Regeneron Pharmaceuticals by Abhishek Gupta

7/21/2019 Regeneron Pharmaceuticals by Abhishek Gupta

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Submitted By: Group – B7

Abhishek Gupta

Abhimanyu Jitani

Manojit Sasmal

REGENERON PHARMACEUTICALS



Table of Content

Chapter 1: Industry Overview ......................................................................................................... 3

1.1 What is Biotechnology? ........................................................................................................ 3

Chapter 2: Regeneron Pharmaceuticals .......................................................................................... 4

2.1 Introduction ........................................................................................................................... 4

2.2 History................................................................................................................................... 5

2.3 Regeneron Pharmaceuticals Vision ...................................................................................... 5

2.4 Regeneron Pharmaceuticals Mission .................................................................................... 6

2.5 Products................................................................................................................................. 6

Chapter 3: External Analysis .......................................................................................................... 8

3.1 PESTLE ANALYSIS ........................................................................................................... 8

3.2 Porter ’s Five Forces Model ................................................................................................. 10

Chapter 4: Internal Analysis ......................................................................................................... 13

4.1 SWOT Analysis .................................................................................................................. 13

4.2 Resources ............................................................................................................................ 14

4.2.1 Tangible Resources ...................................................................................................... 14

4.2.2 Intangible Resources .................................................................................................... 14

4.3 Core Competencies ............................................................................................................. 15

Chapter 5: Generic Strategy .......................................................................................................... 16

Chapter 6: Value chain of Regeneron Pharmaceuticals ................................................................ 17

Chapter 7: Strategic Approaches .................................................................................................. 19

7.1 Strategic Alliances .............................................................................................................. 19

7.2 Acquisition .......................................................................................................................... 19

Chapter 8: Regeneron Model (NPD) ............................................................................................ 20

Chapter 9: Regeneron Pharmaceuticals Business Model .............................................................. 22



Chapter 10: Code of Conduct ....................................................................................................... 24

10.1 Business Ethics ................................................................................................................. 24

10.2 Trading Securities on Inside Information ......................................................................... 24

10.3 Laws and regulations ........................................................................................................ 24

10.4 Anti-Trust Law.................................................................................................................. 25

Chapter 11: Future Growth Strategy ............................................................................................. 26



Chapter 1: Industry Overview

Biotechnology is the use of living systems and organisms to develop or make useful products, or

"any technological application that uses biological systems, living organisms or derivativesthereof, to make or modify products or processes for specific use".

1.1 What is Biotechnology?

At its simplest, biotechnology is technology based on biology - biotechnology harnesses cellular

and bio molecular processes to develop technologies and products that help improve our lives

and the health of our planet. We have used the biological processes of microorganisms for more

than 6,000 years to make useful food products, such as bread and cheese, and to preserve dairy

products.

Modern biotechnology provides breakthrough products and technologies to combat debilitating

and rare diseases, reduce our environmental footprint, feed the hungry, and use less and cleaner

energy, and have safer, cleaner and more efficient industrial manufacturing processes.

Currently, there are more than 250 biotechnology health care products and vaccines available to

patients, many for previously untreatable diseases. More than 13.3 million farmers around the

world use agricultural biotechnology to increase yields, prevent damage from insects and pests

and reduce farming's impact on the environment. And more than 50 bio refineries are being built

across North America to test and refine technologies to produce biofuels and chemicals from

renewable biomass, which can help reduce greenhouse gas emissions.



Chapter 2: Regeneron Pharmaceuticals

2.1 Introduction

Regeneron Pharmaceuticals, Inc. is a biotechnology company headquartered in Tarrytown,

in New York, US. The company was founded in 1988. Regeneron is a fully assimilated

biopharmaceutical company that discovers, develops, and market medicines for the treatment of

serious medical illnesses. Regeneron has the medicines which helped patients healing even in

Phase 3 clinical trials for the treatment of gout, eye diseases and certain cancers. Regeneron has

two products in development based on aflibercept, a VEGF inhibitor, and rilonacept,

an interleukin-1 blocker. VEGF is a protein that normally stimulates the growth of blood vessels,

and interleukin-1 is a protein that is normally involved in inflammation.

