Introduction
Genzyme was among the globally leading biotechnology companies founded in Boston in 1981. The firm had a significant position in the market demonstrated through its ability to serve more than ninety countries with its products. Basically, Genzyme focused on products and services that could treat rare disorders including kidney disease, inherited diseases, cancer, orthopedics, immune diseases, transplant diseases, and diagnostic testing. The great performance demonstrated by the company facilitated its constant recognition as a leader in numerous operations in the market. For instance, in 2007, Genzyme was awarded the National Medal of Technology, a technological innovation award presented to the firm by the then president of the United States. Genzyme’s prosperity in the drug industry was boosted by its focus on orphan drugs. Although various firms including Global biotechnology among other biotech companies ventured in the drug industry, Genzyme remains steadfast positioning its operations for future growth.
Impact of Genzyme’s focus orphan drugs on its competition
Basically, orphan drugs are developed to treat rare medical conditions. Most biotech companies avoid the production of orphan drugs considering the notion that they are not profitable unless the respective firm obtains assistance from the government (Bartlett, 2001). Genzyme focusing on orphan drugs presented a great opportunity to venture into a market that had a limited number of competitors. However, the firm integrates numerous marketing strategies and innovative approaches that improve its competitiveness. In 1983, after the orphan drug act was established under the food and drug administration, Genzyme got into the market and acquired a significant customer base through its products and services (Allispon, 2009). Nevertheless, producing a drug in the market that treats a certain orphan drug does not prevent other firms to come up with an improved version of the drug. A similar situation faced Genzyme where competitors introduced a different version of the orphan drugs and spread them in the market.
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Genzyme’s focus on orphan drugs increases the degree of competition from different biotech companies. For instance, from 2000 to 2008, the competition in the drug industry increased through the emergence of numerous biotech companies producing drugs and offering different services for the firms. Considering the increased competition, Genzyme had to formulate and implement a strategic path that would maintain its position in the market and protect its brand image (Hersher, 2012). The Orphan Drug Act allowed multiple biotech firms to venture into the drug industry. Most competitors would consider the general path of venturing into a market that includes researching and developing firms with skilled personnel from the university and other learning institutions. In the centrally, Genzyme considered technological innovation as the best strategy to fight the competition and position for its future. Genzyme proved that through integrating technology in its operations, it would gain a considerable profit amount and handle a small disease population to achieve great success. Its success is evident from the National Medal of Technology awarded to Genzyme following its technologically advanced operations (Allispon, 2009).
Impact on the bargaining power of customers
Through focusing on orphan drugs, Genzyme acquired a strong customer base. For instance, only 10 orphan drugs had ventured into the market by 1983. Genzyme built its firm focusing on small disease populations and distributed its products and services to the respective customers (Tambuyzer, 2010). Through the operation line, Genzyme has acquired the trust and confidentiality of the customers through the quality of products and services presented (Sheridan, 2004). Consequently, the bargaining power of the customers, which defines the ability of the customers to exert influence on a given market situation has always been equal. The firm has been on the front line improving its operations providing quality products and services for its customers. In return, they have attained a significant position in the market acquiring a strong customer base hence increasing its competitive advantage.
The essence of Genzyme focusing on orphan drugs.
Genzyme’s focus on orphan drugs makes sense as demonstrated by the previous and current market position and a strong brand image created through its operations. For instance, Genzyme records great success through the production of the commercial product, Ceredase. The drug product was applicable in the treatment of a rare genetic disorder known as Gaucher’s disease (Barak & Nandi, 2011). The success of the drug allowed it to be distributed to the market. More so, the firm records numerous cases of a successful venture into the market including building plants such as the French plant that was necessary for extracting and burning unwanted placental tissues. Most biotech firms consider dealing with orphan drugs as non-profitable and consider working with larger pharmaceutical companies and the government as the only way to survive in the market (Allispon, 2009). Nevertheless, Genzyme had already established itself in the market distributing its products and services to around 90 countries.
The decision to remain independent requires informed strategies that would secure a significant position in the future especially in the drug industry with a case similar to Genzyme’s. Most of the biotech companies depend on large pharmaceutical companies for manufacturing capabilities, greater capital resources and distribution and marketing strategies (Balto & Sher, 2003). One of the major strategies that Genzyme executed involved technological advancement and integration in orphan drug production. Through technological advancement, Genzyme has manufactured Cerezyme and introduced three other drugs for genetic disorders caused by enzyme deficiencies. This indicates the manufacturing capabilities possessed by Genzyme supporting its idea to focus on orphan drugs. Moreover, Genzyme had established its roots early before the competition begun. As a consequence, the firm already has capital resources gained through profits made over the years and still, the firm has a wide market for its products and services.
Among the strategies formulated during the decision of positioning for the future, the firm considers advancing more in technology and research in order to identify more orphan disorders and come up with treatment approaches for the respective disorders. Genzyme has tried to stay as self-independent as possible over the years and has laid down necessary strategies that would attract a great advantage towards its profitability (Hersher, 2012).
Genzyme has ventured into the research of different orphan disorders and has manufactured different drugs to treat the same. Also, the firm has successfully established different plants that are necessary for treatment services (Balto & Sher, 2003). These aspects demonstrate a great diversity in drug production and treatment services provision on genetic disorders as the main focus. The advantage of the focus in such area of medication is the monopoly in the respective area hence granting the firm a competitive advantage. More so, the firm has ventured into a diagnostic testing area that is still beneficial. Although the focus is beneficial, the firm might face stiff competition from other biotech companies that are funded by large pharmaceutical companies and the government as well.
In conclusion, Genzyme needs to consider current trends in the drug industry. Since the firm has already established a wide customer base and acquired a significant market position, manufacturing other drugs in addition to the orphan drugs would increase its profitability. Moreover, venturing into different areas of medicine would be profitable so as to serve their market would still increase their competitive advantage. Although Genzyme was bought by Sanofi, a French Company, Genzyme should employ the great knowledge of biological drugs, technological advancement and research capabilities to increase its competitive advantage (Lehmann, 2006). These approaches will still increase the manufacturing capabilities in the future and increase sales resources for the firm. Therefore, Genzyme needs to put into consideration the great focus it had during its foundation and the achievements they have made down the line and execute new strategies that would improve their competitive advantage in the current drug industry.
References
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Balto, D. A., & Sher, S. A. (2003). Refining the Innovation Focus: The FTC's Genzyme Decision. Antitrust , 18 , 28.
Barak, A., & Shankar Nandi, J. (2011). Orphan drugs: pricing, reimbursement and patient access. International Journal of Pharmaceutical and Healthcare Marketing , 5 (4), 299-317.
Bartlett, J. (2001). Technology evaluation: SAGE, Genzyme molecular oncology. Current opinion in molecular therapeutics , 3 (1), 85-96.
Hersher, R. (2012). Small biotechs raring to cash in on the orphan disease market.
Lehmann, A. (2006). Ecallantide (Dyax/Genzyme). Current opinion in investigational drugs (London, England: 2000) , 7 (3), 282-290.
Sheridan, C. (2004). EU to review rare disease drugs market exclusivity.
Tambuyzer, E. (2010). Rare diseases, orphan drugs, and their regulation: questions and misconceptions. Nature Reviews Drug Discovery , 9 (12), 921.
