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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Merck & Company: Evaluating a Drug Licensing Opportunity

Abstract

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