Medfield Pharmaceutical Harvard Case Solution & Analysis

The case introduces Medfield Pharmaceuticals, a company engaged in providing four key products to its customers available in the market, namely Fleximat, Lodamadal, Reximat and Orsamporph, with the sole mission of enhancing the lives of the patients. Whereas, it was assessed that, Fleximat was its core and flagship product responsible for generating 64% of the total revenues generated by the company.Fleximat’s patent was about to expire within two years, which would leave three other products for the company to reap benefits from in the future. However, it was analyzed from the situation presented in the case that, it’s CEO Susan Johnsonwas faced with a tough and critical decision regarding the purchase offer of $750 million for Medfield pharmaceutical, or should the organization reformulated Fleximat. Additionally, there were other alternative present to Johnson, which included launching effective marketing campaigns or engage in ever greening tactics.On the other hand, manufacture generic Fleximat in-house, by establishing partnership with large generic manufactures. Therefore, it can be evaluatedthat, after conducting a critical analysis of Medfield, using discounted cash flow valuation method.It can be recommended, to the Susan and the organizations seniors that, they should accept the $750 million purchase offer given, by potential acquirer with respect to the company.As the Enterprise value of the company would be lessor in any case, then the current purchase offer.It would incur a significant loss after 25 years of operations.

After analyzing the case, it can be determined that, the patent of Fleximat, flagship product of Medfield pharmaceutical was about to expiry within two year. Which meant that, its sales would be cannibalized, by other substitutes that where available in the market.Furthermore, due to the volatility in the market and the rapid development in the pharmaceutical industry, it had become, increasingly difficult to manufacture new products or invent innovation drug. Which had lead the pharmaceutical industries to focus on merger and acquisition, to ensure their long-term growth and profitability.In the highly diverse and competitive pharmaceutical industry. In addition to this, a discounted cash flow valuation analysis could be used, to estimatethe enterprise values of Medfield pharmaceuticalfrom its historic, as well as current income statement form the year 2007-2010. Moreover, through the financial forecast provided from the year 2010-2034. Which would enable us, to estimate the currententerprise value of the organization and its forecasted enterprise values. The current purchase offer available to Medfield amounted to $750 million.In which, it can be estimated that, the current enterprise value of Medfield pharmaceutical amounted to $786 million.Calculated through the data presented, in the income statement from the year 2007-2010. Hence, it can be evaluated that, the purchase prices was a little below the fair market value of the enterprise. However, it was estimated that, if the company decided not toaccept the offer and continues its operations, while implementing the appropriate strategies available to them. Then after 25 years of operations at the year 2034, the enterprise values of the Medfield would be $444 million.Which would be significantly lower, than its current enterprise values.Therefore, it can be evaluated that, if Medfield pharmaceutical decided to reject the offer of $750 million and continued its operation independently then, it would stand to lose $311 million, after 25 year of operations.................

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