Organization and Strategy at Millennium (A)

Group 4
Amit Verma MP14012
Anindya Halder MP14015
Anupam Tripathi MP14018
Prasenjit Dey MP14038 1
Vinayak Siddhi MP13067
 Case Facts

Millennium Pharmaceuticals was founded in 1993 by Levin, a biochemical engineer

in Cambridge.
Millennium started as a Technology company, drastically improving the speed,
effectiveness and cost of drug discovery, providing R&D services to
pharmaceuticals companies thru alliances.
Started forward integration or downstream movement in late 1990s and early
2000s.
Major strategies chosen for forward integration was merger and acquisitions: 1997-
ChemGenics Pharmaceuticals, 1999-LeukoSite, 2000-Cambridge discovery
Chemistry, 2001 COR Therapeutics.
However the tide changed quickly in early 2000s due to high challenge in
commercialization of downward value chain.
Levin launched major restructuring in 2003 including reducing of manpower from
2300 to 1700, winding down UK and San Francisco operations to reduce early
stage discovery expenditures and terminating metabolic research efforts.
One of the major cultural change of Millennium was to move from pure science to
emphasis on commercial functions.
By Jan 31, 2005, Millenniums stock was trading at $9.21 per share about one-tenth
of its all time high. Going forward there is a big challenge in front of Dunshire, MD or
possible successor to Levin is to bring Millennium to profitability.
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Core Competency : what gave an advantage to the company

Mark Levin Daniel Cohen Eric Lander Jeffery Friedman Raju Kucherlapati
-Field expertise -Genetic -Genome -Obesity Research -Medicine
-Entrepreneurial Skills Scientist Research Knowledge Knowledge
-Fund raising Knowledge
Capabilities

Market Risks Faced by

Industry Advantages Offered
30 ppm success rate $70 Million for
of marketable drugs development
Core
Average Cost of $800 5 Years of lead
Competency
Million for development time of
Lead Time of 10 to 15 development
years for drug Learning on new
development drugs

Integrating Rapidly evolving Information Technology for:

Large scale DNA sequencing
RADE- Rapid analysis of Differential Gene Expression
High Throughput Expression Cloning 7/15/2017 3
Millennium, its Alliance business model and forward integration

Benefits for Millennium: Benefits for the Alliances:

Tremendous amount of cash to build Quick development of target-drug
downstream Lower expenditure of development
Downstream market knowledge Research knowledge acquisition
Ownership of by-product drugs and from Millennium
co-commercialization rights
Reasons for going for forward integration:
1) Along with several benefits of alliances it also offered disadvantages which over the time
started increasing :
Initial offerings are guaranteed cash but there is uncertainty of receipt of cash in future hence
a major risk existed in business model
Increased difficulties of resources allocation due contract limitations resulting in inefficiencies
of scale.
Business model restricted risk sharing but has a share in profits
2) Dilution of Millenniums competitive advantage:
Information, technology and tools which were unique are now highly diffused in market
Partners copied competencies and information resulting in loss of uniqueness and IP.
DNA research was reaching a stage where it was no longer a barrier for other companies to
enter in this segment (including Pharma companies developing internal capabilities on similar
model).
Looking at above points Levin sensed that these competitive advantage would have no
value 3 to 5 years down the line, so forward integration is the suitable strategy. 7/15/2017 4
Forward Integration : A Critical anaylsis

1997 1999 2000 2001

ChemGenics LeukoSite Cambridge Discovery COR Therapeutics
Pharmaceuticals Chemistry

High throughput Market Reach Down stream Sales and Marketing

Screening Downstream development skills capability
capabilities Capabilities Medicinal and Acquisition of
1to 1 matching with Product Pipeline Computational Intergrein Cardio
existing capabilities Clinical Trial Chemistry Vascular drug
Is it forward capability Knowhow through $50 million to
Integration? 100 Chemists bottom line

Levins Decision for forward integration was correct w.r.t. the Millennium's future
growth and ability to remain relevant in the Industry.
Internal allocation and management was unsynchronized with respect to growth
strategy
Frequent change of Vision and Mission never gave employees a stability to
commit and work towards it.
Addition of stake holders resulted in many voices in the company which were not
addressed to creating confusion.
Discipline of resource control was missing through out the process
The Interim CEO was never committed towards the company, but was always
acting as an entrepreneur.
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