Genzyme Case Study
1. How does Genzyme’s focus on orphan drugs affect the degree of competition it faces? How does it affect the bargaining power of customers?
For a drug to qualify as an ‘orphan drug’, a disease must only afflict less than 200,000 people worldwide. From this we can understand that Genzyme’s target market is a very small niche and consequently there is very little competition. Big pharmaceuticals primarily focus their resources on ‘blockbuster’ drugs because there is a large market to target. Since Genzyme’s target market does not appear to be attractive for most pharmaceuticals in that regard, it gains significant leeway from competition by focusing on orphan drugs. Also, the Orphan Drug Act provides 7 years of market exclusivity which virtually eliminates competition for Genzyme for at least a while.
As an orphan drug, there is minimal threat of substitutes and potential entrants into the market, as explained above. Also, the nature of the drugs made by Genzyme are of a very critical nature; the drugs save lives of people with very rare genetic disorders. Considering these points, the bargaining power of customers in this case are minimal to none.
2. How does focusing on orphan drugs affect the types of resources and capabilities a biotech firm needs to be successful?
Rare genetic disorders is a highly specialised area, and so is the research and development of orphan drugs. The kind of resources needed will definitely be difficult to procure and a biotech firm needs to have access to relevant technology to be successful. However, in the pharmaceutical industry, orphan drugs can also mean smaller clinical trials, approvals take shorter time, lesser need for focus on large scale marketing and the freedom to have a more direct sales force, allowing the biotech firm to be more focused on its core competencies.
3. Does Genzyme’s focus on orphan drugs make sense? Do you think Genzyme has a long-term strategic intent?
Genzyme’s focus on orphan drugs does make a
For a drug to qualify as an ‘orphan drug’, a disease must only afflict less than 200,000 people worldwide. From this we can understand that Genzyme’s target market is a very small niche and consequently there is very little competition. Big pharmaceuticals primarily focus their resources on ‘blockbuster’ drugs because there is a large market to target. Since Genzyme’s target market does not appear to be attractive for most pharmaceuticals in that regard, it gains significant leeway from competition by focusing on orphan drugs. Also, the Orphan Drug Act provides 7 years of market exclusivity which virtually eliminates competition for Genzyme for at least a while.
As an orphan drug, there is minimal threat of substitutes and potential entrants into the market, as explained above. Also, the nature of the drugs made by Genzyme are of a very critical nature; the drugs save lives of people with very rare genetic disorders. Considering these points, the bargaining power of customers in this case are minimal to none.
2. How does focusing on orphan drugs affect the types of resources and capabilities a biotech firm needs to be successful?
Rare genetic disorders is a highly specialised area, and so is the research and development of orphan drugs. The kind of resources needed will definitely be difficult to procure and a biotech firm needs to have access to relevant technology to be successful. However, in the pharmaceutical industry, orphan drugs can also mean smaller clinical trials, approvals take shorter time, lesser need for focus on large scale marketing and the freedom to have a more direct sales force, allowing the biotech firm to be more focused on its core competencies.
3. Does Genzyme’s focus on orphan drugs make sense? Do you think Genzyme has a long-term strategic intent?
Genzyme’s focus on orphan drugs does make a