Biodel Inc

BUAD 490 3/14/13 team Written Case Analysis (Concise) Biodel, Inc. BIODEL INC. executive manager SUMMARY Biodels mathematical function of bio applied science expertise in the trey prime beas of Cell Biology, molecular(a)(a) Biology, and Immunodiagnostics has take their party into some large(p) opportunities. Biodel created a semisynthetic blood blood blood blood blood blood serum to replace foetal calf serum and horse serum, and provide a much than consistently obtainable crossway for scientific enquiryers. Biodels molecular Biology di lot engaged desoxyribonucleic acid applied science to gain 60% of the grocery store bundle of development chemical elements and billet the largest collection of commercially available synthetic nucleotides, which was 50% of their gross sales.Biodels investigate and development in Immunodiagnostics lead to the invention of DEMA, a non-radioactive method for measure a across-the-board set forth of biologically important s ubstance. The intelligence and vision of Dr. Oscar Feldman drove Biodel to a purview of leadership in the bioengineering industry. Dr. Feldman has employ innovations in Cell Biology, molecular Biology and Immunodiagnostics to adjoin trade carry on for Biodels intersection points. Dr. Feldmans scientific friends and academician contacts offered Biodel high-quality technological advice and links to scientific community, and led to sophisticated seek and development advances.Now the come with is at a crossroad with decisions and direction necessary. In addition to strategic planning, the company would earn from a modest re-structuring to streamline operations and prep atomic number 18 for unexpected stillts. Their prox enthronizations should be in beas where glaring protection is be worry, and in directions and reposes that exploit their homegrown expertise in molecular(a) biota and genetic engineering. These technologies seem appargonnt to transform health sympat hize with in the next two decades.Having survived the brat of bankruptcy, Biodel now has a more balanced contract investigate portfolio and is collected to develop an even great impact in the future. CURRENT mail service Biodels leap outed receiptss for 1980 consist of $1 million in contract explore, and close to $1. 5 million in explore point of intersections. The contract look revenue was explode 70% from industrial research, and 30% g e genuinelyplacenment research. This research include live in Biodels trinity main palm (molecular biological science, carrelphone biology, and immunology) as well as asscer chem another(prenominal)apy and enzymology.These contracts are touch ond by Dr. Feldman through his relationships with other scientists. The revenue from research products also comes from the tierce main fields of Biodel. Nucleotides from the molecular biology area cipher for 50% of revenues, cadre offshoot reckons from the cell biology field story fo r 40%, and immunodiagnostics products account for the other 10%. Research product sales down been developing 35% e rattlingplace the last few years, even with limited merchandise efforts. However, Biodel is being outcompeted in the immunodiagnostics mart and further growth is not being pursued.Biodel has a very small staff, with the company split up into five different sections the comptroller, advertise and sales, and then an experienced scientist manages individually main field of the company. The scientists who manage their fields are all in charge of research and development, production, and even have some selling responsibility. Dr. Feldman does not employ a marketing double-decker or a research director, instead filling two roles by himself. Feldmans style of management is very informal, preferring to walk around and talk to his employees preferably than have them do supererogatory paperwork.The company itself is run more like an academic facility than a business , with the atmosphere more leaning towards contend each other and fashioning technological advances. In addition, employee turnover is very first so close to 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 him as a unique and enthusiastic man, and the reason why the company is so successful. commercializeing had been a very inconsistent department, with Dr. Feldman commonly assuming all of the major(ip) marketing responsibilities.But when Dr. Feldman decided that he demand to market his company more aggressively he hired Mr. Steve Kaplan who had been a marketing manager at a large pharmaceutical company. However, Mr. Kaplan and Dr. Feldman concisely disagreed on who should direct Biodels marketing strategy. Kaplan proceeded to spend a large come in of money on marketing, including hiring additional salespeople and other staff. The se changes resulted in a 65% increase in sales, and marketing costs increased by 500%, which resulted in moolah dropping from $95,000 in 1978 to $17,000 in 1979. As a result, Dr. Feldman is reconsidering Mr.Kaplans direction in the marketing department. OPPORTUNITIES First, Biodel had under development a synthetic serum that would be used to satisfy growth requirements in cells. This would be an innovative product that could be a substitute for inbred fetal calf serum and horse serum. However, a major occupation with the fetal serum is the impermanent fluctuation in cost. The cost is impelled by