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Analysis of Case Study on Salix Pharmaceuticals

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Analysis of Case Study on Salix Pharmaceuticals, Inc Founded by two mutual acquaintances and former staff members of California Biotechnology Inc. (CalBio), Lorin Johnson and Randy Hamilton set out to build a company specializing in a specific area of need, such as inflammatory bowel disease. Their search throughout the international landscape was focused on the chemical compounds that would be the foundation for therapeutic drugs that serve as a benefit to the management gastric disorders. As these compounds were discovered by way of research, with the intent to align and contract with already licensed agreements if the price allows for the newly formed company to take part. One such compound that fit the need for the company was found at a research company in England by the name of Biorex. Johnson and Hamilton found that Biorex had a compound balsalazide disodium that was chemically similar in structure to salicin (found in the bark of the willow tree) that has been known to alleviate pain and fever. (Kyriazis and Swayne) After meeting with the Biorex representatives in the London headquarters, Salix was able to make an agreement to license their first product. Yet this opportunity had a big hurdle to overcome, since the business partners were working out of a spare bedroom and a limited capital of $9,500. It was necessary for the partners to gain the much needed capital to market their new and surround a team of sales personnel to get the word out. The team of Johnson and Hamilton went in search of venture capitalists, but the meetings did not give them the expected results they were looking for. Instead, the Salix founders would need to reach out to their old acquaintances at CalBio, and received investments from John Chappell and Mark Schlesinger to cover the $150,000 to make a milestone payment to Biorex. In 1991 Salix gained international rights to sell...

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