Question

What are the two recommended potential strategies for biotechnology firms (such as Intarcia, Alexion) that would increase their performance.

The chosen strategy should address the key strategic issues you determined above; and it should reflect your external analysis (threats and opportunities you concluded in that section) AND internal analysis (major strengths and weaknesses for the firm you identified in that section).

Answer 1

Ans: The two biotechnology firms are :

Karo BIO and

Oxigene

The external and internal analysis of two biotechnology firms :

?   In order to get to the stage where it is possible to attract the interest of large pharmaceutical firms, if that is the strategy of the firm, it may be necessary to acquire external financial resources on the way and also as a complement. Bank loans are often considered a very expensive way of financing research and it may still be hard to find bankers that are willing to give loans to research projects because of the high risks involved and the difficulties of evaluating biotechnology research. Biotechnology firms cannot be evaluated in traditional ways and, as pointed out by Audretsch (2001) in his contribution, investors therefore have to focus on the value of the network of researchers involved in a firm. Firms with high levels of research and development are more inclined to be financed by equity than mature diversified companies that can use their assets to secure loans.
These two firms are technology driven4 and between 76 and 90 percent of their staff work full-time with research and development. The last firm is market-driven and about 41 percent of the personnel work with research and development full-time. Since this firm’s technology can be applied in many areas, several agreements of licencing have been reached with partners found in various industries. The firm has no plans on engaging in production or marketing of the products, since this is better done by the partners that are already established on the market.
The firms differ from each other regarding the number of employees the range of activities, whether they are independent (not 100 percent owned by another company) and whether they are on the stock market or not. The variables are chosen in order to reflect possible connections between age, size, activities and access to financial resources.