- A. Introduction
The subject of our group research was a company that has gone mostly unnoticed by the common eye and does not command the same notoriety that Google, Yahoo and the likes. However, Invitrogen is a global company in the forefront of medical and biotechnology research. With revenues of $1.15 billion Invitrogen provides products and services to pharmaceutical and biotechnology companies, as well as academic and government research institutions.
In this report we will examine this company, including its history and organizational profile as well as financial health. Also, we will highlight an interview with one of Invitrogen senior executives and some remarks from its current CFO.
- B. Organizational Profile
- Company Background
Invitrogen, a medical research and commercial manufacturer was founded through the establishment of a partnership in 1987. After being a partnership for two years it became incorporated by two main leaders coming to the forefront: A graduate of the University of California Lyle Turner, and Bill McConnell. During the company’s earlier years, Turner kept the company going through the financial aid of CEFO and the World Trade Commission. By 1990, Invitrogen began distributing its genetically engineered products to eight different countries and had accumulated 42 employees in: Canada, U.K., Italy, Germany, Switzerland, Japan, The Netherlands, and Sweden. Their product expanded to both the life sciences research market and the commercial market.
Invitrogen states the following regarding their quest and corporate vision: “To discover how life works is the greatest scientific endeavor of our era, holding promise of fundamental improvement in the human condition. Our Quest is to accelerate this search through innovations in science and technologies that expand biological understanding. Success requires passion, intellectual curiosity, and a sense of urgency. We will strive for excellence and act with unyielding integrity in everything we do so that we can serve as responsible stewards in the global life science community.”
In addition, Invitrogen believes that having high values is important for a company, specifically one that deals with human life. Invitrogen believes that “People Make the Difference”; Company strives to hire the most talented and determined individuals that are as interested in making a difference as the company itself. Company also prides itself on being responsible organization and lists its values in the following order:
- People Make the Difference
We hire and develop the most talented people. All of our employees are determined to learn, support one another, and share in the commitment to our Quest. - Responsibility to Do the Right Thing
We meet our commitments and perform with unyielding integrity. We play a leading role in communities around the world. - Innovation to Change the World
We nurture environments where creative people initiate and champion bold ideas to succeed in record speed. - Dedication to Customers
Customers are our lifeblood; we are dedicated to their success. - Excellence in Everything We Do
Our work is fact-based, measurable, and of the highest quality. We are focused on continuous improvement for the benefit of our stakeholders.
In July 2000, the company began to expand when it attained a rival company, Life Technologies. Following this first acquisition, Invitrogen then merged with several companies like: Molecular Probes, Dynal, Panevera, Genicon Sciences, and BioSourse.
After the Life Technologies merger was completed, Invitrogen then controlled almost 40 percent of the market for its kits for gene cloning, gene analysis, and gene expression. During the first year of the merge Invitrogen’s sales increased significantly reaching $630 million. Through major expansions and innovation, Invitrogen successfully accomplished its strategic goals of making their product more available to its consumers. With its recent acquisition of Sentigen in 2006, one can only speculate what new ideas will be used to assist in the ever advancing medical research.
- Nature and Attractiveness of the Industry
Invitrogen appears to be a very organized and reliable service. They describe themselves to be effective, and dependable, with leading-edge products. Their motto: Providing outstanding products and services that advance discovery. They’re very committed to the community and supportive of science education.
The biotech industry is based largely on a recombinant DNA technique. Recombinant DNA is a method of making proteins such as human insulin and other therapies in cultured cells under controlled manufacturing conditions. Herbert Boyer, of University of California went on to co-found Genentech, which today is biotechnology’s largest company by market capitalization. Biotechnology has created more than 200 new therapies and vaccines, including products to treat cancer, diabetes, HIV/AIDS and autoimmune disorders. Biotechnology is responsible for hundreds of medical diagnostic tests that keep the blood supply safe from the AIDS virus and detect other conditions early enough to be successfully treated. Home pregnancy tests are also biotechnology diagnostic products. Clearly, Invitrogen is a company that is responsible for manufacturing our everyday health safety products.
There are two specific focus areas of Invitrogen as far as the nature of the company is concerned. The first focus is DNA & RNA Purification. Purification in that the company makes sure all of its products is clean and perfect for the user/consumer. The second focus is the quantification factor. The company makes sure that every ingredient included in the product is added in with the right proportions. The fact that this information is provided on the site, gives users a sense of security that the company prides itself in these particular areas.
Industrial biotechnology functions have been able to provide for cleaner processes that produce less waste and use less energy and water in industrial zones such as chemicals, pulp and paper, textiles, food, energy, and metals and minerals. Most laundry detergents produced in the United States contain biotechnology-based enzymes. DNA fingerprinting, which is also a biotech process, has dramatically improved criminal investigation and forensic medicine, as well as meet the expenses of significant advances in anthropology and wildlife management? The biotech industry is regulated by the U.S. Food and Drug Administration (FDA), the Environmental Protection Agency (EPA) and the Department of Agriculture (USDA).
