General

ABP 101 The Future Of BioPasteur Part 1

Damilola Ajayi Written by Damilola Ajayi · 1 min read >

Company Background

BioPasteur is a biotech venture business established by three friends Jeff Thompson, Arnold Hand and Amy Waitz in 2002. The company uses micro-organism technology to develop new cheaper patient-friendly drugs to cure diseases. BioPasteur plans to run till 2019 after which it is projected to cease operations

Current Problem

BioPasteur has developed and plans to release a new drug – Diastop but is having troubles with deciding on whether to release the new drug immediately or hold it back for further research and development. One of the three principal officers firmly believes that the new drug has noteworthy potential for long-term negative effect on the users.

He believes that additional investment on research and development would possibly improve the product despite the likely loss of investment on costs already sunk into Diastop. However, the other two partners believe that Diastop had been adequately tested and should be released immediately to avoid disappointing the expectant market and the incursion of any unnecessary expenses.

Analysis of the Problem

The objective of the partners points towards making the best decisions concerning the release of the new drug Diastop. The two options open to them are to either release the product immediately or to hold back for further testing. In analysing the case, the criteria that would be considered for the decision making includes Profitability, Time, Cost, Regulatory Approval and Company reputation.

Profitability

The decision to release Diastop now would result in immediate revenue generation and profits for the firm which is estimated at about $70million yearly. If the product is delayed the earliest profits estimated at the same $70miilion would be made four years later and there is a 50% probability that the product may be released later than four years and may not yield any returns. On the merit of profitability alone the decision would be tilted more towards immediate release.

Time

In its current state, Diastop has obtained all necessary approvals and does not require any further time element. On the other hand, if additional research was to be carried out to further develop the drug, the earliest estimated time for release is four years later which leaves the opportunity for competitors to erode the identified market opportunity. On the merit of time alone the decision would be tilted more towards immediate release.

To be continued………

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