BIOPASTURE AND THE PROBLEM WITH DIASTOP

Background

In 2002, Jeff Thompson, Arnold Hand and Dr. Amy Waitz created a biotech company known as Biopasture. The company leveraged on their novel technology that allowed micro-organisms to grow 200 times faster than available technologies allowed at the time. They became profitable in 2006 all thank to their revolutionary drug, Lobloprin. By 2011, the profits from Lobloprin had reached a steady $50 million a year and were expected to grow by 10% yearly until 2019 when the patents protecting Biopasture’s technology expires. From 2006 to 2011, the company invested a large portion of their profits on Diastop, a drug to cure both type 1 and type 2 Diabetes.

Problem Statement

The management of Biopasture is considering the launch of their new product Diastop and are having reservations as to the safety of the drug. 

Objective

To safely introduce the Diastop drug to the market without the risk of being recalled by the FDA due to adverse side effects.

Criteria

1. Safety of the Drug
2. Reputation of the company
3. Profits
4. Recall of the drug by FDA

Alternatives

1. Introduce Diastop to the market immediately
2. Delay the introduction of Diastop and carry out more R&D
3. Do not introduce Diastop to the market

Evaluation

Below is the evaluation of the alternatives against the criteria:

Alternative 1:

• Safety of the drug: launching the drugs immediately may be dangerous as the safety has not been fully understood amongst the age group of their nice
• Reputation of the company: launching the drugs as it is may be very risky if it is recalled and this may damage the reputation of the already selling Lobloprin product as there are already alternative medication for blood pressure
• Profit: Launching the drug as it will bring massive revenue to the tune of $70M yearly, thereby leading to increased profits
• Recall of the drugs by FDA: Launching without more research to ascertain the level of risk to the patient may lead to recall by the FDA even those they gave the approval initially

Alternative 2:

• Safety of the drug: Delaying the launch of drug will allow for more research and therefore may make the drug safer for use.
• Reputation of the company: Delaying the drug launch for R & D will reenforce the reputation of the company when brought to the knowledge of the medical community and potential patients alike
• Profit: Delaying the launch of the drug will lead to forfeiture of immediate profits to the tune of $70M annually
• Recall of the drugs by FDA: Delay in launching will give them time to carry out proper research, thereby reducing the risk of the drugs being recalled due to numerous cases of side effects.

Alternative 2:

• Safety of the drug: Not launching will have no effect on the safety as neither potency or side effects will be noticed by their market
• Reputation of the company: The strong reputation of Biopasture will remain intact if the drug is not launched. The medical community will also appreciate their decision of stopping its production due to uncertainties in the adverse side effects. This will increase the reputation of the company
• Profit: A no-launch case will not lead to any extra revenue streams and thus no increased profits.
• Recall of the drugs by FDA: No launch will completely eliminate the risk of it being recalled.

Summary of Analysis

From the analysis of the various alternatives using the criteria provided, it is safe to say that alternative 1 (Introduce the drug immediately) and alternative 2 (Delay the introduction for more research) will be equally weighted while we can eliminate the alternative 3 (Not introducing it to the market)

Decision:

From a wholistic point of view, launching Disatop without further research in a bid to increase revenue and thus profit may have a long-term effect on the company. It is thereby decided that the launch be postponed to allow for proper R & D thereby making easy acceptance of the drug by the medical community.