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Blue Ocean Strategy for Medical & Pharmaceutical Industry

Conference Paper · September 2019

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Shahzadah Nayyar Jehan

Tohoku University of Community Service and Science
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Blue Ocean Strategy for Medical &
Pharmaceutical Industry

Dr. JEHAN S. N.
Professor
Tohoku Koeki Bunka University, Japan
Director
Research Center for New Business Strategies
 From Functionality to Lifestyle

With the creation of Viagra, Pfizer created a blue

ocean in lifestyle drugs by going beyond the
boundaries of the pharmaceutical industry at the
time.
 Problems in Blue Ocean Creation in
Medical & Pharmaceutical Industry

v Long Product Development Period

v Uncertainties
 New Medical & Pharmaceutical
(M&P) Investment Model

v Should Offer Substantial Rewards

v Should Reduce Uncertainties
v Solution : Private Equity and New M&P
Investment Model
 Equity Investment

Listed Equity

Private equity

Venture capital
Business
angels

Unscaled
 Typical Private Equity Structure

Source: Gilligan, J. and Wright, M. (2010) Private Equity Demystified, Corporate Finance Faculty of the ICAEW.
 PE Transactions
LBO leveraged buyout – can be any of the following

MBO management buyout – the existing management of

the company buy the company

MBI management buy-in – incoming management buy

the company

BIMBO combination buyout and buy-in

IBO institutional buyout – a PE company buys the

company and then puts in the management of its
choice
P to P public to private (i.e. delisting)

Leveraged The PE company makes an investment in order to

build up (Buy buy a lot more companies in that sector and put
& Build) them together to make something big and profitable
 PE Deal Process

Negotiate
the deal

Find
Make the Manage the
investments Exit
investment investment

Due
diligence

13
Why New M&P Investment Model

New M&P Discoveries

Regulation
Dream Value

RESULT Blue Ocean Creation

The New Model
 The New Model
The model makes use of Neural Network approach to
understand impact of alternative policy scenarios upon the
RE growth and development paths.

With this approach, we suggest that continued investment

into RE R&D will move the production possibility vector
(PPV) from PPVo to PPV1.

This initial shifting of PPV from PPVo to PPV1 will open up two
possibilities i.e.

decrease in M&P development uncertainties (UcSp )

from H to L
i.e. Reduction in UcSp = UcSp (H) - UcSp (L)
 The New Model

(2) open up the possibility of harvesting Dream Value

associated with ensuing self-sufficiency that will arise from the
increased M&P development and sustainable alternatives
come into industrial use.

i.e. Dream Value = (αβ x αT2) x ½

& New M&P production level will be

M&P Production (PPV1) = (P1P2 x α P2) – (P1T1 x βT1) x 1/2

 The New Model

Adding Dream Value

Total Benefits of New Strategy = M&P Production (PPV1)

+ Dream Value

OR

= (P1P2 x α P2) – (P1T1 x βT1) x ½ + (αβ x αT2) x ½

Also, as
(αβ x αT2) x ½ > (P1T1 x βT1) x ½
NNs for Value Enhancement
M&P & RISK Dispersion
 PE & Unconventional Investments
PE deal structure allows:

Ø active management and

Ø control measures as part of due diligence process
Ø resulting in risk mitigation.

Risk dispersion and due diligence provide ample impetus to

investors to provide funds for investment into risky and
unconventional ventures like M&P Investments.
 Concluding Remarks
Ø In this paper we carried out a quick round up of the Shariah based
private equity or Islamic Private Equity (IPE) and its compatibility
with unconventional investments ventures like rare earths (REs)

Ø The paper is an attempt to bridge the information gap that prevents

whole hearted interest in this very promising and high growth area
of fund provision most suitable for M&P type investment ventures

Ø The model presented in this paper is is modern/innovative enough

to encourage taping huge potential that PE carries
 Concluding Remarks
Ø The model is dexterous enough to encompass all value
components as well as risk factors that are part of IPE.

Ø Furthermore, the application of artificial neural networks to

the model allows us to understand better the risk or
uncertainty factors in a better light, thus allowing us to take a
outcome possibility frontier that minimizes the uncertainty
spread and brings out the dream value of the investment
venture.

Ø The due diligence that is part of the deal structure of an PE

investment also ensures that unnecessary risks are avoided
and better and only creating actions are carried out.

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