slide1 l.
Skip this Video
Loading SlideShow in 5 Seconds..
Capstone Presentation Prepared for Dr. Ian Lee and the Strategic Management Class of Fall 2003 Carleton University PowerPoint Presentation
Download Presentation
Capstone Presentation Prepared for Dr. Ian Lee and the Strategic Management Class of Fall 2003 Carleton University

Loading in 2 Seconds...

play fullscreen
1 / 90

Capstone Presentation Prepared for Dr. Ian Lee and the Strategic Management Class of Fall 2003 Carleton University - PowerPoint PPT Presentation

  • Uploaded on

Capstone Presentation Prepared for Dr. Ian Lee and the Strategic Management Class of Fall 2003 Carleton University. Introduction. Invitrogen is a manufacturer of biotech equipment and supplies used by academic, government and corporate researchers. Part I Macro Environment.

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
Download Presentation

PowerPoint Slideshow about 'Capstone Presentation Prepared for Dr. Ian Lee and the Strategic Management Class of Fall 2003 Carleton University' - EllenMixel

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Capstone Presentation

Prepared for Dr. Ian Lee and the Strategic Management Class of Fall 2003

Carleton University

  • Invitrogen is a manufacturer of biotech equipment and supplies used by academic, government and corporate researchers.
part i macro environment
Part I Macro Environment
  • A. Technological Environment
  • B. Economic Environment
  • C. Socio-Cultural Environment
  • D. Political-Legal Environment
technological environment
Technological Environment
  • Nanotechnology
    • Development of super small products
    • Technology still in its infancy
    • Currently 100 startups
    • Nanobiotechnology, most promising for the Biotech industry
    • Creation of drugs as well as diagnostic tools
  • Gene Chip
    • Ability to store entire human genome onto a single chip
    • Technology still in its infancy, 5 years old
    • Making personalized medicine a reality
    • Ability to expand the biotech industry
technological environment5
Technological Environment
  • Gene Testing
    • Direct analysis of DNA molecules
    • Newborn screening, prenatal diagnostic testing, risk analysis of adult cancers
    • Few tests exist today, many waiting to be discovered
technological environment6

Source: U. S. Food and Drug Administration (FDA)

Technological Environment
  • Gene Therapy
    • Correct defective genes
    • Replacing, repairing, regulating non-functional genes
    • Technology still in an experimental stage
    • FDA has placed a temporary ban on gene therapy
technological environment7
Technological Environment
  • DNA Computing
    • Developed in 1994, by L.M. Adleman
    • Information density greater then that of silicon
    • Allowing large mathematical calculations to be performed
    • DNA is nature’s hard drive
    • Extension of current industry
  • Bioterrorism
    • Increasing bioterrorism, using sophisticated technologies, Anthrax, Sarin gas
    • Provides demand for remedies
economic environment
Economic Environment

Source: The Statistical Yearbook of the Economic Commission for Europe 2003

economic environment9
Economic Environment

Source: The Statistical Yearbook of the Economic Commission for Europe 2003

economic environment10
Economic Environment

Source: The Statistical Yearbook of the Economic Commission for Europe 2003


Economic Environment

  • Beyond 2003

SOURCES: Congressional Budget Office; Department of Commerce, Bureau of Economic Analysis; Department of Labor, Bureau of Labor Statistics; Federal Reserve Board.


Source: Ernst & Young

Economic Environment

  • Biotechnology Industry
    • North America accounts for 77% of global biotech revenues
socio cultural environment
Socio-Cultural Environment
  • Aging Demographic
    • North American and European Population is aging
    • The elderly population will require proper diagnostic tools, as well as various treatments
    • Increased demand for the industry
  • Health Care Expenditure
    • Increasing trend
    • 58% increase in spending since 1990
    • Increase in spending for Prescription drugs by 17%
socio cultural environment14
Socio-Cultural Environment
  • Increasing Death Due to Illness
    • Increasing trend for the population over the age of 44
    • Opportunity for innovation, and development of remedies
political legal environment
Political-Legal Environment
  • Heavily regulated, largely to benefit the industry
  • North American states are attempting to lure the industry
  • Large number of regulating bodies around the world,
strategic group map


Amgen Inc.





