CASE 8.2 PROJECT PICKINGS
Tazer, a pharmaceutical manufacturing company, entered the pharmaceutical market 12 years ago with the introduction of six new drugs. Five of the six drugs were simply permutations of existing drugs and therefore did not sell very heavily. The sixth drug, however, addressed hypertension and was a huge success. Since Tazer had a patent on the hypertension drug, it experienced no competition, and profits from the hypertension drug alone kept Tazer in business.
During the past 12 years, Tazer continued a moderate amount of research and development, but it never stumbled upon a drug as successful as the hypertension drug. One reason is that the company never had the motivation to invest heavily in innovative research and development. The company was riding the profit wave generated by its hypertension drug and did not feel the need to commit significant resources to finding new drug breakthroughs.
Now Tazer is beginning to fear the pressure of competition. The patent for the hypertension drug expires in 5 years,1 and Tazer knows that once the patent expires, generic drug manufacturing companies will swarm into the market like vultures. Historical trends show that generic drugs decreased sales of branded drugs by 75 percent. Tazer is therefore looking to invest significant amounts of money in research and development this year to begin the search for a new breakthrough drug that will offer the company the same success as the hypertension drug. Tazer believes that if the company begins extensive research and development now, the probability of finding a successful drug shortly after the expiration of the hypertension patent will be high. As head of research and development at Tazer, you are responsible for choosing potential projects and assigning project directors to lead each of the projects. After researching the needs of the market, analyzing the shortcomings of current drugs, and interviewing numerous scientists concerning the...
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