ucleon – Nucleon: The main advantage of this option would be the ability to develop its own in-house manufacturing capability that could allow Nucleon to acquire basic manufacturing skills as well as full control of the process and quality of their product. However, due to the FDA regulations, construction of a full-scale commercial manufacturing required for Phase III trials will require a large amount of capital and Nucleon will have to recruit its own personnel for the facility operations. This option, however, returns high profits which it may be worth taken. . Nucleon – Licensee: The main advantage of this option lies with the little capital needed to run the Phase II operations. In addition, by shifting the manufacturing and marketing rights to a licensee, Nucleon decreases the risk involved with “option a”. In addition, the option would dramatically decrease the return on the investment. c. Contractor – Nucleon: With this option, Nucleon would not have to invest heavily for Phase I and II; however, Nucleon will still have to invest about $21 million to build the plant for Phase III.
With this option, Nucleon will have the upper hand on the negations for contract manufacturing as many companies have excess capacity and idle plants. This business model will return high profits but Nucleon will have to sacrifice confidentiality of key information. d. Contractor – Licensee: As with “option D”, Nucleon will have to sacrifice vital information that could place at risk their competitive advantage as leading manufacturer of CRP-1.
However, Nucleon will maintain their capital advantage as major capital investment is not required and the risk will be shift to the partner responsible for Phase III. e. Licensee – Licensee: This option has the lowest risk as the licensee will essentially bear all the risk related to the expenditures in clinical development, clinical manufacturing, regulatory filings and commercial manufacturing and marketing. In addition, this option will allow for immediate revenues.
On the other hand, this option will not generate high profits as “Option A and C” would and this option was highly unpopular among the scientist. Conclusion: Based on the different options and the returns attributed to each option, I recommend option a. Although, this option does not yield the highest profits and entails the highest risk, it is the most promising option not only for CRP-1 but also for future products. With this option, Nucleon will maintain control over the process and quality of their products which is important when trying to acquire brand recognition.
In addition, Nucleon will keep key information that will allow them to maintain product differentiation as well research and development trade secrets. Furthermore, the investment in a full-scale commercial manufacturing could yield them more revenues as they come out with more innovative products. In addition, by not using a licensee or contract out their products, Nucleon can continue to build relationships with community universities, recruiting the best human capital. In addition, Nucleon enjoy high barriers of entry as it is costly and difficult to enter the pharmaceutical.