Case Study Pti
Dysfunction treatment especially among males is considered to be a market with great growth potential. Pharmacy Technologies Inc.
In Canada has achieved a patent for the new break through technology that offers treatment for the condition In a totally different way than the current prevalent drugs In the market Like Vicarage. The case discussion below attempts at analyzing the best alliance strategy between PIT and a company to ensure timely development of a new drug with the technology that PIT has patented.
The analysis includes a discussion on he strategic issues and objectives, industry analysis, Firm analysis, the deal options and recommendation for a strategy. Central Question and Strategic issues Clinician’s central concern seems to be how would PIT secure the second trance of investment from the Investors in their research for the development of a new oral therapy male sexual dysfunction.
With accelerating cash requirements to be able to complete the studies planned, PIT Is under pressure to show results In order to avail the second phase of capital.
However, a deeper analysis brings forth larger strategic issues that PIT needs to decide upon In order to reach the next level of their work. Due to the proprietary technology they own it is imperative that they select a partner for co-development of the final product in a short time frame so that the product can be brought to the market while the market is still profitable.
Also, the short time frame to accomplish the alliance as well as complete the “technologically sophisticated and time consuming studies” (Herbert, 2004) to test the compatibility of the Factor X compounds with Pit’s technology is also due to the milestones PIT needs o achieve in order to avail the second round of funding. There is also a question on what kind of alliance should be the most effective in this situation.
Not only are Len- licensing and out-licensing being considered but since, the formulation of the new drug would use a completely new technology, an alternative that is being considered Is If there Is a need to enter Into an alliance with a large multinational company that would provide the financial and marketing muscle to bring the product to a market that is mostly aware of Vicarage to be the MED go-to drug. The other issue that PIT deeds to address is to establish a timeline for the launch of the oral therapy visa-Ґ-visa the local therapy and delivery devices that is also in research and development.
Strategic Objective PIT wants to introduce a new path breaking taking technology for Male Erectile Dysfunction (MED) treatment that could potentially become not only a temporary stimulant but a cure for the condition. This Is sets Pit’s technology apart from any competition that Is currently existing In the market. Also, this opens up a new positing possibility for marketing the new drug that would use Pit’s technology even hill catering to a wider segment of patients.
Industry Analyses Ana Business Environment analysis The market for Male sexual dysfunction treatment, according to a report by Cowmen and Company held a very promising potential (Herbert, 2004). The value of the MED treatment market was estimated to reach $8 billion in 2002 due to the increase in people accepting and coming forward with their condition to seek treatment would go up to 20% (Herbert, 2004).
However, the total percentage of male population that was suffering from some state of sexual dysfunction was believed to be much larger.
The report by Cowmen and Company also observed that the oral therapy market would grow while the other invasive MED treatments that had been the predominant method of treatment before Pfizer breakthrough drug Vicarage, would keep loosing market share to around 6% in 2002, only being used in severe cases (Herbert, 2004). The MED oral therapy market seemed to be increasingly competitive. Vicarage, having the first mover advantage was predicted to be still the market leader with estimated to be 75% in 2002.
However, there are quite a few side effects of Vicarage some of which are serious.
Vasomotor that was scheduled to enter the market in 1999 had fewer side effects and was predicted to capture while Tasked Abbott Pharmaceuticals’ (TAP) drug that was estimated to enter the market in 2000 had a prediction of capturing 11% by 2002. There were a few other products by Merck and Bristol and Myers Squibb, in the development stage that had similar compositions as Vicarage and were expected to enter market in another three to five years (Herbert, 2004). A quick SOOT analysis shows the new product that would eventually use the PIT technology to have a promising future.
The main strength of the product would be he technology with which it is formulated. The resultant product would have much fewer side effects than Vicarage if at all and especially be able to cater to population with cardiac-vascular disease, which Vicarage or other similar products that are based on nitrate therapy, cannot cater to. Thirdly, this new drug had the potential of becoming a cure for the condition instead of a temporary stimulant like all other drugs that are currently in market. The only weakness would be its timing.
Although PIT has secured the patent for the technology there is still a long way to go before the final product can be produced. The other important factor is that PIT themselves do not own an important piece of the technology, Factor X which they are hoping to acquire through an alliance with a company owns the technical know-how for Factor X.
Being able to accomplish this alliance is crucial for the success of the venture. The market although increasing competitive, is also in a growth trajectory with no competitors offering anything remotely close to the formulation this drug may have.
This could also become a threat if the launch strategy is not strong enough to counter the fact that this product would b one of a kind with other products being animal to Vicarage which itself is the market leader with a lions share of the market. The other threat could be the culture of the target audience or the country in case of international expansion and how open are they in accepting their condition and seeking treatment from their doctor.
However, the neighboring US market can prove to be a tremendous potential market for the new product or even if PIT wants to look at US firms for their potential strategic partner. The Cowmen and Company report in 1998 observed that there were ) According to ten Heritage website, the economic freedom score of US is 76 “well above the world and congenial averages” although less than the domestic score of 79.
4 in Canada (heritage. Org, 2013). According to the U. S. Pharmacy and Healthcare report of 2011, U. S.
S also the largest market for pharmaceuticals in the world. Like Canada, the country has a strong political system with one of the easiest processes and policies for starting a new venture and thus attract entrepreneurs globally. Thus threats to new entrants can be significantly less than it would be if entering any other international market with stricter entry policies. As the formulation is one of a kind, threats for bustiest are also minimal although the competitive rivalry is expected to be intense in the U. S market (Porter’s five forces).
