Team Written Case Analysis (Concise)
Biodel’s use of biotechnology expertise in the three prime areas of Cell Biology, Molecular Biology, and Immunodiagnostics has led their company into some great opportunities. Biodel created a synthetic serum to replace fetal calf serum and horse serum, and provide a more consistently available product for scientific researchers. Biodel’s Molecular Biology division used DNA technology to gain 60% of the market share of growth factors and stock the largest collection of commercially available synthetic nucleotides, which was 50% of their sales. Biodel’s research and development in Immunodiagnostics led to the invention of DEMA, a non-radioactive method for measuring a wide array of biologically important substance. The intelligence and vision of Dr. Oscar Feldman drove Biodel to a position of leadership in the biotechnology industry. Dr. Feldman has applied innovations in Cell Biology, Molecular Biology and Immunodiagnostics to increase market share for Biodel’s products. Dr. Feldman’s scientific friends and academic contacts offered Biodel high-quality technological advice and links to scientific community, and led to sophisticated research and development advances. Now the company is at a crossroad with decisions and direction necessary. In addition to strategic planning, the company would benefit from a modest re-structuring to streamline operations and prepare for unexpected events. Their future investments should be in areas where patent protection is likely, and in directions and projects that exploit their native expertise in molecular biology and genetic engineering. These technologies seem likely to transform health care in the next two decades. Having survived the threat of bankruptcy, Biodel now has a more balanced contract research portfolio and is poised to develop an even greater impact in the future.
Biodel's projected revenues for 1980 consist of $1 million in contract research, and around $1.5 million in research products. The contract research revenue was split 70% from industrial research, and 30% government research. This research included work in Biodel's three main fields (molecular biology, cell biology, and immunology) as well as cancer chemotherapy and enzymology. These contracts are secured by Dr. Feldman through his relationships with other scientists.
The revenue from research products also comes from the three main fields of Biodel. Nucleotides from the molecular biology area account for 50% of revenues, cell growth factors from the cell biology field account for 40%, and immunodiagnostics products account for the other 10%. Research product sales have been growing 35% over the last few years, even with limited marketing efforts. However, Biodel is being outcompeted in the immunodiagnostics market and further growth is not being pursued.
Biodel has a very small staff, with the company split up into five different sections: the comptroller, advertising and sales, and then an experienced scientist manages each main field of the company. The scientists who manage their fields are all in charge of research and development, production, and even have some marketing responsibility. Dr. Feldman does not employ a marketing manager or a research director, instead filling both roles by himself. Feldman's style of management is very informal, preferring to walk around and talk to his employees rather than have them do unnecessary paperwork. The company itself is run more like an academic facility than a business, with the atmosphere more leaning towards challenging each other and making technological advances. In addition, employee turnover is very low so most of the staff is very experienced with the work that the company is doing. The staff is led by Dr. Feldman, who represents the main reason for low employee turnover. Biodel employees describe...