Genzyme Has Diversified into Other Areas of Medicine

1. Why do think Genzyme has diversified into other areas of medicine? What are the advantages and disadvantages of this?

A: Termeer felt strongly that the company should remain independent and stay as self-sufficient as possible but he felt there are disadvantages of being independent and thought that by getting into other areas of medicine they can generate revenues to fund the research. Termeer entered into a number of side ventures including the chemical supplies business, a genetic counselling business, and diagnostic testing business. The diversification of Genzyme into other business could allow it to become more successful. Diversification helps for best utilization of technology to make differentiation for patients with serious and diversified disease.

Disadvantage:

1. Performing its own testing manufacturing and sales would mean much greater risks to the company.
2. High risk and large investment is required to show the importance of licensing the drug into diversification.
3. It can damage its core products brand image or slow development in its core business.

Advantages:

1. The company would get the profits its drugs earned.
2. The diversification of Genzyme offers strengthening of its related business through access to similar activities.
3. By diversification into side business, Genzyme can share its resources, skills and even research and development knowledge.

1. What recommendations would you offer Genzyme for the future?

A: Genzyme proved that a business could be built around small disease populations and demonstrated its ability to profitably. It is also estimated that there are 5000 and 8000 known rare diseases and according to FDA there are 300 orphan drugs have been developed and approved. So, we recommend that Genzyme should stay the course, and continue to focus on orphan drugs while being diversified into a number of other medical areas. And we believe that Genzyme will innovate rest of other orphan drugs in future.