Company Analysis - Genentech
Genentech's Strategy
Genentech's core areas of interest are oncology, immunology and tissue growth and repair. Having a strong reputation in the formation of alliances, along with the purchase and in-licensing of compounds and technology platforms at all stages of development, Genentech is in a strong position to bring vast resources to partnering deals.
In 2003, 24% of Genentech's revenues were directed into R&D, to address the top-heavy position of its pipeline at the time..It has also established GenenFund, to support small companies with promising technologies and/or drugs in development that are at too early a stage for licensing. In this way, Genentech has developed a highly competitive approach, singling out small companies with enormous future potential and establishing mutually beneficial relationships at the earliest possible stage. A significant proportion of the Genentech pipeline has always consisted of proprietary technology platforms and drug candidates, and its brave approach to R&D spending reflects this. In 2003, 24% of Genentech's revenues were directed into R&D, to address the top-heavy position of its pipeline at the time. Since then it has reduced spending to a more sustainable level, with projected R&D spending in 2007 of 18.1%, which is comparable with other big players, for example with AstraZeneca, at 14.9%, and Novartis, at 13.7%.
Genentech's long-term goal is to produce blockbusters, and to be able to out-license technology platforms and profit from royalty payments. In a recent conference call, CEO Art Levinson explained that, "In the short-term, Genentech's growth will be driven by our ability to execute on recent approvals.. and by potential new indications for existing products. However, we recognize that continued long-term growth will depend upon our ability to bring new molecules to the market."
