Case Detail

Case Summary

Orexigen: Valuing Contrave

Case Number: 5-113-001, Year Published: 2016

HBS Number: KEL959

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Key Concepts

Consumer Marketing, Financial Strategy, General Management, Growth Strategy, Health Care, Marketing, Marketing Strategy

Abstract

In January 2013, small biotechnology firm Orexigen was in the final stages of testing Contrave, a promising new pharmaceutical product for the treatment of obesity. At the time, Orexigen had no products in the market, so all its hopes of financial success rested on this new treatment. Contrave had proven to be highly effective in clinical trials, and Orexigen executives were confident it would receive FDA approval.

At the same time, a much larger pharmaceutical company was considering acquiring Orexigen. Because the decision to acquire would ultimately be a financial one, the project team from the large company had to complete a valuation for Orexigen's only significant product in its pipeline, Contrave. What was the new product actually worth?

Learning Objectives

After reading and analyzing the case, students will be able to appreciate the importance of valuation; understand how to complete a discounted cash flow analysis; realize the role of sensitivity analysis; and work with a patient flow model.

Number of Pages: 19

Extended Case Information

Teaching Areas: Marketing

Teaching Note Available: Yes

Geographic: United States

Industry: Pharmaceutical

Organization Name: Orexigen

Organization Department: Business Development

Organization Size: Medium

Decision Maker Position: Head of Business Development

Decision Maker Gender: Female