Nucleon Inc Essay

Words: 915
Pages: 4

1. What is the strategic decision Nucleon was to make?
• Before Nucleon can begin clinical trials, its management must decide how and where to manufacture the product. Three options are being considered:
1) Build an in-house pilot plant
2) Contract production to a third-party
3) License the development, manufacturing, and marketing rights to a corporate partner.
• 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
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Therefore Nucleon needs to license out the marketing rights for its product to established pharmaceutical companies.
-Nucleon has more than one year to reach an agreement with a reliable contract manufacturer. A strict confidential agreement on the proprietary details would permit to approach diverse contract manufacturers. An experienced contract manufacturer can also help in finding a partner for manufacturing and marketing the drug.

Advantages and disadvantages :
-New Pilot Plant, Bacterial Fermentation (Phases I-II) - Possibility to gain experience in manufacturing
- Control over process and quality procedures
- First step towards vertical integration - Obsolescence: mammalian cells fermentation as new promising technology
- Idle plant: uncertainty about clinical trials outcome
- Loss of focus from core R&D activities
- Time: necessity of hiring technicians with manufacturing experience
- Major capital investment. Contract Manufacturing (Phases I-II) - No major capital investment
- Synergies through partnership - Time consuming negotiations (many months)
- Long technology transfer
- Risky disclosure of confidential information.
Vertical Integration at Phase III - Huge revenues due to royalties on gross sales.
- Control of production process and quality procedures - Huge capital investment.
- Phase III costs.
- Excess manufacturing capacity in the industry.
- Necessity of hiring at least 20 people.
Licensing Manufacturing and