Regeneron Pharmaceutical’s corporate headquarter and industry is located in New York. The

company has the revenue worth $1.4 billion and has a huge market share. Regeneron was

granted fundamental Patents rights by U.S. Patent and Trademark office for its Mouse Antibody

Technology used in Velocimmune. A similar European patent was granted by European Patent

office. Large- scale manufacturing is done at Regeneron and is performed under strict cGMP

(current Good Manufacturing Practices) conditions.

http://en.wikipedia.org/wiki/Tarrytown,_New_York

http://en.wikipedia.org/wiki/New_York

http://en.wikipedia.org/wiki/United_States

http://en.wikipedia.org/wiki/Aflibercept

http://en.wikipedia.org/wiki/VEGF

http://en.wikipedia.org/wiki/Rilonacept

http://en.wikipedia.org/wiki/Interleukin-1

http://en.wikipedia.org/wiki/Interleukin-1

http://en.wikipedia.org/wiki/Rilonacept

http://en.wikipedia.org/wiki/VEGF

http://en.wikipedia.org/wiki/Aflibercept

http://en.wikipedia.org/wiki/United_States

http://en.wikipedia.org/wiki/New_York

http://en.wikipedia.org/wiki/Tarrytown,_New_York



2.2 History

By Abhishek Gupta

2.3 Regeneron Pharmaceuticals Vision

“Science to medicine”

Vision for Regeneron Pharmaceuticals remains static for the past ten year’s data. The vision of

this pharmaceutical company clearly states that the firm takes the help of all the possible

technologies in order to produce medicines which will help to cure serious medical conditions.

Their commitment towards the cutting edge science and enabling technologies helps the firm to

fully integrate into a biopharmaceutical enterprise:

VelociSuite Technologies Neurotrophins, cytokines, angiogenesis, receptor chemistry and signaling

Cytokine and growth factor traps



2.4 Regeneron Pharmaceuticals Mission

We can begin to see over the horizon to Regeneron in five or 10 years. What we see is a vibrant,

diversified biopharmaceutical company that addresses serious medical problems such as eye

diseases, hypercholesterolemia, rheumatoid arthritis and other inflammatory diseases, and

cancer.

2.5 Products

1. EYLEA – developed to treat a common cause of blindness in the elderly (Neovascular

age). The drug was approved by the U.S. Food and Drug Administration (FDA) in

November 2011. Eylea (aflibercept) is made from a human antibody fragment. It works

by keeping new blood vessels from forming under the retina (a sensory membrane that

lines the inside of the eye). In people with a certain type of eye disease, new blood

vessels grow under the retina where they leak blood and fluid. This is known as the "wet

form" of macular degeneration. Eylea is used to treat wet age-related macular

degeneration. Eylea is also used to treat swelling in the retina caused by a blockage in the

blood vessels.

2. ZALTRAP – Treating Metastatic colorectal cancer (Colon and rectal cancer involve the

lowest part of the digestive system). Approved by the FDA in August 2012. Zaltrap is a

medicine that contains the active substance aflibercept. It is available as a concentrate to

be made into a solution for infusion (drip) into a vein. The active substance in Zaltrap,

aflibercept, is a protein that binds to vascular endothelial growth factor (VEGF) and

placenta growth factor (PlGF), substances that circulate in the blood and makes blood

vessels grow. By binding to VEGF and PlGF, aflibercept stops them having an effect. As

a result, the cancer cells cannot develop their own blood supply and are starved of oxygen

and nutrients, helping to slow down the growth of tumors.



3. ARCALYST – Approved by the FDA in February 2008. Arcalyst (rilonacept) is used to

treat some of the symptoms of rare genetic conditions such as Familial Cold Auto-

inflammatory Syndrome (FCAS) or Muckle-Wells Syndrome (MWS). FCAS and MWS

are inflammatory disorders in which the body develops certain symptoms without a

known cause (such as virus, bacteria, or illness). These symptoms include fever, chills,

fatigue, and joint pain. More serious symptoms may involve the bones and joints, the

central nervous system (deafness, vision loss, mental impairment), or major organs such

as the kidneys. Arcalyst may treat or prevent the symptoms of Familial Cold Auto-

inflammatory Syndrome (FCAS) or Muckle-Wells Syndrome (MWS). However, this

medication is not a cure for these inherited conditions.



