TotalMedCo* was a $1 billion international manufacturer and distributer of medical equipment, devices and pharmaceuticals. It was a subsidiary of IndustryGiant, a large industrial company whose primary business was in other areas.
When its leading drug came off patent, TotalMedCo was forced to scale back capital investment and reduce spending on R&D and marketing just to stabilize its business.
IndustryGiant* asked Bain to advise on a strategy to generate profitable growth and maximize the value of TotalMedCo.
Bain embarked upon a complete evaluation of capabilities and opportunities which weighed organic growth against acquisition/partnership models.
The strategy with the most promise for TotalMedCo would have required massive investments from IndustryGiant. In light of this, divesting the subsidiary was the best solution.
IndustryGiant opted to divest TotalMedCo rather than make new investments. Bain's work helped demonstrate the full potential of each of TotalMedCo's businesses, increasing the value created from the spin-offs and divestitures.