Genzyme Corporation And Orphan Drugs Essay Sample
Genzyme Corporation 3
The Benefits of Producing Orphan Drugs 4
The Concept of Orphan Drugs 4
The Benefits of Developing and Producing Orphan Drugs 5
Genzyme Corporation is one of the leaders in the United States biotechnology market. It is headquartered in Cambridge, the state of Massachusetts. From 2010 onwards the company is reported to be the third largest biotechnology manufacturer in the globe, employing more than 12,000 professionals internationally. However, the company substantially differs from its competitors due to the fact that Genzyme focuses on the development and production of orphan drugs. Although producing these types of medication is considered to be more resource consuming and less profitable, nevertheless, the performance of Genzyme Corporation demonstrates how with proper management techniques and strategies, R&D and production of the orphan drugs can be a lucrative business. Many critics argue that pharmaceutical companies are profit-oriented only. Genzyme Corporation is the best illustration of how profitability concerns should be harmonically linked with health necessities of the community.
The objective of this paper is to speak about the Genzyme Corporation, to analyze its performance in terms of orphan drugs production and to outline the benefits connected with this practice
As one of the largest global new technology companies, Genzyme Corporation has its presence in 66 countries. The company operates 17 manufacturing units and nine modern genetic testing research laboratories (Genzyme Corporation, 2015). The products of the company are available in 93 countries worldwide, and average annual turnover is more than $9 billion dollars (ibid.). The company has received several excellence awards from the Fortune Magazine for being one of the hundred best workplaces. In 2005, the performance of the company was marked by the National Medal of Technology, the highest award given by the United States Pres. to the innovators (Harris, 2006). The research and development of the company have six focuses - renal disease, oncology, immune and transplant, diagnostics, genetics, orthopedics and storage diseases. The first orphan drug ever developed by this company was Ceredase, a medication designed to treat Gaucher disease. It was eventually replaced by Cerezyme. The average costs of this medication are $210,000 per patient per year. Currently, the production and distribution of this medication account for 30% of the company revenue (Alain, Lut, Fostier, Cleemput &Simoens, 2010). Other substantial drugs developed and distributed by the company are Renagel and the Fabrazyme.
Overall, the popular analytical opinion is that the performance of Genzyme Corporation is unique in the way, how skillfully it fills the market gaps left by other pharmaceutical giants like Pfizer Corporation.
The Benefits of Producing Orphan Drugs
The Concept of Orphan Drugs
Conceptually, orphan drug is defined as any medication designed to treat a rare disease (Sneader, 2005). In this context, a rare disease is understood as any ailment which affects a small percentage of the population (Moyniha & Cassels, 2005). The majority of rare diseases are transmitted genetically. It means that they are constantly present throughout the person's life, but the symptoms may not be apparent immediately. Statistically, the majority of rare diseases transpire at the early periods of a person’s life and approximately 30 % of children diagnosed with these diseases have extremely low chances of celebrating their fifth birthday (Harris, 2006). It is also important to highlight the fact that the concept of a rareness has not been academically agreed on insofar. In other words, there is no exact percentage, which can classify a disease as rare (Illingworth, Cohen & Illingworth, 2004). It may be rare in one part of the world, while being popular in another. Current findings in this regard demonstrate that 10% of the American population suffer from some form of rare disease. Approximately 55,000,000 people in Europe and in the United States together combined have been affected by some form of rare diseases (Alain, Lut, Fostier, Cleemput & Simoens, 2010). The figures demonstrate that there are more than 5000 known rare disease, with the new ones discovered every week (Sneader, 2005).
Orphan drugs are specifically customized for treating these rare ailments. Up to date, 350 orphan drugs have been approved by the Federal Drug Administration in the United States.
The Benefits of Developing and Producing Orphan Drugs
In the United States and the countries of European Union, obtaining marketing approval for an orphan drug is considerably less difficult than for conventional medication (Harris, 2006). In fact, global pharmaceutical companies lack sufficient profit motive because not so many buyers are available. Therefore, the national governments focused on developing different financial incentives, like extended exclusivity periods and other. It is a government prerogative in many countries to assign a status of orphan to a particular disease and to the drugs necessary for its treatment. This type of public policy led to multiple scientific breakthroughs, which could not have been possible otherwise. Furthermore, the popular scholarly opinion in this regard is that without government support and incentives, the people affected by some sort of rare disease may be left without treatment because the economic costs of drug research and development are upscale in this field (Sneader, 2005).
Legal regulation of orphan drugs production is less rigorous than in other spheres of pharmacy. In general, in order to gain approval from the Federal Drug Administration, an orphan drug should undergo similar regulatory procedures. The focus is made on pharmacology dynamics, stability, safety, dosing and efficacy (Alain, Lut, Fostier, Cleemput & Simoens, 2010). However, in order to simplify the process, some statistical requirements have been lessened. For instance, there is no necessity for an orphan drug to demonstrate that it can effectively cure 1000 patients, what is a common requirement for the conventional medication.
At the same time, the market for orphan drugs is a relatively small. It is by default unprofitable for the pharmaceutical companies to develop and merchandise orphan drugs, and the government of the United States follows twofold approach to motivating them. Firstly, for some products there are no statutory imposed price limitations. In other words, the companies are free to charge whatever price they consider necessary. Secondly, for the Americans who cannot pay full price of these medications, the government reimburses the course of treatment, either partially or in full (Illingworth, Cohen & Illingworth, 2004). Although it is sometimes considered as a failure of the free market system, this approach is friendly to the patients, while financially lucrative to the producers of the orphan drugs.
