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Introduction to Feedback:

Dear Loc,

Thank you for your assignment. This assignment has required that you select an industry that
you feel is the most global, describe it, and explain how competitive and chaotic it is. It
requires that you use valid criteria from outside resources to support your explanations.
Therefore, it should be good practice for future assignments in graduate school because
graduate school papers require that you support your claims with specific information.

You successfully fulfilled the content requirements for the following:

Select an industry
Describe industry
Describe competitive environment.
Describe top leaders
Describe global characteristics
Determine if the environment is chaotic
Overall an excellent job. Well-researched, thorough, and focused.

Please look at the comments below and if you wish to meet and discuss your submission over
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Week 1 Assignment: Examine Industry Market Leaders 10 points

REQUIREMENTS FEEDBACK

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 Write a paper about one of those industries
that you believe to be one of the most global
in nature. Include the following:
Select an industry from Bloombergs
Good
Industry Market Leaders that you
believe to be one of the most global
in nature.
Provide a brief description of the Good
industry (beyond the one presented
in the Bloomberg source), along with
a brief discussion about the
competitive environment among the
top two to three market leaders in
that industry.
Compose a list of characteristics that Good
makes the industry one of the most
global in nature as compared to
others on the list.
Good
Based on Tetenbaum and Laurences
(2011) description and discussion
of chaos, would you describe the
environment of your industry pick as
chaotic? Why or why not?

Length: 2-3 pages not including assignment

Yes
coversheet, title page, and reference page
Include:

NCU cover sheet Yes

Title page Yes

Introduction, where you will state the Yes

purpose of the paper
Four topic section headings for each Yes
of the bullets (centered and bolded)
Cite your sources within the text of Yes
your document
Concluding paragraph, Yes

References page with two outside Yes

sources
Yes
Work is free of spelling, punctuation,
grammar, & word usage errors. APA was
used for citations and references.

Grade: 100/100

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 MBA 5102-8
Week 1 Assignment: Examine Industry Market Leaders

LOC X. PHAN
Course Instructor: David Johnson, PhD
12/30/2016

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 Introduction Commented [DLJ1]: Good introduction. You explain why
you are writing the paper and introduce the main points you
It is easy to imagine that as technologies progress, all mainstream industries on the planet are going to discuss.

will be global. Examples of mainstream global industries are Consumer Goods & FMGC, the

Internet, Media & Advertising, Sports & Recreation and Technology & Telecommunications

("Popular industries," n.d.). Each of the global industry mentioned has subcategories. For

example, the subcategory within the Consumer Goods & FMGC includes Clothing & Apparel,

Toys, Cosmetics and Personal Care. The mentioned global industries have goods and services

that are straightforward and easy to identify and classify. Certain industries have products and

services that are so complex making it difficult to determine and classify as a global industry.

The Biotech industry is one such industry. A detailed analysis of this industry characteristics

will demonstrate that it is a global industry (Dontigney, n.d.).

Global Industry Selection

The following discussion on the Biotech industry characteristics focusing on those Commented [DLJ2]: Good. Chose a valid industry

making it a global industry.

Industry Description and Competitive Environment

Industry Description Commented [DLJ3]: Good. Described the industry

The Biotech industry is continuing to evolve over the centuries. It started when

the process of fermentation was first used to produce alcohols and vinegar. Interests in the

Biotech industry peaked in the 1970s, when the recombinant DNA, a method of customizing

DNA to carry any desirable genetic traits, was invented ("Recombinant DNA | Summary," n.d.).

This industry is described today as a scientific discipline that utilizes molecular biology

processes of the organism and various cellular components to produce a new technology.

Application of some these technologies produces pharmaceutical products that would enhance all

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aspects of human lives such as curing diseases as well as preventing them. Biotech products and

process application in the agricultural areas such as optimizing food production for human

consumption and improving the environment and the planet on which we all live. Examples of

products produced by the Biotech industry are Penicillin in the very early days, Insulin, human

growth hormones and drugs today that can cure diseases and treat various human health related

conditions. On the agricultural side, genetically modified corn seed that can resist the effect of

insects such as the corn rootworm is an example of a product of the Biotech industry.

