Dura Pharmaceuticals Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

In May 1999, Antonio Regalado, investment analyst, was charged with determining whether to invest in Dura Pharmaceuticals and Spiros II (formed to develop Spiros inhaler technology for use in patients with diabetes). Dura successfully changed their organization from one that specializes in the marketing of niche products installed on one with extensive research and development (R & D) capabilities needed to create new products. Like a number of other pharmaceutical companies change their business models, Dura relied on R & D spin-offs to develop its own technology. Spin-off of the contract exclusively with Dura, to do the research, there was little staff, and have always been bought Dura end of the development cycle. However, Dura still believed the spin-off will allow to separate the risk of R & D from its core business, because Dura had the opportunity, but not the obligation, to buy shares of the spin-off. "Thus, R & D spin-off allowed Dura to finance their long-term goals, it does not harm the current investor base. Several members of the financial community questioned the validity of the spin-off. was not clear that there was a sufficient basis for the dura mater to the spin-off should be considered as separate entities, given their close communication with Dura. Moreover, many experts warned Wall Street investors that can use Dura Spiros II, to hide the poor underlying economics of business. Finally, it was clear, spin-offs made economic sense for Dura first. As an investor in the Spiros II, Dura lost a lot of money. Regardless of its analysis capabilities Dura, in Regalado believed it would be necessary first to understand the basic economic spin-off transaction. then it shall determine which investments offer the highest reward. "Hide
by Mary E. Barth, Carlos Schoenfeld Source: Stanford Graduate School of Business 16 pages. Publication Date: May 6, 1999. Prod. #: A177-PDF-ENG