Post on 06-Apr-2018
8/3/2019 Nucleon Notes
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What should Nucleon look like in 10 years (e.g., an R&D boutique, an R&D
boutique with pilot scale manufacturing capabilities, or an integrated
manufacturing enterprise)? Explain your recommendation based upon qualitativeinformation provided in the case.
At present, Nucleon
3 options
pilot plant
advantages
can control all proprietary information, especially prior to receiving a patent
provides the firm with the option of developing/expanding the plant into a larger scale inhouse manufacturing facility
employees can gain the necessary skills and experience related to the manufacturing
process early, so they are equipped and in a position to work with manufacturing in theevent that manufacturing is brought in-house for phase 3.
Scaling up will be easier in the event that they are able to experiment in their own pilot
plant
Can differentiate from solely an R&D firm
Disadvantages
Uncertain about CRP-1s success during human trials, although low probability of failureit was still a possibility and this could result in an idle pilot plant + large investment, with
the next products years away from pilot manufacturing needs
Process uncertainty
Given the firms specialization and focused abilities in R&D, the board/investors
would want them to focus on that etc
Contract manufacturing
Advantages
No major capital investment
Could be easily terminatedCompanies supplying the contract manufacturing services had facilities and
8/3/2019 Nucleon Notes
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personnel in place already
Disadvantages
Costly
Few contractors willing to manufacture pharmaceuticals from bacteriaConfidential information disclosureTakes a long time to put together and negotiate an agreement
Licensing to another company
Immediate cash generation
Dont have to make large capital investments into clinical
development/manufacturing, can focus on R&D
Disadvantages
Only receive royalties if product is successful they receive much lower revenuesthan if they made the investment themselves