OPIM 5894 ADVANCED PROJECT MANAGEMENT
VERTEX PHARMACEUTICALS CASE
SURESH NAIR, Ph.D.
Professor,
School of Business
University of Connecticut, Storrs, USA
http://users.business.uconn.edu/snair/opim5894.html
Vertex Pharmaceuticals case
2
Issues Raised
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Drug development issues – selecting a portfolio of products
In-house versus Licensing issues
Types of risks – Target risk, Mechanism risk, Molecule risk,
Market risk
Real options analysis
Prof. Suresh Nair, University of Connecticut
Vertex Pharmaceuticals case
3
Team Assignments – Team 1, Team 2, Team 3
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Which of the 4 project portfolio options currently
facing Vertex do you favor?
Specifically, which two projects would you advance in
development? Why? Show analysis. Remember: If
chance of success is 0.2 for each of two projects,
 the chance that both succeed is 0.04,
 the chance that both fail is 0.64
 The chance that at least one succeeds is 0.32
Prof. Suresh Nair, University of Connecticut
Vertex Pharmaceuticals case
4
Team Assignments (contd.) – Team 1, Team 2, Team 3
Criteria
VX 148
VX 702
VX 765
VX 950
Sales Potential
Financial Return
Risk
Time to market
Wall Street Reaction
Breadth of Potential Applications
Follow-on opportunities
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:
:
Would you license out the two others not chosen or
keep them as backup?
 How much should Vertex management rely on
quantitative methodologies (such as real option
valuation) versus more qualitative approaches?
Prof. Suresh Nair, University of Connecticut
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