Chapter 3: External Analysis

3.1 PESTLE ANALYSIS

Many businesses fail to take the time to look at the macro and the micro environments when

completing their business plans and strategies. These external forces play a big part in shaping

the final outcome of the ultimate corporate achievement. Yet, most managers’ focus only on

internal factors and it is fair to say that sales growth and profits remain high on their agenda.

The macro environment tends to have a long term impact and requires extensive research. Below

is the PESTLE analysis for the pharmaceutical industry.

Political

There is a growing political focus and pressure on healthcare authorities across the world. This

means that governments look for savings across the board.

Economic

The global economic crisis still exists yet government reports show that they still spend on

healthcare per capital continues to grow. The growth in healthcare demonstrates how nursing

services have moved to the private sector and have become a key business offering. The

reduction in consumer disposable income will have an impact on those countries using health

insurance models particularly where part payment is required.

These economic pressures are seeing an increased growth in strategic buying groups who areforcing down prices. Increased pressure from shareholders has caused a consolidation of the

industry: more mergers and acquisitions will take place over the coming years.

Social



The increasing aging population offers a range of opportunities and threats to the pharmaceutical

industry. The purpose is to Capitalize on the opportunities. There is also the problem of the

increasing obesity amongst the population and its associated health risks. Patients and home

carriers are becoming more informed. Their expectations have changed and they have become

more demanding. Public activism (e.g. PETA activists) has also increased through the harnessing

of new social networking technologies

Technological

Technological advancements will create new business prospects both in terms of new therapy

systems and service provisions. Development of molecules as resulting from technology

changes. The online opportunities will see the growth in new information and Communications

technologies.

Social Media for Healthcare

Customized Treatments

Direct to Patient Advertising

Direct to patient communications

LegislationThe pharmaceutical industry has many regulatory and legislative restrictions. There is also a

growing culture of litigation in many countries. The evolution of the internet is also stretching

the legislative boundaries with patient’s demanding more rights in their healthcare programs.

Environmental

There is a growing environmental agenda and the key stake holders are now becoming more

aware of the need for businesses to be more proactive in this field. Pharmaceutical companies

need to see how their business and marketing plans link in with the environmental issues. There

is also an opportunity to incorporate it within their Corporate Social Responsibility programs.

Marketing and new product development should identify eco opportunities to promote as well.



3.2 Porter’s Five Forces Model

1. Threats of New Entrant – LOW:

High barriers to entry as the company needs to put a lot of capital into research and development,

lengthy approval process, marketing before it is able to receive any returns. The “big

pharmaceutical” companies that were able to build global operations are benefiting from

economies of scale in terms of manufacturing. They are able to access low-cost supplies, as a

result. Challenging regulatory conditions (hurdles to get FDA drug approvals for new products);

industry is highly regulated which to some extend protects from new competition. The FDA

approvals appear to have slowed during 2007. This could be one measure indicating that the

FDA is taking a more cautious position on new drug approvals. In addition, legislative changes

in the upcoming years may have a negative impact for the industry. Pharmaceutical companies

benefit from continuation of U.S. employer-based health coverage. Customers buy medicationthat was prescribed by the doctors. Patent expirations may lead to an entry of new competitors

(generic competitions), resulting in decreased revenues. High rates of patent expirations are

approaching in 2010 through 2012. The ability of a pharmaceutical company to offset loss of

revenue from patent expirations depends on growth in existing products as well as successful

execution from the new product pipeline.

2. Rivalry among existing firms – HIGH:

The pharmaceutical industry is the highly competitive market as there a big players that are

influencing the whole industry. The industries like Pfizer, Johnson & Johnson, Roche, &

GlaxoSmithKline comprises of majority of market share. Industry benefits from strong demand



from consumers. Weak, small companies usually go out of business (bankruptcy) if they have no

potential “blockbuster” in future pipeline. Others that have some significant research or valuable

assets will be bought by big and strong pharmaceutical companies.

