Genzyme/Geltex Pharmaceuticals Joint Venture

2089 Words Mar 19th, 2005 9 Pages
Early in 1997, Genzyme Corporation began negotiations with Geltex Pharmaceuticals in an attempt to launch a joint venture to market Geltex's first product, RenaGel. Geltex was a young biotech research company with only two products in its pipeline, and they didn't have the resources necessary to launch RenaGel on their own. Genzyme, on the other hand, was a quickly growing company that experienced revenues of $518 million in 1996. They were attracted to the joint venture with Geltex because of the likelihood of increased earnings, as well as the joint venture being an excellent fit for Genzyme's specialty therapeutics. Genzyme also felt that the joint venture would lead to a similar deal in launching Geltex's second product, CholestaGel. …show more content…
growth rate, European growth rate, and the discount rate.

Genzyme's Analysis

In this section we show how Genzyme went about their analysis and what values they used for certain variables. These numbers were generally found by settling somewhere near the average of the range provided by market research.

One factor that must be considered is that the drug had not yet been approved by the FDA, but was in phase III trials. Historical data shows that 65% of drugs in this phase eventually get approved for sale to the market. It was felt that approval of the drug would occur late in 1998.

It was expected that 90% of the U.S. market would be eligible for the drug, while this number was lower for the European market, at 70%. The U.S. growth rate was based on the historical rate of 8%, while the European rate was found similarly at 6%.

Analysts' reports provided a range of 20-59% for a peak penetration rate into the market. As with most new drugs, the penetration rate was expected to start low, grow to a peak, and then begin to slowly decline again. Analysts estimated a peak penetration rate of 43%

Not all patients would continue to regularly use the new drug, even if recommended to do so by their doctor. The compliancy range was felt to be 75-94%, with an average of 87% expected.

The annual price paid for the drug

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