Name: Aparna Gopalaswamy
PG ID: 61610392
Session No.: 5
Word Count of Text: 500
Overall Word Count: 515

REACTION PAPER
GENZYME: ENGINEERING THE MARKET FOR ORPHAN DRUGS
& BDSS CHP 11 & 12
The Case Study is centered about Genzyme Corporation, a biotechnological firm which successfully leverages the exclusivity and policy regulatory benefits offered by the R&D and subsequent commercialization of Orphan Drugs in the pharmaceutical market. These drugs are not usually developed by the firms as the small volumes of sales in specialized markets are not economically lucrative, but are essential to promote public health. In recent years, the entry of competition, in these small niche markets, is threatening the company’s pricing strategy based on its Benefit Advantage and path-breaking early mover advantage for its more effective product with lower side effects, while other manufacturers focus on Cost Advantage is traded off against product efficacy.
The company must retain its focus on the Orphan Drugs market and renew its efforts in sustaining its capabilities. The important factors affecting research productivity – research portfolio composition, firm’s scientific know-how & distinctive capabilities – were all strongly in Genzyme’s favor.
The strategic logic behind sustaining Genzyme’s Benefit leadership would be to maintain their price levels and concentrate their marketing and communication efforts towards emphasizing their product’s superior efficacy and lower side effects, building their case for their value proposition against the competitors. Reducing costs to produce an inferior product and compete on prices will neither serve the firm’s profitability in a shared market, as well the social welfare wrt the public health sector.
This will further help position their product as that of higher quality and recommendations. However, to ensure a stronger value proposition, the industry standards of very high margins should be reduced to charge a price slightly higher than the costs of production to allow for Additional Costs. This is also inline with the competitive pricing strategy of Margins-Strategy – Charge a premium price relative to the market competition.
Some parameters to compare such benefit advantage firms would include –
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Superior access to inputs, customers and information
A growing market size and economies of scale (Not Applicable in the case of Genzyme due to small markets and infeasibility of building economies of scale of such a market)
Intangible Barriers to imitation – This includes Causal Ambiguity which is applicable to
Genzyme in a market with relatively unknown competitors; Dependence on historical circumstances is an aspect of enhancing capabilities which Genzyme should be aware of, to avoid complacency and inability to replicate distinctive advantageous capabilities not only bound by the history of the firm; Social Complexity is another quality which is home-grown and is strongly related to the organization’s culture and its employees

Name: Aparna Gopalaswamy
PG ID: 61610392
Session No.: 5
Word Count of Text: 500
Overall Word Count: 515
-Some of the Early Mover Advantages that should be enhanced and leveraged by Genzyme are:
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Reputation & Buyer Uncertainty – Genzyme established a Brand for quality and biuotechnology pioneer which deters market entry by others
Buyer switching costs – Superior product efficacy and lower side effects act as high switching costs for Genzyme using patients
Learning Curve – Increasing volumes usually cause learning to reduce costs
Network Effects & Standards – Technological advancements inside & outside the firm propel the Orphan Drugs R&D

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