Genzyme: The Synvisc-One Investment Decision

Abstract

Executives at biotechnology firm Genzyme are debating funding a clinical trial for a new version of a medical device called Synvisc. The trial is expensive and the odds of success are not high, but the upside is substantial. The case presents a common business question: invest or not? The case forces students to think about customer insights, wrestle with a number of complex issues, and evaluate the financials of the decision.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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Resources

Exhibit 1: Genzyme Financial Highlights ($ in millions).

2005

2006

Total revenue

2,734.8

3,187.0

Cost of products sold

462.2

536.4

SG&A

787.8

1,010.4

R&D

502.7

650.0

Goodwill charge

219.2

Other costs

381.2

961.6

Operating income

600.9

(190.5)

Other income

28.1

137.8

Taxes

187.4

(35.9)

Net income

441.5

(16.8)

Exhibit 2: Genzyme's Largest Products ($ in millions).

2005

2006

Cerezyme

932

1,007

Renagel

417

515

Fabrazyme

305

359

Synvisc

219

234

Thymoglobulin/Lymphoglobuline

128

150

Sepra products

68

85

Myozyme

4

59

Exhibit 3: Synvisc Clinical Trial Results (% of patients who were symptom free).

Synvisc

Saline

Patient assessment at Week 12

Weight-bearing pain

56

12

Night pain

82

53

Overall treatment success

70

18

Evaluator assessment at Week 12

Weight-bearing pain

47

8

Night pain

77

42

Loss of activity

60

17

Overall treatment success

51

15

Evaluator assessment at Week 26

Weight-bearing pain

39

13

Night pain

71

45

Loss of activity

59

27

Source: M. Wobig, A. Dickhut, R. Maier, and G. Vetter, “Viscosupplementation with Hylan G-F 20: A 26-Week Controlled Trial of Efficacy and Safety in the Osteoarthritic Knee,” Clinical Therapeutics 20 (May/June 1998): 410–423.

Exhibit 4: Physical Properties of Viscosupplements.

Molecular Weight (million daltons)

Elasticity (Pa at 2.5 Hz)

Viscosity (Pa at 2.5 Hz)

Healthy synovial fluid

6

117

45

Osteoarthritic synovial fluid

1.9

1.4

Synvisc

6

111

25

Hyalgan

0.5–0.7

0.6

3

Supartz

0.6–1.2

9

16

Orthovisc

1–2.9

60

46

Euflexxa

2.4–3.6

93

37

Exhibit 5: Viscosupplements in 2007.

Injections

Duration of Pain Relief

Price per Dose ($)

Total Cost of Treatment ($)

Synvisc

3

6 months

180

900

Hyalgan

5

2 months

100

1,100

Supartz

5

6 months

100

1,100

Orthovisc

3 or 4

22 weeks

175

885 or 1,180

Euflexxa

3

3 months

110

690

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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