Vertex Case Analysis
Vertex faced a very difficult decision when the company had to decide which drug candidates they should fund on their own, and which ones they should partner up with cooperate alliances who can financial support the projects. The company had revenue from various corporate partnerships and roughly $600 million in cash and short-term investments, but the company would not be able to fund more that two of its fours primary development projects. The decision was colossal since the chosen candidates would be the first products Vertex attempted to bring through development and hopefully onto the market on its own (Pisano).
Of the several drug candidates in clinical testing, four candidates were thought to be the most promising that had not been partnered yet. The candidates were VX-148 (Psoriasis), VX-702 (Acute Coronary Syndrome), VX-765 (Rheumatoid Arthritis and Osteoarthritis), and VX-950 (Hepatitis C). Initially, it was decided two of the drug candidates would move forward in development through funding by Vertex, while the other two would be partnered or put on hold as backups for future development.
During the Wall Street briefing, Vertex had decided they would focus all their resources on one project but would keep the other projects going. Development of VX-148 would cease, and VX-950 would move along with MMPD as a combination treatment. Vertex would continue development on VX-702 and VX-765 but only as resources became available.
Main Case Issues
With two drugs already on the market through collaborations with other pharmaceuticals, Vertex was focusing on getting drugs to market through internal development. To succeed, Vertex would have to choose which drugs they can internally support and which ones would have to be partnered. They had the following options: chose two candidates to focus their resources on and hold the other two as backups, choose two candidates and partner the other two, or pick all four candidates but prioritize two.
Vertex can choose to move forward with two candidates and hold the other two potential candidates as backups for future use. If the first two candidates do make it to market, Vertex will already have two leads they can start work with. This way, Vertex will have control over the development process and won’t have to deal with outside partnerships. The difficulty here would be choosing which projects the company should focus on and which two should be held as backups. Putting drug candidates as backups delays the time to market that drug. The company will also risk other pharmaceuticals bringing drugs to market of the same therapeutic area of the backup drugs.
One of the benefits of having a backup is there will a fast follower if a drug in the same class fails to come to market, they almost serve as a safety net (Stock, Molinoff). For this strategy to be successful, Vertex should place VX-148 and VX-765 as their backups, and move forward with the other two candidates. VX-148 should be placed as a backup since there are already many psoriasis drugs on the market. Once the company has sufficient funds to support other projects they should move forward with VX-148. It’s not critical for the company to market a drug that already has successors on the market. VX-765 should also be placed as a backup since Pralnacasan was nearing completion of Phase II of clinical trials in RA and OA. If Pralnacasan didn’t make it to market, Vertex would have a fast follower in the same drug class.
Another option Vertex had was to move forward with two drugs candidates and partner the remaining two. The benefit of partnering the remaining two candidates would be Vertex wouldn’t have to halt development on any of the four most promising drug candidates. This increases the chances of receiving market approval for their drugs....
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