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Nucleon Case Questions

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ASSIGEMENT: NUCLEON CASE
Each group (see below) need to prepare a short paper about the Nucleon case (no more than 10 pages). In the paper you need to answer at least below questions. The assignment need to be submitted on Thursday (23.10.2014) at the beginning of the class.
QUESTIONS THAT NEED TO BE ANSWERED 1. What is this case about? 2. What options of vertical integration are available to Nucleon?

Nucleon has two options how to produce product CRP-1. One option is to produce it in-house and other is that they would license manufacturing and marketing to outside partner.
Therefore they need to invest in a full-scale manufacturing facility that which met the FDA guidelines.
FDA required that Phase III trials should be supplied largely by the plant, which would be used to supple commercial market. With this option they will need approximate $21 million to invest. Regarding to Nucleon’s financial advisory, they would not have difficulties to raise fund after they would have approved success of Phase II.
Second option is to license outsource their rights of manufacturing and marketing. Therefore they would not need to invest $21 millions, but they would receive less money from the sale if the product will succeed at phases of testing.

3. What are the advantages and what are the disadvantages of each option? Try to use theory. 4. Which choice would you recommendations to the company Nucleon based on net present value (NPV) calculation? For each option you need to calculate calculate NPV based on different discount factors. 5. Pilot plant might be used for other projects (products). Estimate how much can Nucleon save on variable expenses by investing in pilot plant. 6. What are your recommendation regarding the manufacturing of CRP-1 for Phase 1 and Phase 2 clinical trials? What are your recommendation regarding manufacturing

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