Biopharma R&D





Protein Design Labs

Level ofIntegration

Biotech Equipment/Supplies



BD Biosciences



Molecular Devices


Emerging Genomics & Bioinformatics


Lexicon Genetics

LION Biosciences


DeltaGen Inc.


Strategic Group Map
five force analysis
Five Force Analysis
  • Threat of Direct Competitors : 9
  • Threat of Entry : 3
  • Substitutes : 5
  • Suppliers : 2
  • Buyers : 9
  • Average : 5.6 / 10
direct competitors 9
Direct Competitors (9)
  • Many Competitors.
  • Technologies can be rendered obsolete!
threat of new entrants 3
Threat of New Entrants (3)
  • Many competitors.
  • High costs: R&D, HR.
  • Strategic Alliances, Patents.
market capitalization
Market Capitalization

Market Capitalization

threat of substitutes 5
Threat of Substitutes (5)
  • Moderate.
  • New Technologies being developed.
  • Biochemical markets secure.
power of suppliers 2
Power of Suppliers (2)
  • Low.
  • Numerous suppliers for most inputs.
  • Outsourcing.
  • FBS.
power of buyers 9
Power of Buyers (9)
  • High.
  • Biopharmas faced with high costs.
  • New entrants = more buyers = lower buyer power.
five forces summary
Five Forces Summary
  • Moderately Unattractive Industry.
  • Major forces: buyers, competitors.
  • Profitability Measures.
key success factors
Key Success Factors
  • Human Resources.
  • Networking and alliances.
  • Access to capital.
  • National Policies.
  • Product Strategy.
driving forces
Driving Forces
  • Success of Biopharmaceuticals.
  • Government policy.
  • Bioterrorism defense spending.
  • IP
industry summary
Industry Summary
  • A moderately unattractive industry.
  • Profitability is negative.
  • Capital markets are volatile.
  • But…Growth is high!
firm analysis
Firm Analysis
  • Listed on the Nasdaq, Invitrogen has a market capitalization of about $3 billion.
  • They offer an integrated technology platform to support their customers’ efforts in molecular and cell biology research, drug discovery, and commercial biomolecule production.
firm analysis 2002 summary
Firm Analysis – 2002 Summary
  • Wide-ranging plan of new product innovation.
  • Emphasis on high growth, high margin products.
  • Revenues increased to $649 million
  • Pro forma EPS grew to $1.81.
  • Over $1 billion in cash puts Invitrogen in strong position for further investment.
  • At the end of 2002, Invitrogen had 2744 employees, 916 of whom were employed outside the United States.
  • Strong competition for talented employees in the industry.
  • Continues success dependant on ability to attract and retain qualified employees.
value creating activities
Value Creating Activities
  • Research & Development
  • Sales & Marketing
  • Technology Licensing
  • Patents and Proprietary Technologies
  • Suppliers
research development
Research & Development
  • Invitrogen has 213 employees principally engaged in R&D.
  • 5.20%, 6.06% and 9.59% were the percentage of revenues spent on R&D in 2002, 2001, and 2000 respectively
  • 2002 was a transition year; R&D was co-located with marketing and manufacturing facilities in Carlsbad to improve speed and efficiency of product development.
sales marketing
Sales & Marketing
  • Invitrogen sells directly in 24 countries
  • Sell through agents and distributors in 45 additional countries
  • There are 893 employees in the Sales and Marketing group
  • They employ scientists as their technical sales representatives.
  • Marketing departments across the globe
  • Comprehensive website
technology licensing
Technology Licensing
  • Many products are manufactured or sold under terms of licensing agreements.
  • Most expire at various times over the next 15 years.
  • Must pay royalties to licensors based upon a percentage of sales which involve licensed product.
  • Renewing licenses involves significant risk.
patents and proprietary technologies
Patents and Proprietary Technologies
  • Company protects proprietary technology using patents, licenses, copyrights, and trademarks.
  • Invitrogen enters into confidentiality agreements with third parties, employees, and consultants.
  • In U.S. alone, Invitrogen has over 100 patents, which tend to last for 20 years.
  • Materials are bought from many different suppliers.
  • The company is not dependant on any one supplier or group of suppliers.
  • Raw materials, with the exception of fetal bovine serum (FBS) are available from multiple suppliers.
  • Invitrogen acquired Serum Technologies which provides the company with its own source of FBS from Australia.
emerging market opportunities
Emerging Market Opportunities
  • Invitrogen has developed a reputation as a pioneer for developing new technologies and packaging them into kit format.
  • Currently refocusing beyond individual products to develop application-centered technology platforms to address an emerging market opportunity.
