The Best Things to Do in Medfield

Introduction 

Medfield is a prominent drug manufacturing company. As presented in the case study, the company's portfolio comprises four main drugs, Lodamadal, Orsamorph, Reximet, and Fleximat. Notably, the sale of the product offering has positively impacted the firm, with an offer already on the table about a $750 million deal. Though quite attractive, it is recommended that the company not move with speed to accept the deal, but rather should evaluate future successes to determine whether the deal is worth consideration. On that account, an extensive analysis is intended to discover the present value of the firm and available options that would positively impact the current trend. This includes ethical practice and behavior and other leading issues such as stakeholders' relationships that could otherwise affect success chances. Reformulation is also identified as a viable option instead of the acceptance of the $750 million deal. 

Part 1: Net Present Value (NPV) 

Net Present Value Formulae (NPV) = RT/ (1+t) ^t 

=$57,776,000/ (1+0.06) ^10 

= $103,468,016.5 

The Net Present Value at a discounted rate of 6% is $103,468,015.50.  

According to the NPV analysis, the company's value accounted for $103 million that is lower compared to the offer price availed of $750 million. The primary reason behind the quoted high offer price is based on the brand positioning of the company. Due to the case of the Covid-19 and the subsequent focus on pharmaceuticals, expected demand on commodities is expected to impact respective firms' financial value, as such guarantee a positive return on investment (ROI). The company should not be excited about the available offer but should instead withhold investment while expecting considerable demand to maximize the financial value. Therefore, the company has a high growth potential, which is the primary reason that a high offer price is availed.  

Part 2: Elimination of R&D 

An assumption is made that 19% of the total revenues should be invested in future research and development. Eliminating this cost from the books would translate to a more substantial financial value. That essentially means that an extra $55 million (exhibit 4) increases the present value of the company to $158,468,015.50. This analysis is thus exceedingly meaningful to ensure that the proposal's rejection has supporting evidence that essentially demonstrates that the offer price of $750 million is lower than the real worth of the company. Such elimination in the future assets will further impact a high future value, hence a sheer demonstration of why the $750 million offer is worth rejection. However, it is still worth noting that the research and development unit is critical, thus, though an elimination is done, it is only in the short-run. The significance of the department is largely depicted by the seeming desire to keep improving. Research and development department will thus be indispensable for the long-term success of the company. 

Part 3: Value Created by Reformulation 

It is with this noted that if the company decides to reformulate the Fleximate drug, then it would achieve an additional $313 million (appendix 1). The figure is reached in consideration of the $55 proposed for the research and development. Reflecting on the income statement, then it outward that the move would be strategic in maximizing the margins, as exemplified in the expected upward gains in the next few years.  There is therefore a sufficient justification why proposed deal is not sufficient to warrant acceptance. Thus, it is advised that the deal should be rejected, and instead, reformulation expedited because of the expected long-term gains. Therefore, the short-term rewards should render one into quick action, but rather a careful examination should be executed to determine the intended actions' viability. The following are provided as the notable vital areas for consideration. The first is the product offering, where it is recommended that the tastes and preferences be considered. That may include designing smaller tablets to make it easier to swallow, stimulating consideration to other available alternatives. 

Part 4: Factors Yielding to Value Creation Following Reformulation 

Presented financials reveal that Fleximat has been a core product offering, with over 60% contribution to its revenue. The popularity of the drug is mostly following its use in the curing of chronic ailments. Continued success depends on the adopted tactics from now on to ensure that its demand continues, impacting the company's liquidity position following high sales revenues. Several improvements are notably highlighted, namely a redesign of the tablets to make it easier to swallow and provide generic drugs that made them affordable even to the poor livelihoods. Such has been momentous in ensuring that the financial value is kept high by mainly capitalizing on the target population increasingly desirous of quality and affordability. That essentially reinforces the argument against the $750 million deal tabled; instead, it should focus on the long-term gains that will be realized by having high-sales categories such as Fleximat.  

