Good day esteemed tutors, how do I evaluate the "As-Is" position of this company

Here's a case study of the company

Introduction

PharmaShah is a team of scientists, consultants and engineers in biomanufacturing projects with a world class reputation. PharmaShahprovides a range of bio-technological/high end logistics services, to maybe larger Pharma companies. This involves process development, sample analysis (using high-throughput techniques/robotics), pilot plant testing, scale up, pre-production consultancy through to clinical (GMP) manufacturing. Essentially PharmaShahsupports businesses in realising the commercial potential in research processes and developing fully licensed facilities.

PharmaShah was created in 2010 by two twins Rishi and Nirav Shah. The twins' parents originally came to the UK from South Africa in the early 1980's. The father and mother both ran the local Pharmacy in Flatsands, where the boys grew up.

The twins' education completely mirrored one another, although they did go to different universities for both their first degrees and eventual PhDs in Biochemical Engineering. After working for some of the larger companies in the industry, using a loan from one of their uncles, they decided to start PharmaShah. Having decided to start their own company they also decided to return to their hometown of Flatsands, as they wanted PharmaShah to be different to the Biotechs typically found in the UK medical research cluster of Cambridge.

Tragically Nirav died in a car crash whilst on holiday in 2015, leaving his brother to continue the business. His brother's death had a profound effect on Rishi, during this time around 12 employees (who are all still at the PharmaShah, and are jokingly referred to as the 12 Apostles) managed the business and kept it going. Rishi has been extremely grateful for the loyalty they showed and how they personally helped him through this difficult time in his life. It has had an impact on how he manages and leads the business.

PharmaShah Location

Flatsands is a typical British seaside town in a very attractive part of the UK, with relatively low cost housing. It is about a 1hr 45 minutes' drive across country roads to Cambridge, and a two hour drive or 1hr 45 minutes train journey to London. Flatsands' main source of income is from tourism, although it also supports the offshore industry (oil and gas, and windfarms) with standby boats and ferrying supplies. This makes PharmaShah the premium high technology company in the town. The business supports a couple of local charities, the local foodbank and rescue dog shelter. However their main involvement is offering non-scientific work experience placements to the local schools and especially to local children who have gone onto University and are looking for science based internships etc.

Rishi's Leadership

When both the twins were alive they were both driven by a highly ambitious objective to become one of the leading Bio-tech companies in the UK with a global reputation. They had a clear vision:

'Harnessing global talents to deliver the best of British innovation, quality and Greatness'

and worked many hours to achieve this. They committed to keeping the supply chain British, and local where and when they could, even if this meant they did not go for the lowest cost option. They did a great job of inspiring those they employed to engage in the vision. It also worked to the company's benefit during the recent COVID outbreak when the UK government was sourcing suppliers.

Both brothers believed that if you want to get something done then you needed to set a clear objective and offer a big carrot, or stick if necessary.However, after the death of Nirav, Rishi reflected on his leadership style, he noted that his key employees had remained engaged and committed without any carrot or stick.

Rishi now relies heavily on the advice and support of his senior management team and sees his role as 'helping them achieve what is right for PharmaShah'.He enjoys talking with the team about any difficult to solve issues - he encourages them to stretch their thinking.Having also realised how dependent he was on employee loyalty during his brother's loss,Rishi believes that loyalty and commitment of key employees is the secret to success, and he will do 'what is necessary' to keep those employees happy. In reality, this means that bonus payments, loans and other little 'side deals' are often made with employees. Employees are aware of this practice, and it is mostly tolerated but occasionally issues do flare up, for example who has one of the 20 allocated parking spaces.

Growth and development

The company remains private to Rishi, with the loan from the uncle having been paid off several years ago. When starting the company the twins were primarily focused on creating a cell and gene therapy (CGT) services company with a solid technical reputation rather than on commercial success, and so the company has grown organically over the past 10 years to 50 employees in 2022. Rishi is now supported by a Finance Director (who also manages all the non-scientific functions) and Technical Director (who manages all the scientific functions) Both Directors are one of the 12 Apostles.

To date all the employees have been personally interviewed and selected by Rishi (or Nirav when he was alive), indeed many of them were found through his own, or PharmaShah employee, networks. This approach to recruiting has resulted in members of the Shah family (his sister, a niece and nephew) finding themselves in employment, but Rishi insists they were always the best person for the job. The networking approach has resulted in high employee loyalty and so the company boasts very low employee turnover (5%) amongst the scientific staff. The geographic location and style of leadership has mainly attracted either older workers in the latter part of their career or young families looking for somewhere 'nice and safe' to bring up their families. However, it has had problems attracting newly qualified PhD science students who are typically looking for more cosmopolitan and vibrant cities, and greater personal development opportunities provided by their employer.

Reward Package

The package offered is straightforward and has managed to keep costs under control. The people costs account for around 55% of PharmaShah's business costs, which is typical for the industry.

