Genzyme’s Focus on Orphan Drugs
Introduction
Thesis: focus on orphan drugs has propelled the overall performance of Genzyme Corporation
Purpose of the Paper
This essay examines Genzyme’s focus on orphan drugs. Specifically, the company’s competitive strategies shall also be evaluated. As one of the world’s most prestigious biotechnology organizations, the strategies used by Genzyme would come in handy for other companies in this industry. Over the years, this company has diversified into other areas of medicine. The specific merits and disadvantages of this innovative approach shall be assessed. Finally, recommendations for managing innovations at Genzyme in the future have been provided.
Overview
Genzyme is a subsidiary company of Sanofi. Founded in 1981, this company specializes in manufacturing orphan drugs. In basic terms, an orphan drug refers to a medication used to treat rare diseases. Apart from United States, the use of orphan drugs is predominant in Europe. The business and strategic approaches of Genzyme Corporation represent excellent innovations. These innovations may be considered from a management and scientific perspective. The success achieved by this company would come in handy towards streamlining business activities in other firms.
Genzyme’s Focus on Orphan Drugs
Even though Genzyme Corporation produces other types of drugs, it mainly focuses on orphan drugs. Orphan drugs are mainly targeted to individuals suffering from rare disease conditions. Some forms of cancers and kidney diseases are only treatable using orphan drugs. Since its establishment in 1981, Genzyme has become one of America’s most respected companies. (Pederson, p. 106)
Considering that this company focuses on orphan drugs, the level of competition is very low. The biotechnology industry requires huge capital. This is why most investors opt for other less expensive industries. Apart from huge capital, risk is another factor that has made it difficult for companies to venture into the business of orphan drugs. The target market for these products is quite limited. From a global perspective, only less than 5% of the world’s population suffers from rare disease conditions. (Turner, p. 97)As a result, most companies specializing in the production of orphan drugs enjoy a relative monopoly. With such a monopoly, the bargaining power of customers is undermined. This is because they have few alternatives.
Types of Resources and Capabilities in a Biotechnology Firm
When a biotechnology firm focuses on orphan drugs, it has to change the types of resources and capabilities required for success. To start with, specialized technology is required in order to produce orphan drugs. The equipment and facilities used in manufacturing orphan drugs are quite different from other medical technologies. A company like Genzyme has invested millions of dollars in specialized technologies for orphan drugs. (Hunt, p. 40)
It terms of human resources, biotechnology companies must recruit highly qualified professionals in order to produce high quality orphan drugs. In order to achieve success, biotechnology companies should ensure that there is a ready market for orphan drugs. This innovative strategy helps the company avoid losses. (Pederson, p. 109)
Genzyme’s Long-term Strategic Intent
The company’s focus on orphan drugs is a sensible decision. This is vindicated by the impressive financial performance during the last few years. For instance, this company has been ranked among the most respected companies in United States since 2005. The biotechnology sector is characterized by few companies. This provides good prospect in terms of minimal competition. The company’s focus on orphan drugs is also justified by the increased prevalence of rare disease conditions around the world.
During the last few decades, more people have been diagnosed with ailments such as kidney complications and terminal cancer. Most of these patients are willing to spend any amount of money in order to improve their livelihoods. (Melissa, p. 61)
This company has a long-term strategic intent. To start with, it has ventured into the production of other common drugs. Such an approach reflects the company’s long term strategic intent to diversify its target market. The company’s transformation into a subsidiary is a strategy aimed at securing financial sustainability in the future. (O’Riordan, p. 48)
Diversification
Even though Genzyme Corporation mainly focuses on orphan drugs, it has diversified into other areas of medicine in recent years. This is an innovative strategy aimed at enhancing the company’s long term sustainability. Additionally, this innovative strategy seeks to attract more clients by diversifying the target market. One of the greatest benefits of diversification is that this company will enhance its financial turnover. Despite the company’s financial performance being impressive, diversification will provide the company with more alternatives. (Melissa, p. 90)
Diversification will also result into increased division of labor within the company. As a result of such a strategy, the corporation’s productivity will be enhanced. When companies diversify, they strongly enhance productivity as a result of minimization of costs. This will serve as a major advantage for the company. In contrast, diversification requires a lot of resources.
This will be a major disadvantage to the corporation. Additionally, by venturing into other areas of medicine the company will require specialized labor from skilled employees. This is a disadvantage because the company will incur additional costs. By venturing into other areas of medicine, the company will also face a higher level of competition from other biotechnology firms. As mentioned earlier, Genzyme has benefited a lot from specializing in orphan drugs. Such benefits are not present in other areas of medicine. (Turner, p. 115)
Future Recommendations for Genzyme
There are numerous innovative approaches that this company might use to enhance its performance in the future. To start with, the company needs to offer specialized medicals services for patients suffering from rare medical conditions. Such an approach will boost the company’s income. In the modern world, more people are in need of specialized medical attention. (Michelle, p. 72)
Such services are not readily available to most people especially in the developing world. Consequently, Genzyme Corporation should target this market in order to the attainment of organizational goals. The company should also integrate modern medical technology within its systems. For instance, the company should use its research department to develop cheaper MRI (magnetic resonance imaging) equipment. Such a strategic approach would enhance the company’s performance. (Turner, p. 99)
Conclusion
Genzyme’s specialization in orphan drugs has resulted into positive and adverse effects. According to the thesis statement, focus on orphan drugs has propelled the overall performance of Genzyme Corporation. This statement has been justified throughout the paper. The business and strategic approaches of Genzyme Corporation represent excellent innovations. These innovations may be considered from a management and scientific perspective.
The success achieved by this company would come in handy towards streamlining business activities in other firms. In order to achieve success, biotechnology companies should ensure that there is a ready market for orphan drugs. This innovative strategy helps the company avoid losses. Even though Genzyme Corporation mainly focuses on orphan drugs, it has diversified into other areas of medicine in recent years. This is an innovative strategy aimed at enhancing the company’s long term sustainability.
References
Hunt, P. A. (2008). Structuring mergers and acquisitions, Aspen Publishers
Melissa A. S. (2010). Strategic Management of Technological Innovation, New York: McGraw Hill
Michelle, T. C. (2011). Advancements in biotechnology, Hoboken: John Wiley & Sons
O’Riordan, T. A. (2011). Commercialization of innovative technologies,Hoboken: John Wiley & Sons
Pederson, J. P. (2007). International directory of company histories, St. James Press
Turner, T. N. (2011). Vault guide to the top pharmaceuticals and biotech employers, Vault Inc.
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