Nucleon Case free essay sample

Nucleon, Inc. is one of over 200 firms founded since the 1970s which are focused on developing biotechnological pharmaceuticals products. Biotechnology came about with the development in advances of molecular biology and immunology, hence the new field of RD is called â€Å"biotechnology†. Nucleons first product is CRP-1 (cell regulation ein-1) and after several years of experimentation the time was ready for human clinical trials, which was not going to be an easy hurdle to get over. Due to the fact that Nucleon did not have any manufacturing facilities which met the FDA requirements they had to figure out how to jump over the hurdles presented. One potion was to contract clinical manufacturing to an outside firm. Another option was to build a new pilot plant for clinical trials. Nucleons third option is to license the manufacturing to another biotechnology company. Risk was found in their options but they also came with rewards. We will write a custom essay sample on Nucleon Case or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page If Nucleon could establish a strong paten on a important molecule this could ensure capital for growth and development which could keep Nucleon alive for years. Recommendations: Although we see the benefit to investing in having their own production capability in house, we feel that in the short-term, Nucleon should not overextend itself on its very first drug venture before it is sure that it will be on the fast track to FDA approval. Furthermore, Nucleon would have to deal with the difficulty and costs of procuring the right talent to fill all the holes that will open up in its organizational structure with regards to maintenance, procurement, quality assurance, technical support, logistics, and other functions in order to operate the manufacturing plant. Nucleon’s management team feels strongly that their strongest core competencies are in the research and development of new therapies using cell-regulating factors. They are the leader in this arena of research and have relationships with top research programs and academia. What the company has working in its advantage is that very few other firms are focusing on developing drugs through this type of research and they have a very optimistic outlook to future ventures. Rather than trying to â€Å"hit a home-run† with this first drug, our group feels that it would be more prudent to go for the single in order to ensure that you can continue plugging away with more chances at bat. The company is not a strong financial situation given that it has already accepted over $6M of venture capital funding which has already been spent (and some) in preparing for the FDA filing. Pursuing the option of building its own production facility would add strain to their balance sheet and force Nucleon to further dilute ownership of the company by raising more financing, possibly through equity swaps. The $7M payout once FDA approval comes would be useful in getting Nucleon’s financial support of their backs so that they can go back to focusing on what they do best, developing new therapeutic drugs. Furthermore, with less focus on every dime in the bottom-line results they could funnel more research dollars into the top institutions with the hope of luring top research academia to their team for future ventures. â€Å"That’s why it’s so important for us to be at the leading edge of scientific research. This means not only attracting the best in-house scientists, but also maintaining close contact with universities. † With this being said, our group does not necessarily mean to convey that Nucleon should never pursue in-house production capability. We just feel that Nucleon should wait until they are in a stronger financial position and when the capital markets become friendlier to biotechnology financing. In a longer, 10-year manufacturing strategy outlook, we feel that Nucleon should transition from their current status as a boutique RD firm to a fully integrated manufacturing enterprise. Once the company is able to kick the tires on many more ventures it will be in a more strategic financial position to capitalize on more streams of revenue within the biotechnology sector. It should then pursue in-house production capability in order to move along their development much more quickly, in addition to possibly entering the market for contract manufacturing services. This would diversify Nucleon’s stream of revenues and allow the company to sustainably grow and leverage its capabilities into a brighter future. The main issue is that Nucleon has to be able to find enough cash in-flow not only for the founding of the clinical trials for CRP-1, but also for the further development of the two new cell regulating factors and of the mammalian cells fermentation technology. Therefore, by choosing its manufacturing strategy, Nucleon should not only focus on the percentage of the forecasted sales revenues, but also focus on the possible synergies. Our group believes that partnerships have to be part of this Nucleon business strategy: they can advance the development of its projects, by complementing and optimizing Nucleon technology platforms. Resource Based View: The VRIO Framework, is a good tool that helps us establish whether a resource is of competitive advantage or not. We can use VRIO to evaluate if the new product will benefit the company. Value: There’s definitely value in a successful drug for burn treatment; it also presents itself as a possible cure for other ailments as well (i. e. kidney failure) Rarity: Not many alternatives for burn victim treatment (assumption based on the case’s voice); large molecule research is still new and rare, tough to get into. Imitability: Not very imitable, especially if Nucleon can gain strong patent protection. Also, the slow development time means that even if another firm could mimic a similar drug, it would take time. Organization: Nucleon is currently not organized to begin trials and manufacturing of this drug. They also don’t have a significant amount of financial backing at this point. SWOT ANALYSIS Strengths Tight links with the academic/research community Strong patent position on the CRP-1 molecule Promising pre-clinical trials of the CRP-1 molecule Technical capability to identify potentially therapeutic regulating factors Weaknesses Small size (22 employee) private held company Weak patent position on the genetic sequence Capital availability RD resources focused on the CRP-1 molecule Opportunities Mammalian cells fermentation Strong links with big pharmaceutical companies Other therapeutic applications of the CRP-1 molecule Two new cell regulators factors in early stage of development Threats Enormous cost of the drug development process Uncertain outcome of clinical trials Challenge of the patent by the competition Uncertain biotechnology patent law As a result, one of the big issues with Nucleon is that it is a small firm coming into an industry with several larger, well established firms. In this case, it was highly important for the company to focus on their core competency and quickly gain a solid reputation within the market through developing their competitive advantage, instead of attempting to build their own facilities or focusing energy on activities outside their core competency, among other things. Work Cited Al-Karmi, Ahmad. VRIO Framework. Arabianeurs. Arabianeurs: A Resource for Entrepreneurs in the Arab World. , 9 Oct. 2011. Web. 26 Sept. 2013. WebsiteLinkTagsEditDelete Chapman, Allan. Index Examples of Porters Five Forces. Michael Porters Five Forces Competition Theory Model. Businessball. com, n. d. Web. 26 Sept. 2013