  • They hope to become a total integrated solutions provider to their customers.
core competencies
Core Competencies
  • Large amounts of valuable intellectual property is one of Invitrogen’s strengths.
  • Currently owns over 125 patents in the U.S., and has almost 300 licenses covering 400 patents.
  • A strong line of products is another strength, with a catalogue of over 10000 products.
strategic acquisitions and mergers
Strategic Acquisitions and Mergers
  • An important component of Invitrogen’s business strategy is identifying growing or emerging markets, and entering these markets through strategic acquisitions.
  • Invitrogen uses strategic acquisitions to improve its market share and acquire new technologies.
summary of value adding factors
Summary of Value Adding Factors
  • Brand Leadership
  • Commitment to Innovation
  • Strategic Acquisitions
  • Emphasis on Customer Service and Product Quality
  • Strong Global Presence
  • Constant Improvement of Operational Efficiency and Financial Performance
financial analysis
Financial Analysis
  • Cash represented 20% of total assets.
  • Liabilities represent 37% of total assets.
financial analysis52
Financial Analysis
  • 2002 was the first time in 3 years Invitrogen had a positive net income (7.35% of revenues)
  • 2001 and 2000 had net losses, mainly due to restructuring and large acquisitions.
  • 2002 shows that this restructuring and acquisitions are paying off.
corporate strategy
Corporate Strategy
  • Current Strategies.
  • Strategy Analysis.
  • Recommendations.
core business
Core Business
  • Molecular Biology (NAICS 325414 Biological Product (except Diagnostic) Manufacturing).
  • 66% of Revenues.
horizontal diversification
Horizontal Diversification
  • Cell Culture (NAICS 335416 Analytical Laboratory Instrument Manufacturing).
  • 34% of Revenues.
  • Highly Related.
life technologies merger
Life Technologies Merger
  • Spawned creation of two segments.
  • Combined income in 1999: 477.9 million.
  • Invitrogen revenue in 2001: 629.3 million.
  • A 31% increase.
  • Staff reduction: 2,981 to 2,744.
  • Pro forma income reporting.
  • Serum Technologies Pty Ltd.
  • Informax
  • Invitrogen B.V.
  • Research Genetics
  • Ethrog Biotechnologies
  • Gene Express Inc.
corporate strategy analysis
Corporate Strategy Analysis
  • Global International Strategy.
  • Growth Strategy.
  • Informax
  • PanVera LLC, Molecular Probes
  • Manufacturing Abroad.
  • Slow rate of acquisition.
  • Reduce Debt/Increase Flexibility.
a new strategy
A New Strategy
  • Gateway Technology Open Architecture®
  • Open licensing, Market driven pricing.
  • Enables sharing of information amongst researchers.
  • Speeds research / drug development.
  • Creates a bigger market for equipment and supplies!
business strategy
Business Strategy
  • Invitrogen currently employs a differentiation strategy.
  • This means they offer something which their competitors can not provide, and which their customers are willing to pay for.
  • Invitrogen differentiates itself by refocusing beyond individual products.
  • Invitrogen has over 10,000 products, which is not itself a source of differentiation.
  • What is unique about Invitrogen’s strategy is that they are developing and optimizing application-centered technology platforms.
  • Instead of presenting their customers with the list of their many products, Invitrogen, through these technology platforms, is positioning themselves as an integrated solutions provider.
  • The value of these platforms is greater then the sum of its parts.
  • Many of Invitrogen’s competitors offer substitutes to the over 10,000 products which Invitrogen offers.
  • However none of the competitors are providing these products in the form of application-centred technology platforms.
  • This is one area that differentiates Invitrogen.
  • These platforms are unique, and customers are willing to pay for the value they provide.
  • Invitrogen can offer custom solutions or a complete package, and combined with Invitrogen’s solid reputation, Invitrogen’s customers know they are getting good value for their money.
  • Another area in which Invitrogen differentiates themselves from their competitors is through their strong customer relations.
  • Invitrogen creates a competitive advantage through their relationships with their customers through the dimensions of richness, reach and affiliation.
  • This refers to a firm’s access and connections to customers.
  • With a presence in over 75 countries, marketing centres in U.S., Europe, and the Asia-Pacific, and a comprehensive website, Invitrogen has good reach with its customers
  • Richness is concerned with the depth and detail of the two-way flow of information between the firm and the customer.