Salary	Around 5% lower than the competitive salary for Cambridge, reflecting the lower cost of living and lack of local competition. Although the last two recent hires for technical staff were at full Cambridge rate, reflecting an upturn in the market. The company has produced a number of salary bands for the functional areas, which are quite narrow. Promotions are looked at once a year. The annual salary review for all employees is based on the annual cost of living/inflationary and is the same percentage for everyone.
Bonus scheme	Bonus scheme based on company and individual performance. Although in reality it is a 'black bag' lottery as it is a mystery to employees how much is available and how the bonus is calculated, or indeed what they need to do to get one. But it appears most employees receive a 5% bonus in a typical year.
Employee Referral Scheme	500 given any employee who introduces someone to the company, who remains for one year and meets the performance requirements.
Pension	The government required plan.
Health cash plan	Scheme where employees can claim cash back up to 50 per year for each dental, eye test, prescriptions etc
Discount at the local gym	20% discount at the local gym
Holidays	Statutory minimum, however the site shuts down over Christmas for five days, and these do not need to be taken from the holiday allowance. There is also a company paid for Christmas party.
Sick pay	Statutory
Car Parking	There are 20 free car parking spaces on site, employees who don't have an allocated space either pay at the local car park, or compete for one of the free on road parking spaces, although they are usually filled by 7.45 AM.

Learning and Development

PharmaShah has nine PhDs and 15 Bioscience Masters amongst its employees, and the scientific staff's L&D take priority. In reality this has mostly been on how to use the latest equipment and software programmes, some of which was originally designed by the staff as part of their Masters and PhDs! Consequently, there is a lot of peer to peer development, supported by attendance at conferences and occasional networking sessions organised by the larger equipment manufacturers. Recognising the importance of leading edge scientific knowledge, the budget is generous.

For the non-scientific staff, the budget is heavily managed. Most training is in the form of learning from the person currently doing the job, job rotation in the Administration section and the occasional IT course.

There is an onboarding programme for new recruits. Each new employee is allocated a 'buddy' to help them settle in during their first three months of employment. Any training is focused on how to do their job.

Employees who want extra development are encouraged to come up with a business case and present it to the Finance Director.

Employee statistics

Recruitment has been mostly on the science side, with the administrative roles kept to the required minimum. Where possible the company has preferred to outsource roles that is not considered core to the business.

Function	Employees
Senior Management	4
Scientific and Administration Consultants	5
Scientific Staff	32
Finance & IT	4
Administration & Procurement	3
Business Development	2

Men	24
Women	26
Full time	42
Part time	8

White	40
BAME	10
Disabled	2

UK Nationals	36
EU Nationals	8
Non-EU Nationals	6

Venture Capital Investment

Whilst the focus has not been on commercial success this is not to say the company has not been successful, over the last 5 years PharmaShah has developed a portfolio of UK and international clients, delivering over 380 projects across 17 countries. The recent COVID outbreak has been particularly beneficial, and saw a dramatic change for the company.

The COVID outbreak saw demand increase significantly for its services, plus the way in which the management team responded to government requests, its high profile British credentials and the professionalism with which it contributed to the development of vaccines within the industry significantly raised its profile.

Such is their recent rise in profile that they have attracted an investment by BVCC (Boston Venture Capital Corporation) a US based Venture Capital Company, of 12M. Following the investment BVCC now have 30% stake in the company, although it remains privately owned.

The investment will also see a significant increase in the number of employees from 50 to 150 in the next three years. It should be noted that the location site does not have enough space to accommodate a threefold increase in the workforce. However, the investment does provide sufficient funding to produce new process development and clinical manufacturing facility.

Overseas development opportunity

Additionally, to the investment by BVCC, PharmaShah has also been contacted by biotech company Kodeshi, who are based in Kode Japan who want to talk about some joint research and developments together. Given that the two companies are on different sides of the world it is not too surprising that they have not met each other before. However Kodeshi looks to have a similar profile to PharmaShah in terms of size, and turnover. Given the two have excellent reputations in their own respective markets, and whose skills complement rather than compete, this has promise. However, to date PharmaShah has been an entirely UK operation apart from sales overseas and of course the investment by BVCC, so this is very new and so far it's has only been a conversation initiated by intermediaries.

In addition to the Kodeshi opportunity BVCC also believe that there are further opportunities for PharmaShah to develop overseas, and whilst not an immediate priority it is something they will want to investigate.

Future development

Whilst the agreement with BVCC locks Rishi into the PharmaShah for the next three years, he is wondering after that period whether he should cash in and leave the business. If he goes ahead, he knows that BVCC or any future buyer will want to have a person within the business who is able to succeed him and take over as CEO. He also knows that he also wants that person to be someone who he trusts, and believes can take the business forward and his legacy is in a safe pair of hands.

In conclusion the future looks very exciting for PharmaShah, however there are many fundamental challenges which will require new processes and practices.