Pharma Technologies' race to fund erectile dysfunction drug development

¶ … Pharma Technologies

Case analysis Pharma Technologies: A biotechnology firm, Pharma Technologies, developed a competing method treatment erectile dysfunction

Pharma Technologies Inc. based in Canada at a major medical research University in February 1999, wanted to develop a product to compete with Viagra which is developed by Pfizer. PTI obtained a patent for developing a revolutionary sexual dysfunctional treatment drug. The company is faced with financial problems to assist it in developing the new drug. Before a drug can receive full approval by the Food and Drug Administration (FDA), it needs to undergo several testing phases. These testing phases consume a lot of time money. The case study indicates that it can cost over $500 million and take 10 years before the drug is approved for manufacturing and marketing Herbert, 2004.

The patent the company obtained has a life span of 20 years. The patent is obtained when the development process is beginning, which gives the company a short period before the drug becomes commercially available. These problems put a lot of pressure on PTI to expedite on the development process.

The other problem was negotiating an agreement with owners of Factor X, which was the main component for their drug. Though PTI had found investors who had committed to funding the project for a tune of $5 million, the investors had specified conditions and milestones that would have to be met before the funds were released. The first amounts would be released immediately after the agreement was signed, and the second after PTI has successfully completed the technical milestones and signing a partnership agreement for co-development with a pharmaceutical company.

The issues that would need to be addressed immediately to ensure the continuation of the development and release of funds are, selecting a pharmaceutical company to partner with, get Investigational New Drug (IND) status, so they can begin clinical trials, and fixing the final product components. These milestones had to be achieved in the next 11 months of the project. For the company to achieve the milestones set out by the investors, the company should expedite on the corporate partnership agreement, and finalize on the screening process.

How will PTI be able to get access of the second payment from the investors as the company was running low on funds? This is the question that Glickman was mostly concerned about, since he knew that the company's expenditure for the next 6 months would deplete all the funds of the company.

Objectives

PTI wanted to introduce a revolutionary method for treating male erectile dysfunction. The company had discovered a different method that could be used to treat erectile dysfunction, and since their method addresses physiology underlying erectile dysfunction, PTI could be able to prevent any progression of erectile dysfunction. This would set their product apart from other competitors as it would also have reduced side effects on the patients.

The drug PTI was developing had the potential to prevent progression and onset of erectile dysfunction and could even be able to reverse the disease. These would have a wider reach in the patient populations as it would cure instead of just treating the dysfunction. There were patients who could not use Viagra since they were on nitrate therapy for the cardiovascular disease. While conducting research for the new revolutionary drug, the scientists discovered a method that could be used to diagnose male erectile dysfunction and female sexual disorders.

Generating alternatives

PTI has an option of partnering with a major pharmaceutical company or a small company. The partner that PTI selects will determine if the company will choose in-licensing or out-licensing. PTI would mostly benefit if they choose to go with in-licensing as opposed to out-licensing their technology. Though in-licensing would allow PTI to have control of their technology, it would mean they had to settle for a smaller pharmaceutical company Taylor, Drummond, Salkeld, & Sullivan, 2004.

This small company's might not have the leverage for pushing the product, but PTI would reap the benefits of profit sharing with the partner as opposed with opting for out-licensing. Though going with in-licensing would not give PTI the opportunity to launch all of the company's research initiatives.

PTI could also try to partner with a major pharmaceutical company and have a collaborative agreement instead of going for the out-licensing option. If PTI can find a major partner who would be willing to settle for such an agreement the company would benefit a lot as it would be riding on the major company's established back bone, and the chances of their new drug been successful would be guaranteed. Using a major pharmaceutical company would allow PTI to better compete with Pfizer's Viagra. The downside for searching for a major pharmaceutical company is the timelines that PTI would need, and they would need to work hard at persuading the company of the benefits it can reap from the new drug, and its market potential.

With external development of their technology PTI would lose out on their drug's revenue generating potential. External development gives full control to the partner and PTI would only get the possibility of some portions been contracted back to them. This option is not viable for the company, because it would mean the research they have been conducting would benefit another company and their work not recognized. Internal development would allow PTI to perform its own clinical research. This gives the scientist the opportunity to understand their drug better, and they can make changes since they understand its requirements. The company would also be able to share in the profit made from their new drug. The company directors will need to analyze the strategies that would benefit the company, and allow it to share in the profits made from the new drug they are developing.

Conclusion

PTI scientists have a revolutionary drug that would not only treat the symptoms for this disorder temporarily, but has the potential to cure and prevent erectile dysfunction. The scientists have also stumbled upon a method of diagnosing male erectile dysfunction and female sexual disorders, which no other company has done so far. If the company can leverage itself well using the best fit strategy of in-licensing, PTI would benefit more, and there is a possibility of the research they have started to progress. Settling for in-licensing will give the company potential for growth, and would allow their drug to grow and compete with the other more established erectile dysfunctional drugs like Viagra. The licensing agreement chosen can apply for both small and major pharmaceutical companies, all the PTI executives will need is better negotiation skills, and demonstrate to the company the potential for their new drug. With the advancements they have made, it is not advisable for PTI to hand over control of their development to another company no matter the benefits the drug might gain from marketing by the major company.