Example McKinsey Style Case: GenCo

The following is a McKinsey style case that I wrote. The questions are posted below and the example answers are contained in the PowerPoint at the end of the post:

Background Info: Your client, GenCo, is a $13.7 billion biotechnology division of a large, global pharmaceutical company.
GenCo has been considering developing a drug to treat Retinal Macular Degeneration (RMD). RMD is a major cause of blindness in elderly people, and no competitor has a drug to treat it.
GenCo has brought you in to determine: should they develop a drug to treat RMD, and what might some of the risks be?

1. What key areas would you examine to determine whether or not the client should create a drug to treat RMD?

2. Let’s skip forward 5 years. The client went ahead and invested in the drug (now called Lucentis) and it has recently been FDA approved. Given the following information, how would you price the drug to break even in 2 years?

3. The client has another drug called Avastin, which is used to treat cancer. This drug is much cheaper than Lucentis ($50/dose vs. $2000/dose). Avastin is being used off label to treat RMD. What are some of the risks to GenCo if doctors continue to prescribe Avastin over Lucentis?

4. A major newspaper has recently run a story claiming that the higher price of Lucentis has cost Medicare $1 billion extra than if doctors had prescribed Avastin instead. How would you respond?

5. The NIH went ahead and conducted clinical trials and found Avastin had no increased risk of mortality / side effects over Lucentis. What would you do?

GenCo

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