15.363, HST.971J  Strategic Decision Making in the Biomedical Business

Hi everyone,

We know it's that time of the semester, so just wanted to send a quick reminder of tomorrow's deliverables and events.

- Final project write-ups are due on Stellar at 5:30pm.  Guidelines are included in the announcement on Stellar from April 23.  Feel free to email me with any last-minute questions.

- Please be on time for our guest talk by Mr. Henri Termeer, CEO of Genzyme.  I have pasted his bio and a company description below - this guy is kind of a big deal, so PLEASE take 5 minutes to read through the brief materials, and think of some good questions for after the talk!

- We will be filling out course evals at the end of class.  I know Andrey and Jonathan take the student feedback very seriously, so please provide your honest and detailed comments/suggestions in the forms - they will be much appreciated.

See you tomorrow in class.

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Mr. Henri Termeer - Bio
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Henri A. Termeer was appointed president of Genzyme Corporation in 1983, two years after the company's founding. He became its chief executive officer in 1985 and chairman in 1988. Under his leadership, Genzyme has grown from a modest entrepreneurial venture to one of the world's leading biotechnology companies.

Genzyme develops, manufactures and markets a range of innovative health care products and services that make a major positive impact on the lives of patients around the world. Genzyme's more than 10,000 employees serve patients in nearly 90 countries, and the company's 2007 revenues were $3.8 billion. Genzyme has delivered consistent financial results, with a compound annual growth rate in excess of 20 percent over the past five years. In 2007, Genzyme was chosen to receive the National Medal of Technology, the highest honor awarded by the President of the United States for technological innovation.

Mr. Termeer is recognized as a pioneer in developing and delivering treatments to patients with rare genetic diseases around the world. This work has provided the foundation for Genzyme's success, and today the company is diversified across medical areas including lysosomal storage disorders, kidney disease, orthopaedics, cancer, transplant and immune diseases, and diagnostic testing.

Widely acknowledged for his contributions to the biotechnology industry and health care field, Mr. Termeer is active in the areas of humanitarian assistance, policy issues, and innovation in providing access to health care. He serves on the board of directors of both the Biotechnology Industry Organization and the Pharmaceutical Research and Manufacturers of America. He is a director of Massachusetts General Hospital and is a member of the board of fellows of Harvard Medical School.

Mr. Termeer is deputy chairman of the Federal Reserve Bank of Boston's board of directors, chairman of the board of Medical Simulation Corp. and a board member of Abiomed Inc. In 2008, he was appointed to Massachusetts Governor Deval Patrick's Council of Economic Advisors, and he is a co-chair of the Leadership Council of the Mass. Life Sciences Collaborative. Mr. Termeer is also chairman emeritus of the New England Healthcare Institute, a nonprofit, applied research health policy organization he was instrumental in founding.

With a great dedication to improving global health, Mr. Termeer is a member of the board of directors of Project HOPE, an international nonprofit health education and humanitarian assistance organization. Through a partnership with Project HOPE, Genzyme provides life-saving treatment at no cost to patients in developing countries. In addition to working with Project HOPE, Mr. Termeer has a strong interest in finding innovative ways to address neglected diseases in the developing world.

Mr. Termeer has been recognized by several highly regarded organizations for his contributions to the health care field. In 2007, he received Ernst & Young's Master Entrepreneur Award for the role he has played in guiding the overall development of the biotech industry. The award is presented periodically to entrepreneurs who have contributed to meeting significant needs in society through the creation of successful companies and the development of new industry sectors. In 2005, Mr. Termeer was elected to Honorary Fellowship at the British Royal College of Physicians, a more than 450-year-old organization dedicated to improving health care through the promotion of high standards in medical practice. In 2003, he received the Franklin Delano Roosevelt Humanitarian Award from the March of Dimes and the Cor Vitae Award from the American Heart Association. Mr. Termeer has also been inducted as a Fellow in the American Academy of Arts and Sciences.

A native of the Netherlands, Mr. Termeer in 1999 received the Golden Door Award from the International Institute of Boston, which recognizes the positive influence that immigrants have had on America. In 1995, Mr. Termeer was honored by the Anti-Defamation League's New England Region with the Torch of Liberty Award for his leadership in human rights and for promoting understanding among people of diverse religious, ethnic and racial backgrounds.

Mr. Termeer holds a strong regard for promoting education at all levels. In recognition of Genzyme's support for its educational initiatives, the Cambridge School Volunteers in 2006 selected Mr. Termeer as a representative of the organization's future and honored him for his leadership. Cambridge School Volunteers recruits, trains and supports volunteers who tutor and mentor students in Cambridge's public schools. In 2005, Mr. Termeer was recognized by the Action Center for Educational Services and Scholarships, which honors individuals and organizations committed to providing educational opportunities to Boston's youth. The Cardinal Cushing School for Exceptional Children named Mr. Termeer Humanitarian of the Year in 1997.

Mr. Termeer is a trustee for the Boston Museum of Science, and a director of the Biomedical Science Careers Program, which provides minority students with the support and guidance needed for successful careers in biomedical science. At the Massachusetts Institute of Technology, Mr. Termeer is a member of the Alfred P. Sloan Management Society. He is also a member of the board of MIT Corporation.

Mr. Termeer studied economics at the Economische Hogeschool (Erasmus University, The Netherlands) and earned an M.B.A from the Darden School at the University of Virginia.

