Amgen Inc Case Analysis
The biotech firm Amgen Inc. gives much attention and time to the planning process. Because the outcomes for a company like Amgen are often very unsure and many employees are quite sceptical about the use of such a planning, the main issue can be described as follows:
What is the added value of planning for a fast-growing company in an uncertain and dynamic environment?
To address this issue, an analysis will follow based on the following elements:
Responsibility structure
Amgen Inc. is a biotech company. The responsibilities of the Product Development Teams (PDT’s) can be described as “discretionary cost centres”. The output of a PDT is therefore difficult to relate to its input. Based on the long-term
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The planning determines which actions the company must take to accomplish her targets. Based on the planning the company can take into account required capital, staff needs, patenting, etc.
But researchers are notoriously difficult to manage. A strategic plan cannot force a research breakthrough. Within Amgen therefore 20% of the researchers’ time is free to use as they themselves see fit.
Rewarding Results
Nearly every employee has Amgen stock options next to their base salary (reward based on long-term performance in the market place). The researchers within Amgen however do not seem to be very susceptible to financial rewards. This has much to do with the culture of research. Researchers gain much more satisfaction from the appreciation by colleagues in the field and from publications.
The planning process does not seem to be very focused on creating specific performance goals for managers and accompanying reward structure. Motivating managers does not seem to be a specific part of Amgen’s planning process.
Reason for creating long-term planning for Amgen Inc.
Within the various layers of the company there are different opinions about the added valie of long-term planning.
Top management considers the LTP’s as the backbone of the company and therefore sees the LTP’s as both a prediction of future revenue and as action plan for the coming year. This makes sure that they can anticipate on the required resources (capital, staff, infrastructure).
The structure and design of organizations have drastically changed over the last twenty-five years. Organizations develop new goals at the beginning of the year or after the completion of previous goals, and heavily depend on planning to help achieve these goals. Planning is an integral part of organizational success, as upper management receives substantial information on various needs such as risk uncertainty, available resources, employee development, and unforeseen changes in technology (Daft, 2013). Most importantly, successful planning allows management to make effective decisions when unforeseen events arise within the organization. Not participating in planning is equivalent to taking a road trip across the country without a
Extremely risky drug discovery and development, lengthening development times which increase development cost, return on investments, and generic competitors.
Merck is one of the biggest pharmaceutical companies in the world today. Although encountered with success, it still faces many problems today while trying to be the market leader competing against its competition. While being research and development driven company, Merck now has to go beyond R&D to stay competitive in the pharmaceutical industry. The main issue that seems to come up is that how far it can progress with the dual challenge of hitting peak annual financial performance while keeping the research pipeline full continued to weigh on senior management. Through the late 80s to early 90s, Merck was able to boast
There are several rewards to consider with expansion of Biocon. Currently in India, there is a growing market for contract research organization and the growth of Biocon falls right within this opportunity. The growth is expected to last for more than few years with a rate that looks promising. Clinigene is expected to reap revenues much higher than the current Biocon and Syngene combined (Kalegaonkar A., Nov 4, 2008). It will take clinical studies to a higher level with better options in terms of drug manufacturing. With other countries ready to outsource the service of clinical studies, Clinigene’s future looks bright.
Nucleon is a small biotechnology start-up company focused on developing biotechnological pharmaceutical products based on a class of proteins known as cell regulating factors. The company has been in the market for five years, and currently, they are in the process of human trials for their first potential product, “cell regulating protein-1” (CRP-1). Overcoming these phases, Nucleon has to decide among several alternatives on producing CRP-1. Knowing that the process involved a tremendous amount of time and money, Nucleon has to choose the right decision for their long-term survival in the intensively competitive and high-stakes drug industry.
EXECUTIVE SUMMARYSilicon Valley Medical Technologies (SIVMED) was founded as a research and development firm. In the beginning, SIVMED performed its own basic research, obtained patents on promising technologies, and then either sold or licensed the technologies to other firms which marketed the products. The firm has since then grown and is now contracted to perform research and testing for larger genetic engineering firms, biotechnology firms, the US government, and is now widely recognized as the leader in an emerging growth industry. SIVMED's founders were relatively wealthy individuals when they started company, and they committed a great deal of their own funds to the venture. Their personal funds, however, were soon exhausted by the
The company has to be able judge its spending performance. Does not matter what type of company it is, the ability to measure performance using budgets is an important process in any business organisation. Planning helps to understand where business is at present and where it is going to be in the future. Company’s planning process has to involve different developing objectives and prepare
Amgen Inc. is a biotech company. The responsibilities of the Product Development Teams (PDT’s) can be described as “discretionary cost centres”. The output of a PDT is therefore difficult to relate to its
MediSys is a U.S.-based medical device manufacturer. It has been developing IntensCare project, a new medical system for monitoring patients in intensive care units. This project represents the most ambitious move in the company’s 10-year history. The company had invested large finances in this project and the market eagerly awaits its launch. The product development team consisting of people from several functional areas of the company, has been working on the product for six months but is now facing significant problems with the product design, clinical testing, meeting the production deadlines, and their own group dynamics. The pressure had also increased because of competitors also planning to launch similar products within the year. Several team members are concerned about meeting the team 's goals. The relationship between team members is quite tense and it doesn’t promise much progress.
In order to decide on the R&D portfolio, an objective quantitative analysis might not be suitable considering the high levels of uncertainities and consequently the risks involved in pharmaceutical research projects. It is important to have a qualitative analysis of the situation as a whole that includes Vertex’s own financial position, strategic implications, a quantitative analysis of its Portfolios with realistic estimations and a risk analysis of the portfolios.
Glaister, K, W and Falshaw, J, R, 1999, ‘Strategic planning still going strong’, Long Range Planning,
I have learned a few things about planning from reading the case study on General Motors. The first thing I learned was that SMART goals are actually very common and once I knew what they were I can see how almost all businesses use them. Seeing them put to use in this case study was very helpful and practical. Goals that may seem unattainable at first can be very attainable as you set out further goals and use the planning/control cycle to tweak your initial plan. GM wanted to boost sales so they offered big incentives, this was how GM worked prior to their federal bailout. Once they realized they wanted to change their goals and switch the company’s
Achieve a median composite eight-year product development cycle by 2010. Deliver two new molecular entity (NME) launches on average per year from 2010. In order to achieve the above objective, ensure that we have 10 or more NMEs in Phase III development by 2010. Development cycle times and quality for small molecules and biologics. Number of NME launches per year. Attrition rates. Number of development projects by phase. Number of in-licensing deals, alliances and acquisitions. R&D investment levels. Improving R&D quality and speed through leading-edge science, effective risk management and decision-making and overall business efficiency. Maximising the value of our biologics business and continuing to build a major presence in this fast-growing sector. Investing in external opportunities to enhance our internal innovation through in-licensing, alliances and acquisitions. 2008 target exceeded for small molecule development cycle times. NME and life-cycle management progressions
Planning provides a guideline for the members of an organisation to carry out their tasks according to the set objectives. The absence of planning can create ambiguity within the organisation.
Chapter 4: How do you think planning in today’s organizations compares to planning in an organization 25 years ago? Do you think planning becomes more important or less important in a world where everything quickly changes and crises are a regular part of organizational life? Why?