Biogen Analysis

Topics: Pharmaceutical industry, Drug discovery, Biotechnology Pages: 26 (7813 words) Published: April 22, 2006
Executive Summary

Biogen is a global biotechnology company headquartered in Cambridge, Massachusetts. Biogen is engaged in the research and development of biopharmaceuticals for human health care. Its main product is Avonex, a drug for the treatment of Multiple Sclerosis. Eighty-two percent of its revenues in 2000 came from the sale of this sole product. Biogen is also involved in the research of drugs for psoriasis, Crohn's disease, congestive heart failure, and cancer. Biogen believes that its success is based on its employees, and its corporate culture reflects this belief. Its culture is embedded in its corporate values. These values consist of hiring the highest quality employees, flexibility in work, leadership, and teamwork.

Biogen is in a strong position within the biotechnology industry. It is one of just seventeen profitable biotech companies and has the fourth largest market capitalization. Biogen has attained this prestige by utilizing partnerships from the beginning of the company which has definitely paid off. By partnering with some of the larger pharmaceutical companies, Biogen has created many competitive advantages. The main competitive advantages have been access to capital and drug marketing. Lack of capital (running out of cash) is what bankrupts most young biotechnology firms.

Although Biogen has many advantages, it also has some definite weaknesses. Over 82% of its 2000 revenues came from Avonex, their cash cow. By relying on Avonex, Biogen has been able to stay profitable, but in the future this will not work. Biogen's main threat comes from Serono, a Switzerland based company. Serono has a drug in their pipeline that has the potential of wiping out half of Biogen's U.S. revenues. To continue into the future, Biogen must focus on the development of drugs in its pipeline. Biogen must stick with the larger blue-chip drug manufacturers in partnerships and also begin to look down the value chain and acquire smaller firms with high potential. Basic Company Information

Biogen, Inc. is a global biopharmaceutical company engaged in the business of developing, manufacturing and marketing drugs for human healthcare through genetic engineering. Biogen was founded in 1978 by a group of internationally acclaimed scientists, and is the world's oldest independent biotechnology company. Two of Biogen's founders, Phillip Sharp of the Massachusetts Institute of Technology and Walter Gilbert of Harvard University both received the Nobel Prize for their individual discoveries. Biogen's headquarters are in Cambridge, Massachusetts, with the international headquarters being in Paris, France. Biogen produces Avonex for the treatment of relapsing forms of Multiple Sclerosis. The company's research and development activities are focused on products to treat inflammatory and autoimmune diseases, neurological diseases, cancer, fibrosis and congestive heart failure. Biogen currently employs more than 1,500 people worldwide. In 2000, the total revenues for Biogen were $926.5 million. The revenues from the sale of Avonex were $761.1 million or approximately 82% of total revenues. Competitive Analysis

Dominant Economic Features
The biotechnology industry is characterized by extremely high capital requirements as well as high research and development costs. The top biotechnology firm spends an average of $101,000 per employee versus an average $29,000 per employee for a pharmaceutical company. Biotechnology firms spend approximately 20% of revenue on research and development while pharmaceutical companies spend approximately 11%. The biotechnology workforce must be extremely well educated in the sciences and most workers have advanced degrees. These credentials constitute high salaries, which greatly contribute to research cost.

Over $30 billion will be spent worldwide in 2001 on biological research in the pharmaceutical industry (perhaps $8 billion on genomics and $2 billion on...

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