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1. In 1979, Novo proposed a joint venture with Eli Lilly and Genentech to produce genetically engineered human insulin, with Eli Lilly receiving rights to the US market and Novo receiving rights for the rest of the world.
2. In 1982, Novo entered a joint venture with E.R. Squibb & Sons called Squibb/Novo to market insulin in the US, as Squibb had a large US distribution network but lower quality insulin, while Novo had high quality insulin production.
3. After 1982, Novo used the joint venture model to penetrate other markets by partnering with major insulin suppliers in countries like Canada, Australia, Japan, Germany, and
Originalbeschreibung:
This document describes the internationalization strategy of Pharma major Novo Nordisk
1. In 1979, Novo proposed a joint venture with Eli Lilly and Genentech to produce genetically engineered human insulin, with Eli Lilly receiving rights to the US market and Novo receiving rights for the rest of the world.
2. In 1982, Novo entered a joint venture with E.R. Squibb & Sons called Squibb/Novo to market insulin in the US, as Squibb had a large US distribution network but lower quality insulin, while Novo had high quality insulin production.
3. After 1982, Novo used the joint venture model to penetrate other markets by partnering with major insulin suppliers in countries like Canada, Australia, Japan, Germany, and
1. In 1979, Novo proposed a joint venture with Eli Lilly and Genentech to produce genetically engineered human insulin, with Eli Lilly receiving rights to the US market and Novo receiving rights for the rest of the world.
2. In 1982, Novo entered a joint venture with E.R. Squibb & Sons called Squibb/Novo to market insulin in the US, as Squibb had a large US distribution network but lower quality insulin, while Novo had high quality insulin production.
3. After 1982, Novo used the joint venture model to penetrate other markets by partnering with major insulin suppliers in countries like Canada, Australia, Japan, Germany, and
In 1979 a joint venure was proposed to the top management of Novo, which would combine Genentech (the company that made the first genetically engineered human insulin), Eli Lilly , the dominant palyer in the industry with 85% market share and Novo. Eli lilly would receive the rights for the US market. In return Novo would receive the rights to genetically engineered human insulin for the rest of the world. Novos strategy to penetrate foreign markets had primarily been based on product differentiation. This branded strategy was contingent on promoting the advantages of Novos highly purified insulin. Squibb/ Novo Joint Venture In February 1982, Novo entered into an agreement with E.R. Squibb & Sons Inc. to establish Squibb/Novo., a jointly owned company with purpose of marketing a full range of insulins produced by Novo and distributed in the US by Squibb. Having tried independently penetrate the US market, Novo expected that the Squibb/Novo partnership would lead to increased sales of insulin in the US. Although, Squibb was the second leading producer of insulin in the US market, it had faced serious problems since the 1970s with its quality and its ability to generate innovative new products. Its insulin product was low quality and its production process according to a former executive was horrible. In addition, the company had multiple providers of bulk insulin and had built up enormous inventory of low quality insulin. Thus, in 1978, Squibb contacted Novo in an attempt to alleviate its product and quality problems. The outcome was an agreement whereby Novo became the single bulk source provider of animal insulin for Squibb. Squibb had wanted Novos high quality Monocomponent Insulin but Novo which wanted to penetrate the US market on its own, was reluctant to give Sqibb this product and instead gave them a medium quality insulin product. By the early 1980s it became clear that Squibb, given its lower quality product, was unlikely to remain a long term player in the industry.At the same time, Novos aspirations for a branded US strategy had resulted in less that 5% market share. By 1982, the stage was set for joint venture. Novo possessed excellent production and purification skills and Squibb had a US distribution network of 800 people and 40 medical specialists. Squibbs sales force had a limited range of products to sell and had ample capacity to sell Novos insulin. The joint venture based its operations and office in Princeton, just ten minutes from the corporate headquarters of Squibb. The joint venture helped companies to globally expand. Over time, Squibb broadenedits product portfolio. It allocated sufficient resources to meet the needs of joint venture. In 1989, the mergers of Squibb with Bristol Myers and Novo with
Norsdisk coincided with managements decision to totally change its
approach to the US insulin market.
Worldwide Strategic Joint Ventures
After 1982 the company used the Squibb Novo JV model in forming alliances throughout the world with major insulin suppliers as a means to penetrate markets and significantly consolidate the industry In Feb 1984 the Canadian government approved Novos establishment of insulin production in Canada. Following an agreement between Novo and Connaught Labs a new Novo subsidiary, Novo Labs Ltd was established to produce insulin. The insulin prepared by Novo would be sold by Connaught in Canada. In 1984 Novo and Commonwealth Serum Labs entered into an agreement covering the manufacturing and marketing of insulin preparations in Australia, New Zealand and Oceania. Under this agreement Novo was responsible for purification and the JV company CSL Novo would market the complete range of Novo insulin preparations. In November 1987 Novo entered into an agreement in Japan with Sumitomo Pharma to handle diabetic care products. In 1988 Novo increased its marketing efforts through cooperation with Boehringer Mannheim for marketing its products in Germany. Novo also made marketing alliances with Kabi in Sweden and Orion in Finland. It formed a marketing alliance with Wellcome in the UK and Institut Merieuxin France Along with entering new Markets their strategy to enter new product categories was made possible by some key Acquisitions. These were, Zymogenetics Novo established research cooperation with Zymogenetics of Seattle, Washington in 1982. It also acquired a 16% minority stake in the company. The two companies worked closely in yeast and mammalian cell technology to develop the know-how that helped Novo engineer the first ever genetically engineered human-insulin. The collaboration also led to the development of Factor VIIa. This was a novel treatment for hemophilia. Zymogenetics was a company that was renowned for its expertise in molecular biology. This helped Novo increase its knowledge of blood coagulation and
fibrinolysis. Hence it also involved Novo in human growth factors
research. Novo completely acquired the company in 1988 for 23.3 million dollars and has maintained it as an Independent Research Unit Novo Diagnostics Systems Novo increased its emphasis on diagnostic systems and developed a new business unit in the 1980s. It was an evolution of the 1981 acquisition of the production and the marketing rights for BMC Lab 22. This was a system for non-invasive measurement of bone mineral content. The increased worldwide effort to develop a preventive treatment for Osteoporosis benefited Novo. NovoBioLabs The company acquired the production and marketing rights for monoclonal antibodies used in the diagnosis of lung cancer in 1984. This new acquisition was combined with its existing facilities in cell biology and immunology to form a new business unit. This was called NovoBioLabs. Its primary objective was to use monoclonal antibody technology for the development and production of test kits for the diagnosis and monitoring of diabetes, cancer and other diseases. Novo BioLabs was consolidated with I.Q. Bio which was a British manufacturer of diagnostic kits. This extended Novo BioLabs effort to develop and market diagnostic products. Alfred Jorgensen Labs Alfred Jorgensen Labs, an internationally recognized consultant to the brewing and the food industry and supplier of pure yeast culture was purchased by Novo in 1984. In December 1986 Novo acquired a minority stake in California base company Idetek Inc specializing in food, feed and veterinary analysis based on monoclonal antibody technology. They also worked together on food and beverage analysis using this technology. Ferrosan Novo also bought Danish company Ferrosan. The rationale for the acquisition was to exploit the combined strength of the companies in the central nervous system field. In addition Ferrosan brought with it a broad portfolio within OTC and prescription pharmaceutical preparations, veterinary activities and vitamins. Although Ferrosan was originally intended to operate as an independent company, most of its activities were integrated into the Novo group and other parts were divested.