Merck Case Decision Tree and Analysis
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Merck & Company :Evaluating a Drug Licensing Opportunity
• Background - Merck & Company :
•In 2000, it was a global research-driven pharmaceutical company that discovers, develop, manufactures and markets a broad range of human and animal health products, directly and through its joint ventures, and provides pharmaceutical benefit management services through Merck-Medco Managed Care.
•Since 1995 , it has launched 15 new products like Vioxx (treats osteoarthritis), Fosamax(treats osteoporosis), and Singular(treats asthma) and most popular products that generated $5.7B in worldwide sales (Vasotec, Mevacor, Prinivil)
•The company earned $5.9B on 1999 sales of $32.7B , is 20% better than 1998.
•Its Financial Evaluation & analysis team was working to decide whether the company should license Davanrik that is new drug.*
•To develop compounds for treatment of neurological disorders.
•Although company is 15 years old, none of its drug was successfully completed by FDA approval process.
•Its stock price was declined by over 30% and needs cash.
•Therefore, it is looking for a large pharmaceutical company like Merck to license the drug,
•Originally developed to treat depression and later observed that there was efficacy to treat weight loss.
•It is in pre-clinical development , ready to enter the three-phase clinical approval process.**
–To Evaluate a drug licensing opportunity by using decision threes.
The Three Phase Clinical Approval Process for Davarink
Purpose to test a small number of healthy volunteers for safety Sample size : 20-80 healthy volunteers
2 years to complete
Cost :$30MM, includes an initial
$5MM fee to LAB
Purpose to determine if the drug is effective in treating a certain condition like depression and/or weight loss and