OPIM 5894 ADVANCED PROJECT MANAGEMENT

VERTEX PHARMACEUTICALS CASE

TEAM 1
http://users.business.uconn.edu/snair/opim5894.html

Vertex Pharmaceuticals case

Which of the 4 project portfolio options currently facing Vertex do you favor?
VX-765 - Big money - Earliest in development - Biggest risk

Prof. Suresh Nair, University of Connecticut

Vertex Pharmaceuticals case

Specifically, which two projects would you advance in development? Why? Show analysis.
VX-702, VX-765 - Highest expected values - See graphs

Prof. Suresh Nair, University of Connecticut

Vertex Pharmaceuticals case

Criteria
Sales Potential Financial Return Risk (Chance of Success) Time to market Wall Street Reaction Breadth of Potential Applications : : : : Prof. Suresh Nair, University of Connecticut

VX-148
$4.6 B $2.5 B 20% 2H 07 Low Low

VX-702
$6.0 B $3.1 B 15% 1H 09 Medium High

VX-765
$7.5 B $3.7 B 22% 2H 08 High Medium

VX-950
$4.8 B $2.5 B 21% 2H 09 High Low

Vertex Pharmaceuticals case

Would you license out the two others not chosen or keep them as backup?
-

VX-148 license out VX-950 license out

How much should Vertex management rely on quantitative methodologies (such as real option valuation) versus more qualitative approaches?
-

Quantitative Methodologies 75% Qualitative Approaches 25%

Prof. Suresh Nair, University of Connecticut

Revenue Stream

Prof. Suresh Nair, University of Connecticut