A U.K.-based liquid pharmaceutical company engaged Clarkston Consulting to perform commercial, operational, and quality due diligence to evaluate an IP asset acquisition of two separate therapy suites from a U.S.-based company. Since the non-tablet target therapies align with their portfolio, the potential acquisition serves as a good expansion opportunity into the U.S. market.
Over the past five years, the market size and competitive landscape for the first therapy suite has increased with the addition of multiple therapies of various dosage strengths and formula types. The non-tablet market has grown due to its ability to provide a more accessible drug formulation and thus steal share from the tablet therapy market. However, the non-tablet market remains a small fraction of the size of the tablet market. The target company currently has two therapies in the non-tablet market and a double strength (DS) version of their therapy in the pipeline. The DS therapy was developed as a defensive strategy to combat the increase in competition in the non-tablet market. Clarkston included the DS therapy in its evaluation as part of the overall commercial viability of the therapy suite.
There were three key issues noted during the due diligence process for the second therapy suite. The first is that the introduction of generics has led to a more competitive market with less financial upside and decreased the market size. The second issue noted is the increase in generic therapies has reduced market share for the target company’s therapies. At the end of 2022, the target company’s therapies controlled only 3% of the market. Lastly, of the three therapies that the target company controls, the therapy that generates the most revenue has a licensing agreement associated with it, which further limits the upside of the acquisition.
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Contributions from Carson Cutright