AMGEN (Partial Solution)

CASE ANALYSIS: AMGEN INC.: PURSUING INNOVATION

AND IMITATION? (A) Case Solution
The company is known as the innovator in the industry since it showed a tremendous performance in
the industry as the company discovered and commercialized many biological products and saved
thousands of lives every year after its introduction in the market. However, the company generated $
15 billion in revenue with a net income of $4 billion and spent almost $3 billion each year in the
research and development procedure for the medicines and its products.
The background of the biosimilars indicates that this was firstly introduced and discovered in Europe
in the past two or three years as the first biotechnological product. The market of the US is expecting
these technology-based products to enter in the American market in next several years and it is being
also expected that the product will also become off patent in the next decade. Due to these
expectations, many companies which have the similar cost and profit structure are pursuing to enter
in this business and that’s the biggest threat for the Amgen Inc.
Moreover, the CEO of the company is aggressively considering the idea to enter in this business since
it will give large gains in both revenue and profits as well as it will also give the company first mover
advantages. On the other hand, the CEO is worried about the thing that if the company moves towards
this business, then its brand image will be affected. The company is known as the innovator in the
market and if the company enters in this business, then it company will be counted as an imitator not
an innovator.

case analysis amgen inc pursuing innovation and imitation a case solution

However, the CEO is also worried about his suggestions about this business in which he has to give
in the next annual general meeting and where he has to give his opinion, which is due in the 4th week
from now. Also, the CEO is worried about the reputation of the company.
This paper will allow the reader to understand what solution will the company make in order to secure
its market position as well as how the CEO satisfy his BODs and other stakeholders. Moreover, this
paper will also go through an analysis section through which the reader will be able to understand the
business potential and those techniques through which the solution will be made while securing the
firm’s market position and its profitability.
Answer No 1
Arguments and the Theory of innovation
As far as theory of innovation by Schumpeter is concerned, it says that the firms have to create
competitive advantage before sustaining it, however the firms can have this advantage while investing
in new and innovative products.Nonetheless,this innovation motivates firms to invest in new and
innovative products and this theory also indicates that the profits or the sustainable competitive
advantage which the company has earned will be taken by the rivals with the passage of
times.However,the economy of any country revolves around innovation and change since the marginal
and additional profits of the companies lead the economy to grow.
Moreover, the pharma industry faced issues regarding the lobby in order to discourage the new
entrants, which include a highly complex and long procedure of the approval of the clinical test for the
new medicines. The industry was restricted to produce new and innovative products as per the
requirements and the regulations by the government and the regulators. The process involves a
submission of an application before starting a clinical test as the regulator then considers it and gives
permission to the company. Furthermore, the company starts working on it, however the pre and post
clinical test reports were also required by the regulator in order to confirm the permission whether the
company should go for the product or not.Afterwards the company starts tests this medicine on an
individual. The report, before and after the test, typically comprised of almost 50,000 pages and the
procedure was also quite lengthy and difficult…………………

Established in the year 2009, the (A) case investigates if Amgen, a poineer innovator of biotech-
based drugs, should consider entering in the emerging business of biosimilars (BS), which are
practically ‘me-too’ products.
There seem to be material reasons to investigate this diversification that is associated: invention is
becoming more difficult, regulators are intent on supporting BS, and renewed growth is needed by
Amgen. However the prospects instigated a robust negative response within Amgen, not because it
contravened Amgen’s mission. Internal argument was exacerbated by the existence of significant
uncertainty over the regulatory conditions for BS growth and how hard it had been to develop a BS.
Some believed it played to the strengths of Amgen, others believed that Amgen lacked essential
abilities. Many believed there was just no requirement for virtually any change in strategy in any way.
Amgen needed clear tactical thinking to browse by means of this morass. Amgen set out to find in
case an objective business case for entrance may be assembled.
This included testing out susceptibility to premises using scenarios estimating likely sales and
profitability, settling on a set of most likely premises, and evaluating the principal dangers of
entrance and of staying out. The evaluation provided powerful support to the crucial premises for
entrance area. The case A further invites students to think through how the CEO Kevin Sharer must
handle a positive entry option given the obstructed opinions across the senior management team.
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