Part 5: Benefits Distribution 

It is now noted that the financial benefits will mostly be felt by the Chief Executive Officer (CEO) if Reformulation succeeds. That is based on the expected upward gains on the margins that exemplify their proficiency to turn desired concepts into tangible value. Still, because the pharmaceutical firm's primary objective is not to make fortunes, but instead, impact positively on population health, it may be inspired to be involved in corporate social responsibilities (CSR). That is mainly aimed at ensuring that the excesses are transferred into some other worthwhile areas. Another area that will benefit from the extra revenue is the research and development department. Induced financial injection essentially means that the company can channel more funds into the research and development unit. That is exceedingly momentous in stimulating further improvements that render the brand even more appealing to the target customers. Marketing is another key area and an associated cost of the undertaking. However, the same is occasioned with diverse implications that essentially render its consideration worthwhile. 

On the other hand, associated costs will be directed to the company. Here, even the CEO will have nothing to lose; instead, the projected undertaking will be executed directly from the bank. That manifests an increment in the cash flow in the investigating activities component. A short payback period is expected, thus explaining why any consideration to selling equity to another firm should be in question; instead, a prompt rejection is necessitated. Associated risks should be effectively managed as well to save the company from probable financial challenges. Expected benefits however outweigh noted costs, as such conforms why reformulation is well-thought instead of the consideration of the $750 deal that is only attractive in the shortrun. 

Part 6: When to Consider Reformulation 

There are several leading issues why Reformulation is worth considerations for improved financial rewards. Reformulation is thus encouraged even at a time that higher sales rewards are expected. That is in line with the changing patterns, which accordingly calls for agility to ensure that the risk of losing market share is drastically minimized. The same could also be involved in the periods of low earnings while aiming for a positive turnaround. Also, reformulation could be done depending on the necessities. Individuals are driven by some tastes and preferences, which essentially calls for a robust plan to ensure that the product offering relates to the target population cluster. Provided deal price though attractive, is not long-term impactful. Only a bit of Reformulation is expected, and accordingly, in a quick span will impact incredibly well in stimulating the demand levels, and accordingly play a vital role in strengthening the going concern position.  

Part 8: Reformulation Options 

The reformulation options availed are applied mainly because of the associated substantive benefits such as the exemplified consumption ease following the resizing of the drug to make it more comfortable to consume. All these benefits are directly connected to the company's financial earnings as depicted in the books of account. Therefore, its consideration comes in handy in stimulating the hospital's success in terms of the promoted positive health outcomes. Another potential area stated is about research and development that is vital to ensure that there is an explicit connection between what is offered by the company and consumers’ needs and preferences. Extensive research and development practices are thus exceedingly important to stimulate future success of the company. 

Part 9: Using the Current Stimulated Value to Generate a New and Helpful Product 

Accounted extra funds could be channeled into other critical areas to stimulate more value. That is mainly stimulated by the desire to attain the economies of scale achieved in various ways, including product diversification. By having a variety for the client's consideration, there is a guarantee that the buyer has explicit options while considering the different tastes and preferences. The move to establish various options is thus warranted and notably towards profit maximization goal. The extra funds can later be channeled into worthwhile areas such as research and development, accordingly catalyze already exemplified a stable financial position. An external analysis is still necessitated as part of the strategic action impacting to a higher NPV. 

Part 10: Medfield Stakeholder Analysis 

Shareholders 

One of the glaring hurdles regards the assurance of a positive shareholders value. One critical aspect to consider is the lessening the possibilities of a corporate fraud, which usually occur when some level of corporate greed is exemplified by the individuals trusted in the day-to-day management of the business. The next critical aspect is about stimulating a positive return on the shareholders, which essentially calls for involvement of best processes that can induce the highest ROI. Notably, the company should exemplify an utmost good faith in the relations with the shareholders. That involves provision of attractive dividends and accurate financial reporting to enhance investment knowledge to the respective investors, thus in an incredible position to make the correct decision about the specific investment portfolio. Ethical behavior should also be exemplified by the managers who must consistently exude determination to work for the interest of the shareholders and not personal greed. The last issue is about the importance of undertaking a socially responsible business. Notably, social sensitive investors may have a preference in owning shares for the socially responsible companies. That poses a direct impact on the share prices, and importantly the financial value of a business enterprise if there is an absence of social involvement. Therefore, it is imperative to stimulate socially responsible actions to stimulate the engagement levels of the investors, thus, more likely to encourage them to consider the firm in their respective investment portfolios. 

