Background

• Client was in the sixth year of ownership by a middle-market private equity sponsor and was preparing for exit

• Market environment was evolving quickly, with introduction of new environmentally friendly materials and approaches

• Meanwhile, the pandemic created exciting new opportunities for the company but also threatened established lines of business

• Company wanted to attract interest from a wide range of financial and strategic acquirers

Client request

• Develop an objective, third-party study on the temperature controlled packaging market

• Broaden the prospective buyer universe by explaining complex, technical issues in simple but accurate terms

• Provide a framework for evaluating the dynamic, COVID-19 related market to account for the surge of vaccine shipments and treatments at a time of overall supply chain disruption

Key issues for consulting team to address

• Customer demand

  • Underlying market drivers, e.g., life sciences commercial development pipelines, product lifecycles, 3PL evolution, controlled lanes, advanced parameters beyond temperature

  • Trends by product type, shipment configuration, geography

  • Demand by temperature range

  • Impact of COVID-19 vaccines and treatments

• Macro trends

  • Environmental laws and regulations related to materials, recyclability, biodegradability, reusability, volume

  • Regulatory changes, e.g., FDA/EMA, US Pharmacopeia, temperature controlled distribution

• Competitive landscape

  • Market share and trends for established players and new entrants

  • Emergence of environmentally friendly technologies

  • Value added services (e.g., pre-conditioning, conditioning, simulation and lane risk studies, technical service)

  • Basis of competition

Health Business Group approach

• Developed list of key questions and hypotheses based on discussions with client, PE firm, investment bank

• Performed primary and secondary data gathering

  • Developed hypothesis-driven data gathering templates and interview guides

  • Mined HBG knowledge base, trade press, competitor websites, market research and analyst report

  • Conducted 40 market interviews with current and former customers, experts, competitors, trade associations, and government agencies

• Synthesized findings

  • Compiled market study highlighting key themes and providing detailed quantitative and qualitative findings

  • Built a market model to quantify baseline assumptions and trends

  • Ran multiple scenarios based on assumptions about the pandemic’s impact, e.g., on worldwide vaccine distribution

• Supported sale

  • Presented findings and answered questions for interested financial and strategic buyers

  • Conducted targeted research to address follow-up questions from buyers

Outcomes

• Produced insightful, comprehensive, third-party study that enhanced credibility of client’s pitch

• Provided support for challenging questions during sales process that exceeded what management or banker could do

• Company attracted significant interest and was ultimately sold at a valuation that exceeded seller expectations  

Background

• Investor (Client) was excited about a new investment opportunity but needed to resolve uncertainty regarding specific market and regulatory issues

• Client had done preliminary work but required third-party support to better characterize the issues and evaluate their impact on the investment

Client request

• Analyze market characteristics and company performance

• Investigate regulatory and legislative issues, and expected impact of upcoming federal elections

• Recommend whether Investor should move forward and if so what growth paths Target should pursue post-investment

Key issues for consulting team to address

• Market characteristics

  • Size and growth by payer, provider and patient type

  • Adoption trends by risk-bearing providers

  • Insourcing versus outsourcing

  • Basis of differentiation

• Company performance

  • Positioning in the overall competitive landscape

  • Differentiation, especially ability to bill CMS directly

  • Value of add-on services

• Legislative and regulatory topics, post-election

  • Medicare expansion

  • CCM outlook

  • Reimbursement trends

Health Business Group approach

• Health Business Group worked closely with the Client and Target to conduct the diligence

• Review background from Target and participate in a demo

• Performed primary and secondary data gathering

  • Mined HBG knowledge base, trade press, competitor websites, market research and analyst reports, conference information

  • Conducted one-on-one interviews with Target’s customers and non-customers

  • Interviewed market experts, providers, health plans

  • Identified a law firm with specialized expertise and worked through key issues with them

• Synthesized findings

  • Developed overall report with and summary findings and implications

  • Developed microeconomic model to assess profitability of Target business under varying sets of options

  • Presented to Investor and provided excerpt for Target

Outcomes

• Demonstrated that Target’s business model and growth prospects were not sufficiently robust to merit investment in base case

• Identified additional downside risk

• Provided feedback to Target regarding opportunities to diversify and shift business model to potentially become more attractive in the future

Background

• Investor (Client) had signed a letter of intent with a contract development organization (Target) and needed expert assistance for due diligence

• Target was growing and seeking investment to expand its facilities for commercial scale manufacturing and to expand its commercial team

• Client did not have experience in CDMO market and needed broad assistance

Client request

• Formulate a set of hypotheses to test to validate the attractiveness of the investment

• Collect and synthesize market feedback to educate Client and guide growth priorities for Target

Key issues for consulting team to address

• Market trends

  • Size and growth for US aseptic pharmaceutical products, by segment

  • Outsourcing trends

  • Pandemic impact

• Company strengths and weaknesses

  • Customer relationships: current performance, projected growth, stickiness

  • Market assessment of Target’s key capabilities

  • Growth plan assessment

  • Management team assessment

  • Physical location assessment

• Competitive landscape

  • Competitive profiles of peers

  • Ability to compete against industry giants and to eventually be acquired by one of them

Health Business Group approach

• Health Business Group worked closely with the Client and Target to conduct the diligence

• Reviewed and augmented Investor data request

• Performed primary and secondary data gathering

  • Mined HBG knowledge base, trade press, competitor websites, market research and analyst reports

  • Conducted one-on-one interviews with Target, customers and lost customers

  • Interviewed industry experts and competitors

• Synthesized findings

  • Developed overall findings and summary findings and implications for each hypothesis

  • Presented to Investor and provided excerpt for Target

Outcomes

• Clarified issues for Investor, providing overall comfort level and prioritization of issues for focus

• Bolstered Target’s confidence in and comfort with Investor by bringing relevant expertise to the table

• Enabled Investor to renegotiate investment terms based on findings from the diligence