3. Bargaining power of suppliers – HIGH:

In the case of pharmaceutical suppliers they have a better chance to bargain as the patents for

drugs are very highly priced and so negotiations are high. Also, the suppliers need patent licenses

for the manufacturing of goods which could come at a high cost and thus they charge more for

their product from pharmaceutical companies.

4. Bargaining power of buyers – LOW:

Generally consumers have very little bargaining power. Most of the medication is prescribed by

the doctors. Consumers will have to buy the drug at any given price if they need it. More

educated consumers may buy a generic alternative (which have the same impact but less

expensive) if available on the market.

Pricing pressure – The U.S. remains one of the few developed markets where drug

manufacturers have significant pricing flexibility, and this is in jeopardy due to increasing

pressures from consumers and legislators to control health care costs. Governments in other

markets are generally the primary customers, and therefore, enjoy substantial pricing leverage.

Shareholders continue to pressure the companies for increases in the share repurchase programs.

The companies looking for ways to increase shareholders returns partly because the industry is

approaching maturity and is not growing as rapidly, and because many companies have a lot of

cash on their balance sheet.

5. Threat of Substitute – MEDIUM:



Threat from generic competition. Customers can find substitute medicine if the original product

has an expired patent. However, if it is a new product the consumer generally will have no

choice for an alternative. Over the few years generic drug manufacturers face excellent

opportunities for utilization and volume trends. Generic companies are increasing focused on

establishing global operations in order to achieve a lower-cost of supplies, thus posing even more

threat to non-generic drug manufacturers.

Based on Porter’s model LOW to MEDIUM forces are present among the strong players in the

pharmaceutical industry. Thus, the industry is attractive to investors largely due to the high-

barriers to entry, purchasing and pricing power, and strong credit profiles of existing firms.



Chapter 4: Internal Analysis

4.1 SWOT Analysis

Strengths

Technology and Innovation – Regeneron Pharmaceuticals has Velocimmune Technology

which is very advance as it is a mammal genetic engineering. This technology produces

fully human monoclonal antibodies based on mouse genetics.

Distribution Network – Regeneron Pharmaceuticals have a strong distribution network in

U.S. and to commercialize the product outside U.S they collaborated with Bayer’s

Healthcare to share their distribution network.

Experienced Management

Weaknesses

Research & Development – Their R&D competencies are very weak and to develop the

drug they made alliances with Sanofi – Aventis and Bayer’s Healthcare.

Opportunities

Medical Research for more critical diseases like HIV.

Growing Economy



Threats

Expiration of Patents – Patents lasts for 17 years and thus thereafter the drug can be

imitated by other pharmaceutical companies

Government Regulations – Every drug which is produced required permissions from

government regulatory authorities and there exist a threat of losing the whole research

and development on the drug if it is not approved by the authorities.

High competition – The market is dominated by large pharmaceutical companies like

Johnson & Johnson, Pfizer, Roche and GlaxoSmithKline.

4.2 Resources

4.2.1 Tangible Resources

Laboratories use cutting-edge analytical equipment, automated laboratory information

management systems, and electronic document management systems.

Fundamental Patents rights by U.S. Patent and Trademark office for its Mouse Antibody

Technology used in Velocimmune.

Manufacturing performed under strict cGMP (current Good Manufacturing Practices)

conditions.

4.2.2 Intangible Resources

Expertise of technical staff i.e. scientists, engineers, technicians, and managers for

developing and operating the complex manufacturing processes



4.3 Core Competencies

It is a skill or expertise that the organization possesses to gain a competitive advantage over its

competitors. It is performed better than other activities. Core competencies are not easy to

imitate and can be used for many products.

Innovation – Product idea generation and bringing these ideas into final drugs is the core

competency of Regeneron Pharmaceuticals. Drugs like Eylea is the biggest innovation

they made in collaboration with Sanofi – Aventis.

