Situation

$100M+ subsidiary of $3B public medical device company. Subsidiary business unit sold 3rd party sourced pharmaceutical products globally. 3rd party supply base was fragmented with a small number of players with limited portfolios (i.e. no one producer had the ability to supply all products for all markets). The company’s US market requirements were largely supplied by one major drug producer which had signaled its intent to exit the relevant products after a 2 year notice period. Upon notice of supply termination, the business unit sought sources elsewhere and reached an agreement to transition this supply to another 3rd party who subsequently failed to make adequate progress towards a timely approval to supply the US market.

Action

Faced with the inevitable loss of supply of this critical US portfolio, the team developed and implemented a plan to engage a direct competitor in a supply discussion. After lengthy negotiations with significant built in protections for both parties, a long term agreement was signed and since renewed with favorable economics and access to additional innovative products. Work continued with the original targeted partner to help get them qualified for the US market.

Result

Developed a dual source of a critical pharmaceutical product. In the process, dramatically improved profitability and gained access to a significant new product platform to drive growth. Achieved target profitability within 24 months of opening negotiations and sustained double digit sales growth from the expanded portfolio for 5+ years from the transition date.