- Company’s Current Position and Prospect
Today Invitrogen is one of the Premier suppliers of products that support disease research, drug discovery, and commercial bio-production. With more than 4,300 employees in 70 different countries, such as New Zealand, Argentina, and the United States of America, Invitrogen has become an industry leader. Through offering products, technologies, licensing arrangements, and services for all researchers to complete their experiments more efficiently and effectively, they have obtained more than 900 patents and 500 license deals to complement their own in-house research. Invitrogen today is producing approximately 25,000 products with a mindset that because of their better and faster understanding they are set apart from the rest. Invitrogen’s success is widely contributed to its strengths in additional to recognizing its opportunities and improving their weakness as well as eliminating potential organizational threats.
The strengths of Invitogen come with an understanding of the importance of time and quality for its clients. One of the most important strengths of this company is its wide variety of products that they manufacture. By producing items with quality and variety that extends across a wide spectrum of areas in the science life industry, Invitrogen sets itself apart from other companies. This year, Invitrogen displayed one of its other strengths with the buying of Bio Reliance and Bio Source Europe. After the buying of these companies, Invitrogen then improves and sells the products that came along with the purchase of that company. By doing this there is not only expansion in product ideas and improvements, but there is also the elimination of any more potential competitors. This then allows Invitrogen to take more control of the life science industry. Strength of this company is that they recognize the importance of producing products that will contribute to making their clients research efficient. They do this by producing new products, such as multi-vendor e-procurement technologies, which is the first of its kind in the life science industry. These technologies allow clients to use software where they can purchase products from Invitrogen as well as other vendors instead of having them purchase different orders with each vendor. Invitrogen has shown that it creates products with the customer in mind. All of Invitogen’s strengths lie in their understanding that positive change makes room for growth and expansion which will help them obtain competitive advantage.
With the strengths, however, also come weaknesses. These weaknesses become deficits in the skills or capabilities that prevent an organization from choosing and implementing strategies that support its mission. In reference to Invitrogen, their weaknesses revolve around products, operating expenses, and research and development technical sales. In the past Invitrogen has encountered problems regarding its products. However, this is something that they are continuingly trying to eliminate by focusing more on the area of quality at a good cost. However, because Invitrogen focuses on producing a good product and then selling it at a decent price they have increased operating expenses for both their Biodiscovery and Cell Culture segments regarding, sales and marketing, general and administrated, and research and development; all increasing from 2-12% from the same time in 2006.
Most of Invitrogen’s opportunities lie within strategic partnerships that will enable them to expand their area of research and also products. With resources provided, through partnerships, Invitrogen can broaden their scientific research in addition to product supply. Agreements such as the Biological Defense System, enables Invitrogen to expand its company’s bio-security applications while leveraging products and knowledge gained through the company’s pathogen research. Also Invitrogen’s recent partnership with Biosynth enables them to launch rapid detection products for MRSA contamination in hospitals. With this launch MRSA colonies can be found in 8-12 hours rather than the 48 hours need for current culture methods. With these two partnerships alone Invitrogen has opened its doors to more opportunities concerning scientific research, development, products, and sells. With partnerships come opportunities for growth that will enable Invitrogen to continue to set itself apart from the rest. However, with these opportunities also come threats.
The overall threat that Invitrogen faces with its strengths and opportunities is the ability to keep up with the industry. With most manufacturing companies there will always be the issue of supply and demand in the ability to meet a need with enough supply. Because the life science industry is constantly changing, due to new discoveries, Invitrogen must keep up with those changes by providing products that were developed rapidly, but at low cost, and are furthermore reliable. With its many partnerships, buying etc., Invitrogen has to focus on making sure that their financial stability and overall image is not tempered while they are taking advantage of its opportunities and strengths.
- Financial Position and Projections
After reviewing five different financial analysis companies—Reuters Company Research, Rochdale Research, BNY Jaywalk Consensus, Sabrient Systems, and Standard & Poor’s (S&P) – Invitrogen Corporation’s current financial position is described as “moderate,” boasting a medium investment risk status, due largely to its intense competition and because it is heavily regulated. It also has made many acquisitions and is dealing with minor integration issues, which will adversely affect net earnings, even if sales boost. Invitrogen’s share price is valued at $97.01(Dec.2), and its projected 12-month target price is $102, representing a steady growth; it pays no dividends to stockholders.
