Competitive Strategy
Amer
Fall 2014
Bonardi
Prof.
Prof.
Genzymes CSR Dilemma:
How to Play Its HAND
Cludia Argues Coralie Honor Caroline Michaud-Nrard
Gabriella Rossier Jannet Sheikh Fernanda Salcedo
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Agenda
1. Executive Summary
2. HAND Overview
3. Selection Criteria
3.1 Based on the criteria established by HAND Steering
Committee
3.2 Based on Responsive CSR approach
3.3 Based on Strategic CSR approach
3.4 Strategic vs Responsive CSR
4. Resources allocation
5. HAND initiative as a CSR program
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1. Executive Summary
Genzymes corporate value: putting the patient first before maximizing financial
returns
HAND program overview:
Genzymes new approach: Improve its image through investing in diseases that are not
appealing pharmaceuticals attention but are affecting a large population, specially in
emerging markets.
Creation of HAND program: Humanitarian Assistance for Neglected Disease
Goal: Research on new ways to treat patients with neglected diseases
Candidates
Malaria
Chagas
Tuberculosis
Solution:
Must choose based on a 6 point criteria:
We have analyzed the 3 cases based on numerous points and recommend that they should
discontinue Malaria, not start Tuberculosis, and continue with Chagas. More resources
should be applied to Chagas and funding should be increased.
Malaria: Grey area; cannot necessarily be qualified as neglected
Tuberculosis: seemingly logical investment but may not create value for Genzyme
commercially in the long run
Chagas:
Already posses existing capacities, less investment, existing prototype: higher chance
3 of
success
3. 1 Selection according to
HAND Committee
Malaria
Chagas
Tuberculosis
Important
unmet
medical need
250M cases per year,
1M deaths per year
16 to 18M cases per
year, 50000 deaths
per year
About 25M cases per year,
1.5 to 2M deaths per year
Medically
effective
product
profile
Genzyme is not in a
position to finance the
entire program.
Possible future investment
would still not be sufficient
Building a good
relationship with top
Brazilian pharma
companies can lead the
way to a very profitable
profile
Investment from partners
can generate long-term
returns if Genzyme
attracts potential
pharmaceutical companies
Evidencebased
scientific
rationale
Large number of global
players already doing R&D
Training of Fiocruz
scientists to work
together
Specific research program
funded by TB Alliance
Two distinct species:
falciparum and vivax.
ICGEB is developing
treatment strategies for
both species
Disease is under
control with the
existing treatments
although they are
highly toxic and
resistance is spreading
fast
Long term treatment that
is neither affordable nor
accessible. People are
developing resistance to it
Fiocruz; Ilex Oncology
Inc. (Bought by
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TB Alliance and potential
partnership with Broad
Ability to
make a
significant
impact for
patients
Credible
Broad Institute; Harvard;
3.2 Selection according to
Responsive CSR
Responsive CSR:
Prioritizing social issues
Considering the social harm of ALL the organizations actions
Malaria Project
It has maximum impact
BUT it already has global attention: many institutions already working on it with
significant resources
AND it may not be considered as a neglected disease anymore
It should be discontinued
Tuberculosis (TB) Project:
Worldwide problem, not much existing R&D although it causes maximum deaths
Highest deaths of all neglected diseases
It can generate long-term revenues by expanding
HOWEVER, already existing treatment although with scope for improvement
Easily imitable by competitors
Completely new startup; no work has been done; no experience
Will require more investment at initial stages
Already credible partners involved who can do the research; of we dont then there
is still work happening
Initial profit margin good but hard to sustain in long term because there is a lot
more competition
Political leadership in developing countries may not be easy to work with
3.3 Selection according to
Strategic CSR (I)
Strategic CSR:
Choosing which social issues to focus on
Creating shared value
Making choices aligned with the organizations core value:
Patients First Ignored suffering from pharma companies
Chagas Project:
Will safeguard Brazil: Need to maintain goodwill in Brazil because of the drug
review; maintain market value in Brazil
Likelihood that government in Brazil will invest; affecting large number of their
citizens
Political support
Less people affected so not many people investing
Requires less investment as already started the project
Endemic disease
Symptomless or silent disease
Only if caught in the early stages its 100% treatable also known as the
new AIDS of the Americas
Mostly affecting those in developing countries; in these regions medical
check ups are not common so diseases not detected until later stage
Low physician awareness of local transmission risk
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It can have a wider influence, template can be applied to other regions