Velocimmune Technology (mammalian genetic engineering i.e. technology for producing

fully human monoclonal antibodies).

Regeneron has Expertise and knowledge in neurotropic factors and regenerative

capabilities.



Chapter 5: Generic Strategy

Regeneron Pharmaceuticals is following focused differentiation strategy as it is catering to

specific diseases, selling to specific segment and charging premium prices. Regeneron is

following niche marketing strategy to gain the competitive advantage over its competitors. For

example, EYLEA is a drug for curing the blindness of old-age people thus, targeting the specificsegment of people.

A broad cross-section of buyers

A narrow

buyer segment(or market

niche)

Lower cost Differentiation

Best –

Cost

Provider

Strategy

Overall Low – Cost Provider

Strategy

BroadDifferentiation

Strategy

Focused Low

– Cost

Strategy

Focused

DifferentiationStrategy



Chapter 6: Value chain of Regeneron Pharmaceuticals

Regeneron Pharmaceuticals has a different value chain as compared to conventional value chain.

The components of value chain for Regeneron Pharmaceuticals are:

1. Discovery

2. Product Development

3. Manufacturing

4. Marketing

Regeneron is a vertically integrated firm as from the drug development to manufacturing and

distribution are done by the firm. Regeneron shares the Discovery stage with Sanofi-Aventis and

Bayer’s Healthcare and for distribution outside U.S. Regeneron was sharing Bayer’s Healthcare

distribution network.

Discovery

Regeneron brings the product ideas for critical and rare disease whose cure is not available in the

market. Then the research is performed for the feasibility of the drug which is shared with their

strategic partners to reduce the risks.

Product Development

Once the molecular discovery is completed, Regeneron moves towards the development stage in

which 3 stages testing’s are performed to check the compatibility of drugs on the human body.

Once all the 3 stages are successfully cleared, the drug is given to the regulatory authority for the

approval.



Manufacturing

As soon as the approval is received, Regeneron starts producing the drug in their manufacturing

facilities i.e. the drug is produced in-house.

Marketing

Further the product is distributed through their distribution network in U.S. and to commercialize

the product outside U.S., Regeneron share the distribution of Bayer’s Healthcare.



Chapter 7: Strategic Approaches

7.1 Strategic Alliances

I. In 2003 allied with Aventis to develop and commercialize VEGF Trap-eye which further

got merged with Sanofi

II. In 2006, allied with Bayer healthcare to develop and commercialize Eylea and support

VEGF-Trap

III. 2007, made partners with Sanofi & Aventis to discover and develop & commercialize

fully human antibodies

IV. In 2010 VEGF-Trap entered clinical trial.

7.2 Acquisition Acquired manufacturing facility in NY in 1993 to develop in-house capabilities and to

get vertically integrated.



Chapter 8: Regeneron Model (NPD)

Regeneron Pharmaceuticals follows the model as shown in the figure below for new product

development. In this model, the firm first generate ideas about the drug to be developed and

according to the skills and competencies of their partners, they decide whom to choose for which

type of drug development. After selecting the partner for the drug, the drug is designed and

developed with the strategic partner. After the molecule for the drug is formed and researched,

the trials are performed for testing the drug. These trials are performed in 3 phases:

Trial 1



In this the drug is tested on the mouse using Velocimmune human antibodies technology to

check for any side – effects and whether the drug is working as per the plan.

Trial 2

This trial is performed on other animals to check whether the same results are achieved on them

or not.

Trial 3

This is the last trial which is termed as clinical trial. As this trial is done on the humans to check

the consistencies of the drug.

Once the unique and innovative drug passes through all the stages of trials, the drug is send for

approval from government regulatory authority. And after the approval is received, Regeneron

executes the production of the drug followed by the distribution.



