Vertex Pharmaceuticals is evaluating its R&D portfolio and must decide which projects to advance in development. The portfolio includes projects for pasoriasis (VX-148), acute coronary syndrome (VX-702), rheumatoid arthritis and osteoarthritis (VX-765), and hepatitis C (VX-950). The summary provides details on the development phase, estimated costs, probability of approval, and potential profits for each project.

1. Case Report
Vertex Pharmaceuticals: R&D Portfolio
Management (A)
ROV metrics

2. ROV Metrics
VX-148 VX-702 VX-765 VX-950
Indication Pasoriasis ACS RA & CA HCV
Phase Phase II Phase II Phase I Preclinical
(2H’07) (1H’09) (2H’08) (2H’09)
Cost $100MM $300MM $600MM $220MM
Prob. Approval 75% 50% 75% 80%
Profit $400MM $355MM $220MM $395MM
Character 牛皮癬; 急性心血管; 類風濕性關節及 C型肝炎;
81萬(約1%, 每年190萬美國 退化性關節; 每年約8,000
270萬美國居 居民; 2100萬美國居民; ~10,000因此病死
民中的30%;) 可納入依療保 VX-74 亡, 270美國居民
VX-944, VX- 險; 隱憂:Aventis 合 罹患慢性 HCV,
497 VX-850 夥關係, 高研發成 全球1.85億;
本; Alpha 干擾素可
VX-740 能增加成本;

3. QUESTIONS
1. WHICH OF THE PROJECT PORTFOLIO OPTIONS CURRENTLY FACING
VERTEX DO YOU FAVOR? SPECIALLY, WHICH TWO PROJECTS WOULD
YOU ADVANCE IN DEVELOPMENT? WOULD YOU LICENSE OUT THE
TWO OTHERS NOT CHOSEN OR KEEP THEM AS BACK-UP?
2. WHAT CRITERIA WOULD YOU USE TO MAKE THE DECISION?
WHAT OTHER INFORMATION, IF ANY, DO YOU THINK BOGER NEEDS
TO MAKE THE DECISION?
3. WHAT APPROACH SHOULD BE USED TO MAKE A DECISION LIKE
THIS? HOW MUCH SHOULD VERTEX MANAGEMENT RELY ON
QUANTITATIVE METHODOLOGIES (SUCH AS REAL OPTION
VALUATION) VERSUS MORE QUALITATIVE APPROACHES? HOW
SHOULD A COMPANY VALUE INVESTMENTS IN PROJECTS LIKE
THESE, WHICH ENTAIL AN EXTREMELY HIGH DEGREE OF
UNCERTAINTY? WHAT MANAGEMENT PROCESS SHOULD BE USED?