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Due diligence - acquisition
Bridgehead undertook a due diligence programme on behalf of a privately-owned European pharmaceutical company that was seeking to acquire the European marketing rights to several products in the area of pain management. The client required a fast turnaround to support its decision making on whether to proceed with the deal, as well as input on possible terms in the form of a detailed understanding of the sales potential of each product and the likely sales force requirements in each of the EU5 countries.

The objectives for the client

 

The main objectives of the project were:

  • To use primary research to explore the level of interest among specialist physicians (anaesthesiologists, oncologists and trauma specialists) in products targeted at post operative, cancer breakthrough and trauma pain.

  • To explore the pricing potential of such products.

  • To estimate the likely market share of each product in the indications which were found to be of most interest.

  • To estimate the likely sales force requirements.

  • To prepare a 10-year sales forecast.

The programme of work

Bridgehead undertook a programme of primary and secondary market research to compile the following technical and commercial information for each of the pain products:

  • An overview of the product, its stage of development, target market and competitive position.

  • An estimate of the likely market share of the product in the indications of most interest, as determined by the physician depth interviews.

  • A summary of the assumptions used in the market models.

Sales force requirements were determined using a combination of:

  • Benchmarking, through review of audited promotional data for analogous products

  • Bottom up assessment based on target audience.

  • Interviews with industry experts.

Based on the above information, a market model was constructed which provided an estimated sales forecast for each product by country for the next 10 years.

 

The deliverables to the client

  • A comprehensive report addressing the company's stated objectives above.

  • The report was subsequently included in the "Auditors Report" to gain regulatory clearance for the deal.

  • A tailor made probability-based NPV model covering the major elements of the company's current business activities.

 

The project achievements

  • Bridgehead delivered a comprehensive analysis of the market potential for each of the products in the countries of interest.

  • An independent view on likely sales force requirements was provided, which corroborated the company's own views.

  • Based on Bridgehead's recommendations, the client progressed to term sheets.

Added value

  • The rapid turnaround by Bridgehead enabled the company to proceed with the deal within the tight deadlines set by the vendor company.

  • The detailed market models constructed by Bridgehead provided valuable input on market potential and value, such that the company considered itself to be in an excellent position for negotiating the final deal terms.

 

 

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