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    Nucleon Case Submission - Section B - Group 3

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    Sohom Karmakar
    This document analyzes options for a company called Nucleon to pursue regarding a new drug. It identifies the company's strengths, weaknesses, opportunities, and threats. It then evaluates 5 options: conducting phases 1-3 internally; conducting phases 1-2 internally and licensing phase 3; contracting phases 1-2 and licensing phase 3; and licensing all phases. It calculates the net present value of each option and concludes that licensing phases 1-2 and contracting phase 3 (Option 4) has the best combination of risk and return.

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    Nucleon Case Submission - Section B - Group 3

    Uploaded by

    Sohom Karmakar
    48 views9 pages
    This document analyzes options for a company called Nucleon to pursue regarding a new drug. It identifies the company's strengths, weaknesses, opportunities, and threats. It then evaluates 5 options: conducting phases 1-3 internally; conducting phases 1-2 internally and licensing phase 3; contracting phases 1-2 and licensing phase 3; and licensing all phases. It calculates the net present value of each option and concludes that licensing phases 1-2 and contracting phase 3 (Option 4) has the best combination of risk and return.

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    Econ of Startegy

    Original Title

    Nucleon Case Submission_Section B_Group 3

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    This document analyzes options for a company called Nucleon to pursue regarding a new drug. It identifies the company's strengths, weaknesses, opportunities, and threats. It then evaluates 5 options: conducting phases 1-3 internally; conducting phases 1-2 internally and licensing phase 3; contracting phases 1-2 and licensing phase 3; and licensing all phases. It calculates the net present value of each option and concludes that licensing phases 1-2 and contracting phase 3 (Option 4) has the best combination of risk and return.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    48 views9 pages

    Nucleon Case Submission - Section B - Group 3

    Uploaded by

    Sohom Karmakar
    This document analyzes options for a company called Nucleon to pursue regarding a new drug. It identifies the company's strengths, weaknesses, opportunities, and threats. It then evaluates 5 options: conducting phases 1-3 internally; conducting phases 1-2 internally and licensing phase 3; contracting phases 1-2 and licensing phase 3; and licensing all phases. It calculates the net present value of each option and concludes that licensing phases 1-2 and contracting phase 3 (Option 4) has the best combination of risk and return.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 9

    LOGO

    Nucleon Case Study


    Economics of Strategy

    GROUP 3
    Naveed
    Ramkumar D
    Sohom Karmakar
    Sumanraj E
    Prakash R

    PGP/19/150
    PGP/19/219
    PGP/19/231
    PGP/19/232
    PGP/19/158

    SWOT

    Strengths
    R&D powerhouse
    Strong patent
    position of CRP-1
    Leader in BioTech

    Opportunities
    Mammalian host
    research
    Forward integration
    Tie Ups

    Weaknesses
    Low Financials
    Low Marketing
    potential

    Threats
    Uncertainty due to
    Patent Law
    Competitors
    Failure of Drug

    Options

    What are the options?


    Phase I and
    II

    Phase III

    Option 1
    Internal Pilot (Phase 1&2) and Internal Commercial Manufacturing (Phase 3)
    Year

    NPV

    Total Cost
    Incurred
    1991
    1992
    1993
    1994
    1995
    1996
    1997
    1998
    1999
    2000
    2001
    2002

    Revenue
    3350
    1840
    6204
    4000
    4000
    4000
    5000
    26480
    39800
    50000
    52000
    60000
    $66,586.20

    Assumption
    WACC = 10%

    Option 2
    Internal Pilot (Phase 1&2) and Licensing (Phase 3)
    Year

    NPV

    Total Cost
    Incurred
    1991
    1992
    1993
    1994
    1995
    1996
    1997
    1998
    1999
    2000
    2001
    2002

    Revenue
    3350
    1840
    2204
    0
    0
    0
    0
    12370
    9950
    12500
    13000
    15000
    $17,923.63

    Assumption
    WACC = 10%

    Option 4
    Contract (Phase 1&2) and Licensing (Phase 3)
    Year

    NPV

    Total Cost
    Incurred
    1991
    1992
    1993
    1994
    1995
    1996
    1997
    1998
    1999
    2000
    2001
    2002

    Revenue
    250
    1995
    2550

    12370
    9950
    12500
    13000
    15000
    $20,353.76

    Assumption
    WACC = 10%

    Option 5
    Licensing (Phase 1,2&3)
    Year

    NPV

    Total Cost
    Incurred
    1991
    1992
    1993
    1994
    1995
    1996
    1997
    1998
    1999
    2000
    2001
    2002

    Assumption

    Revenue
    3000

    2685
    4975
    6250
    6500
    7500
    $13,167.32

    WACC = 10%

    Conclusion
    Even though the return on investment is very high for option 1, the total

    investment will be a sunk cost if either of the phase fails or if there is a new
    development in the process. Since risk is very high it is not ideal to go for
    option 1
    Return on investment is very low for option 5 i.e. licensing of all the phases
    If Nucleon opts for contract/licensing in phase 1 and 2, then it should not
    choose internal commercial manufacturing for phase 3 since they lack
    capabilities to carry out maintenance, procurement, quality assurance,
    technical support etc., Hence option 3 is negated
    Among the remaining two options (i.e. 2 &4 ),option 4 has a better NPV than
    option 2 and hence it should be chosen
    Moore should chose contract manufacturing in Phase 1 and 2 and License
    manufacturing in phase 3 because of low risk and better return

    LOGO

    THANK YOU

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