Selecting a Pharmaceutical Company from Northeast Asia for Investment
(4 pages of text)
Joe Clift, a co-founder and managing partner of private equity firm Blacksmith Partners LLC in New York, managed his company's emerging market funds for several industries. He planned to add one company from Northeast Asia to generate growth in his pharmaceutical industry portfolio, and had focused on three outstanding pharmaceutical companies: Takeda Pharmaceutical Company Ltd. from Japan, Dong-A Pharmaceutical Company Ltd. from Korea, and Sinovac Biotech Company Ltd. from China. All three companies had shown strong growth in their respective markets over the years. Japan, the number-one pharmaceutical drug consumer in Asia, was also the second-largest individual market in the world, behind the United States. Japan generated sales of $60 billion, which constituted approximately 11 per cent of the global market in 2006. Korea maintained a competitive domestic market share supported by an excellent national health insurance system and high research power. Korea was the fourteenth-largest drug consumer in the global market as of 2008. China, being one of the fastest-growing pharmaceutical markets, was the second-largest pharmaceutical drug consumer in Asia. With an ever-growing population of senior citizens in Northeast Asia, the managing partner predicted strong potential growth in drugs for chronic diseases in these emerging markets. Which company should Clift choose among these three companies, and why?
This case has been developed for classes such as intermediate financial accounting and/or financial statement analysis.
- To formulate ratios using financial statements and to make financial decisions concerning both accounting and investments.
- To calculate an array of financial ratios.
- To use the background of each company to analyze the factors affecting financial health and other types of issues in making an investment decision.
Korea; China; Japan, Medium
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