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Maximizing Value of Pharmaceutical Closeout Inventory

Challenge:

A Pharmaceutical Company was looking for a new solution to obtain additional value for their close out inventory of over-the-counter pharmaceuticals. Their existing disposition methods yielded a return of approximately 35% of original product value. Given the intricate terms and conditions around re-sale of these product lines, they did not want to change their current distributor.

Solution:

Active worked in partnership with the client to manifest a corporate trade agreement tailored to their needs. The client sold to their current aftermarket distributor and transferred the $1MM cash proceeds to Active.

In return, Active provided $3.2MM in trade credits - equal to wholesale value. The client committed to purchase media through Active for a combination of Cash and Trade Credit.

Execution:

The credits were used to offset costs of a 3-year $21MM advertising budget that included print, radio and television. Active worked in collaboration with agencies of record to ensure alignment with the media plan and negotiated rates. 

Benefits:

  • Client received full market value for inventory instead of facing liquidation - $2.7MM in added value. 
  • Client was able to invest this savings towards the advertising of new product lines over 3 years.
  • They were able to do this without compromising their existing aftermarket distribution relationships.