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Running Head: 5-1 MILESTONE THREE 1

STRATEGIC MILESTONE 3 8

5-1 Milestone Three: Alternative Buyer Research Report and Acquisition Road Map

Alternative Buyer Research Report

A life science organization is a type of business that deals in pharmaceuticals, research, and development or biomedical equipment manufacturing, or biotech medical and food production. Being one of the largest life science organizations gives the company an edge over its competitors. Recently, one of the companies showed some intentions to buy the company, and the owners are also willing to sell the organization to the potential buyer. Still, the management has noticed that the potential buyer might pull out of the offer. So, I need to look into more companies, specifically life science organizations, for potential buyers. The contingency plan demands looking into the financials of the potential buyers and identifying a suitable buyer. 

Alternative Buyers

There are many alternative buyers, and some of them are Alexion Pharmaceuticals, Alkermes, Gilead Sciences Inc, Jazz pharmaceuticals, Johnson & Johnson, Novartis, Nova Nordisk, Regeneron Pharmaceuticals, and Vertex Pharmaceuticals. These companies have solid financials, all of these companies are Multinationals, and these companies have enough resources to buy the organization. Out of these companies, I have chosen Johnson & Johnson as a potential buyer from the list of alternative buyers. (Mazzucato et al., 2020)

Johnson & Johnson is one of the oldest pharmaceutical corporations globally and is around 130 years old. The company produces a wide range of pharmaceutical products. Johnson & Johnson is a multinational organization that sells its pharmaceutical products in over a hundred countries. 

Current Market

Johnson & Johnson mainly focus on Immunology, Cardiovascular and metabolic disease but also produces and sells products related to Infectious disease and vaccines. Most recently, during the pandemic, they also made one of the covid vaccines, which were quite effective against the virus. The company manufactures products related to children's diseases and viruses related to infants and children. One of the best-selling products of Johnson & Johnson is products related to Infants and children, like baby lotion and powder. As the company is multinational, it has a different product focus in other world regions. For example, in third world countries, the company is most famous for infants and children's products and vaccines for infants and children. In developed countries like Europe, vaccines, and products related to infectious diseases are more popular as people rely on the quality of the product. Cardiovascular products are famous around the globe, and doctors and patients prefer these products the company. So, the company operates in a market of all medical or pharmaceutical-related fields. The company is leading the current market in some of the categories, like products related to kids and vaccines. Customers of almost all ages buy the company's products, and around the globe, it is equally famous, and that's why it's the most prominent pharmaceutical organization. They have many competitors in every sector, and in almost every country, it manufactures or sells its products. The total market share of Johnson & Johnson is above 7%. And the closest competitor relative to market share stands at above 2.5 percent, and this information is enough to prove that Johnson & Johnson is the leading pharmaceutical company in the world. (Milanesa et al., 2020)

Financial Situation

As we have discussed earlier, the company is the largest pharmaceutical company. The financial position of the company is also solid and stable because of this pandemic which accelerated the health issue crisis, which as a result, increased the demand for pharmaceutical products, has a very positive impact on the company's financial position. The company's revenue has increased by almost 17 percent in the past two years. Revenue of the company right now is $93,775,000,000, compared to where they stood in 2018 at $81,581,000,000; there is a good increase in revenue. When the revenue increases, the cost of sales also increases. The current price of sales of the company is $29,855,000,000, an increase of around 15 percent if we compare it with the numbers of 2018. The company's operating expenses have seen a sharp increase in 2021 compared to 2020 and 2019, but other income has also seen a sharp decrease recently. The current net income of the company stands at $20,878,000,000, which is up from $14,714,000,000, which is an excellent jump in profits. EPS for the last year was 5.59, and it is expected that the EPS will be above 8 dollars per share this year. The company's balance sheet is also solid, with low debt and high equity. (Livingstone et al., 2021)

Recent Developments

Johnson & Johnson has appointed Jaoquin Donato as its new CEO. Joaquin has 33 years of experience in the company, has worked in all the sectors, and has in many different countries. The new CEO brings vast experience and has worked his way to the top. Recently, the company has won the award of leading Innovation Company globally, and Times magazine also named the covid vaccine of Johnson & Johnson as the world's best invention of 2021. which gives the company massive credibility in the fight against the virus has been very effectively won with the help of vaccines. The most important factor which affected the whole world was the pandemic. Since the pandemic hit the world, almost all big pharmaceutical companies have started research on developing an effective vaccine to beat the virus. After some time, nearly all of the big pharmaceutical companies have invented a vaccine, and Johnson & Johnson's vaccine is one of the most effective vaccines. 

All the events that happened recently will not affect the idea of a potential buyer. As the company is currently so occupied with fighting the pandemic and working on innovation, the new CEO can pose an excellent opportunity to convince him to buy the business. 

Buyer Rationale

Johnson & Johnson is the best option for the life science organization as the company is already working with a very successful business model. Instead of expanding into a new segment of the sector, the company can buy an already successful business and make the company more robust and financially reliable for the investors. The company's goodwill will also play a huge role in acquiring the business. The company has been making good profits and has enough cash to buy an already successful business, so the company is the best option for the life science organization. 

Acquisition Road Map

To acquire a company, the organizations on both sides need to work on a plan to make the transaction successful. The plan needs to be clear, and all the details should be in the plan about how this acquisition process will work. (Lei et al., 2018)

Acquisition Related Tasks

The First step must be about preparing all the acquisition demands and taking all the stakeholders on board for the upcoming acquisition process. Taking the whole management on board and preparing for the acquisition process by teaming up with the relevant people will take around 2 to 3 months. The second step must be preparing for the negotiations related to the sale of the business. The organization should collect all the numbers associated with its finances and the potential price for the whole company. The seller will be looking to buy a good business with sound finances at a lower price, but a buyer will be looking for a good and reasonable price. In this step, the negotiations on the acquisition price will be discussed between the top management of both organizations. This process can take up to 1 month. The third step should be the acquisition price, and the price should be accurately related to the company's financial position. All the numbers posted in the sale document should be without any error because any error will turn the deal out of the table, and the management should be looking to close the information gap. Price negotiations will depend on the financial health of the company and the potential of the business model the company in the future. Executives from both sides should look into the numbers carefully and draft the agreement carefully with all due diligence. This process can take up to 1 month. The Fourth step must look into closing the deal. The CEOs of both organizations should be looking to sign the acquisition papers and complete the transaction carefully with all the funds deposited in the respective accounts. 

References

Mazzucato, M., Li, H. L., & Darzi, A. (2020). Is it time to nationalise the pharmaceutical industry?. BMJ, 368.

Milanesi, M., Runfola, A., & Guercini, S. (2020). Pharmaceutical industry riding the wave of sustainability: Review and opportunities for future research. Journal of cleaner production, 261, 121204.

Livingston, E. H., Malani, P. N., & Creech, C. B. (2021). The Johnson & Johnson Vaccine for COVID-19. Jama, 325(15), 1575-1575.

Lei, Y., Li, N., Guo, L., Li, N., Yan, T., & Lin, J. (2018). Machinery health prognostics: A systematic review from data acquisition to RUL prediction. Mechanical systems and signal processing, 104, 799-834.

Acquisition Plan

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