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Red biotechnology in Germany

environmental factors to an entrance of the German fertility treatment market

Seminararbeit 2010 18 Seiten

BWL - Sonstiges

Leseprobe

Table of Contents

List of Abbreviations

List of Figures

1. Introduction

2. Oxford Fertility Unit – Company Profile

3. The German Assisted Reproductive Treatment market
3.1 Market facts
3.2 Economical environment
3.3 Socio-cultural environment
3.4 Political/Legal environment
3.5 Technical environment

4. Market entry modes

5. Conclusions

Affix

Hofstede Cultural Dimensions

Sources

Monographs

Internet

List of Abbreviations

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List of Figures

Figure 1: Development of the ART market by the number of FTRM treatments and centers per year in figures

Figure 2: Development of the ART market by the number of FTRM treatments and centers per year in graphics

Figure 3: Porter’s five forces model

Figure 4: Religious affiliation of the population in Germany

Figure 5: Germany as in Hofstede’s cultural dimensions

Figure 6: IvF success rates at Oxford Fertility Unit

Figure 7: Average IvF success rates of German ART centers

1. Introduction

The entrance of biotechnology into medicine, especially driven by new genetic techniques, has led to promising new markets.[1] Biotech companies are spending extraordinary sums in R&D before new technologies generate a return on the investment. In Germany alone biotech companies have spent more than half of their total revenues on R&D in 2008 which accounts for more than a billion Euros.[2] Therefore it stands to reason for biotech companies to exploit as many markets – and thus as many countries – as possible to maximize the return on the investment.

In this academic paper Oxford Fertility Unit will serve as a representative example for red biotech companies. It is a Great Britain based fertility treatment and reproductive medicine company offering Assisted Reproductive Technology (ART) services. Entering the German market would call for a elaborate market entrance strategy as Oxford Fertility Unit would face challenging market uniquenesses derived from culture and politics for intstance. Hence, it serves as a great case study to exemplify such factors that arise when entering new markets outside the home country and how to deal with them. This paper will focus on the analysis of these factors as a requisite to draft a market entrance strategy.

2. Oxford Fertility Unit – Company Profile

Oxford Fertility Unit (OFU) is “one of the foremost centres of clinical excellence for fertility treatment and reproductive medicine in the UK.”[3] OFU is located in Oxford, Great Britain and has not yet any affiliates abroad. It offers the following services:

- In vitro fertilization (IvF)
- In vitro maturation (IvM)
- Intrauterine Insemination (IUI);
- Intracytoplasmic Sperm Injection (ICSI);
- Surgical Sperm Recovery (SSR);
- Donor Insemination (DI);
- IvF with donor sperm/egg;
- Sperm and embryos storage;
- Pre-implantation Genetic Screening (PGS)[4] ;

As a privately owned company OFU is not obliged to publishing any company figures, so barely any hard data can be found on this company. As a typical ART center it stands to reason that OFU has both high one-time and running costs.[5]

3. The German Assisted Reproductive Treatment market

3.1 Market facts

With the first in vitro fertilization (IvF) child born in Germany in 1982 the German ART market has grown to one of the biggest in Europe with more than 100,000 fertility treatments[6] in 2003. Due to a political decision which lowered the coverage of treatment costs the number has almost halved from that peek to 59.448 in 2004 and has then grown to 68,336 treatments in 2008 while the number of ART centers has stabilized at around 120 as can be seen in figure 1 and figure 2. We will take a look into the event of the change in medical care coverage in chapter 3.3.

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Figure 1: Development of the ART market by the number of treatments and centers per year in figures[7]

illustration not visible in this excerpt

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Figure 2: Development of the ART market by the number of treatments and centers per year in graphics[8]

Although Germany is one of the countries with the highest absolute amount of fertility treatments in Europe, it falls behind regarding the relative numbers – the treatments cycles per inhabitant.[9] Germany is a country of “reproductive tourists” going abroad rather than foreigners going to Germany for treatment. This has not been taken into account in the relative figure, so the German market (Germans using ART services) is actually bigger at the second glance and that relativizes the mentioned low number.[10] To conclude, the German market may in deed be promising regarding its size.

What are the factors that influence the market size? We already briefly saw how big of an influence political decisions can have. Yet there are several different factors that influence the market which we will take a look into in the following chapters.

