MKTG 433 – 01
1. The alternative that I choose is to do a partnership with Pharmacol. Abgenix wants to be quickly profitable and this alternative would be the most appropriate for this purpose.
This alternative is the one the most in the continuity of what Abgenix usually does which is to start doing test on a certain antibody or in this case cancer treatment. Then Abgenix would sell the access to the research of XenoMouse to Pharmacol, let Pharmacol take the product through human trials, manage the regulatory process and finally take the product to the market after getting the FDA approval.
Since this decision is the most expected by the board of directors, R. Scott Greer the President and Chief Executive Officer of Abgenix won’t have much trouble getting the joint venture agreed. Moreover the different departments at Abgenix, both from research and marketing will see this partnership as a continuity of what has been made before.
The choice of a “hand-off” approach is the one that fits the culture at Abgenix best and won’t meet much resistance within the company. However the choice of the company with which Abgenix has chosen to partner could. On one hand Pharmacol is a good choice because it has the skills that Abgenix lack to get the product through the different steps and to the market, it has the proper salesforce and the right connections to get the product known after the FDA approval and onto the market.
On the other side, Pharmacol is not a company specialized in cancer treatment which is a specific market due to its size (the disease being the second leading cause of death in the USA). Pharmacol realizes that this partnership is a huge opportunity for them which is why the royalties are much higher than with other Abgenix partners.
This partnership is not to be taken lightly. It is at least a 10 year relationship that Abgenix and Pharmacol are getting into. With that in mind, at the end of these ten years the partnership will have brought Abgenix almost $4 billion. This new partnership would open new relationships since Abgenix and Pharmacol have never worked together before.
This is if everything goes according to plan. Is Pharmacol can’t get the FDA approval and the clinical development, the partnership wouldn’t event last 5 years and the profits for Abgenix would be largely reduced.
If we imagine that the product gets the FDA approval, that it passes the clinical trials, and that it is launched on the market, it would have a huge impact on both companies’ reputations. Cancer is a famous disease that costs more than $35 billion just in the USA, being part of its cure treatment would bring Abgenix lots of interest from the biotechnical and pharmaceutical community. This would insure Abgenix to be a viable node in these networks, which is one of the main goals of the company.
Nevertheless, by choosing this partnership with Pharmacol, Abgenix would not partner with Biopart. The latter would have lead Abgenix to develop its field of action by learning how to take a product to the market. Moreover since having a role in a cancer treatment is a great opportunity for both Biopart and Pharmacol and that both companies would have put a great importance on getting the deal signed, Abgenix might make an enemy of Biopart by choosing Pharmacol of at least closing the opportunity for a partnership in the future.
The emotional attachment to ABX-EGF and the great potential repercussion of getting the product on the market is what makes this choice hard to make. Abgenix will have to be careful not to get too close to this product if it would not work. Moreover by having a hand-off approach with Pharmacol, Abgenix wouldn’t have much control over the outcome and need to be prepared if things don’t work out the way they want.
To summarize the different steps by which Abgenix would go through if they sign with Pharmacol: R. S. Greer would have to get the board to agree…