Genentech's Business Strategy
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Code : COM0012
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Region : USA
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Introduction:Genentech, the pioneer of the biotechnology industry and one of the world’s leading biotech companies, was founded in 1976 by venture capitalist Robert A. Swanson and biochemist Dr. Herbert W. Boyer. It was the first biotech to go public and bring a genetically engineered drug to market. The company, in its early years, aspired to become a blockbuster -producing giant, and launched Tissue Plasminogen Activator (TPA), a drug used to dissolve blood clots that precipitated heart attacks. But in the late 1980s, it had to drop this drug, as its projected blockbuster sale was never achieved. It failed to perform against a much cheaper and older drug Streptokinase. This failure prompted Genentech to seek help for capital from other players. In 1990, it raised capital for the development of its growing number of proto-drugs by selling a 60% stake to Swiss-based Roche Holding for $2.1 billion. The company also followed the path of some Big Pharmas6 (BPs) to bolster its sales. It allegedly promoted unapproved uses of its bioengineered growth hormone. This led to more than two years of federal investigation, which finally ended with Genentech paying $50 million fine. On May 19th 2003, when investors had a terrible day in the stock market, the company made public its success on the clinical trials of its new cancer drug, Avastin. This shot up Genentech's stock price while most of the other stocks underperformed in the Dow and Nasdaq. The share price went up by 45% to $16.95, adding about $9 billion to the market value. Unlike most drug companies, which went after blockbusters, Genentech specialized in targeted drugs and lucrative treatments aimed at smaller sets of patients. In 2003, the company's market cap of about $30 billion was bigger than BP players such as Schering-Plough. Moreover, in 2002, it was the top US seller of branded anti-tumor drugs... |
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