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Why do you think Genzyme has diversified into other areas of medicine

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  • 1. INNOVATION PRESENTATION- CHAPTER 6
    • Group – D
    • By:
    • Keshanis
    • Malindi
    • Chanaka
    • Reeza Fazily
  • 2. Q4: i). Why do you think Genzyme has diversified into other areas of medicine
    • To have best utilization of technology to make differentiation for patients with serious and diversified disease
    • To generate more reliable cash flow stream in order to invest on R & D and to continue in developing new medicine
    • Had so many industrial opportunities to diversify. Ex: Blockbuster drug
  • 3. Contd…..
    • The diversification of Genzyme into side business could allow it become more successful organization.
    • By no longer relying on a single business so it can reduce and manage risks well as it has diversified into other businesses
    • With ODA, the firm received tax free research,7 years market exclusivity to firms that introduces orphan drugs.
  • 4. Contd….
    • The firm considered on serving smaller market
      • few patients and few competitors
      • Drugs for rare diseases has higher margin
      • less expensive targets sales approach
      • smaller clinical trials
    • They require to be self sufficient to retain the whole profit ,therefore they entered in to several side ventures (chemical supply, genetic counseling, diagnostic testing)
  • 5. ii). Advantages of this?
      • Less direct rivalry on Genzyme products even though they are in a high competitive biotech industry
      • This avoids licensing with other large pharmaceutical companies and encourages them to develop medicine by their own R &D efforts
      • Payoff is very high when the drug gets succeeded. So, if the company carries its own sales and productions then the company can enjoy the full amount of profits rather than licensing
      • Gain Benefit from sharing its competencies: By diversifying into side businesses, Genzyme can share its resources, skills and even research and development knowledge.
  • 6. Contd….
    • Improve quality: The diversification to side activities offers Genzyme with a broader platform for strengthening of its related business through access to similar activities
    • Risk is spread, since any cost of developing a new drug can be offset with a successful ones profit.
    • Knowledge base is high where one area of study may be a key for another area creating innovative medicines.
  • 7. iii). Disadvantages of this?
    • High uncertainties, High risk and large investment requirement show the importance of the licensing in the diversification
    • Loss of focus: It can damage its core product’s brand image or slow the development in its core business while attempting to do many businesses at a time because the management focus can be scattered and less industrious.
    • Serving a smaller market with orphan diseases made it difficult for them to develop therapies.
  • 8. Thank You!!!!