Case 2. Eli Lilly And Company Frug Development Strategya.docx

NAME OF STUDENT: NGUYEN QUANG MINH Program: Master of Business Administration

Student ID Number: 18110029 Vietnam Japan University

ASSIGNMENT QUESTIONS FOR THE CASE OF ELI LITY AND COMPANY

1. The first challenges that pharmaceutical companies have face in the year of 1990s is the strong emergence of a lot of different pharmaceutical companies. This is put them in to a zones of high pressure of competitiveness and they have to focus on too much on R&D process to push their medicine up to the market. Consequently, this problem can contain too much risks because in case they fail in the way to research and develop medicine, the company would definitely be bankruptcy. However, in case they success (pass 3 stages under “Food and Drug Administration” (FDA) supervisor), the sponsoring drug firm typically spent more than 230$ million USD to expose their products to the market in 14.8 years. However, the difficulty here is the patent protection will be expired 20 years from the time patent application is filed. After 20 years, when patent is expired, the price of medicine must be decreased 80% and cause the company to lose the share market. This is considered as a factor to shorten the time to gain profit of the company which is successful in researching and producing the medicine because after 20 years. To improve the ability of developing new drug, most of pharmaceutical at that time tried to invest in R&D process (roughly 15-20% of revenue). This marks the importance of R&D process and it is considered the good way to break out the market. In the context of that period, many companies tried to make strategies to develop their products, some of them cooperate with biological companies or purchase and take advantage of modern technologies to expose the new kind of drugs. Moreover, whenever they get in the business market at a right time, they will have more advantage to control the market share, the price of products as well as the revenue.

2. The combinational chemistry could create so many new compounds whose origins are mainly from nature with extremely stronger effect than old one. This is the reason why the spawn multinational drug industry appears at that time. When the synthetic chemistry appears, alchemists as well as pharmaceutical companies not only approach the research with stronger investments (longer and more expensive for researching compounds) but also be hasher to push their successful drugs to the market. However, after the abundant ways to research and measure the drugs, obviously they have to consider to implement more research and experiments to bring back for them a higher successful results, sometime implementing in the living body (Ex: White mouse, or further human body). - The risks of the appearance of combinatorial chemistry is very serious. It acts a factor to make pharmaceutical companies implement more experiments with taking advantage of technology. Doing

experiment to figure out suitable compound is very expensive process. Even they were successful and take their drugs to the market, the competition still happens among them and other companies, and makes them not satisfied about their outcomes and continue to R&D process more. This could be as the non-stop process in the future.

3. When combinatorial chemistry appears, it has strong influence on the market. From this point, traditional chemistry has to be dependent on the combination one, and become the intermediary of them. Basically, the traditional chemists would still exist but their influence on market was reduced and they would also become a small part of a production line of drugs. As for managers, they have to think about set up R&D process to implement improve drugs (through research and development). This can make a pressure on them to create the process to result in final drugs which must be the combination of traditional chemists and scientists. Additionally, beyond research scientists, they will have more chance to do research in R&D area and combine with traditional chemists.

4. a. Take the lead Migraine compound directly into clinical and bring it to market as quickly as possible. With this option when Migraine compound directly into market, it is very convenient for them to capture the market share and increase the revenue earlier. However, even Migraine is the 4th mover in the market, this will face to the hash competition with other rivals. b. Spend more time to refine the current lead migraine compound, using combinatorial chemistry. If they need time to research and complete the Migraine compound, it is very good because they will have chance to put the compound with high quality to the market and this also mark a good status on users. However, the disadvantage of this option is the lately getting in the market because it seems slower than other competitors and we just capture lower market share. c. Go back to basic research and spend significantly more time to search for a new migraine drug platform, using combinatorial chemistry. Regarding to this option, the good thing we can observe is completing and perfecting the products. This is quiet good because after a long time of research, the compound will be pushed out to the market with higher quality than other one. Another thing is that the completed compound will be the pattern for subsequent products in the future. However, the disadvantages of this option includes making up too much time and money for researching this product, and the slowly getting into the market and lose time to compete with other companies and gain revenue (because the price of drugs will be reduced).

Conclusion: The second option will be the most suitable. The reasons why experts have too much disagreements on these options: Because of the conflict between 2 parts: R&D which has more demand on researching and developing products, and Finance which prefer selling and gaining profits for the company.