What should Nucleon look like in 10 years (e.g.

, an R&D boutique, an R&D boutique with pilot scale manufacturing capabilities, or an integrated manufacturing enterprise)? Explain your recommendation based upon qualitative information provided in the case. At present, Nucleon

3 options pilot plant advantages can control all proprietary information, especially prior to receiving a patent provides the firm with the option of developing/expanding the plant into a larger scale in house manufacturing facility employees can gain the necessary skills and experience related to the manufacturing process early, so they are equipped and in a position to work with manufacturing in the event that manufacturing is brought in-house for phase 3. Scaling up will be easier in the event that they are able to experiment in their own pilot plant Can differentiate from solely an R&D firm Disadvantages Uncertain about CRP-1s success during human trials, although low probability of failure it was still a possibility and this could result in an idle pilot plant + large investment, with the next products years away from pilot manufacturing needs Process uncertainty Given the firms specialization and focused abilities in R&D, the board/investors would want them to focus on that etc Contract manufacturing Advantages No major capital investment Could be easily terminated Companies supplying the contract manufacturing services had facilities and

personnel in place already Disadvantages Costly Few contractors willing to manufacture pharmaceuticals from bacteria Confidential information disclosure Takes a long time to put together and negotiate an agreement Licensing to another company Immediate cash generation Don t have to make large capital investments into clinical development/manufacturing, can focus on R&D Disadvantages Only receive royalties if product is successful they receive much lower revenues than if they made the investment themselves