Mission, Vision, Core Competency and Analysis of the firm According to Pit’s senior management, Pit’s mission is not be only associated with treatments of any one specific condition like sexual dysfunction but take their know- how on aspects like “peripheral vascular disorders to other areas like congestive heart failure, renal failure and even male pattern baldness” (Herbert, 2004).
From Clinician’s words, it seems that the vision and mission of PIT is to define itself as Technology Company that offers breakthrough pharmaceutical solutions as treatment or cure of ailments that are related to peripheral vascular disorders.
That is why Pit’s housed at a major research university in Canada was looking at research and development for not only oral therapies for MED treatment but also a local therapy and a delivery device that could later on be licensed for therapies beyond sexual dysfunction treatments. The company employed four people two scientists and a part-time CEO all of whom came with rich experience in the MED research on the alnico side and extensive financing, patenting and licensing on the business side.
However, none of them came with a strong pharmacy marketing background. Thereby it seems that the core competency of the PIT would be in developing of the new technology and accomplishing strategic alliances and licensing agreements to create a new drug. Bringing the drug to the market and marketing it to an increasingly competitive market would be a completely different story.
At this point Pit’s competitive advantage seems to be their research and development acumen that has enabled them to come up with the break through technology in the field of MED retirement.
Most of the competitors on the other hand especially the market leaders like Vicarage are from the house of Pfizer who themselves are pharmacy marketing giants. The Deal and Venture Relationship Considering the Competency and Comparative advantage of PIT, it is important that they secure a partnership that will enable to first develop the product itself in a timely manner and then look at ways to license the end product for marketing. In creating the deal the Strategic fit between partners, the Deal structure and Negotiations are to be considered.
The resultant deal should be an alliance between rims that are a strong strategic fit and the deal structure allows them the ability to bring the best that both firms can offer in technical know-how, so that the end product Is developed as early as possible.
Negotiations are part AT every deal out ten fact that the in-licensing option offers the possibility of generating additional revenue and also have control over the timeliness and product development process should be taken into consideration.
Alternative Strategies As mentioned in the case study, there are three options for possible alliances already on the table – 1 . In-licensing where the partner firm would allow PIT to use it’s Factor X compound for the development of an oral therapy drug (Herbert, 2004). In-licensing would make the time frame that PIT is looking at, more achievable, plus this option gives the opportunity for additional revenue generation and control over the production of the end product.
The end product would be licensed out to a third party for marketing and proceeds from the sale would be divided among all three firms.
2. Out-licensing where PIT would license out its oral therapy technology. This among all the options would allow PIT the least amount of control over the research to produce the drug (Herbert, 2004). However, out-licensing with an established multinational company would mean that the financial and marketing backing required for the future success is ensured.
The other concern is that to get quick responses from large corporations may be an issue as a result this may affect the timeliness severely.
3. The third option would be collaboration between PIT and a smaller pharmacy company to develop the product as well as take it through Phase II clinical testing (Herbert, 2004). This option would allow somewhat control over the development process although not as much as in-licensing would. This would also impact time-lines and does not allow the additional revenue opportunity that in- licensing offers.
But going into an alliance with a major pharmacy company would mean access to support for other research initiatives PIT plans to undertake.
4. There is also a fourth option possible – a Joint venture with an established pharmacy company who has a Factor X compound, to produce the drug and bring it to market. This option brings the marketing acumen from the established pharmacy company while PIT would bring the technology to produce the drug.
Financially this is the most remission option but this would be against the vision and mission of PIT of not defining their business as only cure providers of sexual dysfunction. Recommended Strategy and Timeliness Considering that the alliance need to be achieved quickly as a requirement for the second round of capital and also so that the product itself can be developed as soon as possible, the in-licensing option seems to be the recommended strategy.
The strategy behind this alliance is technological more than organizational or transactional (Mann, 2006).
In in-licensing both firms would come in to share their threatens to “ensure productive performance” (Mann, 2006) and provide technological innovation as a result of the alliance. More so, in-licensing allows PIT to be involved in the development process of the product in a timely manner and then have the opportunity to earn revenue from the sale of the product. The earning from licensing with the third party for the marketing of the product could be profit-sharing and thereby be a recurrent income for PIT and directly proportional to the increase in sales AT ten product .
I en case mementos Tanat ten market Tort any toner treatment Tort MED other than oral therapy is on the fall. Thereby, instead of concentrating resources on coming up with the local therapy and the delivery device, PIT should concentrate efforts in accomplishing the alliance and development of the final product as soon as possible so that it can enter the market while it is still growing instead of when it has already matured or tapering off.
Once the oral therapy has captured some market share then PIT can look into introducing the local therapy and delivery device as additional products for MED treatments Thus the recommendation is for a phase approach with the oral therapy launching first followed by the other offerings. Conclusion The oral therapy market for Male Erectile Dysfunction treatment is predicted to grow at a healthy pace in the next few years.
To be able to succeed in its venture of bringing to the market a revolutionary product that does not have the side effects like the current products in the market thereby catering to a niche segment that cannot take nitrate based treatments like Vicarage, PIT has to move fast. Also it could potentially be a cure for the condition, The In-licensing option offers the opportunity to do Just with the potential for garnering revenues and that is why would be the est. way to enter into an alliance and possible produce the product in time to reap in profits.