Vertex Case Study

Vertex succeeded in competition with large pharma by eliminating bureaucracy and investing in the best minds and technology to make decisions. However, an environment of rising costs, generics and negative attention has been created, leading large Pharma to survive through mergers and partnerships. In order to stay nimble, independent and in-control, Vertex must avoid the big Pharma solutions.

Vertex has been able to shield itself from mergers through its policy of “rational drug design” which saves the company millions of R&D funding by focusing the testing, instead of randomly searching for viability. However, Vertex may be losing ground by trying to develop all compounds internally. Partnering with large Pharma is not the answer, as they would reap more of the rewards due to name recognition. Instead Vertex should partner with smaller bio-tech firms, or even university research laboratories. This would allow Vertex:

• More control

o Vertex could produce the compound, but use outlets for basic testing and retain the power for marketing and distribution

• Branding

o Vertex would have more name recognition over bio-tech start-ups and high prestige from partnering with Universities

• Young Scientific Minds

o By funding graduate research, Vertex can recruit the best minds from many disciplines. Having graduates research will also cut down on initial costs.

With development taking 10 to 15 years and costing over $800 million, Vertex needs to:

• Continue to specialize in the best technology

o Being on the cutting edge of pharmaceuticals does carry risk, but with the ability to market to the general public, patients will always be looking for the best, most recent, prescription