Competitive Environment

Buyers and sellers. The operating margin for the Biotech industry is 30.80% meaning Commented [DLJ4]: Good. Discussed valid competitive
industry characteristics
that the environment is not as competitive as other global industries such as the Retail

industry or the Food industry. Although there are 411 Biotech companies and 315

diseases worldwide, all these companies do not compete directly against one another

trying to treat all diseases (Damodaran, 2016). Under normal circumstances, every

business developed a specific set of technologies that will treat very focused few

diseases. The buyers in this market are large Health Maintenance Organizations such as

Kaiser Permanente, hospitals, and insurance companies. The normal consumers do not

participate in this market.

Barriers to exit or entry. Threats of a competitor entering the Biotech market is low Commented [DLJ5]: Good. Discussed valid competitive
industry characteristics
because of multiple high barriers to entry. The two barriers are a large initial cash and

time investment before any return on investment may be realized. These two barriers are

due to the regulatory requirements by government agencies such as the FDA and the

EPA. It takes about 15 to 20 years from conception and nearly three billion U.S. dollars

for a Biotech drug to receive approval for marketing in the United States (Patrick, 2015).

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 Laws passed by the Congress requiring the manufacturer of pharmaceuticals and medical

products to show safety and efficacy before receiving approval. The level of

requirements depends the product risks to the patients, and the health professionals

exposed to the products. Another barrier to entry is the intellectual property (IP) laws

giving the inventor of the technology exclusive rights to manufacture and to sell the

products for a pre-determined length of time. Owners of these IPs can license or to sell

their IPs to any interested parties. IPs are highly valuable assets and the individual or

the firms will go to great lengths to protect their IPs from being stolen or copied. The

United States government agency regulating intellectual property is the USPTO (United

States Patent and Trademark Office).

Securities laws regulate when and how owners of Biotech industry firms that are publicly

held (stocks traded publicly) can sell their shares of ownership in the company. The

individuals with secret knowledge about firm technology and business matters must not

use such knowledge for personal gains at the expense of the public shareholders. The

SEC (Securities and Exchange Commissions) enforces the laws and regulates the

securities market in the United States.

Homogeneous products. Products from the Biotech industry are both homogeneous and Commented [DLJ6]: Good. Discussed valid competitive
industry characteristics
heterogeneous. Those products that are still protected by intellectual property laws

would have no competition. While still under IP protection, other firms are not allowed

to manufacture or market the same or similar product. The fact that no other companies

produce or market a similar product does not affect operational efficiency. What is

important is the fact that a single product would satisfy all customer requirements across

all the world markets. The manufacturers, in this case, have all the bargaining powers.

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 However, those products with expired patent lives are homogeneous across all the

markets. The competitor products getting quicker approvals by regulatory agencies are

the biosimilar (generic) products. The manufacturers, in this case, have lower

bargaining power because the goods in these markets are similar to one another.

Top Two Market Leaders in Industry Commented [DLJ7]: Good. Discussed the top two
companies in the industry
For 2016, according to Genetic Engineering & Biotechnology News, the leading two firms in

this industry based on market capitalizations are Amgen and Novo Nordisk (Philippidis, 2016).

Amgen is an American multinational biotech company located in Thousand Oaks,

California. The firm has a total of seven approved drugs making up their entire product

portfolio. The drugs are for the treatment of the after-effects of cancer treatments.

These are severe and life-threatening side effects making the need for these drugs dire

(McFarlane, 2014).

For 2016 Amgen market capitalization is $127.35B. The operating margin is 43.49%

meaning that there is little to no competition ("Amgen Inc. (AMGN) | EBITDA," n.d.).

Protection from the competition of the Amgen drugs is the result of Amgens strong

intellectual property position.

http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.html

Novo Nordisk is a Danish multinational Biotech company located in Denmark. The

company produces Biotech drugs to treat diabetes, hemophilia, growth disorders and

obesity. The diabetes drug accounts for the largest portion of the income (McFarlane,

2016). It is ironic that the #1 and #2 money maker products for the company are for the

treament of diabetes and obesity.

