Transcript Genzyme Case Review

Genzyme Case Study
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Pharmaceuticals Company
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Caters to a small market
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Orphan Drug Development
Focus on enzyme replacement therapy
Rare, genetic diseases
Potentially less than 5k people affected
#6 out of Top Ten US based Biotechnology
Companies in 2000
#8 most profitable biotechnology drug
(Cerezyme) in 2000
Describe the key factors in
Genzyme’s success to date.
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Avoided “blockbuster” market
Gov’t incentives
First ones to market
Identify potential customers
Worked closely with insurance company
Good management
Experienced doctors
Good financial engineering
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Loss of legislation
Bad press
Running out of orphan diseases
Competitor finds the cure
Health care reform
Attracts competitors
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Genzyme entered a small, untapped market
 Little competition
 Government incentives
 Exclusive rights to treat certain rare diseases (i.e. Gaucher disease)
 Ability to identify almost all customers
 Ability to set prices
 Reduced government restrictions due to severity of diseases
 FDA process sped up
 Reduced restrictions on clinical trials
 Smaller number of test patients required
 Marketing exclusivity
Their drugs were successful
 Relatively easy to develop their drugs
Lots of good contacts through universities and government agencies
Does the Drug Development
process have to be so long?
Why or why not?
Pros
 Statistics generate
Trust
 Less likely to get sued
 More likely to
discover dormant
effects
Cons
 Delay in profits
 People are dying
while developing
 Giving competitors
more time to catch up
Pros
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Cons
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SHORT TERM
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Faster to Market
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LONG TERM
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Ensures examining longterm effects
 Can determine side effects
 Can determine drug
compatibility
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Better able to set prices
Able to establish name
brand recognition
Higher profit
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Immediate sales
Less cost associated with
development
Avoids liability issues
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Statistics generate trust
Sales increase with sound
statistics
 Government approval is
more likely
 Gain industry advocates
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How do you think the process
can be improved?
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Limited release for Phase 3 patients
Federal incentives
Paying for the review of your testing
Reallocate money towards good science
Continue after review process
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Better monitoring after release
Better educate the public
Create a drug testing agency with government approval
 Centralized resources (facilities, materials, equipment)
 Standardized procedures across all drugs
 Benefits to company:
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More time to develop new drugs
Time investment is cut in half
Eliminates testing facilities overhead
Ethical incentives:
Dis-incentivizes falsifying results as there is now a cost
associated with falsification (bribing)
 Dis-incentivizes shortened testing periods to ensure
market superiority since there’s a cost associated with
speeding up the process
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Adds legitimacy to the results since they come from an
expert agency
What is a better business
model - a cure or a treatment?
Why?
PROS
CONS
PROS
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Government incentives
Higher price
Free advertising because
it’s ethically superior
Preferred by insurance
companies
 Doctors and interest groups
prefer it
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Obtain investment funds
more easily
Chance to improve the
cure
CONS
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Lose customers once
they’re cured
(deal breaker)
PROS
CONS
PROS
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Repeated customer
sessions
Potential health benefit
from a holistic approach
Multiplicity of services
Chance to refine the
treatment
CONS
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Each session doesn’t
command as large a
price as a cure
Competition from cures
may put you out of
business
Competition from other
treatments
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Genomics is showing that targeted therapies
that address smaller populations might be a
more effective approach to more common
diseases.
The products in the pipeline are addressing
rarer and rarer diseases.
How would you address
changes in the environment if
you were Genzyme?
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Lobby for support
Customizable drug family
Legislation to increase time of exclusivity
Lobby for what “orphan” drugs are defined as
In the Future Genzyme will need to:
From partnerships/conglomerates with similar
companies of small size with the same mission
 Shared resources
 Less overhead
 Establish a reputation of quality
 Focus on relations with customers, doctors,
insurance, and support groups
 Increase focus on marketing and sales
 Establish a more personal relationship with your
entire market
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