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A mid-sized, internationally operating pharmaceutical company wished to optimize the development for two of its key products. For both products alternative development strategies were discussed, but management could not agree which one to choose. Bioscience Valuation worked together with senior management to select the optimal strategy. An agreement was reached that the main criterion for selection should be value maximization, but risk, time to market and cost should also be considered.
Together with senior management, assessment teams were defined that included project management, marketing, R&D, regulatory, CMC and finance. Under Bioscience Valuation's guidance the teams evaluated both projects and provided the information needed to develop the valuation model. Missing pieces of information were provided by Bioscience Valuation. Furthermore, Bioscience Valuation served as moderator of the marketing and decision tree meetings and ensured, as a neutral third party, a fair assessment of both projects and of all development alternatives.
The result showed that for the first project development alternative 'C' provided the highest value. This alternative was the second fastest route to the market (with a slight, acceptable delay compared to the fastest option), but was much less risky than the fastest alternative. Unfortunately, the 'C' development plan required the highest resources and was therefore in conflict with the goal to minimize costs. Bioscience Valuation's analysis clearly demonstrated that the incremental expected costs were small in comparison to the incremental value gained.
As a result, an unanimous vote was reached in favor of development alternative 'C'. The conflict over the optimal development strategy was resolved and the client was confident that the best, value-maximizing development alternative was chosen. The same consensus was reached for the second project. The analysis supported the decision reached and convinced all parties to follow the value-maximizing development plan.
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