GlobaPharm

A good answer would include the following:

• The value of BioFuture’s drug pipeline, number of drugs currently in development, quality of drugs (likelihood of success), potential revenues and profits
• BioFuture’s R&D capabilities (future drug pipeline), scientific talent, intellectual property (for example, patents, proprietary processes or know-how for biologicals research), and buildings, equipment, and other items that allow BioFuture’s R&D to operate.
• BioFuture’s marketing or sales capabilities. Especially how promotional messages will be delivered, for example, relationships with key opinion leaders that can promote biologicals; key opinion leaders can come from the academic arena, like prominent medical school professors, or from the public arena, like heads of regulatory bodies or prominent telejournalists.
• Acquisition price.

A very good answer might also include multiple additional key factors GlobaPharm should consider:

• BioFuture’s existing partnerships or other relationships with pharmacos.
• GlobaPharm’s capability gaps in biologicals, R&D, sales and marketing, etc.
• GlobaPharm’s alternatives to this acquisition. Alternative companies GlobaPharm could acquire. Other strategies for entering biological segment, for example, entering partnerships rather than acquiring, and pursuing other strategies than entering the biological segment

A good answer would include the following:

• Further cost of R&D until each drug is ready to be sold.
• Potential value of selling each drug.
• Market size, for example, size of patient population, pricing
• Market share, for example, number of competitive drugs in R&D or on the market; different side effects, convenient dosing schedule (that is, patients are prescribed to take a drug at regular intervals that are easy to remember such as once a day or every 12 hours)
• Costs to manufacture and sell, for example, marketing, distribution
• Press about these drugs, for instance, have famous doctors called for this kind of drug? Is it only slightly improving on what is on the market already?

A very good answer would also include the following:

• Risk level
• Likelihood clinical trials of a drug will prove effective
• Likelihood that a drug will win regulatory approval
• Side effects and potential legal exposure, for example, potential law suits due to unexpected side effects
• Emergence of substitutes: are competitors working on substitutes already? Is it about speed and does BioFuture have enough researchers working on the respective drugs?
• Strength of underlying patents, that is, how likely is it that a competitor can successfully copy BioFuture’s drug?

A very good answer would include the following.

Investment would need to increase the probability of success in Phase II from 40 to 80 percent (that is, increase of 40 percentage points). There are multiple ways to approach this calculation. One method is shown here:

• If a candidate drug passes Phase II, then it has a 50% x 90% = 45% chance of being successfully marketed and sold. Since a successful candidate drug is worth $1.2 billion, a candidate drug that passes Phase II is worth 45% x $1.2 billion = $540 million.
• To break even (that is, to make the $150 million investment worthwhile), the value of the candidate drug that passes Phase II would need to increase to $540 million + $150 million = $690 million. This means, the probability of combined success in Phase I and II would need to increase by (150/540) = 28 percentage points.
• So the current probability of Phase I and II, that is, 70% x 40% = 28% would have to increase by 28 percentage points, to 56%. In order to come up to 56%, Phase II probability would have to increase from 40% to 80% (70% x 80% = 56%).
• This seems like a very big challenge, as an increase by 40 percentage points means that the current probability of 40% needs to double.

Helpful hint

A very good answer would include the following:

• Scientists do not have overlapping disease (therapeutic area) interests or expertise and are unable to materially collaborate.
• Integration into the process-driven GlobaPharm culture kills the entrepreneurial culture at BioFuture that has been key to its success.
• Language barriers severely hinder communication and sharing of information.
• Poor management and sense of community as a result of R&D operations that might come with a time difference of 9 hours.
• Key scientific talent leaving BioFuture after the acquisition – either because acquisition makes them independently wealthy or because they don't want to be a part of the new big GlobaPharm pharmaco.

Helpful hint

• Recognize the “human element” of organizational change is always a key component of our work. Don't forget to include these types of insights in your answers.