Genzyme Case Study

This week’s case study concerning Genzyme’s strategic direction was very interesting in that they essentially pursued a strategy that seemingly was purposely avoided by other players in the pharmaceutical industry (Schilling, N.D.). Their strategy centered on developing prescriptions for rare diseases. Typically “developing a drug takes 10 to 14 years and costs an average of $800 million to perform the research, run the clinical trials, get FDA approval, and bring a drug to market,” and in turn it is normally intuitive, from an economic standpoint, to attempt to develop drugs that will have a substantial market so to be able to assure enough revenue is generated to produce a significant profit. In turn, drugs marketed towards treating

Furthermore, as was the case with developing Ceredase, Genzyme chose to produce such drugs that were substantially difficult to produce in the first place. In turn they benefited from an increased barrier to entry. Additionally, being mindful of their profit margins and ownership and full discretion over their strategic direction, Genzyme initially refused to engage in licensing deals with large pharmaceutical companies who at the time could have significantly reduced the marketing/distribution burdens that Genzyme would inevitably encounter as a newer and smaller company. Instead, Genzyme, in an effort to produce the necessary revenues to fund the research, “entered into a number of side ventures including a chemical supplies business, a genetic counseling business, and a diagnostic testing

However, as proven by Genzyme’s roadmap to selling for $20 billion, it was clear that innovative approaches had to continually be pursued and considered. It was not enough to simply identify and enter this niche market, Genzyme also had to innovate the way a biotech firm would position itself within the market by not teaming up with larger pharmaceutical companies early on and by pursuing alternative means to obtain the necessary funds to finance their research and development costs, which was done by generating revenues though side