BU Reorganization Strategy

Case Study

Challenge

  • A mid-size pharma company had recently re-organized into three business units
  • One of the business units had approximately $1bn in annual revenue, spread across two major franchises, a handful of smaller franchises, and a long tail of marginal franchises
  • The BU was given aggressive 3-year growth targets
  • The client tasked Putnam with evaluating the portfolio and helping to decide which franchises to:
    • Focus on growth
    • Attempt to dispose of through sales or swaps
    • Consider exiting (shutting down)

Putnam Approach

  • Develop an evaluatory framework for analyzing and scoring franchise.
  • Through internal client workshops, develop ingoing hypotheses on which franchises might be most appropriate for each category
  • Analyze the top 32 franchises, with particular emphasis on the two largest

Impact

  • Significant growth opportunities identified for the two largest franchises, and specific strategies put in place
  • A number of promising growth opportunities identified for smaller franchises, for which strategic direction and follow-on analyses were identified
  • A portfolio of approximately 12 smaller businesses was identified that would benefit from scale and scope synergies that might be achieved through sale to strategic partners – two companies were identified as targets for possible swaps (tax advantaged over outright sale)
  • A handful of businesses were found to be profit-negative with poor growth prospects – exit was recommended
  • At 18-month check-in, the client was on target to hit growth targets

Strategy for the Life Sciences