In situations like this, it no longer possible to create a win-win solution, as the win of one party will always be the loss of the other party. Hence, one should only be focused only on calming the value. The company had two options. The first option was to buy the plant from Seltek, a small pharmaceutical company, which would allow for the immediate start of production.
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You are on page 1of 2 Search inside document phone: fax: email: cci midcoast. You need to buy or build a plant in the US to produce a genetically engineered biotech antibiotic compound, Depox. You bought a license from the Belgian company that developed Depox. The Belgian company sold the license because they dont have the plant capacity or other resources to expand the business beyond the European market. The licensing agreement gives you exclusive rights to manufacture and sell Depox in North America.
It makes the most sense to manufacture Depox in the US because this is your biggest market. Depox has great market potential, and it complements BioPharms existing product line of conventional antibiotics. A special plant is needed because manufacturing genetically engineered compounds requires special water-processing facilities. You cannot modify an existing BioPharm plant because none of these is set up to handle biotech manufacturing with its special water processing requirements.
You have two choices: you can build a new plant or buy a plant that is already set up to manufacture genetically engineered compounds. It will take 12 months from the time you break ground to the time when the first shipments of Depox will reach the US market. Part of that time is taken up with getting the FDA the US Food and Drug Administration to approve the plant for pharmaceutical manufacturing and to train a new work force in special biotech manufacturing techniques.
The Depox compound has already been approved by the FDA. Depox is ready for manufacture right now, and you would like to begin production as soon as possible, since time-to-market is a huge competitive advantage. In an ideal world, you would find a turnkey plant that you could move into immediately and start operating at the end of this month. These profits cannot be recovered later: a sick patient cant wait for an antibiotic.
Anticipating that you will have to buildrather than buya plant, you have located a suitable site in a new industrial park 10 miles from your US headquarters operations. You need to commit to buying or not buying that site very soon, otherwise you might lose it.
Your option expires tomorrow. It also has a high-quality, experienced work force, which could save you the costs and time of hiring and training your own workers.
If you were to buy the plant, you very much want to take over operating it as soon as Seltek ceases operations. You dont want them to shut down the plant and leave it idle for a while, because the workers may take other jobs. Thus, the Seltek plant seems like an ideal turnkey facility.
Your plant engineers have assured you that BioPharm could start up Depox production and distribution immediately. All rights reserved. This exercise may not be reproduced or distributed without specific permission. The case should be considered fictitious. Revised Creative Consensus, Inc. In addition to selling the plant, Seltek wants to sell the patent on Petrochek, the compound it has been manufacturing at the plant.
Petrochek is of zero interest to you because it is not a pharmaceutical product and you have no way to distribute it. Petrochek is a genetically engineered bacterium that breaks down oil into water-soluble compounds and is sold for use in treating oil spills.
Your present sales force specializes in pharmaceuticalsselling to doctors, hospitals, HMOs, and drug store chains in the US. The sales force would be useless for selling to the oil industry or to government agencies that deal with water pollution.
You would need to set up a new sales force to market Petrochek, but its not in your strategic interests to do so. You dont have any sales people to spare, and you have no one available who could recruit and manage a new sales force for this product. Thus, buying the patent would be inconsistent with BioPharms corporate strategy. You are about to meet with the Chief Financial Officer of Seltek. You have full authority from the Board and CEO to buy the plant at any price you deem acceptable.
Below is the available information concerning the appraised value of the Seltek plant. This would have to be paid by one of the parties to remove the tax lien that would hold up transfer of title.
The real estate taxes would be the same at either location you are considering. Seltek Plant The following information is in the public domain and was made available to BioPharm. The plant i. The local real estate market has declined 20 per cent in the last two years due to the state of the local economy.
The IRS lets a corporation reduce the book value of a building every year as if it were wearing out, like an automobile does with increasing mileage. The resulting theoretical loss in value can be deducted from the companys tax bill. The building is insured against total loss fire, explosion, hurricane, etc. Page 2.
Get custom paper I Biopharm Seltek was the first negotiation that I walked into this semester, and it is also the first negotiation that I prepared myself by reading and learning different strategies to use in different situations. I knew that I had to be well prepared with the information I had but at the same time think about few questions that my colleague from Seltek would ask and think about their reservation price as well, because not only I want to do a good job by understanding my reservation price and BATNA but to have a plan and idea of their RP in order to get a good deal for my company. After I came up with the plan I tried to get some background information about the Seltek negotiator. This is where the four Ps were really helpful, It was very important to understand the purpose of the negotiation and I believe because I understood the purpose I did a better job in getting a great deal for BioPharm.
Biopharm - Seltek Negotiation Case