  • Sales force of almost 900 is composed of scientists with extensive backgrounds in biology and molecular biology.
  • They are able to provide provide meaningful answers and information to customers.
  • Affiliation is concerned with facilitating useful interactions with customers
  • Invitrogen's direct sales presence in 24 countries gives them strong affiliation.
  • Their affiliation is further improved by their on-line catalogue on the Invitrogen website.
business strategy analysis
Business Strategy Analysis
  • For differentiation to succeed, all functional level strategies must support the business level strategy.
  • The company must ensure it is aware of and able to respond to competitors threats to their business strategy.
  • Company must be able to adapt to ensure strategy remains effective.
competitor threats to business strategy
Competitor Threats to Business Strategy
  • Any strategy can lose its effectiveness.
  • Because of this, it is important to closely monitor the activities throughout the value chain to ensure that they are continuing to add value and have not become obsolete
  • It is also important to closely monitor the actions of competitors.
competitor threats to business strategy80
Competitor Threats to Business Strategy
  • Competitors could offer a good substitute at a lower price.
  • Competitor could develop products which render Invitrogen’s products obsolete.
research development81
Research & Development
  • Invitrogen’s functional R&D strategy corresponds to the business-level differentiation strategy.
  • To be an integrated solutions provider, Invitrogen must be on the cutting edge of product development.
  • Failure to continue to develop new products could result in failure of diffentiation strategy and loss of market share.
sales and marketing
Sales and Marketing
  • For differentiation to be successful, customers must perceieve value for which they are willing to pay.
  • Invitrogen’s large and highly qualified sales and marketing staff help make the differentiation strategy successful.
  • Invitrogen’s differentiation strategy consists of offering complete solutions to meet customer needs.
  • Because needs vary greatly, Invitrogen cannot meet customer needs exclusively with internally developed products.
  • For this reason, licensing is an important part of the success of Invitrogen’s differentiation strategy.
patents and proprietary technology
Patents and Proprietary Technology
  • For the differentiation strategy to be successful, Invitrogen’s products must offer added value compared to the products of competitors.
  • Patents and proprietary technologies help to prevent competitors from copying Invitrogen, and as such, protect Invitrogen’s source of differentiation.
business strategy recommendations
Business Strategy Recommendations
  • The corporate level strategy of acquiring new technologies and entering new markets through acquisitions has been complemented by the business level strategy of differentiation.
  • Because of this, there is no reason for any dramatic changes to Invitrogen’s business strategy.
business strategy recommendations86
Business Strategy Recommendations
  • It is important to be flexible and to adapt to an ever changing market.
  • For this reason, it is important that Invitrogen does not become complacent and continues to refine and improve.
  • Monitoring the external environment and competitors is essential.
closely monitor competitors
Closely Monitor Competitors
  • Invitrogen must be aware if its products are becoming obsolete.
  • It also must ensure that its customers are willing to pay a premium for the unique features Invitrogen offers.
  • Must be aware if competitors are offering similar products at lower price.
  • Invitrogen must be ready to quickly respond if any of these things occur.
continue to improve customer relations
Continue to Improve Customer Relations
  • For continued success, strong customer relations are successful.
  • A good product is useless if customers don’t trust Invitrogen.
  • Invitrogen does well in this area, but must continue to seek new ways to improve access and connections with customers.
move away from licensing
Move Away from Licensing
  • Although licensing is important to the business strategy, it brings high risk.
  • As much as possible, Invitrogen should move away from licensing and increase internal product development.
  • By doing so, Invitrogen ensures it is responsible for its own fate, and cannot be held hostage by licensors.
be a moving target
Be a Moving Target
  • It is only a matter of time before competitors copy the features that make Invitrogen unique.
  • For this reason, Invitrogen must continue to focus on innovation and the development of new products and technologies.
  • They must stay one step ahead of competitors to maintain competitive advantage.