Case Study: Illinois State University achieves simulation-driven drug development decision insights with Palisade @RISK

Illinois State University - Customer Case Study

Illinois State University used Palisade’s @RISK in Professor Domingo C. Joaquin’s finance classes to illustrate a pharmaceutical R&D decision problem: a hypothetical firm, "Drugco," must decide whether to invest $200 million to pursue Phase III trials and potential commercialization while facing uncertain FDA approval, market size and growth, competing drugs, and cost dynamics.

Palisade’s @RISK ran a 10,000-iteration Monte Carlo simulation to generate NPV and IRR distributions and tornado sensitivity charts; the model quantified that there is a 28.6% probability of NPV exceeding $400 million (the threshold for launching vs selling) and identified drug efficacy and competitor efficacy—and early entrant risk—as the primary drivers of project value, giving students and decision-makers clear, measurable insight into risk and key levers.

Illinois State University

Domingo Castelo Joaquin

Advanced Corporate Finance