Nucleon Inc.

Presented by:Group 3
Economics Of Strategy

Current Scenarios

Scenarios
Phase I/II

Phase III

Alternative 1 (P +IM)

New pilot plant

In-house manufacturing

Alternative 2 (P+ LM)

New pilot plant

Licensing manufacturing and marketing rights

Alternative 3 (C +IM)

Contract manufacturing

In-house manufacturing

Alternative 4 (C+ LM)

Contract manufacturing

Licensing manufacturing and marketing rights

Alternative 5 (L)

Licensing the product to an another company

No Major Capital Investment in

Phase I&II
Very little risk
Manufacturing experiences
gained which is then utilized in
commercial manufacturing

Risk of confidential information

disclosure
Estimates of cost & time painstaking
with limited information
High capital cost required for
commercial facility

In-house
Manufacturing

NPV: $7.94 Mn

Licensing

NPV: $3.02 Mn

Pilot Plant

Pre-Clinical
Trials

In-house
manufacturing
Contract
Manufacturing

Licensing

NPV: $10.07 Mn
( Patent Granted)
NPV: $15.41 Mn
(Patent not Granted)

Licensing

NPV: $5.15 Mn

Licensing

NPV: $6.23 Mn

Contract Manufacturing in Phase 1, 2

Pros:

No capital investment required

Can exploit Buyers power by utilizing the unused capacity of other

manufacturers

Since, the asset specificity is high necessitates outsourcing

Contracting companies have personnel and facilities in place

Technology, Regulatory and Market uncertainties are high

Contract can be terminated in case of failure

Can focus on core competencies (R&D)

Cons:

Confidentiality of the information maybe compromised

Complex processes are involved, hence time consuming

Vertical integration

Pros:

Lower risk

Increased possibilities of raising the needed funds

Large potential income

Possibilities of other products (Kidney)

Cons:

Large investment of $21 mn

Organizational changes

Could get lost in production