Employees 

The Medfield’s employees are strategically impactful to stimulate desired successes, with their contribution depicting a direct correlation with the company's success. Several strategies can be employed to stimulate impressive employees' satisfaction, accordingly play a vital role in stimulating the undertaking's success. Firstly, extrinsic benefits should be offered to the respective employees, including bonuses, fair pay, and allowances. That may also include an insurance package aimed at ensuring that their socioeconomic issues are not threatened in any way. The next element is creating a unique work environment away from negative issues such as bullying (Drucker, 2016). Indeed, by stimulating the work environment that works motivation is induced, further influential in encouraging a high level of productivity, and accordingly momentous to stimulate future financial successes. Another notable aspect is exemplified by the involvement of the transformational leadership style- that arises where the leader is keen to inspire the subordinates into action. It is recommended that the CEO should apply a hands-on approach in the operations to stimulate increased productivity, and notably chances of the project's success. The work-life balance of the respective scientists should also be taken into consideration. That involves offering enough off-days to ensure that the team remains focused and focused on work success. 

Government 

The Government's contribution is most seeming on matters of governance and data protection. Indeed, with the facility in constant involvement with the public in testing various drugs, then confidentiality should be stimulated, just like in a hospital setup where the facilities are tasked to adhere to certain elements. Health record encompasses any document containing the patient's information made by a health care facility or drug production company. Information protection from unintentional exposure is thus an important matter to consider in any healthcare setting. The same case applies for Medfield, where any information about the patients should be treated with utmost confidentiality to avoid legal repercussions associated with some of the disclosures. On that account, a functional legal department should regularly advise the company about closing specific gaps that may lead to legal liabilities. That include pertinent matters such as taxation law and other corporates operating frameworks such as the call for the involvement in the CSR activities. 

Another involvement on government function is in the provision of the public goods through active CSR participation. Indeed, we all have the responsibility to protect and safeguard the universe. The responsibility has a heavier weight on the corporates noting their financial might. It is with those regards that much of their presence should be noted in city cleaning exercise and tree planting for example. In addition, in line with safeguarding peoples’ wellbeing, it is prudent for corporates also to promote the green agenda. We need to find more companies having fewer carbon emissions in their production, and importantly use of solar energy as an alternative source of power (Grayson & Hodges, 2017) . By shifting to green energy and active participation in environmental activities/ forum a positive appeal will be created, consequently playing a significant role in the generation of a positive appeal. Indeed, an active engagement in environmental matters is a show of dedication towards sustainable development 

Part 11: Ethical Issues 

Ethical practices consider an enhanced management technique that comes with favorable treatment of the employees, information flow to the shareholders, and stringent follow-up of the laid down corporate strategies (Horton, 2015). Being ethical in the management perspective entails closely monitoring the allocated duties and above par customer relationships. With that, it is evident even through the statistical examination carried out that ethical management practices strongly correlate with the level of profitability (Horton, 2015). Business ethics notably induces the morale of the employees positively (Horton, 2015). The moment the employees are happy due to the nature of their working environment, they tend to be more productive. It is important to note that high productivity leads to more sales, which achieves economies of scale, consequently increasing profitability. 

Moreover, the employees' satisfaction also boosts the retention level of highly experienced and competent employees (Horton, 2015). Still, it is essential to note that a more ethical business enterprise is likely to be more appealing to the public's eyes (Horton, 2015). With a positive image, consumers tend to have the utmost faith in the company, which is vital in boosting productivity levels (Horton, 2015). A more appealing company to the public is likely to have an increased sales volume due to the high consumer demands, which consequently results in an increased level of profitability.  

