Liquid Medicines Company Deal: Innovation With 130 Pharma Portfolios

liquid medicines

Table of Contents

LiquidPharma Solutions is a company that specialises in liquid medicines. They develop, manufacture, and distribute oral liquid medicines, catering to individuals who find swallowing solid forms challenging. They have been in business for over 50 years and have a portfolio of over 130 oral liquid medicines. With a strong emphasis on R&D, they continuously strive to enhance their existing products while simultaneously exploring innovative new formulations.

Business and Technologies in Liquid Medicines

Here are some of the key technologies that LiquidPharma Solutions uses to develop and manufacture its liquid medicines:

  • A proprietary manufacturing process that uses a unique combination of ingredients and equipment to create a smooth, easy-to-swallow liquid.
  • A proprietary formulation technology that allows LiquidPharma Solutions to create liquid medicines that are both effective and safe.
  • A proprietary delivery system that ensures that the active ingredients in LiquidPharma Solutions’ liquid medicines are absorbed into the body quickly and efficiently.

LiquidPharma Solutions offers a diverse selection of liquid medicines in various flavours and potencies to cater to the specific requirements of its patients. They are also available in a variety of packaging options, including single-dose bottles, multi-dose bottles, and unit-dose packets.

LiquidPharma Solutions is a leading provider of liquid medicines for patients who have difficulty swallowing tablets or capsules. The company’s commitment to R&D ensures that it will continue to develop new and innovative liquid medicines that meet the needs of patients around the world.

oral liquid medicines

Products and Competitiveness

LiquidPharma Solutions offers an extensive portfolio of over 130 oral liquid medicines, including both licensed and unlicensed (‘Specials’) products, across various therapeutic areas. Their approach to product development emphasises quality and compliance with GMP(Good Manufacturing Practice) standards, aiming to address special clinical needs through prescriptions.

LiquidPharma Solutions’ products are available in a variety of therapeutic areas, including:

  • Oncology
  • Cardiovascular disease
  • Autoimmune disorders
  • Central nervous system disorders
  • Respiratory diseases
  • Infectious diseases

These products reach a global audience, being available in more than 100 countries worldwide. The company’s end users are patients who are suffering from a variety of diseases. Patients in all regions of the world use the company’s products. LiquidPharma Solutions distributes its products through a network of distributors and wholesalers. The company also has a direct sales force that sells its products to hospitals and other healthcare providers.

R&D in liquid medicines

Recent Activities and ESG

In recent years, LiquidPharma has been active in a number of areas, including:

  • Acquisitions: In 2022, LiquidPharma acquired another UK-based pharma company that specialises in cancer immunotherapy. This acquisition expanded LiquidPharma’s portfolio of cancer treatments and strengthened its position in the global pharmaceutical market.
  • Research and development: The company has a strong pipeline of new products in development. In 2023, LiquidPharma announced the launch of a new clinical trial for a potential treatment for Alzheimer’s disease.
  • Environmental, social, and governance (ESG): LiquidPharma is committed to ESG principles, and the company has implemented several strategies aimed at minimising its environmental footprint, upholding ethical labour practices, and serving its community. In 2023, LiquidPharma achieved ISO14001 environmental certification and became a Living Wage Employer.

Here are some specific examples of LiquidPharma’s recent activities and ESG initiatives:

  • In 2022, LiquidPharma opened a new state-of-the-art R&D facility in the UK. This facility is expected to create hundreds of new jobs and help LiquidPharma develop new treatments for a variety of diseases.
  • In 2023, LiquidPharma launched a new program to help patients with cancer access affordable treatment. This program provides financial assistance to patients who are unable to afford their cancer treatment.
  • In 2023, LiquidPharma partnered with a local community organisation to provide educational opportunities for children in need. This partnership is helping to ensure that all children have access to a quality education.

LiquidPharma’s recent activities and ESG initiatives demonstrate the company’s commitment to innovation, patient care, and sustainability. Such initiatives have the potential to bolster the company’s long-term performance and future outlook.

GMP

Market and Regulatory Environment

LiquidPharma Solutions operates in the global oral liquid medicines market. This market includes a broad range of medicines for individuals who struggle with ingesting solid-form medications.