Other types of positive government intervention into the market of orphan drugs take different forms. The most popular is by means of providing different tax incentives for the producers. The Genzyme Corporation saves approximately 20% of all tax payments annually by producing orphan medication (Genzyme Corporation, 2015). The second method of invigorating the company to invest into the development of orphan drugs is by providing enhanced patent rights and marketing privileges. To be more specific, Genzyme Corporation enjoys extended exclusivity period of production and full protection from the competitors’ activity in this field. Thirdly, these companies are known to receive substantial subsidization from the government for its clinical research. A typical research of an orphan drug is extremely financially consuming, and no positive results are guaranteed in beforehand. Therefore, the government of the United States of America is often willing to share the financial burden of the companies in order to stimulate further development. Current estimates show that more than 25% of all clinical experiments of Genzyme Corporation receive state sponsorship. The statutory regulation of this activity is exercised by the Orphan Drug Act 1983 (Harris, 2006). This instrument was lobbied by the National Organization for Rare Disorders and many pharmaceutical companies, with Genzyme Corporation taking the leading roles in that campaign. Under the provisions of this document, the company developing a drug, which is designed to cure a disorder, which affect fewer than 200,000 Americans is authorized to sell it without any forms of competition for the period of seven years. Furthermore, this Act grants significant clinical trial tax incentives.
Similar legislation has been enacted in the European Union. The products in the Regulation # 141/2000 are referred to as “orphan medical products”. The exclusivity period given to the Genzyme Corporation in European Union is 10 years after the drug has been approved by the Committee on Orphan Medicinal Products of the European Medicines Agency. Similar tax incentives and methods of financial encouragement are applied by the members of the European Union (Moynihan & Cassels, 2005).
Overall, market strategy of Genzyme Corporation in terms of orphan drugs is effective primarily because of serious support from the government. The practice illustrates, that producing orphan drugs is not profitable from financial purview, but the community is in strong need of these products. Therefore, the national governments of the United States of America and the countries of European Union organize effective financial and organizational support to the producers of this medicine. Granting tax incentives for clinical trials and providing prolonged exclusivity periods of merchandising are the most popular methods of encouraging the manufacturers. The Genzyme Corporation is one of the international leaders in the biotechnological community in this context, and its decision to make the focus on orphan drugs is justified by the accrued sales and public recognition of the firm.
The development of orphan drugs is not only profitable, but also beneficial for the community. Potentially, many rare diseases may have lethal outcomes for those, who are affected by them. Therefore, the development of these drugs should be positioned as an important tenet of a corporate social responsibility. Genzyme Corporation aspires to make their products as accessible as possible and receive thousands of positive feedbacks from the recovered customers. Building rapport with the users becomes an important aspect in the pharmaceutical business, and Genzyme Corporation accomplished this mission with remarkable success. Not only the companies endorsed by the medical authorities in the United States and in Europe, but its patients worldwide are supportive and cooperative.
Choosing a partner for any cooperative venture is not easy. Different criteria are applicable to the different projects, but the most unified are the following. Firstly, a prospective partner should be reliable. This aspect is easily traceable by means of analyzing previous performance of the potential partner and its cooperative projects with other entities (Lavanassani, Movahedi & Kumar, 2009). Positive feedback from those institutions, which collaborated with it should always be available. Secondly, the partner should be technology-oriented. Otherwise, the developed product risks to be noncompetitive on the market. To be more specific, while the performance of a Business A can be satisfactory for the project needs, technological retardation of the Company B may become fatal for the product of their cooperation.
With regard to the collaboration mode, the most effective methods of keeping the project developed dynamically have been developed by the IT industry. Kanban methodology is one of the most recommended for any types of corporative ventures nowadays. The teams from different companies should organize regular meetings (their frequency is determined on the complexity of the project, amount of work to be done and resources available), when the key point are agreed upon, and the development efforts are "synchronized”.
Finally, as far as the most recommended governance structure is concerned, the use of committee is mostly recommended. This committee should comprise one project manager from each collaborator and one independent project manager, which will assure that the responsibilities are shared between the partners equally (Lavanassani, Mohavedi & Kumar, 2009).
Alain, D., Lut, M., Fostier, C., Cleemput, I., & Simoens, S. (2010). "Issues Surrounding Orphan Disease and Orphan Drug Policies in Europe," Applied Health Economics and Health Policy 8 (5): 341.
Genzyme Corporation. (2015). About Genzyme. Retrieved from http://www.genzyme.com/Company/About-Genzyme.aspx
Harris, M. (2006). Managing health services: concepts and practice. Marrickville, N.S.W: Elsevier Australia.
Illingworth, P., Cohen, J., Illingworth, P. (2004), “Orphan drug policies: Implications for the United States, Canada, and developing countries”, Health Law Journal 12: 183–20
Lavassani K., Movahedi B., Kumar V. (2009) Developments in Theories of Supply Chain Management: The Case of B2B Electronic Marketplace Adoption, The International Journal of Knowledge, Culture and Change Management, Volume 9, Issue 6, pp. 85– 98
Moynihan, R. & Cassels, A. (2005). Selling sickness: how the drug companies are turning us all into patients. Crows Nest, N.S.W: Allen & Unwin.
Sneader, W. (2005). Drug discovery a history. Hoboken, N.J: Wiley.