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Analysis of Biogen Idec Inc.

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by

Yiwei Yan

on 4 November 2014

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Transcript of Analysis of Biogen Idec Inc.

Analysis of Biogen Idec Inc.
Company profile
Industry at a glance
Industry Analysis
Structure
Investor uncertainty
R&D expenditures
Prices of agricultural commodities
Medical needs from the population
key external drivers
Technology and innovation
Technological change and development is the engine of the Biotechnology industry. Innovation is the differentiation and profit-generator of this industry
Or
Competitive landscape
The Biotechnology industry in the US remains populated by hundreds of small firms, alongside a few pharmaceutical, agricultural and chemical conglomerates.
Four industries generate over half of total annual revenue for the industry.
Cost Structure of companies in this industry varies considerably depending on the size of the company.
Product development and manufacturing are two major cost categories for biotechnology firms
This industry has a cutting edge nature of performing R&D and its business pathway is significantly different from other industries.
The very specific nature of biotechnological processes makes it hard for companies to horizontally integrate their research and collaborate with each other.
Key Competitive Factors
- Ability to raise financing
- Concentration on core business
- Compliance with required product standards
- Ability to quickly adopt new technology
- Ability to educate the public about their research

Sources of competition
- Pricing and customer service

- Product performance

- Intellectual property (IP)


Potential Risk Factors

Protection of intellectual property rights: patents

Company’s long-term growth depends on R&D

Manufacturing issues

Doing business internationally.


Risk management instruments
Biogen mainly uses foreign currency forward contract to hedge the risk of exchange rates fluctuation.
Company’s growth and innovations strategies
Revenue for 2013 was $6.9 billion, an increase of
26%
from 2012.
5-Year average revenue growth is
11.09%
Consistent growth trend of revenues, EPS and free cash flow
Discovering, developing, manufacturing and marketing therapies for the treatment of multiple sclerosis (MS) and other autoimmune disorders, neurodegenerative diseases and hemophilia.
The marketing of their pipeline business.
In the past, Biogen pursued growth opportunities by expanding its existing capacity by performing the following activities:
- The launches of TECFIDERA in the U.S., Canada and Australia.
No.1 prescribed oral MS medicine
- AVONEX business remains their most prescribed MS treatment
Innovations

Developing new pipelines and bringing in high-potential candidates and technology platforms
Global expansion.
Become the leader in hemophilia treatments: ALPROLIX,ELOCTATE
M&A Activities
In April 2, 2013, Biogen acquired Elan Corp.
Highest stock price since it began trading
Future development plan .

In March 2012, Biogen completed our acquisition of all the outstanding stock of Stromedix, Inc.
STX-100-First therapies for pulmonary fibrosis
Gain of $9 million in 2012

In January 2007, Biogen acquired Syntonix Pharmaceuticals, now called Biogen Idec Hemophilia Inc. (BIH).
Financial strategy and funding
Capital structure of the biotechnology industry
WACC for Biogen
Capital structure of choice
Industry life cycle: growing

Industry environment : relatively risky
Opportunities and Challenge: government funding
Revenue : main products & clinical development

Main source of financing
Large company : cash & equity.
Small companies : Debt & equity


Trade-off strategy

Pecking order strategy
Founded in 1985
(Cambridge, Massachusetts)

Discovery, development &
manufacturing of several treatments

Leader in MS treatments

Biotechnology industry
(2nd largest in the healthcare sector)
Primary activities:
cell tissue engineering
protein sequencing and engineering
DNA coding

Young and growing
Very wide range of product applications
Large number of disparate firms
Fragmented



- Pricing and customer service
- Product performance
- Intellectual property (IP)

Risk related variables
Overall assessment
Market leader in therapies for the treatment of MS
Acquisitions strengthen leadership in MS treatments
Global Expansion
Scope and scale
Cautious and responsible for the capital structure and risk

Q & A
Sources of competition
Shuang Liang
Juan Vallejo
Hanxiao Yan
Yiwei Yan
Full transcript