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Medium Market Attractiveness Two Options Investment Decision

Pharma Co

#Life Sciences #Pharmaceuticals
ProHub Comment

This is a sophisticated market decision case that requires candidates to balance financial analysis with strategic risk assessment. The case progresses from market sizing and profitability calculations to risk-adjusted analysis and competitive positioning, testing both analytical rigor and qualitative business judgment.

Estimated Time 15 minutes
Difficulty Medium
Source Cornell
50 / 100

Our client today is Pharma Co., which is a global manufacturer of specialty drugs. They produce blockbuster drugs across a variety of diseases. They have approached you because they have two drugs in the pipeline to help the 5 million people living with Alzheimer’s. The two drugs in the pipeline are:

  1. Disease Modifying Drug – which is designed to slow the progression of Alzheimer’s.

  2. Symptom Treating Drug – which would reduce the effects of Alzheimer’s symptoms and improve the patient’s quality of life.

Both drugs are in the same development stage, but Pharma Co. can only continue to invest in the research and development of one.

They brought you in to help determine which drug they should choose.

Clarifying Information

  1. There is no specific revenue or financial target, though for this analysis we are primarily concerned about overall profitability. Blockbuster drugs are highly profitable drugs with annual sales of $1B+ and benefit from patent exclusivity.
  2. 5 million people globally suffer from Alzheimer’s. In the context of this case, there is no other treatment or cure on the market for Alzheimer’s.
  3. Both drugs are in the same development stage. Additional research is needed for either of them to be completed.
  4. Both drugs would be taken daily for the rest of the patient’s life.
  5. Total Alzheimer’s Patients, % of which are diagnosed and accessible
  6. Insurance / Medicare coverage and reimbursement
  7. International revenue and pay structure
  8. Research – Additional investments to complete R&D
  9. Production – Specialized machinery, access to raw material inputs
  10. Sales & Marketing – Staff and advertisements to sell the new drug
  11. Competition – Others performing R&D to combat Alzheimer’s
  12. Regulatory – Completion of clinical trials; Access to patent exclusivity