Merck & Company:  Evaluating a Drug Licensing Opportunity

Richard S. Ruback; David B Krieger

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Case | HBS Case Collection | October 2000 (Revised March 2003)

Merck & Company: Evaluating a Drug Licensing Opportunity

by Richard S. Ruback and David B Krieger

Abstract

This explores the valuation of an opportunity to license a compound before it enters clinical trials. Describes Merck's decision tree evaluation process is presented. Information required to evaluate a specific licensing opportunity is provided, including the costs of the three phases of the review process, the revenues if approved, and the probability of various outcomes. It includes an introduction to decision tree analysis and valuation.

Keywords: Decision Making; Cost vs Benefits; Opportunities; Valuation; Outcome or Result; Pharmaceutical Industry;

Format: Print

6 pages

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Citation:

Ruback, Richard S., and David B Krieger. "Merck & Company: Evaluating a Drug Licensing Opportunity." Harvard Business School Case 201-023, October 2000. (Revised March 2003.)

About the Author

Richard S. Ruback

Willard Prescott Smith Professor of Corporate Finance

Finance

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Teaching Note | HBS Case Collection | July 2018

MC Tool

Richard S. Ruback, Royce Yudkoff and Ahron Rosenfeld

Sean Witty and Jason Premo acquired MC Tools, a machine shop located in South Carolina in 2007 with the intent to transform it into a precision manufacturer. Witty and Premo were able to more than double revenue to $6 million in their first year of managing MC by expanding production capabilities and adopting best practices. It seemed that their plan to use cash flow from MC’s business to fund the transformation into precision manufacturing was well underway. However, the Great Recession substantially reduced the demand for the high quality tools MC made; many of the existing orders were cancelled while most new ones went to low quality-low price competitors. The two partners laid off 34 of their 57 employees, cut the salaries and workhours of those remaining, and negotiated with their creditors to delay the repayment of their $3 million debt.

Keywords: Small ＆ medium-sized enterprises; Small Business; Production; Transformation; Problems and Challenges; Financial Condition; Manufacturing Industry; United States;

Citation:
Ruback, Richard S., Royce Yudkoff, and Ahron Rosenfeld. "MC Tool." Harvard Business School Teaching Note 219-004, July 2018. View Details

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Teaching Note | HBS Case Collection | July 2018

Next Street, LLC

Richard S. Ruback, Royce Yudkoff and Ahron Rosenfeld

Teaching Note for HBS Nos. 211-094 and 219-723.

Keywords: Small ＆ medium-sized enterprises; Small Business; Capital; Development Economics; Urban Scope; Commercial Banking; Growth and Development; Banking Industry; Consulting Industry;

Citation:
Ruback, Richard S., Royce Yudkoff, and Ahron Rosenfeld. "Next Street, LLC." Harvard Business School Teaching Note 219-003, July 2018. View Details

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Teaching Note | HBS Case Collection | June 2018

ALAC International

Richard S. Ruback, Royce Yudkoff and Ahron Rosenfeld

ALAC International (ALAC) was awarded the U.S. distributorship of di-isononyl phthalate (DINP) which provided ALAC an opportunity to increase its sales and profits. But the opportunity required a significant additional investment in working capital. The DINP, shipped by boat from Taiwan, had a four month cash conversion cycle; after purchasing the DINP, it took two month to arrive in the U.S., another month to sell and distribute it, and then another month to collect the receivables. ALAC planned to double the number of shipments in 2011 to twelve from the six in 2010. ALAC needed to estimate its working capital needs and then evaluate alternative ways to finance its needs. Teaching Note for HBS No. 211-065.

Keywords: working capital; Working Capital; Financing and Loans; Growth Management;

Citation:
Ruback, Richard S., Royce Yudkoff, and Ahron Rosenfeld. "ALAC International." Harvard Business School Teaching Note 218-131, June 2018. View Details

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Merck & Company: Evaluating a Drug Licensing Opportunity

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