Liquid Medicines Market Size and Growth Rate

  • Current size: The global oral liquid medicines market was valued at approximately $40 billion in 2023.
  • Future growth rate:
    • Next 3-5 years: 5-7% annual growth rate expected
    • Medium to long term: 4-6% annual growth rate expected
  • Growth factors:
    • Increasing chronic illness rates due to an ageing population
    • Rising number of paediatric and special patient populations
    • Growing demand for convenience and improved absorption

Regulatory Environment and Impact

LiquidPharma Solutions is subject to the following key regulatory environments:

  • Good Manufacturing Practices (GMP): Regulations governing manufacturing facilities and processes
  • Drug Safety and Efficacy: Regulations governing clinical trials and approval procedures
  • Marketing and Advertising: Regulations governing the marketing and advertising of pharmaceuticals

Impact of Regulatory Environment

  • Increased costs of regulatory compliance
  • Delays in product development and approval process
  • Restrictions on marketing and advertising
  • Need for continuous adaptation to the changing regulatory landscape

LiquidPharma Solutions operates in a market with high growth potential. However, the company is also subject to a stringent regulatory environment. The company needs to achieve sustained growth by demonstrating a strong commitment to regulatory compliance, efficient product development and approval process, and responsible marketing and advertising.

Financial Performance and Future Extraction

Here’s a consolidated overview of LiquidPharma Solutions’ financial performance and corporate value, organised according to the provided guidelines.

Financial Performance and Growth

Since its carve-out from the parent company, LiquidPharma Solutions has seen remarkable growth. Within a year post-acquisition, the company reported a substantial increase in sales and profits, growing by over a third (35%). This growth was facilitated by the licensing of 33 new products and a significant expansion of the team. The company’s annual turnover has now reached £110 million, doubling from what it was three years ago. This accelerated growth is attributed to the company’s strategic focus and the backing of its partner, which has enabled LiquidPharma to reinvest in its expansion, particularly aiming at the US market​​​​.

Future Performance Estimates

Looking ahead, LiquidPharma is setting its sights on international expansion, with a particular focus on the US, Canada, France, and Germany. The company’s strategy includes doubling its turnover over the next four to five years, aiming to launch six new products annually. This ambitious growth plan is supported by the identification of key markets and leveraging the partner’s expertise in M&A to facilitate potential deals and partnerships​​​.

Strategic Investments and Acquisitions 

LiquidPharma’s growth strategy also includes growing through acquisitions, both in the UK and internationally. The company has been actively pursuing opportunities to expand its product portfolio and market reach. This approach is part of a broader initiative to strengthen LiquidPharma’s position in the pharmaceutical industry and enhance its ability to serve a wider range of patients with its specialised liquid medicine offerings​​.

deal value of liquid pharma

Estimated Deal Value

The Price-to-Sales Ratio (PSR) is employed for the valuation of LiquidPharma Solutions’ stocks. Due to LiquidPharma’s distinct specialisation in liquid medicines, pinpointing precise analogues presents a challenge. Nonetheless, firms that develop specialised products or target niche healthcare markets have been identified as comparable. 

  • Alliance Pharma PLC – This company operates in the pharmaceutical sector with a diverse product range, potentially including some liquid medicine formulations. While not a direct competitor, Alliance Pharma’s focus on acquiring and licensing niche pharmaceutical products aligns with LiquidPharma’s focus on meeting specialised patient needs.
  • Hikma Pharmaceuticals PLC – Hikma develops, manufactures, and markets generic, branded, and in-licensed pharmaceuticals, including oral and injectable medications. They share LiquidPharma’s focus on addressing critical health needs across different markets, along with a commitment to making medicines more accessible.
  • Indivior PLC – Indivior specialises in treating addiction and serious mental illnesses with innovative drug delivery systems. This aligns with LiquidPharma’s dedication to serving underserved patient groups, as both companies address specific health challenges through unique formulations.

Their respective PSR multiples are 1.432.03, and 2.77, with an average of 2.08. Meanwhile, LiquidPharma Solutions is a high-growth company. Given its growth trajectory, a valuation based solely on past sales may complicate negotiations.

