Genentech: The Beginnings of Biotech (review)

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An analysis of the study on Genentech
Due to the belief in the legendary expertise in the field of biotechnology that Genentech
had, Roche had cemented a partnership between the two companies dating back to the 1980s.
The main aim of the partnership was to propel the company towards achievement of personalized
medicine. However, the company was not in the right standing as the clinical trial of the third
phase of Avastin has failed in the year 2004. Clinical Avastin was meant for the clinical
treatment of colon cancer. Getting the rights to Avastin was the major reason behind Roche’s
accusation of Genentech. Furthermore, it was part of Roche’s strategy to expand its application s
a key part of the growth strategy. If the results could have been positive the company would have
had billions of more sales of Avastin. Other than the sales, they would have come up with an
effective way of detecting multiple early stage cancer indications. The failure of the clinical trial
was not only a medical set but also a business set back as the company shares went down by
10%. In addition, the US advisory cancel also proposed to have Avastin’s approval revoked. This
was because of the opinion that Avastin was not beneficial in terms of survival. Both patients
and doctors struggled to keep the product on the market but the vote was 12 to 1 in the long run.
However, that does not stop the pressure from Roche to proceed with the development of phase

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three project with an aim of introducing more products to the market. Even though Genentech
and Roche are partners at this level, Roche intends to use the abilities of Genentech optimally.
To help with this agenda, early drug discovery was vital as way of keeping the production
pipeline well stoked.
Resources of Genentech
Over 17500 workforce
Available biotechnology
Existing pharmaceutical pipe lines
Newly discovered rDNA technology
7,400 current patents and over 6,250 patent pending applications world wide
Existing market for cancer products
Capacities of Genentech
Commercial success and market dominance of cancer products
Financial ability to support research and development of new biotechnology
Good research and development reputation
Competencies of Genentech
Discover biotherapeutics
Develop biotherapeutics
Manufacture biotherapeutics
Commercialize biotherapeutics

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Business strategy currently in use
In order to sustain relevance in the market, Genentech does not only make use of
partnerships with relevant organizations and Research Institutes abut also diversify their
products. Even though cancer products have been the main source of sales for the company, the
fear of government intervention has pushed the biotechnology giant to diversifying their
production to consider diversifying their production to accommodate two therapeutic areas of
neuroscience and Infectious diseases. This strategy would ensure that the company remains
relevant in the market irrespective of the expected government policy on cancer products. The
strategy would also aid in increasing revenue generation. Furthermore, the business was also
keen to remain in line with the trending business models that come with the biotechnology.
The emergence of biotechnology come with it new business models that enabled
commercialization of intellectual property that is scientific in nature. The model is entirely based
in three major components which are market for knowhow, public equity and venture capital
markets and the development of new technologies. However, the business model also has some
short comings. While the research institutes and universities are on the frontline in the discovery
of biotechnological breakthroughs, the institutions do not have the knowledge and the resources
that are required to bring the technological breakthroughs to the market. The researchers
therefore have to partner with private equity and venture capital to propel the commercialization
of the new technology. With this kind of partnership, it is now easy for the new ventures that
have ready supply of financial capital to provide the badly needed support for the research and
development. The other strategies that become common in the attempts to promote the biotech
products were partnerships between the biotech firms and the pharmaceutical firms. The
pharmaceutical firms are keen to acquire biotech partners with an aim of bringing their new

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product pipelines backed by their innovative capabilities not jut closer but within the house. It is
for this reason that Roche merged with Genentech. It is feared that major mergers might lead to
decline in the research and development as well as innovation in general. Genentech had built a
leading portfolio in the industry by the year 2006 when it led in the sales of oncology in the
United States. During their last year of operation before acquisition, Genentech reported
revenues of up to $ 13.4 billion which was more than double the amount that they reported in the
previous year.
Findings of fact
Genentech adopted criteria that aided in moving the existing projects from discovery
research to research and development. The criteria included critical medical need, scientific
rationale adequate market protection, significant marketing opportunity and reasonable
manufacturing economics.
Marketing
Genentech has not had a serious challenge in marketing their products. This is evident
from the sales that they have reported. The development pipeline of the entity includes 100
projects capturing multiple therapeutic areas. The main source of revenue, however, remains
oncology medicines which contributed an approximate of seventy percent of the year 2008 sales.
During the year, the best selling product was Avastin which had record annual sales of $2.7
billion. Being the company dealt in cancer products, the market was not really an issue. It is
recorded that the market for cancer treatment products is not only one of the fastest growing
markets but also one of the existing largest markets in the pharmaceuticals industry. It is also
projected that the market for cancer product will increase by twelve to fifteen percent annually.