Biopasteur, is a biotech venture that developed a technology that allows micro-organisms to grow quickly in a controlled environment; rather than sell their technologies to pharmaceutical firms who were not ready to embrace this new technology, the founders opted to produce a specialized kind of drug that uses their technology. The development of the new drug uses special types of micro-organisms to cure diseases by killing this the substance or bacteria that causes such diseases.
It was founded in 2002 by three fellows- Thompson, Jeff, and Professor Waitz. After several rejections from various pharmacists, they made their first profit in 2006 from a revolutionary blood pressure drug called Lobloprin. They made a $50m profit in a year, with a potential 10% increase yearly till 2019. By 2019, the technology used for the production will likely expire, after which all the founders are expected to return to the classroom. From their profit, they expanded their R and D and developed a drug called Diastop to cure type 1 and type 2 diabetes.
Business Problem: Biopasteur is faced with the decision problem if DIASTOP (type1 & type2 diabetes drug) should be introduced to the market now or return and develop. Due to the fact that they had a trial with 1,000 people; 4.5% had heart-related complications, of which 0.3% had severe complications. During a plenary involving Professor Waitz with his colleague Rivers, the former disclosed that the drug was dangerous for ages 45 and 70 which was the target group for Diastop.
The way our problems are framed helps us better with our decisions.
Objectives: This refers to what we hope to achieve, what is our goal when this decision is made.
Biopasteur wants to release the drug with superior results to the market than existing products.
Criteria: these are the conditions which the alternatives must meet in trying to attain objectives.
- How will the decision affect the reputation of biopasteur/risk of side effects.
- What is the opportunity cost of launching now or return and develop.
If they decide to launch now, they lose 70m (due to a recall) and the possibility of sales in lubriplin but if they return and develop, they make 70m and still have the sales of lubriplin.
Also, the opportunity cost of 56m for launching now and 28m to return and develop with 4.5% of 1000 patient with mild complications and 0.03% with severe complications.
Decision: if they launch now, given the risk of the side effect the sales of lubriplin would be affected/questioned. However, if they return and develop, they will continue to earn from the sales of lubriplin and if they succeed it would be additional from diastop and if not, they still have the sales from lubriplin.
If they decide to launch now, it would be blindly as the case does not guarantee the level of side effect. The case implies that the market expects a certain quality from Biopasteur as indicated by the doctors patiently waiting for the release of the drugs. Why release if the drugs would do the same thing that the market offers.
Matric Number: 2023-MMBA-4-001
