Genentech's Business Strategy
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Code : COM0012
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Region : USA
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Genentech's Business Strategy According to the estimates of Datamonitor (a London-based research consultancy), patents on 35 drugs worth more than $73 billion a year were due to expire between 2002 and 2007. By 2006, BPs were expected to launch only 14 potential blockbuster drugs.With such a low output of new blockbusters, BPs, under pressure, substituted marketing muscle for scientific success. For instance, they spent $3 billion a year on direct-to-consumer ads. Even with such spending, the sales of BPs branded drugs were expected to rise only by 5.3% a year between 2001 and 2010. To retain the double-digit growth rate of the 1990s and meet investor expectations, BPs opted for mergers and cost cutting. Though such strategies temporarily boosted profits, they failed to address the basic productivity problem that dragged the industry down... The Road Ahead To maintain a constant growth rate beyond 2004, allocation of additional resources to sales and marketing and pumping further investments into R&D was expected. Since early 2001, the company's stock was trading at its highest level. "Clearly there's tremendous potential, but it has to translate to commercial success. The worry is, can Genentech execute"? observed, Kris H. Jenner, Portfolio Manager, T. Rowe Price Health Sciences Fund, which owned shares of Genentech. After the incident of TPA, Levinson called an all-employee meeting and made an emotional plea that everyone ensured that Genentech never faced such accusations again. He said, "I completely love this place. It was very tough for me to see us getting beat up". This act made him establish boundaries and controls in the company's activities. For instance, its legal and regulatory departments would review all sales materials of the company... |
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