Focused Diversification

 Increased competition, spiraling costs of drug discovery and development, consolidation and a changing regulatory environment in the life Sciences industry have intensified interest in the re-analysis of drug development strategies. In the absence of cost complementarities, our internal analysts have concluded that multiproduct firms may exist to reap the benefits from diversification, or the cost savings from sharing inputs across independent product lines. We support this conjecture by providing empirical evidence that X-efficiencies are greater for biopharmaceutical firms with a diversified product mix compared to firms that focus on a relatively narrow range of outputs. Our analyses are consistent with variations in X-efficiency due to differences in managers’ ability to respond effectively to rapidly changing industry conditions. Compared to their counterparts in more narrowly focused firms, the managers of diversified firms appear better able to contain costs by reallocating inputs among independent product lines when adjusting to shifts in product demands.

 Avanti Therapeutic’s strategy is based on focused diversification utilizing its innovative and open product development platform. Our uniquely broad business portfolio focuses on science-based healthcare sectors that are growing, reward innovation and enhance the lives of patients.  Avanti Therapeutics will maintain its strategy of exploring integration of innovative technologies to develop, market-leading product pipelines with strategic partnerships and will continue to diversify. However, it will also keep its focus on platform development, the industry it knows best. Unit holders will benefit from this concentration in both the long term and more immediately, as they did from special partnerships derived from the sale of non-core assets in the past five years.