CORPORATE GOVERNANCE - a relationship among

stakeholders - to determine and control strategic direction

and performance of organizations - establish order between a
firms owners and its top-level managers whose interests
may be in conflict.

GOVERNANCE MECHANISMS
i. Internal
Ownership Concentration
Board of Directors
Executive Compensation
ii. External
Market for corporate control

SEPARATION OF OWNERSHIP AND MANAGERIAL

CONTROL
Leads to An Agency Relationship
e.g.
a. Possible Problems
b. Use Of Free Cash Flows
Managerial opportunism

ACCOUNTING AT
BIOVAIL

Strategic Profile and Case Analysis Purpose

ii

Situation Analysis
A.General environment analysis
B.Industry Analysis
C.Competitor Analysis
D.Internal Analysis

iii

Identification of SWOT Analysis

iv

Strategic Formulation
A.Strategic Alternatives
B.Alternative Evaluation
C.Alternative Choice

Strategic Alternative Implementation

A.Action items
B.Action plan

A specialty pharmaceutical company that

applies advanced drug-delivery technologies to
improve the clinical effectiveness of medicines.
The Company is engaged in the formulation,
clinical testing, registration, manufacture and
commercialization of pharmaceutical products.

Eugene Melnyk
Founder, Chairman
of
Board
of
Directors
& CEO of Biovail
Corp.

CASE ANALYSIS PURPOSE

ETHICS

AN ANALYSIS OF SITUATIONS THAT LACK OF CORPORATE

GOVERNANCE MECHANISM

CASE ANALYSIS PURPOSE

A MODERN PUBLIC
CORPORATION

(cont.)

1.
2.
3.
4.

Scanning
Monitoring
Forecasting
Assessing

THE EXTERNAL
ENVIRONMENT
INDUSTRY
ENVIRONMENT
Threat of new
Entrants
Power of Supplies
Power of Buyers
Product Substitute
Industry Rivalry
________________________

COMPETITOR
ENVIRONMENT

Industry profit
is a of 5
forces
competition
model :
1.Threat of new
entrants
2.Rivalry among
firms
3.Threat of
substitute
products
4.Bargaining
power of buyers
5.Bargaining
power of
supplies

Interpretation
of data
analysis cover
international
market
Diagnose
competition ,
positioning
and
profitability
within the
industry

Biovail need to understand its competitor components enable it to gain

competitive advantage / damage its competitor ability to exploit a
competitive advantage

Procuremen
t
Technologic
al
HRD
Firm
infrastructur
e

Inbound
/outbound
logistic

ANALYSI
S ON
VALUE
CREATIO
N

Operations

Marketing
& sales
Service
OUTSOURCING THE
CURRENT MANTRA
TRENDS

CHECK INTERNAL
CONDITIONS !

WEAKNESSE
LimitedSInvestor Confident

STRENGTHS

Managerial Opportunism
Bigger

Coverage Of Area

Served In North America

Intellectual Property

Cutting Down Of R&D

Lack

Of

Corporate

Governance-Accounting
Policies
High

Accrued

Legal

Settlements
Drug-Delivery

Stringent

Technologies
Acquisitions

Food

Administrations
And

Agreements

OPPORTUNITIE

License

Regulatory
Herbal Products

THREAT

&

Drug
(FDA)

Alternative Choice
Alternative 1
Merger

Alternative 2

Advantage

External
support require
to ensure
the
financial sound
strength

Leadership
deterioration
issue
can
be
resolved

Corporate
Restructuring on
Internal
Management and
Operation
Advantage
Enhance the
internal
arrangement
through
corporate
restructuring

Disadvantage
Job cuts

Loosing

Disadvantages
Leadership
deterioration

Merger is the
alternative choice
because
since
2004, Biovail is
facing Leadership
Deterioration,
shareholders
value

and
share price keep
$11.73 in 2008.

Biovail
to
refocus
the
business .

1. Search And
Select

5. Operational
Combination

4. Legal
Combination

2. Test &
Purpose

3. Design &
Action
Planning

 Biovail

successfully merge with

Valeant Pharmaceuticals
International , HQ in Ontario.