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    Genzyme Case

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    Uday Shukla
    Porter's five forces analysis of Genzyme shows: 1) The threat of new entrants is low due to large capital requirements, long development timelines, economies of scale challenges, and orphan drug exclusivity protections. 2) The threat of substitutes is low as there are no alternative treatments and Genzyme's products have a better price-performance ratio than rare disease surgeries. 3) The bargaining power of customers is low since there are few buyers who are dependent on Genzyme's life-saving drugs. 4) The bargaining power of suppliers is high since there are few suppliers of differentiated inputs and scarce raw materials. 5) Genzyme has internal competitive advantages through

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    Genzyme Case

    Uploaded by

    Uday Shukla
    991 views2 pages
    Porter's five forces analysis of Genzyme shows: 1) The threat of new entrants is low due to large capital requirements, long development timelines, economies of scale challenges, and orphan drug exclusivity protections. 2) The threat of substitutes is low as there are no alternative treatments and Genzyme's products have a better price-performance ratio than rare disease surgeries. 3) The bargaining power of customers is low since there are few buyers who are dependent on Genzyme's life-saving drugs. 4) The bargaining power of suppliers is high since there are few suppliers of differentiated inputs and scarce raw materials. 5) Genzyme has internal competitive advantages through

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    Porter's five forces analysis of Genzyme shows: 1) The threat of new entrants is low due to large capital requirements, long development timelines, economies of scale challenges, and orphan drug exclusivity protections. 2) The threat of substitutes is low as there are no alternative treatments and Genzyme's products have a better price-performance ratio than rare disease surgeries. 3) The bargaining power of customers is low since there are few buyers who are dependent on Genzyme's life-saving drugs. 4) The bargaining power of suppliers is high since there are few suppliers of differentiated inputs and scarce raw materials. 5) Genzyme has internal competitive advantages through

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    991 views2 pages

    Genzyme Case

    Uploaded by

    Uday Shukla
    Porter's five forces analysis of Genzyme shows: 1) The threat of new entrants is low due to large capital requirements, long development timelines, economies of scale challenges, and orphan drug exclusivity protections. 2) The threat of substitutes is low as there are no alternative treatments and Genzyme's products have a better price-performance ratio than rare disease surgeries. 3) The bargaining power of customers is low since there are few buyers who are dependent on Genzyme's life-saving drugs. 4) The bargaining power of suppliers is high since there are few suppliers of differentiated inputs and scarce raw materials. 5) Genzyme has internal competitive advantages through

    Copyright:

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    Download as DOCX, PDF, TXT or read online from Scribd
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    Porters five force analysis

    1. Threat of new entrants (LOW) a. Product differentiation : Genzyme focused only on orphan drugs which were very rare and related to the lack of key enzymes in the body which can be artificially induced/replaced b. Capital Investment : very huge capital investment is required in order to set up an infrastructure of research and development. c. Switching costs : the drugs usually take 10-14 years and $ 800 million to be brought into the market. If the company doesn t do well then its not possible to move to another product or industry d. Economies of scale : no high volumes for rare diseases. Only a few thousand of patients to be served to. e. Entry barriers: the orphan drug act provides 7 years of exclusivity higher than the patents to the first company bringing out a specific product. 2. Threat of substitutes (LOW) a. No of substitutes available in market: There are no substitutes available other than the direct surgeries for the diseases b. Price/performance ratio : the success rates of such rare surgeries are very low and the costs are very high. So the price performance ratio of the genzyme product will be better. c. Perceived level of product differentiation: there are very less target customers and doctors treating these diseases. Marketing campaigns can directly access this group and create a better perception. 3. Bargaining power of customers (LOW) a. Buyer concentration: there are a very few number of buyers across the world. b. Degree of dependency: these drugs are life saver drugs against the rare diseases and hence the buyers are fully dependant on the company which gives them less power to bargain. c. Backward integration: the customers here are the end users or the doctors treating these kind of patients. The possibility of backward integration in this case is 0.

    4. Bargaining power of suppliers (HIGH) a. Supplier concentration: there are relatively very less suppliers for this organization b. Product differentiation: the suppliers provide a highly differentiated product which is not available in the market c. Substitute inputs: there are no substitute inputs available d. Availability of raw material: placentas which was needed for the production of ceredase was not available easily and they had a scarcity of resource. 5. Internal Competition a. Sustainable advantage by innovation: genzyme was the first company to introduce the drugs which it was marketing. This innovation gave it an edge against potential competitors. b. Competitive strategy: the decision to stay independent provided them an edge to concentrate on their goals and not be over powered by the huge organizations c. Level of advertising expense: there were only a few patients and a few doctors treating them. So a very small sales force would be enough to create the brand loyalty in the market.

    Conclusion: The positioning of the the organization is very strong. As shown by the above analysis it has strategic advantages over many other organizations. The decision to stay independent and serve the niche market was a brilliant decision which is responsible for the high profitability of the organization.

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