The Future of BioPasteur

Today on Wale’s musings, we would be reflecting on a business case study in our Analysis of Business Problem (ABP) class at the Lagos Business School (LBS). Here three friends were at a crossroad on a business decision critical to the future of the business –BioPasteur.

Case Background:

The case was about a company BioPasteur- a bio tec venture established by Jeff Thompson, his classmate Arnold Hand and MIT chemistry professor Amy Waitz. BioPasteur company became profitable in 2006 following the release of a revolutionary blood pressure LOBLOPRIN. The company is now at a crossroads with the introduction of another revolutionary product DIASTOP following the investment of a large portion of its profit from 2006 to 2011 in the development of the drug.

The Problem:

BioPasteur had to decide whether to introduce DIASTOP, a product with estimated profits of $70 million

per year despite the growing concerns and suggested analysis of side effects and age complications from

its use. There are moral issues surrounding the fears that patients could suffer long-term negative

consequences from the product use despite the Food and Drugs Administration’s (FDA) approval.

Business Objective:

For BioPasteur, the major objectives to be considered are stated below:

• Grow the profit of BioPasteur from its current $50 million by 10% per year till 2019.
• Donate BioPasteur to MIT upon the expiration of the patent covering its technology by 2019.
• Release DIASTOP within an acceptable level of safety.
• Recall DIASTOP back to the lab for further development.

Alternatives:

To achieve the stated objectives above, BioPasteur needs to consider the following alternatives:

• Introduce DIASTOP as it is into the market.
• Recall DIASTOP back into the lab for further development.

Consequences of Alternatives on the Business:

SHOULD DIASTOP BE INTRODUCED INTO THE MARKET AS IT IS?

• The possibility that DIASTOP will have dangerous side effects on its users if it is introduced into the market as it is.
• Possibility of age’s effect on complications from using DIASTOP.
• The moral issue surrounding the introduction of a product with the possibility of unpredictable side effects from its use cannot be outweighed by the expected profit to be earned.
• The possibility of the FDA recalling DIASTOP after its release leads to a loss of reputation and acceptance from doctors which will eventually jeopardize the sales of LOBLOPRIN and cause a negative run on the profitability of BioPasteur that can lead to the company’s end.
• Further development to improve DIASTOP significantly will require four years of major investment at an estimated $12 million per year.

SHOULD WE RECALL DIASTOP BACK INTO THE LAB FOR FURTHER DEVELOPMENT?

• The introduction of DIASTOP will grow the profit of BioPasteur by an estimated $70 million yearly, the consequence of not introducing it means that the company will lose $70 million yearly.
• The possibility that the required technology needed for DIASTOP further improvement run into difficulties, and a 50% probability that the technology would not be available until 2015 might lead the company to abandon the product.
• The reputational loss of goodwill for the Doctors eagerly awaiting the release of DIASTOP will be unquantifiable if the product is not released again.
• The legal implications and the potential payment of damages from the termination of the marketing contract already in place with GFT who had started a marketing campaign for DIASTOP.

Recommendation to the Management of BioPasteur:

I will recommend that the management of BioPasteur introduce DIASTOP into the market as it is while

commissioning research for further development of the product.

Justification for the Recommendation:

My recommendation is based on the following facts:

• The FDA approval has confirmed DIASTOP’s safety for use.
• The concern about the dangers in the usage of DIASTOP by patients between the ages of 50 and 70 does not have any direct empirical support for its theory.
• The reputational loss of goodwill for the Doctors eagerly awaiting the release of DIASTOP will be unquantifiable if the product is not released again.
• The introduction of DIASTOP will grow the profit of BioPasteur by an estimated $70 million yearly.
• The legal implications and the potential payment of damages from the termination of the marketing contract already in place with GFT.

However, the concerns raised about the side effect of the usage of DIASTOP cannot be overlooked, this should make the company commission further research on the improvement immediately after the

introduction of the DIASTOP into the market.

Until next time when we will be considering another reflection on my learnings at LBS, have a great week ahead.

OLAWALE