 

LiquidPharma Solutions Valuation:

  • Recent revenue: £110 million
  • Estimated revenue (considering a 35% growth rate): £150 million
  • Total stock value (applying the industry average PSR of 2.08 to the estimated revenue): £310 million

The estimated total stock value of LiquidPharma Solutions is £310 million, based on comparable company analysis and projected revenue growth. This valuation should serve as a base point for price negotiations.

Funding Structure Example

Considering an acquisition of 100% of LiquidPharma Solutions’ shares at £310 million, the capital structure for the transaction could be envisaged as follows:

  • Equity Financing: £93 million (30% of the total acquisition cost) is assumed to be raised through equity.
  • Debt Financing: The remaining £217 million (70%) is proposed to be financed through loans. Assuming a 50-50 split between senior and junior debt:
    • Senior Debt: £108.5 million could be sourced with an estimated annual interest rate of 5%, leading to an annual interest payment of approximately £5.43 million.
    • Junior Debt: £108.5 million could be sourced at a higher risk-adjusted interest rate of 8%, resulting in an annual interest payment of around £8.68 million.

This results in a total annual interest payment of approximately £14.11 million for the loan component of the acquisition. Given the complexity of such financial arrangements, these figures are indicative and depend on the prevailing market conditions and the creditworthiness of the acquiring entity.

PMI and Value-up Strategies

Following the acquisition of LiquidPharma Solutions with an investment of £310 million, the ambitious goal is set to double its stock value to £600 million within five years. This translates to an annual Internal Rate of Return (IRR) of approximately 14.12%, showcasing a robust growth trajectory and investment efficiency.

PMI Strategy

The buyer should adopt a PMI (Post-Merger Integration) strategy tailored to preserve and integrate LiquidPharma Solutions in a manner that aligns with the company’s business and industry norms. This approach should ensure that the company not only fits seamlessly within the acquirer’s organisational structure but also capitalises on synergies to foster innovation and growth. Key considerations:

  • Organisational structure: Assess the optimal balance between preserving LiquidPharma’s operational autonomy and integrating key functions for efficiency gains.
  • Corporate culture: Promote a collaborative culture that fosters synergy and minimises disruption.
  • Talent retention: Implement strategies to retain key talent from LiquidPharma Solutions.

Value-up Strategies

To double the company’s value to £600 million within five years, a concrete, action-oriented strategy is crucial. To achieve a 14.12% IRR, the buyer will focus on:

Sales Expansion

  • Vigorously drive sales growth of existing product lines:
    • Target new geographic markets (expansion within the UK and internationally).
    • Develop new formulations or delivery mechanisms for existing products to appeal to broader patient segments.
    • Implement aggressive marketing campaigns with targeted messaging based on product strengths.
  • Expand the product portfolio through a robust new product development pipeline:
    • Focus on niche therapeutic areas where LiquidPharma has existing expertise in liquid formulations.
    • Prioritise product candidates that address unmet medical needs or offer clear advantages over existing therapies.
    • Accelerate the development timeline through potential partnerships with research institutions or smaller biotech companies.
  • Pursue innovative strategies (e.g., licensing deals, strategic partnerships) for market expansion:
    • Identify complementary products or technologies from other companies that could be licensed in.
    • Form strategic partnerships to jointly develop and commercialise new products.
    • Explore market entry into countries where LiquidPharma could leverage the distribution networks of established partners.

Operating Profit Enhancement

  • Optimise operational efficiency, reducing costs while maintaining quality:
    • Streamline manufacturing processes through automation or improved technologies.
    • Negotiate favourable terms with suppliers and implement efficient procurement strategies.
    • Reduce administrative overheads by identifying potential areas for consolidation.
  • Explore strategic pricing initiatives to improve margins:
    • Implement value-based pricing for specialised products where therapeutic advantages justify a premium.
    • Offer tiered pricing structures for different customer segments or geographic regions.
    • Carefully evaluate the impact of price adjustments on volume to optimise profitability.
  • Reassess R&D projects for efficient investment and sustainable growth:
    • Allocate a specific portion of annual revenue to R&D.
    • Withdraw from projects judged to have little chance of generating profits relative to the investment.
    • Foster a culture of innovation through employee incentives and recognition programs.

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