It has to be 2 parts. Excel calculations and case study. Please charge me as much as needed
THE MEDFIELD PHARMA CASE: FIRM VALUATION AND ETHICAL CONSIDERATIONS OF REFORMULATION THE MEDFIELD PHARMA CASE: FIRM VALUATION AND ETHICAL CONSIDERATIONS OF REFORMULATION Understand that the Medfield case has 2 major problems: 1) Firm Valuation – Impact of Patent Loss and Reformulation; 2) Ethical Considerations – How to Ensure Patients and third-party payees are not hurt Organize your paper around the case questions, use them as an organizing device. This will benefit you in several ways: 1) provide a framework for constructing your paper; 2) ensure I (your reader) understand exactly what question you are answering; and 3) ensure you answer every question. Use examples from Pfizer, AstraZeneca and other firms in EXHIBIT 3 to substantiate your thought. 1. What is the current value of Medfield as a company? Use the exhibit 4 spreadsheet to calculate the NPV of Medfield. Compare this result to the offer price and provide your reasoning for the difference. 2. If we consider the sale of Medfield as the sale of existing assets how does the elimination of R&D, investment in future assets, change the valuation of Medfield? (Using the exhibit 4 spreadsheet distinguish between the NPV value of existing products and R&D) 3. What is the value that would be created by a reformulation? Complete and explain the table below. 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Incremental Research 35 35 Incremental Special Marketing 25 25 25 25 25 Growth 2% -50% 2% 2% 2% 2% 2% 2% 2% 2% -50% -50% -50% New Sales 214.77 Marginal Sales (New Sales – Original Sales 0.00 New Cost of Sales 49.40 Marginal Cost of Sales 0.00 New Direct Marketing 57.99 Old Direct Marketing 57.99 59.15 29.57 14.79 7.39 0 0 0 0 0 0 0 0 0 Marginal Direct Marketing 0.00 New G&A 8.59 Old G&A 8.59 8.76 4.38 2.19 1.10 0 0 0 0 0 0 0 0 0 Marginal G&A 0.00 Marginal Cash Flow pre Tax (60.00) 29.52 14.76 7.38 Marginal NOPAT (40.80) 20.07 10.04 5.02 NPV 4. What factors explain the value created from the reformulation for Fleximat? 5. Who reaps the financial benefits? 6. Who bears the financial costs? ONLY ANSWER ONE OF THE QUESTION 7’S: IF YOU SUPPORT REFORMULATION: 7. What facts would change your mind and cause you to recommend against reformulation? IF YOU ARE AGAINST REFORMULATION 7. Under what conditions might you be in favor of reformulation? 8. How would you change your thinking if Medfield’s reformulation approach were more substantive (e.g. drug works faster, works longer) than cosmetic? 9. Could Medfield use the extra value created by the reformulation to generate new and helpful products? 10. When you consider Medfield’s stakeholders, what are the key issues. Choose three from the following list and discuss the key issues. a. Shareholders of Medfield b. Patients using the drug c. Third-party payees (Medicare, private insurance companies, etc.) d. Government e. Employees of Medfield f. Physicians 11. What ethical issues need to be considered in making a reformulation decision? Which are more pressing? Reference the ethics concepts discussed earlier in the semester, include at least one of the Right vs. Wrong explanations presented: Consequences, Duty, or Virtues. Use external references sources to support your discussion of the ethical issues. 12. What should Susan Johnson do? Explain your choice of a, b, c, or d. If you have another approach, discuss it here. a. Don’t pursue the reformulation, but accept takeover offer b. Initiate the reformulation and accept the offer c. Refuse the offer but initiate reformulation d. Refuse the offer and not reformulate Your Turnitin Score needs to be 0-30% tops. Try to get it down there. If it is higher, I will read your paper, and see why the score is high but your grade will reflect the score. REFERENCES MUST BE IN ALPHABETICAL ORDER. NAKED URLS ARE NOT ACCEPTABLE APA conventions for citing and referencing: https://owl.purdue.edu/owl/research_and_citation/apa_style/apa_formatting_and_style_guide/general_format.html//owl.purdue. Cover Page i Case Studies in Finance Managing for Corporate Value Creation Eighth Edition Robert F. Bruner Kenneth M. Eades Michael J. Schill Page ii CASE STUDIES IN FINANCE: MANAGING FOR CORPORATE VALUE CREATIONS, EIGHTH EDITION Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2018 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2014, 2002, and 1989. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 LCR 21 20 19 18 17 ISBN 978-1-259-27719-1 MHID 1-259-27719-4 Portfolio Manager: Tim Vertovec Senior Product Developer: Jennifer Upton Marketing Manager: Trina Maurer Content Project Managers: Melissa M. Leick, Karen Jozefowicz Buyer: Susan K. Culbertson Content Licensing Specialist: Beth Thole Compositor: Aptara , Inc. All credits appearing on page or at the end of the book are considered to be an extension of the copyright page. Library of Congress Cataloging-in-Publication Data Names: Bruner, Robert F., 1949-author. | Eades, Kenneth M., author. | Schill, Michael J., author. Title: Case studies in finance: managing for corporate value creation / Robert F. Bruner, Kenneth M. Eades, Michael J. Schill. Description: Eighth Edition. | Dubuque, IA : McGraw-Hill Education, [2018] | Series: The McGraw-Hill/Irwin series in finance, insurance, and real estate | Revised edition of the authors’ Case studies in finance, [2014] Identifiers: LCCN 2017023496| ISBN 9781259277191 (alk. paper) | ISBN 1259277194 (alk. paper) Subjects: LCSH: Corporations—Finance—Case studies. | International business enterprises— Finance—Case studies. Classification: LCC HG4015.5 .B78 2017 | DDC 658.15—dc23 LC record available at https://lccn.loc.gov/2017023496 The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites. mheducation.com/highered ® https://lccn.loc.gov/2017023496 http://mheducation.com/highered Page iii The McGraw-Hill Education Series in Finance, Insurance, and Real Estate FINANCIAL MANAGEMENT Block, Hirt, and Danielsen Foundations of Financial Management Sixteenth Edition Brealey, Myers, and Allen Principles of Corporate Finance Twelfth Edition Brealey, Myers, and Allen Principles of Corporate Finance, Concise Second Edition Brealey, Myers, and Marcus Fundamentals of Corporate Finance Ninth Edition Brooks FinGame Online 5.0 Bruner, Eades, and Schill Case Studies in Finance: Managing for Corporate Value Creation Eighth Edition Cornett, Adair, and Nofsinger Finance: Applications and Theory Fourth Edition Cornett, Adair, and Nofsinger M: Finance Fourth Edition DeMello Cases in Finance Third Edition Grinblatt (editor) Stephen A. Ross, Mentor: Influence through Generations Grinblatt and Titman Financial Markets and Corporate Strategy Second Edition Higgins Analysis for Financial Management Twelfth Edition Ross, Westerfield, Jaffe, and Jordan Page iv Corporate Finance Eleventh Edition Ross, Westerfield, Jaffe, and Jordan Corporate Finance: Core Principles and Applications Fifth Edition Ross, Westerfield, and Jordan Essentials of Corporate Finance Ninth Edition Ross, Westerfield, and Jordan Fundamentals of Corporate Finance Twelfth Edition Shefrin Behavioral Corporate Finance: Decisions that Create Value Second Edition INVESTMENTS Bodie, Kane, and Marcus Essentials of Investments Tenth Edition Bodie, Kane, and Marcus Investments Eleventh Edition Hirt and Block Fundamentals of Investment Management Tenth Edition Jordan, Miller, and Dolvin Fundamentals of Investments: Valuation and Management Eighth Edition Stewart, Piros, and Heisler Running Money: Professional Portfolio Management First Edition Sundaram and Das Derivatives: Principles and Practice Second Edition Financial Institutions and Markets Rose and Hudgins Bank Management and Financial Services Ninth Edition Rose and Marquis Financial Institutions and Markets Eleventh Edition Saunders and Cornett Financial Institutions Management: A Risk Management Approach Ninth Edition Saunders and Cornett Financial Markets and Institutions Seventh Edition INTERNATIONAL FINANCE Eun and Resnick International Financial Management Eighth Edition REAL ESTATE Brueggeman and Fisher Real Estate Finance and Investments Sixteenth Edition Ling and Archer Real Estate Principles: A Value Approach Fifth Edition Financial Planning and Insurance Allen, Melone, Rosenbloom, and Mahoney Retirement Plans: 401(k)s, IRAs, and Other Deferred Compensation Approaches Tenth Edition Altfest Personal Financial Planning Second Edition Harrington and Niehaus Risk Management and Insurance Second Edition Kapoor, Dlabay, Hughes, and Hart Focus on Personal Finance: An active approach to help you achieve financial literacy Sixth Edition Kapoor, Dlabay, Hughes, and Hart Personal Finance Twelfth Edition Walker and Walker Personal Finance: Building Your Future Second Edition Page v Dedication In dedication to our wives Barbara M. Bruner Kathy N. Eades And to the memory of Mary Ann H. Schill and to our children Page vii Page vi About the Authors Robert F. Bruner is University Professor, Distinguished Professor of Business Administration and Charles C.