There has a significant concern in the recent past relating to the overworking of the employees. The management’s responsibility is to ensure that employees establish a manageable workflow and importantly engage a healthy balance between work demands and other personal responsibilities (Rees & Smith, 2017). Also, the management must engage a flexible working model, which accommodates the undertaking of personal responsibilities. The management should still actively engage forums seeking to counsel or train the employees on appropriate investment options. By so doing, employees will feel thought of by the organization, possibly by the accorded positive gesture, repay it by putting immense hard work. Involvement if the unions should be supported to ensure that the grievances of the workers are well-tracked, and effectively executed by the respective persons. The move is indispensable for a reduced employee turnover rate. Corporates benefit from the created positive image that assures them both employees and clients’ loyalty, consequently stimulating high financial performance. An investment in the Corporate Social Responsibility though a little bit costly is worth consideration by the corporates. Importantly, such exudes determination not only in profit making, but impacting positively in people’s socioeconomic statuses. 

Part 12: Ultimate Choice: Refuse the offer but initiate Reformulation 

The ultimate recommendation is that the CEO refuse the order but should initiate the reformulation exercise accordingly. The deal's rejection is based on the expected future rewards that depict $750 million offered as a fraction of the future value. It is on that account that it is recommended that the availed deal should be discarded, and instead, the company should embark on a rigorous exercise of redesigning the product offering to match the new demand levels. Nevertheless, the move at first will be costly for the firm and could significantly impact the liquidity position though it is recommended that necessary actions should be put in place to ensure that the company is protected from the effects of low liquidity and the ultimate threat on the going concern position. That essentially is a lead explanation why such consideration is thus warranted, with the exercise noted only to involve a tiny portion, but with a guarantee of high future returns. Apart from production maximization, another focus area that should be considered is research and development- aimed at gradual improvement of the product offering to stimulate a positive customer engagement rate and secure liquidity and going concern position.  

Conclusion 

In this case analysis, Medfield's success is presented as much likely, thus explaining why any idea connected to its sale should be seized and instead reformulation strategy embraced by the company. That includes the redesigning of the product offering. Besides, several issues should be taken into account about the facility's general management, significantly a keen consideration of key stakeholders, and accordingly ensuring that there is a seamless relationship between the parties. Ethical behavior is also called upon and rooted as exceedingly momentous in stimulating impressive successes following developed trust. Besides, it should be the mandate of the leadership to exercise selflessness. Though still concerned with profit-making, there should be an active presence in critical areas such as social activities, mainly directed to improving social welfare following effective healthcare delivery.  

References 

Drucker, P. (2016). The effective executive . Routledge. 

Grayson, D., & Hodges, A. (2017). Corporate social opportunity! Seven steps to make corporate social responsibility work for your business . Routledge. 

Horton, M. (2015). How important are business ethics in running a profitable business? 

Rees, G., & Smith, P. (Eds.). (2017).  Strategic human resource management: An international perspective . Sage. 

Shields, J., Brown, M., Kaine, S., Dolle-Samuel, C., North-Samardzic, A., McLean, P. ... & Plimmer, G. (2015).  Managing employee performance & reward: Concepts, practices, strategies . Cambridge University Press. 

Appendix 1. NPV. 

	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020
Incremental Research	35	35
Incremental Special Marketing	25	25	25	25	25
Growth		2%	-50%	2%	2%	2%	2%	2%	2%
New Sales	214.77
Marginal Sales (New Sales – Original Sales	0
New Cost of Sales	49.4
Marginal Cost of Sales	0
New Direct Marketing	57.99
Old Direct Marketing	57.99	59.15	29.57	14.79	7.39	0	0	0	0
										0
Marginal Direct Marketing	0
New G&A	8.59
Old G&A	8.59	8.76	4.38	2.19	1.1	0	0	0	0
Marginal G&A	0
Marginal Cash Flow pre Tax	-60
Marginal NOPAT	-40.8
NPV	$313 million