Chapter 9: Regeneron Pharmaceuticals Business Model

Regeneron core technology is Innovation as they have experienced staff and are good in bring

new ideas into existence. The firm shares their resources i.e. Velocimmune Technology –

monoclonal human antibodies which is mammal genetic engineering with their partners Sanofi –

Aventis and Bayers Healthcare in return by sharing the research and development with them to

bring new product idea into existence. They have two functionality in their organization which is

Drug Development and Production. The firm is vertically integrated and in these the drug

development is shared with their strategic alliances to share their risks and then the in – house

production of the government regulatory approved drug is done. They had made this

competencies by acquiring the manufacturing facilities in New York in 1993. Further the drug is

passed through quality check and then the packaging is done and the distribution of product is

made.



In this distribution, the firm is having a good network in U.S but for the commercialization of

drugs outside U.S they are sharing the network with Bayer Healthcare. The revenue achieved

from the drug selling are further utilized in improving their in house R&D team, so that in future

they could have their own R&D.



Chapter 10: Code of Conduct

10.1 Business Ethics

Regeneron business success and reputation are built upon the principles of fair dealing and

ethical conduct of all officers, directors, and employees. Regeneron continued success depends

upon the trust of their customers, collaborators, employees, shareholders, contractors, and

suppliers.

Regeneron policy is to comply with all applicable laws and regulations. Officers, directors, and

employees are expected to conduct business in accordance with all relevant laws, regulations,

and company policies and to refrain from any illegal, dishonest, or unethical conduct.

10.2 Trading Securities on Inside Information

Federal law and Regeneron policy prohibits officers, directors, and employees, directly or

indirectly through their families or others, from purchasing or selling Regeneron stock while in

the possession of material, non- public information concerning Regeneron. The same prohibition

applies to trading in the stock of other publicly held companies on the basis of material, non-

public information obtained from Regeneron. Regeneron has a specific policy on insider trading.

10.3 Laws and regulations



Regeneron expects all personnel to comply with all applicable laws and regulations. These

include, but are not limited to, False Claims Acts, Anti-Kickback Statutes, Prescription Drug

Marketing Act, Food and Drug Administration Modernization Act, Federal Food, Drug, and

Cosmetic Act, Health Insurance Portability and Accountability Act and Federal healthcare

program requirements. Violations of healthcare laws or regulations may result in severe

penalties against the responsible employees and the Company, including jail sentences, large

fines and exclusion of Regeneron products from reimbursement under federal and state

programs. Regeneron is committed to conducting the sales and marketing of its products in

compliance with these laws.

10.4 Anti-Trust Law

Regeneron understands that the public interest is best served by vigorous competition and will

suffer from illegal agreements or collusion among competitors. Compliance with applicable

competition and antitrust laws within in the United States and other countries in which the

Company does business is essential to Regeneron. Antitrust laws are complex and difficult to

interpret. Although not exhaustive, the following list provides a general guide to antitrust

compliance:

i. No employee, officer or director shall discuss with or provide information to any

competitor about pricing or related matters, whether such information concerns the

Company or Regeneron suppliers, distributors, wholesalers or customers.

ii. No employee, officer or director shall agree with a customer on resale price; imply that

such resale price is a condition of sale, contract renewal, or advertising allowance; or

discuss with or imply to a customer that Regeneron will attempt to influence the pricing

of another customer or competitor.

iii. No employee, officer or director shall engage in group boycotts or allocate or divide

customers, territories or production with a competitor.



iv. No employee, officer or director shall engage in any predatory pricing or discriminate in

prices or terms of sale, for like goods, between competing customers to the injury or

damage of the disfavored customers, or induce a seller to so discriminate in favor of the

Company, as purchaser.

Chapter 11: Future Growth Strategy

1. Regeneron Pharmaceuticals is developing 2 drugs for curing LDL cholesterol which is

the most common problem in the world and rheumatoid arthritis. On Nov 22, 2013Sarilumab drug which is used to treat rheumatoid arthritis reached its clinical stage of

testing.

2. Since Eylea sales continue to increase by 49% in U.S. and by 22.5% outside U.S. and

along with this the product is also used to cure small eye related disease that is caused

due to blood clotting, so the firm can spend further on the research and development of

Eylea to discover more about the other usability of the drug.

3. Regeneron can move their research & development into more critical drug whose cure is

not available like HIV.

Documents

Regeneron Pharmaceuticals by Abhishek Gupta