the supply of the serum and the supply is determined by the tot up of calves that are slaughtered. The synthetic serum could offer a steady rate. The market is projected at $50 to $80 million.Biodel would have a free-enterprise(a) advantage over the rival and could attain 20% of the market treat if they pursue this project. A salient problem with this project is the uncertainty tha t Biodel give be able to grow a patent. That provides a major find in this investment. Second, another project is available that is extremely intriguing to us. Biodel has the luck to produce a current product called DEMA. DEMA is a scrutinying technology based on enzyme membranes sort of than radioactivity. This product could be used to test for pregnancy, syphilis, hepatitis, keistercer, toxins in food and carcinogens in the environment.DEMA is a healthier, safer, faster and cheaper way of examination than the radioactive method. There are no hazards or side effects to DEMA and it substructure provide the aforesaid(prenominal) results as radioactive tests. The problem with this project is the financial aspect. It is more dearly-won than the synthetic serum. Investments could total in the millions and the R costs could range from $1 to $3 million. However, this project has drawn the vigilance of major drug companies who are willing to participate in a joystick venture w ith Biodel, which would financial aid with the costs of the investment. Third, Biodel has been thinking about fall in the genetic engineering field.The company has basal and not wide experience if this field but they have been a major provider of molecular biology products. At the moment, there are four major competitors in the market Cetus, Genentech, Genex and Biogen. The basic purpose of this field is to engineer a cell to produce a specific biological product. Competitors use the bacteria E. coli as their boniface cell, for the most part. Biodel has the probability to enter the market with a new strategy that involves the use of yeast as the host cell instead of E. coli. He and three other scientists believe that yeast would be a better host cell than E. coli.Yeast has a biochemical machinery that can allow the growth of medically relevant glycoproteins such as Interferon and Urokinase. These glycoproteins are used to inhibit the contemporaries of pubic louseous cells a nd to disrupt blood clots. The investment costs for this project would be high, including salaries that Biodel would pay for Dr. Ballantine and three other passing successful scientists to work for them. However, the reelect on such an investment could be immense. RECOMMENDATIONS 1. The Biodel Board of Directors should hold annual or semi-annual Board meetings to review company progress. Dr. Feldman should delegate more.The Board should be expand by 1 or 2 people to extend to greater diversity and breadth of expertise. date planning should be considered in case Dr. Feldman died, or a social class head left. 2. Mr. Kaplans marketing grouping should be streamlined and asked to direction on a marketing strategy for DEMA. The marketing group can probably be reduced to lower costs while maintaining the increase in research product sales. Challenge Kaplan to analyze the marketing group to understand the most important parts versus parts that are expendable. 3. Among the growth opp ortunities to pursue, the synthetic growth factor option does not seem likely to succeed.Although it is the least expensive investment, there is uncertainty that the patent protection can be obtained. Furthermore, researchers accustomed to fetal bovine serum may be unlikely to abandon a tried and true method. In contrast, the DEMA technology is a unique opportunity for Biodel. It eliminates the risks and hazards associated with radioactivity, which researchers would appreciate. There is a high likeliness of patent protection. Based on the information in the case, the company take a better understanding of how to bring this product to market.This could be a great project for Kaplans smaller marketing group. 4. Pursue ancestral Engineering, with the advice and guidance of the four academic experts. This is an important initiative and Biodels connections with the prize-winning scientists are important. They should be paid per diems and offered job options. One of the four also sho uld be invited to join the Biodel Board of Directors. cecal appendage A SWOT Analysis S- Strengths bioengineering special expertise by the 1970s in (three prime areas of localise/ other fields) 1.Cell biology polish technology paid off 60% share growth factor market 40% offspring sales 2. Molecular biology desoxyribonucleic acid paid off 60% share growth factor market stocked largest commercially available synthetic nucleotides (50% of sales) 3. Immunodiagnostics biology a. Sub categories crabby person chemotherapy Enzymology Offered high-quality technological advice, numerous links to scientific community, highly sophisticated research and development service Feldman was able to secure contracts with his personal relationships with scientists in the judicature and industry Low employee turnoverW Weaknesses Molecular biology researchers used numerous substitutes Immunodiagnostics biology large firms aggressively entered and has not expanded since 10% of sales of resear ch products -1980 profitability varied