Sales are expected to increase by 7% to 1.23 billion in 2007, although sales are projected to slow down in the last two quarters of this year, on account of estimated slowdown in pharmaceutical and biomedical spending. Another forte of Invitrogen is that it has low price volatility, meaning its stock price doesn’t fluctuate whimsically, and it is highly liquid and can easily pay its bills – Its current assets total $798 million and its current liabilities total 248 million – roughly a 3 to 1 ratio on the balance sheet. However 75% of analysts label Invitrogen’s stock as a “hold” stock, meaning that it should be held on to, not bought nor sold, although it leans more toward the “buy” side; analysts are cautious because of an actual minor dip witnessed in the last two quarters of 2006, even though information from the first two quarters of operations of 2007 show steady improvements and profitable business operations.
- C. Executive Requirements and Challenges
For purposes of in-depth analysis of the executive requirements and challenges we interviewed several executives from Invitrogen Corporation. The main subject of the interview and this report is Jerry Garcia, Director of Internal Audit in the Invitrogen Corporation. Additional remarks regarding requirements and challenges for company executives are provided by the Chief Financial Officer and the Senior Vice President, David Hoffmeister as well as the former CEO and Founder of the company, Lyle Turner.
When interviewed, Gerry Garcia (Director of Internal Audit) described that one of the most important qualities someone in his position must poses is the integrity and high ethics. Mr. Garcia mentioned that specifically in the auditing department these qualities are the foundation to successful resolution and managing of day to day challenges that occur throughout the company’s many world-wide offices. Mr. Garcia shared with us that although academic training and degree qualifications are important aspects of success for someone in his position, flexible management style and personal communication skills are other very important aspects of his job that he has been able to grow and improve as he worked at the director capacity.
Mr. Garcia mentions that working in the auditing department he has an enormous responsibility to the board as well as the shareholders of the company to perform his job to the best of his abilities. One of the challenges to doing that is the fact that his job requires mobility and consistent travel to company’s world-wide locations thus, using up his time on travel and talking him away from his family, which at times can be burdensome for a young dad. The CFO, Mr. Hoffmeister mentions that although traveling around the globe is a large part of his job also he feels that one of the challenges he faces on daily basis is the fact that he must divide his valuable time amongst numerous projects throughout the day and it is very easy to lose track of priorities at hand. Both executives agree however, that presenting information to the board and the audit committee (as it is the case with Mr. Garcia) is a challenging task. Partly due to the fact that board and the auditing committee have a very short time to grasp many complicated concepts presented, and it is the executives job to ensure that the information presented via visual aids as well as in forms of other data is interpreted in a way that best represents the operational reality for the corporation.
When asked about the typical day in the workplace it’s no surprise that the response from the executives was quite clear on the fact that there is no typical day for an executive of a multinational corporation such as Invitrogen. Although some days are more relaxed than others, a job of an executive in a company the size of Invitrogen is around the clock communication with various counterparts and requires extensive multitasking. Often times Mr. Garcia finds himself sitting on a company plane heading to office in UK or China while communicating with his team in California. He says that due to the fact that his job is of such nature that does not require consistent presence in an office building, sometimes he works from home or other locations where he is able to focus on a particularly pressing matter without being interrupted. According to Mr. Garcia he appreciates the fact that his job at Invitrogen allows him to telecommute and work remotely.
When asked about likes and dislikes about the job Mr. Garcia mentions that part he looks forward to everyday is the fact that he has a unique place in the organizational structure and has a direct channel of communication to the auditing committee and the board of directors. There is no other director of department in Invitrogen that is able to communicate and report directly to the highest levels of organization. Mr. Garcia appreciates the flexibility and personal initiative that this opportunity provides for him as an executive. In addition, Mr. Garcia believes that no one also within the Invitrogen Corporation plays such an objective role as he does. Mr. Garcia goes on to say that he takes joy in seeing when an area of the company that he saw needed improvement took his advice and improved. He also appreciates when individuals involved in the improvement process give him direct feedback and are appreciative of the work done by the auditing department.
Overall both Mr. Garcia and Mr. Hoffmeister value and appreciate the work-life balance that Invitrogen offers to its executives. Although work is often times grueling and difficult the company values its employees and is concerned about their well being.
D. Conclusion
Invitrogen is a major player in global in pharmaceutical and biotechnology research. As described by the executives interviewed company’s vibrant and multinational environment offers an array of challenges as well as tremendous amount of personal fulfillment. Throughout the project we are able to note the effect a company’s overall citizenship has on individual employees. While the research that went into this project was rather difficult, we as a group appreciate the opportunity to explore a new and largely unknown aspect of this particular industry. By being able to speak on the phone to the executives of this company we now have a better understanding of what it takes to run a multibillion dollar business as well as what it takes to be able to balance work with family life. Invitrogen research project and preparation of the report allowed our group to experience multi-tasking and teamwork that was talked about in the interview first hand and that is quite possibly the most important lesson to be learned today.
Invitrogen Corporate Website; http://www.invitrogen.com/content.cfm?pageid=10053
