Synergy Pharmaceuticals Scales Up: License or Go It Alone?
(5 pages of text)
Case (Pub Mat)
After more than a decade of development, US-based Synergy Pharmaceuticals Inc. (Synergy) received marketing approval from the US Federal Drug Administration (FDA) for its first drug, Trulance, which targeted a large market that had only two other approved competitors. Synergy now needed to scale up from a research-and-development shop to a sales-and-marketing powerhouse. The company had not partnered with a larger pharmaceutical company during the regulatory review process, which was typical for smaller drug development companies, and as a result, it retained 100 per cent of the sales revenue but had virtually no in-house sales or marketing capability. In September 2018, the company was heavily indebted and the stock was priced below US$2; many wondered if Synergy had been right to go it alone or if it should continue that strategy for developing the lucrative North American market. With a new chief executive officer, Trulance sales beginning to accelerate, and other products moving through the FDA approval process, Synergy needed to decide whether to stay the course and become a full-fledged pharmaceutical company or seek a partner and stick to its research and development competency.
The case can be used in an undergraduate- or graduate-level course on strategy, strategic marketing, corporate finance, or entrepreneurship. After working through the case and assignment questions, students will be able to do the following:
- Evaluate a strategic decision for its impact on company earnings.
- Use a spreadsheet template to develop financial modelling skills.
- Justify and support assumptions used to build financial models.
- Understand licensing agreements in the drug development industry.
Health Care Services
United States, Small, 2018
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