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Successes And Failure In Biotech Innovation

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Successes and Failures in Biotechnology Innovation

When I first started this paper I would have to admit that I was pretty green in the field of Biotechnology, I had a brief understanding but nothing near an in depth understanding of the field. So when I first started looking for a success story, I tied my views on successful innovation in the areas that I am familiar with to the biotech field. The major theme that emerged was that successful innovation equals a product that produces quality profits for a company. After further research on the success of innovation, you do realize that profits may be the end goal of the company but success stems from a total company wide effort, that may start many years before a single cent of profit is ever realized.

In my opinion, you have to look at three major areas to see if a company successfully manages their innovation; at the company level, customer level, and the impact the innovation had on society. From the company viewpoint, you have to look at how well management set the company up to be innovators in a given market. Did they choose an industry that would provide the company potential for continuous growth? How did they utilize their employee base and acquire a strong base of knowledge to continually come up with new ideas in the area of interest they are trying to enter? In addition once a product is developed did they manage their intellectual property in the in a manner which provided themselves maximum protection? Finally you have to look at the end results of the innovation. Did they introduce an innovation that allowed the company revenue to grow, were they able to achieve a strong segment of market share, did this innovation have a positive effect on the companies stock price, etc?

From the prospective of the customer you have to look at if the innovation introduced by the company successfully met their needs. Would this product help them save time and money and improve their overall business? How did they manage the channels to which deliver their products to their customers? Your customer will ultimately impact your final sales figures, if they view the product as a benefit to them and if you can meet the needs that the customer has you can have your innovation viewed as a success.

Finally from the standpoint of how the companies innovation had an impact on society. Was it viewed as a welcome innovation and did it have a positive impact as a whole? You could have a great product but if the press and other reputable sources view your product ass a detriment to society they can sink your innovation with bad press.

An innovation that can meet the needs of these three categories can be viewed as success in my opinion. Yes its true that there have been innovations that have been viewed as a success even though they have meet one or more of these requirements but for the ultimate feeling of success I feel that threes three categories have been meet in some way shape or form.

My success story starts with a company called Monsanto. They original started as a chemical company providing primarily chemical herbicides to farm and household consumers for weed control but as of recent, nearing the expiration of the patent on their biggest cash cow "Roundup", they have changed their scope a company focusing on innovation in biotechnology, genomics and breeding. (Monsanto, 2005) They saw that their herbicide was still a leading seller in the industry and saw a way to improve on that product so they genetically engineered a soybean seed that would be resistant to their herbicide Roundup creating Roundup-Ready Soy beans, the first genetically engineered crop to be commercially available. Farmers now had to no longer apply herbicides before planting and on the borders of field they could spray the herbicides directly over the crops eliminating any weeds from intermingling and taking away nutrients from their crops producing bigger yields. They were an early mover in the market place creating a strong foothold as the leader in genetically engineered crops.

Taking a look at why this product was a success, let's first look at the company level critical success factors for this particular innovation. Management at Monsanto has always filled their knowledge base with incredible people. They have been willing to spend the big dollars on R&D, $527 million in 2002 or roughly 10% of their sales, to not only create new and innovative products but to entice the best employees to Monsanto. With the promise of 80% of that R&D budget going towards biotech research as well as the companies desire to put out one new product each year, the researcher know that they will have budgets deep enough to see products through to the end. (Ruen, 2005)

In addition, Monsanto management effectively manages their intellectual property of their Roudup-Ready (RR) soybeans. One measure being that they forced farmers using their products to sign contracts to prevent them from reusing the seeds from the RR plants during the next season, a process called brown bagging. They also required that the farmers allow for inspections of their fields to ensure that they were indeed not performing brown bagging techniques. This made sure those farmers using their product purchased seeds each year that they were going to grow RR crops. There was some initial anger towards these measures but in the end they were widely accepted. (Geo-Pie Project 2004)

The revenues generated by this new innovation were significant. It not only boosted numbers by the sale of the seeds themselves but the innovation helped boost the numbers of sales of their Roundup herbicide as well. In 1999 over 30% of the worlds crops of soy beans were the RR variety and over 50% of the US crops were of the RR variety. That has even increased to the point where now in 2005 over 90% of the US soy bean crop is of the RR variety. This helped to boost numbers for Roundup to the point where the sales of Roundup generated over 40% of the total revenue for Monsanto. (Estes, 2002)

The sales success of the product is due to the fact that the product clearly shows a positive benefit for farmers producing these products and in turn helps them increase their bottom line. RR soybeans help farmers reduce the traditional application of herbicides and tillage which in turn helps them save time, labor and input costs. The traditional saving that a farmer can have in just fuel consumption and wear and tear on their machinery is $10 per acre and overall providing a gross profit advantage of $22 more than using traditional soy bean crops. (Monsanto, 2005)

One environmental aspect that shows that the adaptation of RR soybeans is success is that Roundup is viewed as one of the safest to mammals. This dramatically reduces the risk



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