The initial decision Merck must make is whether to purchase the drug rights of the KL-798 product. It will initially cost $30 million up front and an additional $5 million to complete phase one. Disregarding Mr. Merck’s philosophy, the program suggests to not invest in drug rights due to an overall loss of $260,000.…
(b) Common stock, $.0006 par value; 2,100,000,000 shares authorized; issued and outstanding 932,246,614 and 669.182,785 shares at February 2, 2013 and 922,126,579 shares and 695,743,547 shares at January 28, 2012, respectively.…
On April 6, 2011, GNC completed an initial public offering (the "IPO") pursuant to which 25.875 million shares of Class A common stock were sold at a price of $16.00 per share. Holdings issued…
The team viewed the video “Cost of Capital” as part of our weekly team discussion. In the video, Amil Singh discussed the cost of capital for Pfizer Inc. Pfizer Inc. is the world 's largest research-based pharmaceutical company that develops its own products in America. Pfizer revenue is about $65 billion with market gap close to $140 billion (John Wiley and Sons, 2012). The cost of capital is the "rate of return that capital could expect to earn in an alternative investment of equivalent risk" (Investopedia LLC, 2015). When the company researches and develops a new product it can take nearly eight to ten years before it hits the market and see a profit. In this paper, we will look at how Pfizer addresses its cost of capital and issues with research and development.…
Specific aspects of the Healthcare Reform Act also posed serious threat to Genentech 's business model. The passage of the Biologics Price Competition and Innovation Act allowed for a shortened approval pathway for biogeneric drugs, which would have a significant impact on Genentech, because of the significant costs associated with product development and testing in the industry.…
At the end of 2013, a merger was announced between Biomet and Zimmer Holdings. It was a success and the new company, in a bid, acquired Biomet for a fee of $13.4 billion. But in October 2014, EU antitrust regulators opened an investigation into Zimmer’s bid on the grounds thinking that the deal may lead to substantial decreases in competition in certain markets. The verdict of the investigation into the deal that would make Zimmer the…
As shown in Exhibit 8-3, in order to maximise its profit, what price should GeneTech charge for it’s vaccine?…
Geron the first company to get the green light for trials, quit and is selling that part of the business…
As I have read the case it was presented that in January of 1990, Burroughs Wellcome executives were under continued pressure to reduce the price of Retrovir, a drug which had been found to be effective in the treatment of acquired immune deficiency syndrom (AIDS) and human immunodeficiency virus (HIV). After careful review of the data and the case I have come up with the recommendation for the company to maintain the current price of Retrovir.…
Issued 6,000 shares of preferred stock to Thevenot Corporation for the following assets: equipment with…
After this investment, there will be 10 million shares outstanding, with a price of $0.50 per share, so the post-money valuation is $5 million.…
Using the decision tree with the cash flows and the probability of each scenario, we calculated the expected net value of this drug license to be $13.98 million at year 2000 (Appendix 1). In addition, Merck’s patents on its current drugs will soon…
In March 1999, LVMH made a 100% takeover bid to the Gucci Group. The offer was $ 81 per share for all shares, including the ones recently issued to PPR, or $ 85 per share for all if the newly issued shares to PPR were rescinded. This proposal can be interpreted as a sign of high interest of the acquirer in Gucci. Most likely, LVMH believed the target company was quite undervalued and the synergies between the two companies would be fairly significant. The reason behind the structure of the deal (higher price if PPR’s shares were rescinded) was the dilution suffered by LVMH from the entrance of PPR group in Gucci. If the acquirer could undo the deal, they would not have seen its position diluted in the target company. Hence, it is advantageous for them to…
Merck had a 14% increase in sales between 1997 and 1998 and 22% increase in sales from 1998 – 1999, and a 13% annual increase in earnings over the same period. Merck’s business strategy consists of two parts: (1) developing and marketing new drugs through internal research, and (2) developing partnerships with smaller biotechnology companies. Since 1995, Merck had launched 15 new products that earned $5.9 billion on sales of $32.7 billion. Furthermore, Merck may agree to license new drugs from other firms and with its larger capital and greater assets, can assume the risk of submitting the drug through various regulatory approval phases. If the drug becomes profitable, Merck can earn significant cash flows while paying a royalty to the licensor. However, most important is the option that Merck has in deciding when to abandon or continue on this project (deferability or optionality). If Merck reaches a point when its expected NPV is negative, it can simply abandon the project. As a licensee, Merck can allow smaller biotechnology firms to focus on research and development. These smaller firms often have smaller budgets and are not financially or personnel equipped to handle the costly and long FDA approval process, and the subsequent marketing, distribution, and sales of new drugs. This task is better suited for a larger company, such as Merck, which has more resources and money.…
Since the beginning of 2014, a real battle is going on between 2 major competitors in order to acquire Club Med : Andrea Bonomi on one side and Fosun on the other side. The first bid was made by the association of companies owned by Fosun at the beginning of…