Genentech Case

It was November 2004 and David Ebersman, senior vice president of product operations at Genentech, was digging through spreadsheets as he was flying back to his company's headquarters in South San Francisco. He was returning home from a quick trip to check in with Genentech's biotech manufacturing plant in Porriño, Spain. He was pleased to see that the Spanish plant was successfully producing Avastin, Genentech's promising new cancer drug. Avastin had been approved by the FDA in February 2004 for treatment of metastatic1 colorectal cancer, and nine months later it was being prescribed to nearly half of the colorectal cancer patients in the United States.

As Ebersman settled into the flight, he started to think again about all of the other cancer patients that might benefit from Avastin. Building on Avastin's success in prolonging survival for patients with colorectal cancer, the drug was now being tested on other forms of cancer, including breast, lung, and ovarian, which collectively impacted more than 300,000 Americans each year. If the drug proved beneficial for a significant portion of these patients, Genentech may need to expand its capacity in order to meet the increase in demand. Recently, the company had entered into two contract manufacturing relationships and broken ground on a new cell culture production plant scheduled to be ready by 2009, however the company could still need to expand capacity further. The possibility of creating such a powerful drug was exciting, but everyone at Genentech knew that there was no guarantee that Avastin would work well for the types of cancer for which trials were currently underway. Until all of Genentech's clinical trials were completed over the next five years, there would be no way to know how many cancer patients could benefit from Avastin. Furthermore, it was impossible to know how alternative cancer drugs from other companies might fare in their own clinical