The Sirtris Pharmaceuticals Case Study

In understanding and examining the “Sirtris Pharmaceuticals: Living healthier, longer” case study, it can be inferred that the pharmaceutical company is facing three distinct strategic problems. Firstly, Sirtris Pharmaceutical’s top entrepreneurs Sinclair and Westphal are in dilemma as to whether or not should buy the option of in-licensing. Currently, the company is apparently operating on a narrow focus on SIRT1-a drug that is one of the seven Sirtuin variants present in the human body. However, in-licensing would offer an opportunity for diversification of Sirtris drug development platform. The situation nevertheless calls for intensive decision-making considering that majority of the executive members in the company are for the view that more balanced risk portfolio is given preference since the company is just started to venture into investment aimed at increasing its drug development abilities (Staurt, & Kiron, 2008).

 Secondly, the company faces the predicament of forming a partnership. According to Stevenson and Spence (2009), entrepreneurs often want to exploit opportunities that would promote sustainability of the projects, enable them to grow and develop. From this perspective, Sinclair and Westphal are faced with the situation of having to make a deal with Pharma or postpone such a deal. Despite being informed that partnership with large pharmaceutical firms has made many biotech companies realize their dreams, the two co-founders are hesitant for particular concerns. In parts, they are in doubts as to what it would imply if they got into partnership at that stage of their development and to wait until they have generated more data (Staurt, & Kiron, 2008).

Thirdly, the company faced the problem of whether to or not to release their drug as a nutraceutical. The thought followed having received many e-mails and phone calls that were sent and made by the public in request of the reveratol-SRT501 version from the Sirtris Pharmaceutical. While it offered a lucrative opportunity to generate some revenue for the company considering that it was allowed without the approval of Food and Drug Administration body, the major issue was the reputation, credibility, integrity, and ethical values of the all-star scientists who worked with the biotech firm (Staurt, & Kiron, 2008).

Analysis

Based on the case study, three questions are at the center of the strategic decisions to be made. For instance, is it viable to in-license compounds from other biotech firms to diversify the company’s drug development prospects? Is it the right time to make a deal with another company in the form of partnership? And is it appropriate to begin sales of the drug as nutraceutical? To generate appropriate and the most suitable answers for the highlighted central questions, Porter’s five forces are imperative for interpreting certain aspects that the entrepreneurs would have considered.

In The Five Competitive Forces That Shape Strategy by Porter (2017), it is inferred that Sinclair and Westphal would have paid particular attention to forces including rivalry among the existing competitors, threats of the new entrants, threat of the substitute products, bargaining power of the suppliers, and the bargaining power of the buyers. As such, there are different rival biotech firms including Pharma which it wants to partner with that considers it a business enemy based on the competition that it creates. The suppliers would be the other pharmaceutical firms whose compounds it considers to in-license, its new drug that is still being developed is the new entrant as well as a substitute to other drugs that are already in the market, and lastly, the target consumers are the buyers with the bargaining power. Each of those forces has a direct influence on Sirtris Pharmaceutical future in regards to the three strategic challenges. Effective application of the five forces, enable and facilitate understanding of the company’s structure as well as the prevailing conditions in the drug industry, thus, prompting the entrepreneurs to stake out and implement strategies that are not only promising a realistic increase in profits but also show less vulnerability.

Sirtris Study Questions

The odds that Sirtris will generate substantial revenue when Westphal joins are very high. As an entrepreneur, he has a record of having formed larger companies including Mementa and Alnylam which had gone public at a combined net worth of $1.4billion. His ability to pitch ideas and convince other investors interested in his field is magnificent. As informed by Elsbach,  (2003), he has a full understanding of how he is stereotyped. Sharp who is noble prize winning biologist confirms that entrepreneurs of Westphal’s caliber are rare and he is the only one he has met in three decades of his work in the biotech industry. Like Westphal, I would have left Polaris to join efforts with Sinclair who had a viable project worth billions if implemented. In the shoes of entrepreneurs who are as well innovators, it is only expected that you achieve different results by trying new ideas that are of less vulnerable to attack and have the high probability of being profitable (Stevenson, H. & Spence, 2009: Saaty, 2008).

In regards whether or not Sirtris should do a deal with Pharma, I am of the opinion that it should. This would be one way of spreading the risks involved in the drug development process including the costs and all the resources that might be required. Nevertheless, since the worry is on the currently available data, it would be best to do the deal with Pharma it allows Sirtris to have an equity stake of 51%. With such a stake, Sirtris remains the major shareholder and would be able to control major decisions within the company (Karimi, Papamichail, & Holland, 2015).

Sirtris should not launch the SRT501 nutraceuticals. While it is allowed without the approval of the FDA, it is only ethical to release safer to consume drugs with minimal or few sides effects. Moreover, it would be a bigger achievement for the company if the drug is finally approved by the FDA. The team of all-star scientists believes in themselves hence the drug could be one in every five that gets approved. It does not only get used to waiting until all the relevant data on the drug is collected but also the integrity and credibility of the scientists would be preserved.

Recommendations

After weighing all the alternative causes of action, the preferable approaches would be those that spread the risks, remain less vulnerable to attack, and promises increased profits. As such, it is a recommendation that Sirtris buys the option of in-licensing. Here, the company would diversify its drug development platform via only licensing pharmaceutical products that have known side effects to the market. Nevertheless, the move would allow the company to maintain a better relationship with the target clients who will be informed of the specific values they would get from consuming such drugs. It is also a recommendation that the company forms the partnership with Pharma. The deal would enable the company to share the cost, human capital and other resources that might be required for the successful development of the drug.

References

Elsbach,D. Kimberley. (2003). How To Pitch A Brilliant Idea. Harvard Business School. Pdf.

Karimi, S., Papamichail, K. N., & Holland, C. P. (2015). The effect of prior knowledge and decision-making style on the online purchase decision-making process: A typology of consumer shopping behaviour. Decision Support Systems, 77, 137-147.

Porter, E. Michael .(2017). The Five Competitive Forces That Shape Strategy. Harvard Business School. Pdf.

Saaty, T. L. (2008). Decision making with the analytic hierarchy process. International journal of services sciences, 1(1), 83-98.

Staurt, T., & Kiron,D. (2008).Sirtris Pharmaceauticals: Living Healthier, Longer. Harvard Business School. Pdf.

Stevenson, H. Howard, & Spence, M. Shirley. (2009). Identifying And Exploiting The Right Entrepreneurial Opportunity…For You. Harvard Business School. Pdf.