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Genentech is a leading large market biotechnology industry worth over 70.8 billion dollars. This company has built its reputation in the oncology field, having produced several blockbuster drugs. The company has also formed strong alliances with other companies, and is known for bringing the vast resources to the formation of partnerships with other companies. For example, companies such as Genetics shares rose by a margin of 24% on its announcement of a partnership with Genentech. The company also has a strong reputation in the purchasing and licensing of technology platforms at different stages of its development. Through their alliance, they have managed to single out small companies with strong potential in this business. The main foundation of the companys growth is discovery of new drugs relying on science and researchers. This company has a good reputation as an employer. For example, the company was ranked the best company to work for in 2007 (Media Release). With its reputation, the company easily attracts the brightest minds in maintaining scientific research teams.
The relationship with Roche is the one that brings a level of stability to Genentech. The Genentech partnership with Roche affects the growth and expansion of the companys market in Europe. Roche holds majority of shares of Genentech and therefore has the ability to curtail major acquisition of market in Europe. The company also has weaknesses in its marketing strategy adopted. The company focuses on the provision of specialized training to its members opposed to the more profitable mass marketing.
The company currently focuses on the development of drugs for ongoing problems such as cancer, heart problems and emerging diseases. The company has a whole checklist in the development of drugs in the field of oncology, tissue repair, and immunology. In the current society, the majority of people with the diseases increases and so is the demand for the drugs. Its reputation in their past-developed drugs will aid the Genentech Company in maintaining its position as the market leader. The company is currently the leading leader in the USA market in biotechnology, placing its position to expand its market internationally. With its partnership with Roche, there is greater opportunity for reaching the international market by expanding to Asia and other new markets.
The company has expanded its production globally so that the small companies that trying to enter the biotechnology industry face huge entry barriers. FDA is notorious for its reviews of drugs from small biotechnology companies. With the partnership formed with the European Giant Roche, the developing companies pose insignificant threat to Genentech compared to larger threats such as Novartis and Pfizer. For example, Pfizer has a bigger threat with its shift focused on oncology. This company has developed thirteen drugs, five of which are biologic targeting the eradication of cancer cells. Other companies such as Amgen also pose threats with the majority of their drugs during the second and third phases of development. In terms of marketers, the company needs to be careful in maintaining its lead in oncology.
The Impact Roche Buyout has on Genentech
Genentech is retaining its cultures even with new ownership. The success of merging both companies is equated to the powers of the two companies. The Genentechs employees are promoted and get key positions in the company. Despite the billions spent by Roche to purchase Genentech, it goes to all the levels to protect the market of the lucrative cancer drugs. The sale of the three major drugs such as Avastin, Mab Thera, and Herceptin had net revenues of 17.6 billion dollars topping the revenue of Roche best selling non-Genentech medicines (Dou et al. 7). By reducing complexity as well as the duplicate functions, the Company benefits from manufacturing, corporate administration, and support functions. Bringing the Roche global structures to the company reduces Genentechs complexity in its focus on innovative research and early development of scientific modalities.
If these two companies will be combined, they will be the largest U.S. pharmaceutical company in the market share. The combination has the potential of generating $15 billion annual revenues and employing 17500 employees in the United States. Inclusive of the diagnostics around 25000 individuals in the U.S., the company combined broad portfolio and expand commercial operations, enhancing the ability to successfully commercialize the emergence of new medications (Pisano 467). The combined company has one of the strongest emerging product pipelines in the industry. Genentech late-stage development and manufacture operations will be combined with the global operations of Roche, achieving its substantial benefits of scale, synergies, and avoidance of cost. Roche manufacturing in Nutley will be closed and support functions in informatics and finances will be achieved through consolidation.
It is possible for Roche to retain the innovations of the Genentech innovative strategies. Roche did not tamper with the Genentech culture of research and innovation, which was an encouragement to the employees to continue pursuing their projects through the creation of a workplace where the scientists had an easy access to the top management positions. In this arrangement, Genentech Company operates as an independent researcher, retaining talent and approach in discovering and processing new molecules. The combined structure of the company will give a way for the diverse approaches in research and early development whilst strengthening cross-cultural operations in both companies. Sharing of technologies, assets, and intellectual property rights will enhance the companys abilities to innovate. Genentech and Roche have complementary strengths and joining of assets is mutually beneficial for both companies. Genentech Company has a chance to leverage international clinical trials and expertise; hence, the result will be the emergence of strong product pipeline in the industry. The company will continue to produce the drugs of their quality giving Genentech scientists such key job as drug developer for the combined company. Following the merging, the Genentech branches have not changed its employees.
The Major Dilemma that Mr. Scheller Faces in the Case
Mr. Scheller said that the purchase of Genentech caused a shakeup in research leading to initial uncertainty of the company. The company was forced to shut down its Calif and Nutley research facilities, axing about 500 to 3000 jobs as a part of the manufacturing shake up. This is because Nutley was the home for Roche research labs in its early development of compounds that could treat cancer and viral inflammation. These branches were shut down because Genentech labs were also aimed at the production of drugs targeting similar therapies. Roches concerns of losing the best-trained staff from Genentech led to the integration of the staff to the company (Copley). The Genentechs staff would be essential in keeping the spirit of innovation for the company; therefore, it was important to retain the scientists. The company distributed $375 million dollars in payments to prevent the shortage of scientists. urrently the staff unstable rates at Genentech are lowered even after the purchase.
What he should do:
Roche Company is currently transforming the work of the labs after realizing that the Genentech labs setup made more sense for the company. In the past, Roche Company maintained separate departments for the laboratory research on its drugs and in order to test on people the efficacy of these drugs. With the new Genentech lab arrangements, the company merged the two departments into one company.