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Hard Growth M&A Product Strategy

Into the Unknown

#Healthcare #Pharmaceuticals
ProHub Comment

This is a challenging growth strategy case that tests the candidate's ability to recognize market saturation (90% patient eligibility for FHS), shift to portfolio diversification thinking, and apply expected value calculations under budget constraints. The case requires moving beyond the initial business analysis into M&A evaluation and risk mitigation planning.

Estimated Time 15 minutes
Difficulty Hard
Source Duke
50 / 100
Arendelia Pharmaceuticals is a fast growing, innovative pharmaceutical company that has developed best-in-class treatments for Frozen Heart Syndrome (FHS), a rare but devastating progressive disease that significantly shortens a patient’s lifespan without treatment. Arendelia had $6.2B in revenue in 2020 and grew revenues 55% from 2019 to 2020. Arendelia has hired your firm to understand whether or not its current growth is sustainable and what they should do to ensure long term growth.

Clarifying Information

  1. Client/Company information: US biopharmaceutical company founded in 1989 which focuses on delivering scientifically innovative treatments for diseases with high unmet need.
  2. FHS is typically diagnosed at a very young age and most eligible patients with healthcare coverage are treated with one of Arendelia’s products. There are an estimated 100k total patients with FHS worldwide (70% in the US, 30% International). As this is a rare disease, YoY growth rates are correlated with population growth at ~1% annually.
  3. Industry/Competition information: Arendelia has a monopoly on the FHS market as they are the only product that treats the underlying cause of FHS rather than the symptoms. Competition is likely in the future but not a current concern.
  4. Product information: Arendelia sells 4 products to treat FHS each at 300k/year in the US and 100k/year internationally.
  5. Value Chain/Revenue information: Products are room temperature stable pills making them easy to ship/store. Patients take 1 pill 2x daily for their entire lives.