What is the current value of medfield as a company

Question

Homework

THE MEDFIELD PHARMA CASE: FIRM VALUATION AND ETHICAL CONSIDERATIONS OF REFORMULATION

Understand that the Medfield case has 2 major problems: A) Firm Valuation - Impact of Patent Loss and Reformulation; B) Ethical Considerations - How to Ensure Patients and third-party payees are not hurt

Organize your paper around the case questions, use them as an organizing device. This will benefit you in several ways: 1) provide a framework for constructing your paper; 2) ensure I (your reader) understand exactly what question you are answering; and 3) ensure you answer every question.

Use examples from Pfizer, AstraZeneca and other firms in EXHIBIT 3 to substantiate your thought.

• What is the current value of Medfield as a company? Use the exhibit 4 spreadsheet to calculate the NPV of Medfield. Compare this result to the offer price and provide your reasoning for the difference.

• If we consider the sale of Medfield as the sale of existing assets how does the elimination of R&D, investment in future assets, change the valuation of Medfield? (Using the exhibit 4 spreadsheet distinguish between the NPV value of existing products and R&D)

• What is the value that would be created by a reformulation? Complete and explain the table below.

	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022	2023	2024
Incremental Research	35	35
Incremental Special Marketing	25	25	25	25	25
Growth		2%	-50%	2%	2%	2%	2%	2%	2%	2%	2%	-50%	-50%	50%
New Sales	214.77
Marginal Sales (New Sales - Original Sales	0.00
New Cost of Sales	49.40
Marginal Cost of Sales	0.00
New Direct Marketing	57.99
Old Direct Marketing	57.99	59.15	29.57	14.79	7.39	0	0	0	0	0	0	0	0	0
Marginal Direct Marketing	0.00
New G&A	8.59
Old G&A	8.59	8.76	4.38	2.19	1.10	0	0	0	0	0	0	0	0	0
Marginal G&A	0.00
Marginal Cash Flow pre Tax	(60.00)
Marginal NOPAT	(40.80)
NVP

 

• What factors explain the value created from the reformulation for Fleximat?

• Who reaps the financial benefits?

• Who bears the financial costs?

ONLY ANSWER ONE OF THE QUESTION 7'S:

IF YOU SUPPORT REFORMULATION:

• What facts would change your mind and cause you to recommend against reformulation?

IF YOU ARE AGAINST REFORMULATION

Under what conditions might you be in favor of reformulation?

• How would you change your thinking if Medfield's reformulation approach were more substantive (e.g. drug works faster, works longer) than cosmetic?

• Could Medfield use the extra value created by the reformulation to generate new and helpful products?

• When you consider Medfield's stakeholders, what are the key issues. Choose three from the following list and discuss the key issues.

o Shareholders of Medfield
o Patients using the drug
o Third-party payees (Medicare, private insurance companies, etc.)
o Government
o Employees of Medfield
o Physicians

• What ethical issues need to be considered in making a reformulation decision? Which are more pressing? Reference the ethics concepts discussed earlier in the semester, include at least one of the Right vs. Wrong explanations presented: Consequences, Duty, or Virtues. Use external references sources to support your discussion of the ethical issues.

• What should Susan Johnson do? Explain your choice of a, b, c, or d. If you have another approach, discuss it here.

o Don't pursue the reformulation, but accept takeover offer
o Initiate the reformulation and accept the offer
o Refuse the offer but initiate reformulation
o Refuse the offer and not reformulate

Format your homework according to the following formatting requirements:

o The answer should be typed, using Times New Roman font (size 12), double spaced, with one-inch margins on all sides.

o The response also includes a cover page containing the title of the homework, the student's name, the course title, and the date. The cover page is not included in the required page length.

o Also include a reference page. The Citations and references must follow APA format. The reference page is not included in the required page length.