Galenicum Health: The Adventure of Becoming a Global Pharmaceutical Company

Description

Galenicum Health was one of the leading importers of active pharmaceutical ingredients in the Spanish market. Its clients were Spanish companies that would acquire the API from Galenicum and develop the drug (finished dosage form or FDF), marketing it under their own brand (generic medicine). Little by little, Galenicum began to codevelop drugs with other laboratories and even outsourced their manufacture (contract manufacturing), thus building up its B2B business in Spain. In 2012, after rejecting a purchase offer for the company, the partners decided to implement a strategic plan (2013-2017) with the aim of increasing annual sales from €75 million to €240 million in five years. To achieve this, they intended to begin a strong international expansion in Latin America with their own brand (B2C) and later to take the plunge into manufacturing in-house, not only products for others (B2B) but also their own (B2C). At that time, one of the world's leading pharmaceutical companies announced the closure of its factory in Madrid, something that attracted the attention of the Galenicum partners. Although the complete integration of the company was not part of the plan in the short term, the partners decided to analyze the proposal and look at the options for in-house manufacturing. Meanwhile, strong disagreements with a partner who became a shareholder a few years after the company's foundation led the founders to consider buying his stake and dismissing him once and for all. The case study sets out the twofold decision that the three founding partners of Galenicum had to take at the end of 2012 about, on the one hand, the company's vertical integration and, on the other hand, the dismissal of the fourth partner. Was it the right time to carry out the integration? Would they know how to do it? Which option should they choose? Could they afford to do both things at the same time? If not, which one was the priority? Should they focus on the company's vertical integration but keep a partner who did not share their ambition for growth?

Learning Objective

This case study is designed to be used in any course or subject on general management, strategic management, business analysis or decision-making. The main objective is to analyze a twofold decision: on the one hand, whether to vertically integrate the company (and, if so, how) and, on the other hand, what to do with the fourth partner. For this purpose, it is vital to have a good understanding of not only the business and the sector but also of the context in which the company finds itself once its strategic plan has been launched. Beyond the economic analysis, the discussion makes it possible to put a lot of other criteria on the table in order to analyze both decisions properly.

Related Documents

• Galenicum Health: The Adventure of Becoming a Global Pharmaceutical Company - Teaching Note
• Galenicum Health: La aventura de convertirse en una empresa farmacéutica global - Nota del instructor

Keywords

Decision-making Medication Partners pharmaceuticals Strategy Vertical integration