The agreement states Pharmagen will receive up to $500 million funding for R&D costs as they are incurred solely for the research efforts of a potential new drug “X”…
The Opportunity: Merck, a global, research-driven pharmaceutical company, has core values invested in cutting edge science programs. Recently the organization was accosted by Kappa Labs with a proposal to purchase the product KL-798. This drug is associated with obesity and weight-loss which is becoming a valuable investment to the pharmaceutical industry.…
1. Why does Merck want to switch Pepcid to OTC status when the patent is good for another six years? How attractive is this opportunity?…
Enabling mighty competition between commonplace drug treatments and patent-expired fashioned brands is relevant to decreasing pharmaceutical charges and stimulating innovation. However, this mentioned, there are numerous troubling problems surrounding general medicines because of the convenient access to an abundance of illegal generics on the internet breaking the patent ownership and the unregulated companies that produce and supply them. At the same time familiar medicines will have to be approved identical types of depended on drugs, providing the equal fine, safety and efficacy because the normal, that is commonly no longer the case. A conventional drug must endure strict scrutiny before it is licensed and given market approval with the aid of countrywide medicines authorities. In brief, common medicines will have to comply with the same strict standards of great, safety and efficacy as usual pharmaceutical…
Another factor is that Pharmagen is also partially financing the research and development for product “X”. Plus, they had already started the research and development process prior to the contract agreement, and therefore, the success or failure of this product can have a great impact on this Pharmagen.…
Based on the decision tree model, it is recommended that Pat Harlow does not invest in the purchase of KL-798 from Kappa Labs assuming that the current payoffs and expected probabilities given currently are correct and do not change in the future. At the current decision point, during Phase I tests, there is an expected payoff of -$1.16 million based on the probabilities of success further in the future and expected returns. If Merck can negotiate either the price of KL-798 down by more than $1.16 million or reduce their contribution to complete Phase I testing, this could be an attractive option to invest in.…
First, note that the $170 million spent are sunk costs, they will be lost regardless of the decision. The relevant question is whether the incremental benefits (the present value of the profits generated from the drug) exceed the incremental costs (the $30 million needed to keep the project alive). Since these costs and benefits span time, it is appropriate to compute the net present value. Here, the net present value of DAS’s R&D initiative is $26,557,759.86…
This situation is an opportunity because Bristol-Myers needed to figure out how to successfully price and promote Datril as it launched in the analgesics market. Two main options are available (1) whether to promote Datril as a direct point of sale towards the consumer or (2) to adopt the traditional and more conservative route as that of Tylenol and promote Datril towards the trade only. Ultimately, to establish a price point that allows Datril to compete with Tylenol given like functionality.…
Create a decision tree for Merck. The 2 leftmost branches would identify the alternatives related to licensing Davarink (specifically license versus not to license). Next, if Merck decides to pursue license, they go into phase I which results in a success, or failure. Phase I success is followed by phase II where Merck has the opportunity to develop the drug to treat depression alone, weight loss alone, or both, or contemplate phase II failure. Finally phase II success for different options leads to phase III, and there are success or failure related outcomes for each of the alternatives in phase II (i.e. developing the drug to treat depression, weight loss, or both).…
The regulatory and legal issues related to drug and pharmaceutical development and sale is very complex. In order for the FDA to approve this drug for sale it must go through a very long lengthy process of it being approved. This long process can be costly and is considered highly risky. To achieve the point where you can sell your drug, the drug company must go through drug discover and testing. This is when thousands of scientists are employed to test the drug and do clinical testing. Once you pass the rigorous process of the FDA guidelines, your drug will then go through post approval safety and marketing. During this process, safety monitoring becomes a big issue. Next is labeling, advertising and promotional claims. Legal issues can occur during clinical testing to when the drug is out for the public to use.…
Rejecting this investigation could have had a serious impact on the morale of Merck employees, who are "inspired to think of their work as a quest to alleviate human disease and suffering world-wide". Along the same lines, the approval for the 3 stages of clinical trials was also a decision based on Merck's overall corporate philosophy. A possible way in which the situation could have been improved at this stage would have been to start exploring a strategic partnership with a third party international entity or government, in order to increase the likelihood of achieving a future deal that would allow Merck to recoup some of the funds invested in this project, if a viable medication was ever…
Today’s finance is challenging in the medical environment. Cost seems to be of central concern to decision makers. This could lead you to wonder if research and development can flourish. To develop a new medication is costly and the payoff might appear in jeopardy to those that invest. Recently a new ground breaking drug called Sugammadex has been approved for use in over 40 countries around the world but further delayed in the U.S.…
His company’s decision to raise the price of a lifesaving drug by more than 4,000 percent, from $1,130 to $63,000. An entrepreneur who acquired the rights to produce a life-saving drug then increased its price more than 50-fold overnight is defending his decision with assertions that the profits will help create better medicines in future. The Infectious Diseases Society of America and the HIV Medicine Association sent a joint, open letter to Turing Pharmaceuticals earlier in September, complaining that the sudden, steep price increase for Daraprim was “unjustifiable for the medically vulnerable patient population” and also that it was “unsustainable for the health care system. Shkreli said hiking the price of Daraprim was simply a “ business decision.” My initial reaction was that why would Shkreli want to raise the price that high even…
This should be maintained for this deal as well. Hence the most Merck could pay as licensing fee is = 37.84%…
There are high cost and risks associated with developing new drugs and bringing it to market as out of every 5000 compounds tested in the laboratory by a drug company, only one of these ultimately make it to the market.…