on depending on intensity of product research and development By the 1980s 60% of companys revenue was from commercializing research Reliant on judicature contracts when they started making cut backs 85% contracts are establishment forcing Biodel into 1st layoff (damaging to long-run otential) 55 employees scientists and technicians no marketing manager or research director hired (Feldman filled both positions with widespread contacts and scientific expertise) Staff meetings old and no regular reports involve from subordinates Poor merchandising Products sold by mail Depends on word of mouth trade shows, advertising, direct mail, ad phone solicitation customer service almost laughable O OpportunitiesGoal to manufacture and market biochemical products developed through their own research Cell Biology synthetic serums to satisfy growth requirements in cell lines of tissue culture successor natural fetal calf serum (most widely u sed, horse serum was 2nd most widely used). Market of 50 million domestically and 80 million worldwide growing at 15% no systematic analysis of serum market done Immunodiagnostics- opportunity to enter the market new test technology based on enzyme membranes kind of than radioactivity new product DEMA simpler, faster, and slight expensive.Market in excess of $ vitamin C million and has potential to be over $1 billion. High misadventure for a patent and a joint venture with a major drug company. Genetic engineering raise advantages/high return on investments Supplier of molecular biology products nucleotides and synthetic genes sold supported by genetic engineers some cases biodel was soul supplier T Threats Relying on government contracts lead them to the threat of bankruptcy Biodels spending strategies APPENDIX BBiodel IncBUAD 490 3/14/13 Team Written Case Analysis (Concise) Biodel, Inc. BIODEL INC. EXECUTIVE SUMMARY Biodels 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. Biodels 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.Biodels 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 Biodels products. Dr. Feldmans 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. CURRENT SITUATION Biodels 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 res earch, and 30% government research. This research included work in Biodels 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 m anage 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. Feldmans 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 him as a unique and enthusiastic man, and the reason why the company is so successful. Marketing had been a very inconsistent department, with Dr. Feldman usually assuming all of the major marketing res ponsibilities.But when Dr. Feldman decided that he needed to market his company more aggressively he hired Mr. Steve Kaplan who had been a marketing manager at a large pharmaceutical company. However, Mr. Kaplan and Dr. Feldman soon disagreed on who should direct Biodels marketing strategy. Kaplan proceeded to spend a large amount of money on marketing, including hiring additional salespeople and other staff. These changes resulted in a 65% increase in sales, but marketing costs increased by 500%, which resulted in profits dropping from $95,000 in 1978 to $17,000 in 1979. As a result, Dr. Feldman is reconsidering Mr.Kaplans direction in the marketing department. OPPORTUNITIES First, Biodel had under development a synthetic serum that would be used to satisfy growth requirements in cells. This would be an innovative product that could be a substitute for natural fetal calf serum and horse serum. However, a major problem with the fetal serum is the unstable fluctuation in cost. The co st is determined by the supply of the serum and the supply is determined by the number of calves that are slaughtered. The synthetic serum could offer a steady rate. The market is projected at $50 to $80 million.Biodel would have a competitive advantage over the competition and could attain 20% of the market share if they pursue this project. A big problem with this project is the uncertainty that Biodel will be able to receive a patent. That provides a major risk in this investment. Second, another project is available that is extremely intriguing to us. Biodel has the opportunity to produce a new product called DEMA. DEMA is a testing technology based on enzyme membranes rather than radioactivity. This product could be used to test for pregnancy, syphilis, hepatitis, cancer, toxins in food and carcinogens in the environment.DEMA is a healthier, safer, faster and cheaper way of testing than the radioactive method. There are no hazards or side effects to DEMA and it can provide the same results as radioactive tests. The problem with this project is the financial aspect. It is more expensive than the synthetic serum. Investments could total in the millions and the R costs could range from $1 to $3 million. However, this project has drawn the attention of major drug companies who are willing to participate in a joint venture with Biodel, which would help with the costs of the investment. Third, Biodel has been thinking about joining the genetic engineering field.The company has basic but not wide experience if this field but they have been a major supplier of molecular biology products. At the moment, there are four major competitors in the market