SWOT: Genzyme in China

Strengths Weaknesses

International capabilitiesReimbursement systemEffective drugs ReputationIndustrial leader

Expensive drugs Healthcare systemsResource focus

Opportunities Threats

Biotech vs. Pharma reputationGlobal pioneerEmerging markets

Political uncertainityExpensive distractionIPR protection

SWOT: China’s biopharma industry

Opportunities Threats

Partnerships and collaborationsDomestic market in growthProcess improvements Generics & biosimilarsTraditional medicineStem cell cure

Regulatory framework and enforcementInvestment barriers Reputation

Strengths Weaknesses

Governmental support Investments in R&DBusiness culture Low cost structureSupplier and distribution networks

IPR protectionManagement skillsBrand namesInfrastructureSmall biotech industry

Model Framework

Strengths

China’s Industry Genzyme

Environmental Scan

Internal Analysis External Analysis

Weaknesses Opportunities

Scenario analysis

Threats

System

Dynamics

Strategies

SWOT Matrix

Hypothesis

ROW 1

ROW 2

CHINA 1

CHINA 2

Orderly

index

TimeNot only China is moving towards anarchyThe rest of the world is deteriorating slowly

Orderly State

The Dragon Orderly

Isolation Marginal

Orderly Anarchy

Anarchy

Orderly Best case scenario

Worst case scenario

CHINA

ROW

Competitive Cost Advantage

A B

D C

Low Cost

Innovators/IPR

Chinese

competitors’

capabilities

Genzyme (Strategy)

Domestic Markets Global platform

GDP & Salaries

Process

Innovation

Cost savings on their own are not the primary considerat ion for biotech and pharma industry

R&D engagement

Remain in-house

Make captive Investmets

In China

Invest to Improve feasibility

Outsource to China

Strategic importance

-Driver of competive advantage

-IP risks

-Regulatory risks

-Operational risks

Feasibility

Availibility of reliable vendors

Ease of technology transfer

Interdependcy

Well defined activity

SWOT MatrixBest case

Strengths Weaknesses

Opportunities S-O Strategies

1. Partner & Aquire

2. Use China as strategic lever for

helping companies achieve China

ambition

3. Lab works and clinical trials will

halve the rentals, wage bills and

Overhead

4. Companies set up new vendor

Relations, R&D facilities, research

alliances

W-O Strategies

1.Get Excellent lawyers and translators

2. Reduce transactions costs involved

3. Relocate the necessary Western staff, importing equipment and supplies

4. Ensure good maintenance of that equipment

Threats S-T Strategies

1. External foreign companies

2. Try to increase productivity and security (reduced productivity in the short term)

3.Use brand

4.Use the legal system

W-T Strategies

1. Do not reveal complex manufacturing process

2. Trade secrets & Patents

3. Keep propritary assets secret for foreign companies

4. Keep government notified

SWOT MatrixWorst case Strengths Weaknesses

Opportunities S-O Strategies

1. Capture some output of trained science graduate

2. Invest in a very large pool of talents of local talents

3. Set up new vendor relations

W-O Strategies

1. Language

2. Culture

3. Scientific skills

Threats S-T Strategies

1. Companies set up new vendor

relations

2. Invest in a very large pool of

talents of local talents

3. Investmensts in R&D

4. The high output of trained

science graduate students

W-T Strategies

1. Fraction the know how

2. Penalty system

3. Defensive strategies...

RecommendationsGenzyme should enter the Chinese market carefully and learn from the experience:

• Productivity will be threatened in the short term in unfamiliar countries hiring local staff , extra challenges bridging differences in business and technical practices regulatory and legal requirements and culture and language

• Has the chance to help shape the future of the Chineses health care market and to consolidate their own position within it

• Can contribute to the discussion on reforming the health care system; they can expedite the implementing of highest quality standards for innovative drug discovery and development

• by building strong relationships from the outset with key opinion leaaders and officia, an MPC will improve its chances of faster approvals, advantageous pricing and speedier access to the market.

• Trangenics and stem cell reseach

Extra: The Strategic game

• Labor costs and overhead• Scientific talent and managent capability• Quality control during development phases • Regulatory barriers in clinical trials • The flow of returnees trained in the west helps to

invigorate the nations scientic communitiy• IPR security• Select areas of activity and research topics

Extra: Odds looking good 1• A very large pool of talents of exandably looking

good• Investments in R&D expandable • High output of trained science graduate students

more than US • In a few years more graduates than the US in

lifesciences in medecine• It has reasonably advanced in clinical trials and

lower complexity chemistry work • Less so in preclinical and biology based drug

discovery

Extra: Odds looking good 2• Companies set up new vendor relations, R&D facilities, research alliances

• Productivity and is threatened in unfamiliar countries hiring local staff , extra challenges bridging differences in business and technical practices regulatory and legal requirements and culture and language

• The more R&D that MPCs conduct in China (as long as they do it sensitively and efficiently) , the more opportunity they have to help shape the future of the Chineses health care market and to consolidate their own position within it.

• Specifically they can contribute to the discussion on reforming the health care system; they can exedite the implementing of highest quality standards for innovative drug discovery and development.

• They can encourage the develoment of new technologies that are shunned by other governements (such as trangenics and stem cell reseach); they can expand their alternative sources of comounds by investigating traditional Chinese medicine with the techniques of modern drug discovery; and through various well chosen research undertakings, they can gain ear and confidence of government officials, hospital administartors and key oinion leaders, thereby enhancing their market prospects

• The last point needed to be made to be kept very much in mind by MCs when they devise their China strategies: by building strong relationships from the outset with key opinion leaaders and officia, an MPC will improve its chances of faster approvals, advantageous pricing and speedier access to the market. The surest way to build such relationships is to show commitment – both for the long haul and to the advancement of China’s own R&D capabilities. Making captive investments demonstrates commitment of the first deepening involvement throughout the value chain demonstrates commitment of the second kind.

Extra: SWOT Matrix

• S-O strategies pursue opportunities that are good fit to the company’s strengths

• W-O strategies overcome weaknesses to pursue opportunities

• S-T strategies identify ways that the company can use strengths to reduce its vulnerability to external threats.

• W-T strategies establish a defensive plan to prevent the company’s weaknesses from making it highly susceptible to external threats.