Massachusetts General Hospital and the Enbrel Royalty Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Massachusetts General Hospital and the Enbrel Royalty case Solution

Introduction

The Massachusetts General Hospital is one of the oldest general hospitals in the United States. The Hospital has a great image in the world for its remarkable services. The hospital also has the name for its originality and the fame for its services to the Harvard Medical School as the largest teaching hospital. Most of the all the active staff physicians from the nearby hospitals were providing their services to the Harvard Medical School as being the faculty member of Harvard Medical School.

The MGH have the facility of the 893 beds in the hospital and provide superior services for the diagnosis and the satisfying care. The hospital provides their services in almost every field and have sub-specialty in Surgery and also the medicine. The achievement of a development of the Enbrel is also attached to the name of the Massachusetts General Hospital. The scientists at the MGH jointly with the other scientists have developed a technology that is used to fuse the immunoglobulin in order to convert them into the hormone receptors. The same technology was used in order to create Enbrel.

Problem Statement

The Director of the Corporate Sponsored and licensing, Frances Toneguzzo was facing problems in order to decide the right price for the selling of the Enbrel royalty and other licensing technologies. The MGH have some options to sell their royalties and invest for the future research. The problem is the selling Enbrel royalty will restrict the income from the licensing of the technologies. Frances Toneguzzo has to decide the right price in order to minimize the future losses from the opportunity of the income from these royalties.

Objective

In order to find the proper value of the Enbrel Royalty, the objective of the analysis is to analyze the sales data and forecasting sales and the market data. The objective is to find the appropriate beta, CAPM and WACC from the data and use it accordingly in order to get the right value of the Enbrel Royalty.

Analysis

The Enbrel sales record 39 percent of the overall sales of TNF Blocker Market in the year 2003 and 38 percent in the year 2004. The sales of the Enbrel is declining concerning TNF Blocker Market share. However, it is increasing in numbers.

Calculation of WACC

The WACC has been calculated in order to know the rate that is feasible for both the investors and debtors. The Cost of Debt is calculated by dividing the interest rate from the EBITDA of the Massachusetts General Hospital. The calculated cost of debt is 8.88 percent.......................