than 13% income tax rate).

Slide 7

Furthermore, we find out another important fashion: the “portfolio deals”. With such strategy, we

mean the sale of sub-critical business to players better suited to own and manage them, or vice versa

the look for sub-critical business which you can acquire. So, in the last years, many big transactions

were aimed to consolidate the business that a company covers and adding complementary products

to its core business area. Your deal with Novartis is a perfect example of such strategy. But also the

M & A strategy pursued by Astrazeneca is an example: she is buying assets in respiratory (that is

one of three core areas for the UK firm) while systematically selling non-core legacy drugs.

For this overview, we find out one last notable thing: the CMO market expansion. The changing in

regulatory frameworks, cost pressures, and an efficiency gap compared to other industries, is

bringing big pharma companies to outsource the production to CMO market. However, this market

is still very fragmented and very small compared to biopharma one. We see this situation as an

opportunity for big pharma firms: taking advantage from the greater bargaining power, they could

build strong alliances with the CMO as done with the CRO. The final result of such strategy could

be this: to concentrate efforts and investments on core products and outsource the production of

secondary products to CMO.

Slide 8

Now, let’s pass to GSK focused overview. Here you can see your Revenue and Net Income trends,

and also your revenue compared with the sector. Last decade your turnover remained higher