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Gx/BGx Manufacturer—Commercial Due Diligence

Assess investment risks and provide an independent opinion on Target's core business areas.
Assess investment risks and provide an independent opinion on Target's core business areas.
Ukraine, CIS, export markets
Product portfolio:
  • provide a detailed review of Target’s current and planned products (including within its core markets), pricing, margins, and outlook;
  • original and generic products driving Target’s sales;
  • assessment of Target’s new product development process and in-house research and development (R&D) capacity to develop new original and generic products;
  • assessment of Target’s ability to continue replacing non-target's originals (following patent expiring and availability for a copy) with new generic products.
Investment program:
  • assess the Project Cost, including construction and equipment costs and Project Financing Plan;
  • assess the appropriateness of technology and equipment suggested by Target, including sources of such technology/equipment and reasonableness of indicative costs;
  • review equipment procurement process and draft contracts with key equipment suppliers;
  • review draft contract with the main contractor(s) for the construction works;
  • assess the lead time for the key components of the Investment Programme;
  • verify contingency plans to cover shortfalls;
  • provide an assessment of the proposed time-line of new manufacturing capacity becoming operational;
  • assess the GMP certification process of Target’s new production facilities;
  • review the recent project preparation/implementation status.
  • Assess the adequacy of Target’s management resources (both extent and quality).
  • Assess the organizational structure and decision-making process within Target.
  • Assess the quality of Target’s IT, finance, and operational systems for managing Target and reporting on its operational and financial performance.
  • An independent assessment of the investment project.
  • Revision of the information provided by the Target and the Client.
  • In-depth research of the core Target's pharmaceutical market.
  • A set of interviews with Target's top management with insights and recommendations.
Key areas covered in the project:
  • Assessment of Target’s strategy, investment program, and business plan.
  • Understanding the sustainability of Target’s competitiveness and profitability.
  • Study of the industry regulation.
  • Analysis of the intercompany goods and cash flows of the Target
  • Assess transfer pricing and tax arrangements of Target.
  • Study of the quality of the management team, organizational structure, and systems.
Market study:

To perform Ukrainian Target's core markets analysis:

  • evaluate Target’s marketing strategy for its core market, including product mix, pricing policy, logistic and distribution’s channels, advertising/promotion;
  • provide recommendations on marketing strategy improvement;
  • assess market volume (i.e., size in volume, value terms, and contribution’s margin), market growth rate (i.e., growth trends and assumptions for the period of up to 5 years), key players and their market shares, supply and demand, long-term trends, product substitution, the Target’s existing and potential market share.
  • review and  confirm whether existing marketing and sales structure and workforces are  appropriate
Industry regulation:
  • Review the current and prospective market regulation affecting Target’s operations, including:
  • licensing: to confirm availability and validity of Target’s timeless licenses issued by the Ministry of Health also confirming the Target’s compliance with GDP standards; procedures for the confirmation of the license validity by the Ministry of Health;
  • product certification/registration process (e.g., regulatory approvals needed, timing for bringing products to market, potential regulatory hurdles, and risks to commercialization of the newly planned products);
  • regulation of prices of medicine producers;
  • raw materials import taxes and duties;
  • supply to state hospitals: key requirements, procedures, contracts, promotion, payment terms, etc.);
  • introduction of mandatory medical insurance and reimbursement mechanism;
  • the potential of introduction of VAT on medicines and ban on medicine advertising;
  • any other regulatory risks.
Competitive position:
  • assess  existing and planned customer base (customer profile), including hospital segment;
  • assess customer contracts, their length, volume/price guarantees, termination clauses, and raw-material cost pass-through ability;
  • identify the main raw materials and operating costs of the Company, and the main suppliers of these products/services plus any available alternatives;
  • identify whether any major contracts are priced below or above market levels;
  • analyze inter-company goods and cash flows (including the Company’s existing raw materials supply chains involving off-shore companies) as well as transfer pricing practices and tax arrangements used by the Company;
  • analyze cost/price competitiveness of the Company and its ability to maintain it in the future;
  • assess distribution channels: effectiveness of proposed channels, trends, key players, and cost justification;
  • analyze indigenous and foreign competitors and their respective market shares;
  • produce a SWOT analysis;
  • comment on existing production facilities, the performance of the existing equipment, utilization rate.


Anastasiya MAXIMENKO
Partner, Recruitment & Organizational Development
Partner, Pharma & MedTech Market Access

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