Based on 'The Science of the Deal', Could you help me to answer case study question? but you do not have to answer the 3 questions in the picture.
And i do not fully understand planned change and reactive change. So i cannot answer number 2 question.
The Science of the Deal Over a decade ago. lIIII'SI Pharmaceuticals. a small bio technology company based on Long Island. New York. was looking for a partner to share in the development of a newly invented drug for the treatment of lung and pancreatic cancer. The drug was extremely promising. and with 42 companies bidding on a piece of the action. the OSI deal was the year's most competitive In the pharmaceuticals industry. The wirurer was San Franciscobased Genentech. a highly successll pioneer In the biotech eld. In order to lock up the deal. both Genentech and its largst shareholder [and eventual parent]. the Swiss pharmaceuticals company Roche Group. purchased 335 million in 051 stock and offered up-front fees totaling another $11? million. It was certainly an attractive offer. but It wasn't actually the highest hid. DSI went with Genentech because it had more than money to offer. Ioe McCracken. who negotiated the deal for Genentech. argues that 031 accepted his bid because his company paid attention to what 051 wanted [in addition to a healthy infusion of capital}: \"They wanted to build a company." he recalls. \"and you were not going to help them build a company by giving them a whole bunch ofcash.... Whatwe proposed wasaparbier ship where we would really work. together and share the science and be partners in development.\" The agreement called for Genentech and DSI to share development costs and prots om ILLS. sales and Roche to pay royalties on sales in all other markets. According to MoGracken [who was vice president of business development at the time}. deals like the one with 051 are mostly about the science and the organi sational processes that transform scientic resources Into protable products: At Genentech. he says. \"we emphasize scientic rationale and probability of approval much more than we emphasize market size. a strong underlying scientic rationale or a probability of approval will trump market size any time." For example. McGracken negotiated a deal with a biotech rm called Seattle Genetics Inc. to partner in the commercialization of a cancer drug lcnown as SIGN4t}. Under the terms of the arrangement. Genen tech made an up-front payment of S60 million and agreed to pay for future research. development. and manufacturing through \"milestone\" payments of more than $800 million based on Seattle Genetics' clinical and regulatory progress in developing the drug. It was an expensive deal. but McCrarken had good reason to make it: n'[F]or us to do these larger deals." he explains. \". .. we have to believe we have synergies we can exploit in mardmiring the development of [the products]. In this case. we really believe we have some good Insights and expertise in basic research and in development and manufacturing that we can leverage. This product.\" he adds. \"has the opportunity to address an iroportant disease that we don't have anything else in our pipeline to address. We put a big premium on that" As of 2012. SEN-40 was performing well in clinical trials on patients wii a rm of blood cancer known as non Hodglcin lymphoma In the pharmaceuticals industry. in addition to the usual run of joint ventures and mergers and acquisi tions {Hess}. deals come in a variety of forms. In- iicensfng ventures. for example. are partnerships between rms with shared goals. strategies. or elds of interest; like Genentech's deals with 051 and Seattle Genetics. they're often created to share the costs of developing products from which both parbiers can prot. Outlicensing refers to ventures in which a rm seeks a partner to continue the development of a prod uct iat's previously been developed Internally. For instance. Genentech once took a drug called Rapttva through preclinical and midstage clinical trials but didn't have the nancial wherewithal to take it any further. So it outlicensed the drug to a small biotech com [biotech] business is by leveraging the resources of three forms of innovation discussed in the text: partners in manufacturing and development." It is radical versus incremental, technical versus mana- interesting to note that Mccracken's approach leaves gerial, and product versus process.) little room for acquisition as a deal-making option; in 2. Ex-Roche Chairman Franz Humer committed the fact, Genentech has only made one acquisition in its parent company to sustaining Genentech's "inno- entire history. "We haven't had to do them to drive vative culture," and his successor, Severin Schwan, growth," he explains. "We've been able to sustain has stated that he intends to "keep the two respec- growth with our internal pipeline. We've been able to tive research and early development organizations get access to the technologies and products that we as independent units"; merging the two R&D needed through licensing activities." units, he says, "would kill innovation" at Genen- As part of a major reorganization of Genentech's tech. Schwan needs suggestions on how best to development, commercial, and manufacturing activi- follow through on both Humer's commitment ties, Mccracken was given additional responsibilities and his own. It is no surprise that your boss has as head of a new unit called Strategic Pipeline Develop- asked you to furnish her with two or three ideas ment. Among the goals of the reorganization was that she might pass on to the CEO. What will your focusing the efforts of top managers on product inno- suggestions be? vation and the firm's product pipeline-the flow of 3. Despite the commitments made by its CEOs, new-product concepts through the process that trans- Roche Group is an immense company: It employs forms them into products available to end users. more than 80,000 people in 150 countries and Mccracken's new responsibilities included heading up posted revenues of $48 billion in 2012. There will a team to advise the president of the Product Develop- undoubtedly be changes at Genentech. Generally ment unit on the expansion of the company's product speaking, what sort of changes might you expect pipeline. in the following areas-organization structure and Following the reorganization, Mccracken's team design, technology and operations, and people, atti- would negotiate anywhere from 40 to 50 deals annu- tudes, and behaviors? ally, but hooking up with partners soon became a sec- ondary aspect of his job. Following the reorganization, Case References he spent most of his time with what he called "my customers"-the people inside Genentech who conduct "Genentech's Joe McCracken Is on the Hunt," The Bur- the research necessary to develop products already in rill Report, May 7, 2007, www.burrillreport.com, the pipeline. The shift in his job description, according accessed on July 21, 2012; Querida Anderson, "OSI to Mccracken, was important "because business devel Pharma Needs to Expand Pipeline," Genetic Engi- opment [at Genentech] is so integrated with our inter- neering & Biotechnology News, June 15, 2007, nal customers in research [and] development." For the www.genengnews.com, accessed on July 21, 2012; record, it wasn't long before Mccracken was back at "Seattle Genetics Reports Final SGN-40 Phase I the job of making partnership deals, first as Roche's Non-Hodgkin Lymphoma Data at International head of Pharma Partnering Asia and, currently, as its Conference on Malignant Lymphoma," Drugs.com, global head of business development. February 3, 2011, www.drugs.com, accessed on July 21, 2012; Genentech Inc., "Genentech Announces Case Questions Voluntary Withdrawal of Raptiva from the U.S. Market," Press Release, April 8, 2009, www.gene 1. You're an up-and-coming assistant to a manager .com, accessed on July 21, 2012; Maureen Martino, at Roche Group. Your boss is being transferred to "CEO: Roche, Genentech R&D Won't Merge," the company's recently acquired research facilities Fierce Biotech, September 15, 2010, www.fiercebio at the former Genentech headquarters in San tech.com, accessed on July 21, 2012; and "Business Francisco. She's asked you to compile a brief Development at Roche and Genentech: An Inter- report on Genentech's overall approach to product view with Joe Mccracken and Dan Zabrowski," Bio- innovation. What will you say in your report? Pharma Today, July 28, 2009, www.biopharmatoday (Hint: Structure your report according to the .com, accessed on July 21, 2012
