CASE ANALYSIS: AMGEN INC.: PURSUING INNOVATION AND IMITATION? (A) Harvard Case Solution & Analysis

CASE ANALYSIS: AMGEN INC.: PURSUING INNOVATION AND IMITATION? (A) Case Solution

Background of the industry

The medical biotech industry was manufacturing medicines for human health care and marketing those products through different channels.The traditional pharma industry was also known as the Pill industry since; this industry was working to produce those drugs which were based on small molecules rather than large molecules. However, the biotech companies were making and discovering drugs with large and more complex molecules. It has also been noted that proteins or antibodies, which were the core products of these companies were manufacturing on large and more complex molecules. Moreover, the DNA of the antibodies was quite different from small molecule items; typically the large molecule products comprised of almost 20,000 atoms rather than of 80 atoms, which were the part of small molecules products.

The company or industry which uses any technological applications to makes its products while synchronizing the living organisms or derivatives in order to achieve a specific task can be referred to as Biotechnology. This technology played a crucial role in the pharmaceutical industry for years through mass productions via the process of fermentation. Moreover, the post war advantages opened many potential for the industry since a scientist discovered a double Helix DNA model after the war, which enabled the scientists to manipulate generics of the nuclei in order to develop more advanced and innovative medicines.
Through recombinant proteins the biologics discovered a wide range of products,which includes the early age hormones, vaccines, insulin and other human growth hormones. Later on,itwas also discovered that the biologics 1.0 and biologics 2.0 had more complex molecular structure as compared to the conventional medicines.
Furthermore, the companies which were engaged in biotech invested in research and development in order to develop more beneficialmedicines, which were able to give more quick and effective assistance over the presently available therapies. However, this required more understanding of how diseases occurred and what are the basic molecules, which forced the body to get that disease.
Moreover, the promotional process and the marketing strategies were a highly regulated procedure since the regulatory body was restricting the companies to advertise and to promote the pros and cons of these biotech medicines. In addition to this, the companies were also restricted to give proper training to the physicians about the newly developed products which would enable the physician to demonstrate the dosage as well as the usage of the newly developed products.
Furthermore, it was noted that the cost of manufacturing these medicines was far too high and the companies were unable to recover these cost while charging higher prices and giving the medicines at expensive prices. Moreover, the companies were putting a lot of efforts and amount in the research and development process of these medicines. It was estimated that the process involved almost 500-600m.

Problem Statement

The chairman and the CEO of the company were considering the idea to enter in the business of biosimilars when they become off patent. Amgen was the world’s largest and most successful biotechnological company and has been competing in the market since 1980. The CEO of the company sees the biosimilars business as a dual nature;firstly as an opportunity and secondly as a threat, opportunity in the sense that the company may have quantum gains in profits and revenues while entering the new business and threat in the sense, as the company has many competing companies it may also enter in the business as it would become off patent, and after the entry of many companies Amgen Inc. may not be able to earn that much profits as it was expecting.................

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