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Genzyme Case

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Genzyme Memo

Genzyme is interested in a joint venture with Geltex to market GelTex’s first product, RenaGel. GelTex was an early-stage biotech research company with two products in its pipeline. GelTex had neither the capital nor the marketing organization to launch RenaGel. Therefore, the company had been looking for a partner that would contribute cash and marketing expertise in exchange for a share of profits in a joint venture.
Genzyme had revenues of $518 million in 1996, and had grown rapidly through the innovative use of joint ventures and alliances.
In addition to the benefit of increasing earnings through the sale of RenaGel, the joint venture would represent an excellent fit for Genzyme’s specialty therapeutics and allow the firm to tap new markets. Also, building a strong partnership with GelTex might enable Genzyme to strike the same kind of deal for GelTex’s second product, CholestaGel, which was targeting a much larger segment, the multibillion-dollar market of anticholesterol drugs. Overall, the joint venture was very attractive for Genzyme which would lead the firm in capturing a larger market share and capitalizing on the synergies associated with this venture.

A joint venture is a partnership between two or more companies which is usually for strategic reasons or to combine capabilities which is beyond the realm of each individual company. On the other hand, an acquisition involves one company buying a controlling interest in the securities of another company and therefore managing both companies with one management team.
An acquisition/merger is useful when two firms wish to become fully integrated when they have enough commonality that they can perform most of their business/operations together. A joint venture concentrates on a specific area where two firms overlap and can work together to leverage their expertise, but the majority…...

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