3.2 Economical environment

An analysis of the economical environment is substantial for the definition of a market entrance strategy. Here, Porter’s five forces can be taken as a useful analysis model. It describes five interdependent forces (figure 3) that determine the economical environment.

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Figure 3: Porter’s five forces model[11]

Threat of new entrants

In the case of new entrants into a market the prices of that market good or service may fall and costs for input may go up as new entrants focus on winning over customers and therefore will invest more in customer acquisition. Established competitors see themselves being forced into following by lowering their prices and investing more in advertising for instance.

As having seen in figure 1 and 2 the number of ART centers has been stable for about ten years. Hence, the threat of new entrants is to be considered rather low at the moment. This can change quickly though with a change in regulations allowing so far prohibited or restricted techniques.

Bargaining power of buyers

The higher the bargaining power of buyers the more limited the pricing latitude.[12] In the ART market the bargaining power of buyers can be determined by various factors such as the buyers’ mobility to use lower price services abroad or the buyers’ intensity of the desire for a child.

While it is hard to determine the intensity of the desire for a child in an operationalized way, the buyers’ mobility to use lower price services abroad can be assessed by regarding the number of German fertility tourists. Unfortunately, that is not documented so it can only be referred to assertions that state that the number is high.

Threat of substitutes

The desire for a child can also be satisfied by child adoption. It depends on the attitude of the infertile people towards having a biologically own child over an adopted one. Furthermore the desire of a child may itself be substituted by pets, materialistic joys or other situations to give meaning to a life such as working with children charitably. The bottom line is that it all depends on how important people see children a part of their lives and that feeling can vary individually but also in society as a whole.

Bargaining power of suppliers

Suppliers determine the price for the input such as the machines and the labor and therefore the costs. The influences on their bargaining power are determined by the typical demand and supply mechanism and it appears that there is no special uniqueness in the ART market.

Rivalry among existing competitors

Competition itself must not lead to price or investment wars and thus decreasing profits. There can be a situation of contented coexistence. It rather depends on rivalry which is the urge to win over market shares and to acquire or to put competitors out of business. Rivalry depends on different factors such as the number and size of competitors, the market growth and the product’s or services nature.

[...]


[1] EuropaBio (2009), http://www.europabio.org/documents/100403/Innenseiten_final_screen.pdf (date 01/04/2010) pp. 7

[2] cf. Deutsche Industrievereinigung Biotechnologie (2009), pp. 5

[3] Oxford Utility Unit (2009): http://www.oxfordfertilityunit.com/default.aspx (date: 12/28/2009)

[4] cf. Oxford Fertility Unit (2009): http://www.oxfordfertilityunit.com/default.aspx (date: 12/28/2009)

[5] cf. Breitbach, E. (2009): http://www.wunschkinder.net/aktuell/wissenschaft/buyout-finanzinvestoren-uebernehmen-ivf-kliniken-791/?article2pdf=1 (date: 12/28/2009)

[6] A fertility treatment includes all fertility methods, not just IvFs. Whether the treatment was successful or not is not relevant for this statistical figure.

[7] Based on Deutsches IVF Register (2009): http://www.deutsches-ivf-register.de/pdf-downloads/dirjahrbuch2008.pdf (date: 01/01/2010), pp. 10

[8] Based on Deutsches IVF Register (2009): http://www.deutsches-ivf-register.de/pdf-downloads/dirjahrbuch2008.pdf (date: 01/01/2010), pp. 10

[9] cf. Sorinson, C. (2006): http://www.euro.who.int/Document/Obs/EuroObserver8_4.pdf (date: 01/01/2010), pp. 1

[10] cf. Sorinson, C. (2006): http://www.euro.who.int/Document/Obs/EuroObserver8_4.pdf (date: 01/01/2010), pp. 1-6

[11] Based on Porter, M. (1999), pp. 12

[12] Porter, M. (1999), pp. 58

Details

Seiten
18
Jahr
2010
ISBN (eBook)
9783640621286
ISBN (Buch)
9783640621712
Dateigröße
570 KB
Sprache
Deutsch
Katalognummer
v150715
Institution / Hochschule
Stuttgart Institute of Management and Technology
Note
1,9
Schlagworte
Biotechnologie Red Biotechnology Rote Biotechnologie Biotechnology Market Entrance Expansion Market development Fertility Treatment Reproduktive Medizin

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Titel: Red biotechnology in Germany