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 For 2016 Novo Nordisk market capitalization is $116.09B. The operating margin is

51.00% (, 2015). The majority of Novo Nordisk drug patent portfolio will not expire

until the year 2022 ("Intellectual property rights," n.d.).

Global characteristics of industry

Information technology/communication infrastructure. The Biotech industry Commented [DLJ8]: Good. Discussed valid global
industry characteristics
companies establish and locate facilities at various locations throughout the world to take

advantage of differences in resource availability, the labor force skills and the cost of

labor. For example, the company might locate its manufacturing plant where the real

estate price is the lowest being that they will need a significant space. Regardless, the

various needs must be considered at the same time so that there would be the best

outcome for the business.

Products/services modification. The drug products that the Biotech industry sells are Commented [DLJ9]: Good. Discussed valid global
industry characteristics
homogenous for biosimilar and generics, but heterogeneous for the drugs still under patent

protection. Regardless, these products meet the requirements of patients throughout the

world market without requiring modifications. The reason is, it is evident that although

general appearance of people and cultures may be different for countries across the world,

biologically there is not any difference between humans that would change the

functionalities of drugs or the biology and epidemiology of diseases.

Economies of scale. The fact that a single product can satisfy a comprehensive set of Commented [DLJ10]: Good. Discussed valid global
industry characteristics
human needs then the economies of scale would significantly improve the profit margin.

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 Industry chaos Commented [DLJ11]: Good. Discussed valid industry
chaos characteristics
The Biotech industry is global, and chaotic. At any time, anyone may discover or invent new

technologies so significant that a new order would emerge. The industry is continuously evolving,

and the speed of evolution is increasingly faster because of the continual improvement in the tools

available to the industry. There is so much left to learn about our biology and the biology of

everything else around us. The knowledge pool is increasing with the passing of time and self-

organizing.

Conclusion
As evident by the above discussion, the features that characterize a global industry are the

same as those of the Biotech industry. Thus, the Biotech industry is a global industry. A notable

characteristic of the Biotech, unlike many other popular global industries, is the enormous barriers

to entry and exit. That is, from concept to market takes 15 to 20 years at the cost of $3B which is

very capital intensive and a risky investment; however, human lives and the quality of those lives

are invaluable.

References

(2015, October 29). Retrieved from https://www.novonordisk.com/bin/getPDF.1962208.pdf

Amgen Inc. (AMGN) | EBITDA. (n.d.). Retrieved from https://www.stock-analysis-

on.net/NASDAQ/Company/Amgen-Inc/Valuation/EV-to-EBITDA

Damodaran, A. (2016, January 2). Operating and Net Margins. Retrieved from

http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.html

Dontigney, E. (n.d.). Global Industry Definition | eHow. Retrieved from

http://www.ehow.com/facts_6864353_global-industry-definition.html

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Intellectual property rights. (n.d.). Retrieved from http://www.novonordisk.com/about-novo-

nordisk/novo-nordisk-in-brief/positions/intellectual-property-rights.html

McFarlane, G. (2014, November 5). How Amgen Makes Billions On Just A Few Drugs |

Investopedia. Retrieved from http://www.investopedia.com/articles/markets/110514/how-

amgen-makes-billions-just-few-drugs.asp

McFarlane, G. (2016, March 7). How Novo Nordisk Makes Money (NVO) | Investopedia.

Retrieved from http://www.investopedia.com/articles/markets/030716/how-novo-

nordisk-makes-money-nvo.asp?ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186

Novo Nordisk Profit Margin (Quarterly) (NVO). (n.d.). Retrieved from

https://ycharts.com/companies/NVO/profit_margin

Patrick, M. (2015, July 2). Drug Approval Process in the Biotechnology Industry - Market

Realist. Retrieved from http://marketrealist.com/2015/07/drug-approval-process-

biotechnology-industry/

Philippidis, A. (2016, September 26). Top 25 Biotech Companies of 2016 | The Lists | GEN.

Retrieved from http://www.genengnews.com/the-lists/top-25-biotech-companies-of-

2016/77900741

Popular industries. (n.d.). Retrieved from https://www-statista-com.proxy1.ncu.edu/markets/

Recombinant DNA | Summary. (n.d.). Retrieved from

http://www.whatisbiotechnology.org/science/rdna

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