Question

Based on your reading of the case "Genzyme's Focus on Orphan Drugs," what do you think would be some of the barriers to entry into the biotechnology industry

Answer 1

Introduction:

Genzyme is a completely owned subsidiary of Sanofi. Established in 1981, it specializes in manufacturing orphan drugs. In simple terms, an Orphan drug is a medication which used to treat rare diseases.

Genzyme's Focus on Orphan Drugs:

Despite the fact that Genzyme Corporation produces different sorts of medications, it essentially centers around Orphan Drugs. Orphan Drugs are mostly focused to people suffering from rare diseases. A few types of cancers and kidney illnesses are just treatable using Orphan Drugs.

Orphan Drug Act in 1993:

The Food and Drug Administration enacted the Orphan Drug Act in 1993, in order to advance the development of medications for rare diseases.

Barriers to Entry into Biotechnology Industry:

1. The Orphan Drug Act in 1993 gave different tax breaks on the expenses of research and market exclusivity of 7 years to any organization that introduced Orphan drug in the market. This market exclusivity, gave an extraordinary competitive advantage to the company concentrating on Orphan medications in the market.

2. The biotechnology business requires huge capital which that has made it difficult for companies to venture into the business of orphan drugs. The target market for these drugs is very constrained, which isn't reasonable for another comer. From a worldwide point of view, just under 5% of the total populace experiences rare disease conditions. (Turner, p. 97)

3. A biotechnology company needs to change the sorts of assets and abilities required when it wants to venture into Oxford drugs. To begin with, specialized technology is required keeping in mind the end goal to create Oxford drugs. The Manufacturing facilities utilized as a part of producing Oxford drugs are not the same as other traditional drugs. An organization like Genzyme has put a large number of dollars in particular advances for Oxford drugs. (Chase, p. 40)

4. As far as Human Resources are concerned, biotechnology company must recruit profoundly qualified experts so as to deliver reliable oxford drugs.

5. The high cost of production results in high prices for the drugs. Affordability to patients can limit the market performance leading to ineffective manufacturing. and losses.

6. Sources for research funds to develop orphan drugs are also liited since many donors have little faith in the performance of such drugs.