3.3 Selection according to
Strategic CSR (II)
Existing prototype = higher chance of success, less investment
Eflornithine drug: surprisingly positive effect but not effective because
intravenous 4x a day, very difficult to follow in remote areas
If we find a breakthrough, we will dominate the market as we will be major
player
Treatment will not only cure Chagas but also sleeping sickness
No major partner as is in with malaria and TB
Important to consider example of Ebola
Similar situation as Chagas with local, small disease
Ebola was ignored and no pharmaceutical company invested because it
didn'tt have a large effect
Sudden blow up; Massive unexpected outbreak in 2014
There may not be short term benefits on working on Chagas but, in the
long term it may help avoid and epidemic like Ebola
It should be continued
Recommendation:
Identify the project whose partners interest is more aligned with HAND core
strategy
Must choose project based on Strategic CSR: the Chagas project
Pursuing to many initiatives would lead to less oversight and therefore7
3.4 Strategic VS Responsive
CSR
Malaria Ruled out in initial analysis as it doesnt fit the criteria of being a neglected
disease
Tuberculosis can be considered as Responsive CSR:
The reason to choose it over Chagas would be because its more widespread
Affects more people
BUT there is less long term profit prospect
Business strategy prospective:
If drug is found and Intellectual property is shared then there will be a lot
more competition; many investors ready to emulate
Reduced market share and profits
Chagas can be considered as Strategic CSR:
Balance between CSR and long term prospect for business (profits)
Intellectual property will be made available, but since market is smaller and
demand is less there is more chance of domination, more competitors in Malaria
and Tuberculosis
Can set price
Wont attract many investors
If objective is shot term gains then TB makes more sense:
Lower profit margins in the short term, but opposite in long term
4. Resources Allocation
Financial Resources
Essential support from Brazilian government
Fiocruzs intention to maintain long-term cooperation
Human Resources
Skills and time
Most of the researchers time and energy is invested to the HAND program
Partnerships
Sharing knowledge with Fiocruz
Scientists are invited to Genzymes labs to learn more about the drug development
process
Access to DNDi facilities to test compounds
Which partnering approach should be taken?
Make the most of Fiocruz interest in neglected disease in order to reinforce long-term
relationship
Re-open the discussion with DNDi for a more global partnership
Benefit from END program if new treatment for neglected is brought to the market
5. HAND initiative as a CSR
program (I)
HAND project possesses sustainable business CSR strategies:
Alignment with company goals
Partnerships
Employee participation
CEO leadership
Need and progress
Short term: there will be costs
BUT Long term:
HAND will create sustainable goodwill with NGOs, government agencies
and public in emerging markets
Can build strong relationships with governments
Boost to CSR profile = Commercial benefits
Opportunity to create Shared Value:
Provide Society with treatment/medicines
Society provides them with sustainability; need support of the people to
compete
Government goodwill provides them with funding
First movers opportunities by sharing value with society
The company committed to share intellectual property with other players
around the world
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It can attract future funding for further research
5. HAND initiative as a CSR
program (II)
Potential Problems:
Managing partnerships extremely important for success:
Must be prepared for for problems with partners; can take different paths
and goals can stop being aligned
Careful attention to relationship with India i.e Novartis
Partnership roles and expectations must be clearly defined to avoid
problems in the long term
Differences over funding i.e Broad and Harvard
Partners belong to different cultures, languages: potential barriers and can
create confusion/misunderstandings
Fiorcruz: Sending scientists for training puts pressure on already scarce
recourse but essential to remain partnership
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5. HAND initiative as a CSR
program (III)
The Carrolls pyramid is a tool that allow us to
identify the main
corporation when
Responsibility.
four responsibilities of a
Phil
defining Corporate
Social
Find cure to neglected diseases, help people to
have a better quality of life
Develop and deliver treatments under best
conditions for
both employees and patients - avoid toxic and
harmful treatments under any circumstance
Do not skip any step that might corrupt the law
ant
hro
pic
Res
po
nsi
bili
Ethical
ty
Responsibility
Legal Responsibility
Choose wisely to cover the costs and be able
Economical Responsibility
to reinvest in new projects or future
phases of the current research
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