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Millennium Case Study

Millennium Case Study

1) Millennium was different from most other biotech firms that usually became dependent on large pharmaceutical firms because they did not have the resources to take their products to market or have a broad technology platform. Millennium sought to build varied technological capabilities i.e. a broad technology platform.

One of the key focuses of building technological capabilities was making the drug production process more efficient. This involved the use of advance technology like robotics & automation. Thus Millennium sought to build a technology platform and that was one of the capabilities that helped it become more successful in the 1990s.

This capability allowed them to focus on finding the most promising DNA and patenting it. Specifically it involved patenting the gene sequence, the specific protein produced by that gene & the engineered drug that was produced from the gene. Thus Millennium used its technological expertise to find out the most promising gene related to curing a particular disease or illness & then patented the discovery.

Effective use of technology and patenting the most important genes relating to specific illness made it essential for the company to have a highly skilled employee base. It managed to attract top notch talent by keeping politics to a minimum, providing stock options to its employees & being very selective in hiring individuals. Employees also saw that top management set the stage when it came to having a strong work ethic.

The skill set that Millennium had build had to be used effectively to ensure growth. Millennium decided to move away from the FTE model because that didn’t allow it to focus on the long term health of the organization. The FTE model led to agency costs as scientists were more focused on meeting individual goals rather than focusing on the benefit of the whole organization.

On the other hand it used the skill set it had created to build partnerships that would the lead to R&D that was most beneficial to Millennium. Millennium was also smart enough to retain rights of unforeseen discoveries. In summary Millennium was able to achieve synergies between the structure it had, the culture it created, the people it employed and the strategy it used to leverage these resources.

As organizations grow they need to change their structure & their strategy. The key concern in Millennium’s case is the organization’s structure. To become into a fully integrated pharmaceutical firm Millennium needs a structure that allows for the most efficient allocation of resources. Currently the workforce at Millennium feels overburdened. This is a classic case of burnout i.e. not being able to manage growth. Millennium has a loosely defined corporate structure that is based on the business areas it operates in. In the 7-S framework structure is a key ingredient to success. Thus Millennium needs to be able to create a more robust structure for it to succeed & without one it won’t be successful over the next 10-years.

2) A traditional pharmaceutical organization has the capabilities to take the drugs it creates to market which is currently lacking in Millennium. This is a fundamental disadvantage to Millennium & the acquisition of ChemGenics only solved part of the problem. Millennium doesn’t have the capability of taking a drug to market and that makes its success dependent how successful it is in creating alliances & partnerships. Traditionally Millennium has been very successful at creating good partnerships and that has led to it being successful. However Millennium has become very good at the process of discovering genes & ensuring that they can become marketable drugs. It has an advantage compared to pharmaceutical firms in this process as that is why it has been successful at forming good partnerships.

Traditional pharmaceutical organizations are also much larger than Millennium and that makes them less vulnerable to failures in the drug development process. This is a disadvantage; however Millennium is much more nimble than its peers when it comes to capitalizing on available market opportunities. The culture & the structure that Levin has managed to create is something that provides Millennium an edge over large pharmaceutical organizations. The creation of an efficient drug development process is the goal of Millennium & the pharmaceutical organizations. Millennium is definitely the more innovative of the companies involved in achieving this goal however all pharmaceutical companies have more resources at their disposal.

3) The primary disadvantage of securing funding through alliances & partnerships is that it limits an organizations ability to allocate resources as it seeks to do so. Thus every alliance has to be made keeping in mind what the company’s vision is. This is quite difficult to implement because once an organization enters into an alliance its revenue stream is dependent upon its ability to fulfill the goals set at the outset of the alliances. Thus organizations may seek to fulfill these goals even if it means deviating from the objective.

On the other hand deals & alliances ensure that the organization manages it resources effectively because it has to meet its deliverables. This is different from raising money from the capital market. In this case once an organization has been successful at raising money through the market it is relatively free to utilize it as it seeks to do so. This could lead to an inefficient allocation of resources. Raising money also means giving away ownership rights to the organization. This would mean that the new equity holders will have a say in company strategy. This can hamper an organizations ability to choose what it believes to be the best course of action.

4) The key criteria is that does it allow Millennium to focus on the R&D that it wants to focus on and will it enhance Millenniums ability to meet its ambitious growth targets. Millennium should pursue the Lundberg deal. Millennium wants to create an efficient drug discovery & development process. This requires that its process be codified & that it have substantial funds at its disposal that can be used to master the drug discovery & development process. Thus this deal will allow it to focus on the R&D it seeks to pursue. There are elements of the deal that require effort in areas that are not of interest to Millennium. This should be expected in any alliance that an organization seeks to undertake as it is unrealistic to expect complete alignment of goals of both organizations.

Millennium hopes to create a sustainable competitive advantage by creating an unrivaled drug discovery & development process. It has invested significant time & effort in making the process as efficient as possible. The success of this process is going to allow Millennium to become a fully integrated pharmaceutical company in the future. The Lundberg deal provides capital recourses to Millennium that are invaluable for the company’s success. Considering the fact that sound strategic alliances are very difficult to come by & they are the source to the company’s growth Millennium should pursue the Lundberg deal.

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