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Genzyme Company Overview
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Genzyme makes big money off small-time diseases. The company's product portfolio focuses on rare genetic disorders as well as kidney disease, cancer, and biosurgery. One of its main products, Cerezyme, is a leading (and pricey) treatment for Gaucher's disease, a rare enzyme-deficiency condition. Founded in 1981, Genzyme also is involved in drug development and genetic testing and other services. In addition, the company develops gene-based cancer diagnosis and treatment products, renal care therapies, and orthopedic biological surgery products. Genzyme's products are sold to healthcare professionals in some 100 countries, primarily through wholesale distributors.

The US market accounts for about half of the company's revenues. Cerezyme is one of the most expensive drugs in the world and accounts for nearly one- third of Genzyme's global sales. Genzyme is avidly working to diversify its product line in case competition for Gaucher's disease treatments increases or this radical treatment turns out not to be profitable in the long-term.

Newer therapies include Myozyme, a treatment for Pompe disease (a genetic disorder caused by a deficiency in the enzymes needed to break down glycogen). The FDA approved Genzyme's Renvela kidney treatment in late 2007; Renvela is the next generation of its Renagel kidney disease medicine. In 2008 the company received FDA approval for Mozobil, a treatment for cancer patients undergoing stem cell transplants.

Genzyme's pipeline of potential future drug releases includes therapies for the treatment of multiple sclerosis, kidney disease, osteoarthritis, and leukemia, as well as a new treatment for Gaucher's disease. Genzyme is collaborating with Isis Pharmaceuticals on cholesterol treatment mipomersen and with Osiris Therapeutics on cell therapeutics for cardiovascular, inflammatory, and orthopedic ailments.

Genzyme has been honing in on its cancer treatments and diagnostic testing over the last couple of years. In 2007 it acquired Bioenvision for $345 million, mostly to gain worldwide rights to Bioenvision's acute lymphoblastic leukemia treatment for pediatric patients, clofarabine (sold in the US and Canada under the brand name Clolar and in Europe as Evoltra), which the two companies developed collaboratively. The acquisition bumped up against some disapproval from Bioenvision shareholders but was ultimately approved. Bioenvision was promptly absorbed into Genzyme's other operations, expanding Genzyme's global marketing business in the oncology field. Genzyme plans to expand Clolar's applications to include adult leukemia patients.

Reported speculation that Genzyme might itself be acquired was put to rest by CEO Henri Termeer in late 2007, despite interest in the company from activist investor Carl Icahn. Rumors were completely quashed when Icahn later sold his shares in Genzyme.

 

 

Regards,

Julie

Hi Class,

I hope you are all having fun with the final project.

We have just uploaded the document describing the next stage of the project.  As you read the document, you will notice that the decisions around financing and initial clinical trials for Octagon have been made for you.  It is important that each team compare the "outcome" of this initial phase with the strategy they had formulated and note the differences.  You will need to include those comparisons as part of your final report.

As you will derive from the writeup, the company is now facing a big decision.  Initial clinical results are in for a couple of the compounds and each team must now propose the course of action for Octagon that maximizes their own gain.  You will need to analyze the different clinical scenarios and decide what the optimum decision strategy would be for the point of view you represent.  The decision models you come up with must also be included in your final report. 

Again, there is no deliverable due next class, but the instructors highly recommend that each team get started figuring out their strategy and start interacting with other teams in their section.  By our Final Project Day on May 5th each team MUST have a clear idea of the value chain and the financing and clinical strategy that maximizes their own gain, as well as a pretty clear idea of what the other teams on their section will be thinking.  Remember, you will only have ONE HOUR to conduct your negotiations on May 5th, so unless you spend enough time talking with other teams, or thinking about different negotiation tactics, you will have a very hard time getting it done.

During the next lecture we will allocate 15-20 minutes to answering questions about the project, but in the mean time feel free to contact Julie or Andrey if anything comes up.

Best,

Your 15.363 team

Hi everyone,

Since I received a lot of questions about the final project guidelines and deliverables, I am posting them here. 

By next Tuesday (April 28), you should have met with your team to discuss the assignment at the end of the Perspective page of the project handout (email me if you need a copy).

The in-class negotiation takes place the following week, on May 5th.  By then, you should have completed the following:

- gather the inputs you will need for your decision
- build your decision models
- come up with your optimal deal terms and alternatives
- meet with other teams in your section to discuss interests related to the negotiation

In class on May 5th:
- SESSION 1: The first half of the class will be dedicated to the negotiation based on the assignment in the project handout.  You must come to a decision between all four parties by the end of this session.
- DINNER: We break for dinner, and a clinical trial simulation is run to determine the outcome of Phase I and Phase II for all compounds
- SESSION 2: The second half of class will be dedicated to a second round of negotiations based on the new information
- The final deliverable (due May 12th on Stellar) is a 5 page writeup, including figures and analysis, that includes the following:
            -initial assumptions and decision model
            -changes after initial negotiation
            -changes after clinical trials
            -outcome
            -all assumptions made and how those changed

Please email me with any questions about items that are not covered here.  See you next Tuesday, when Andrey and Jonathan will be discussing distribution/go-to-market strategies and exit strategies.

Regards,
Julie

Hi all,

We have made a change to the process for obtaining HBS cases - you will now be able to purchase electronic copies online through the HBSP website.  Please see the directions below; the next two cases you need to read (Wyeth, Merck) will pertain to week 3 of the class (Feb 17th).

** You will no longer need to bring a $15 check for your case fee, as you can now pay for the cases yourself through the HBSP website **

As always, let me know if you have any questions.

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