Cetus, Genentech, Genex and Biogen. The basic purpose of this field is to engineer a cell to produce a specific biological product. Competitors use the bacterium E. coli as their host cell, for the most part. Biodel has the opportunity to enter the market with a new strategy that involves the use of yeast as the host c ell instead of E. coli. He and three other scientists believe that yeast would be a better host cell than E. coli.Yeast has a biochemical machinery that can allow the growth of medically relevant glycoproteins such as Interferon and Urokinase. These glycoproteins are used to inhibit the multiplication of cancerous cells and to disrupt blood clots. The investment costs for this project would be high, including salaries that Biodel would pay for Dr. Ballantine and three other highly successful scientists to work for them. However, the return on such an investment could be immense. RECOMMENDATIONS 1. The Biodel Board of Directors should hold annual or semi-annual Board meetings to review company progress. Dr. Feldman should delegate more.The Board should be expanded by 1 or 2 people to achieve greater diversity and breadth of expertise. Succession planning should be considered in case Dr. Feldman died, or a division head left. 2. Mr. Kaplans marketing group should be streamlined and as ked to focus on a marketing strategy for DEMA. The marketing group can probably be reduced to lower costs while maintaining the increase in research product sales. Challenge Kaplan to analyze the marketing group to understand the most valuable parts versus parts that are expendable. 3. Among the growth opportunities to pursue, the synthetic growth factor option does not seem likely to succeed.Although it is the least expensive investment, there is uncertainty that the patent protection can be obtained. Furthermore, researchers accustomed to fetal bovine serum may be unlikely to abandon a tried and true method. In contrast, the DEMA technology is a unique opportunity for Biodel. It eliminates the risks and hazards associated with radioactivity, which researchers would appreciate. There is a high likelihood of patent protection. Based on the information in the case, the company needs a better understanding of how to bring this product to market.This could be a great project for Kaplan s smaller marketing group. 4. Pursue Genetic Engineering, with the advice and guidance of the four academic experts. This is an important initiative and Biodels connections with the prize-winning scientists are important. They should be paid per diems and offered stock options. One of the four also should be invited to join the Biodel Board of Directors. APPENDIX A SWOT Analysis S- Strengths Biotechnology special expertise by the 1970s in (three prime areas of focus/ other fields) 1.Cell biology culture technology paid off 60% share growth factor market 40% offspring sales 2. Molecular biology DNA paid off 60% share growth factor market stocked largest commercially available synthetic nucleotides (50% of sales) 3. Immunodiagnostics biology a. Sub categories Cancer chemotherapy Enzymology Offered high-quality technological advice, numerous links to scientific community, highly sophisticated research and development service Feldman was able to secure contracts with his personal relationships with scientists in the government and industry Low employee turnoverW Weaknesses Molecular biology researchers used numerous substitutes Immunodiagnostics biology large firms aggressively entered and has not expanded since 10% of sales of research products -1980 profitability varied on depending on intensity of product research and development By the 1980s 60% of companys revenue was from commercializing research Reliant on government contracts when they started making cut backs 85% contracts are government forcing Biodel into 1st layoff (damaging to long-term otential) 55 employees scientists and technicians no marketing manager or research director hired (Feldman filled both positions with widespread contacts and scientific expertise) Staff meetings rare and no regular reports required from subordinates Poor Marketing Products sold by mail Depends on word of mouth trade shows, advertising, direct mail, ad phone solicitation customer service almost laughable O OpportunitiesGoal to manufacture and market biochemical products developed through their own research Cell Biology synthetic serums to satisfy growth requirements in cell lines of tissue culture replacing natural fetal calf serum (most widely used, horse serum was 2nd most widely used). Market of 50 million domestically and 80 million worldwide growing at 15% no systematic analysis of serum market done Immunodiagnostics- opportunity to enter the market new test technology based on enzyme membranes rather than radioactivity new product DEMA simpler, faster, and less expensive.Market in excess of $100 million and has potential to be over $1 billion. High possibility for a patent and a joint venture with a major drug company. Genetic engineering exciting advantages/high return on investments Supplier of molecular biology products nucleotides and synthetic genes sold supported by genetic engineers some cases biodel was soul supplier T Threats Relying on government contract s lead them to the threat of bankruptcy Biodels spending strategies APPENDIX B