SWOT: Genzyme in China

1. SWOT: Genzyme in China

2. SWOT: China’s biopharma industry

3. Model Framework Environmental Scan Internal Analysis External Analysis Strengths Weaknesses Opportunities Threats SWOT Matrix System Dynamics China’s Industry Genzyme Scenario analysis Strategies

4. Hypothesis ROW 1 Orderly index CHINA 1 ROW 2 CHINA 2 Not only China is moving towards anarchy The rest of the world is deteriorating slowly Time

5. Orderly State Orderly The Dragon Best case scenario Orderly CHINA Isolation Marginal Worst case scenario Anarchy Orderly Anarchy ROW

6. Competitive Cost Advantage A B Low Cost GDP & Salaries Cost savings on their own are not the primary considerat ion for biotech and pharma industry Chinese competitors’ capabilities Process Innovation D C Innovators/IPR Domestic Markets Global platform Genzyme (Strategy)

7. R&D engagement Remain in-house Make captive Investmets In China • Strategic importance • Driver of competive advantage • IP risks • -Regulatory risks • -Operational risks Invest to Improve feasibility Outsource to China Feasibility Availibility of reliable vendors Ease of technology transfer Interdependcy Well defined activity

8. SWOT MatrixBest case

9. SWOT MatrixWorst case

10. Recommendations Genzyme should enter the Chinese market carefully and learn from the experience: • Productivity will be threatened in the short term in unfamiliar countries hiring local staff , extra challenges bridging differences in business and technical practices regulatory and legal requirements and culture and language • Has the chance to help shape the future of the Chineses health care market and to consolidate their own position within it • Can contribute to the discussion on reforming the health care system; they can expedite the implementing of highest quality standards for innovative drug discovery and development • by building strong relationships from the outset with key opinion leaaders and officia, an MPC will improve its chances of faster approvals, advantageous pricing and speedier access to the market. • Trangenics and stem cell reseach

11. Extra: The Strategic game • Labor costs and overhead • Scientific talent and managent capability • Quality control during development phases • Regulatory barriers in clinical trials • The flow of returnees trained in the west helps to invigorate the nations scientic communitiy • IPR security • Select areas of activity and research topics

12. Extra: Odds looking good 1 • A very large pool of talents of exandably looking good • Investments in R&D expandable • High output of trained science graduate students more than US • In a few years more graduates than the US in lifesciences in medecine • It has reasonably advanced in clinical trials and lower complexity chemistry work • Less so in preclinical and biology based drug discovery

13. Extra: Odds looking good 2 • Companies set up new vendor relations, R&D facilities, research alliances • Productivity and is threatened in unfamiliar countries hiring local staff , extra challenges bridging differences in business and technical practices regulatory and legal requirements and culture and language • The more R&D that MPCs conduct in China (as long as they do it sensitively and efficiently) , the more opportunity they have to help shape the future of the Chineses health care market and to consolidate their own position within it. • Specifically they can contribute to the discussion on reforming the health care system; they can exedite the implementing of highest quality standards for innovative drug discovery and development. • They can encourage the develoment of new technologies that are shunned by other governements (such as trangenics and stem cell reseach); they can expand their alternative sources of comounds by investigating traditional Chinese medicine with the techniques of modern drug discovery; and through various well chosen research undertakings, they can gain ear and confidence of government officials, hospital administartors and key oinion leaders, thereby enhancing their market prospects • The last point needed to be made to be kept very much in mind by MCs when they devise their China strategies: by building strong relationships from the outset with key opinion leaaders and officia, an MPC will improve its chances of faster approvals, advantageous pricing and speedier access to the market. The surest way to build such relationships is to show commitment – both for the long haul and to the advancement of China’s own R&D capabilities. Making captive investments demonstrates commitment of the first deepening involvement throughoutthe value chain demonstrates commitment of the second kind.

14. Extra: SWOT Matrix • S-O strategies pursue opportunities that are good fit to the company’s strengths • W-O strategies overcome weaknesses to pursue opportunities • S-T strategies identify ways that the company can use strengths to reduce its vulnerability to external threats. • W-T strategies establish a defensive plan to prevent the company’s weaknesses from making it highly susceptible to external threats.