Biotech tropicana Journal
Reverse Value Chain: The Biotech tropicana SMARThivGLOBALmos Reversely Engineered Market Niches For the United States Biotech Corporate Giants, In The Developing World
Aboubakar YARI & Venus YARI
Biotech tropicana, Inc, Parakou, Benin
*Corresponding Author: Aboubakar YARI, Bioteh tropicana, Inc, 02 Po Box 1038, Parakou, Benin Republic, e-mail: ayari@biotechtropicana.com
Published Online July 1, 2010
Abstract:
Traditionally, small businesses look for niches in value chains controlled by larger businesses, and generic products developed by smaller companies tend to compete for market, with standard products developed by bigger companies. Here, we describe a "reversed" value chain designed by a small company, Biotech tropicana, Inc, that reversely engineered a "generic” product to instead, create market niches for bigger companies: SMARThivGLOBALmos.
Keyword: Biotech Company; Global Value Chain; Market Niches; Developing Countries; Generic Products; Globalization
Background:
The value chain is a systematic approach to examining the development of competitive advantage. The concept was introduced in the 1980s by M. E. Porter of the Harvard University School of Business, in his 1985 best-seller book, Competitive Advantage: Creating and Sustaining Superior Performance. The chain consists of a series of activities that create and build value. [1]
The value chain model is a useful analysis tool for defining a firm's core competencies and the activities in which it can pursue a competitive advantage, that are cost advantage, and differentiation. Cost advantage permits to better understand costs and squeeze them out of the value-adding activities, and differentiation focuses on those activities associated with core competencies and capabilities in order to perform them better than do competitors.[2] In the Biotech tropicana Systems, we refer to cost advantage as cost factor, and differentiation as complexity factor. [3]
The emergence of the concept of "value chain”, combined with the emergence of Information and Communication Technologies (ICT) have speeded up the globalization of the world economy. " Global Value Chains” have "sliced” the process of producing goods, from raw materials to finished products, into pieces. Each "piece process” can now be carried out wherever the skills and raw materials are available at a competitive cost. Information and Communication technologies permit the coordination of the "process pieces”, from anywhere on the globe. [4]
Since its introduction in the 1980s, the concept of "value chain” has evolved to an independent scientific field. [5;6;7] At its inception, in the 1980s, the business unit was the appropriate level for construction of a value chain, not the divisional level or corporate level. Within the following decade, in the 1990s, the value chain concept moved to that "value stream”, and then to the larger "global value chain”. [5]
According to the initial business unit models of the 1980s, products pass through all activities of the chain in order, and at each activity the product gains some value. The chain of activities gives the products more added value than the sum of added values of all activities. Activities in a typical Porter’s value chain my be divided into primary, and support activities. The "primary activities" include: inbound logistics, operations (production), outbound logistics, marketing and sales (demand), and services (maintenance). The "support activities" include: administrative infrastructure management, human resource management, technology (R&D), and procurement. The costs and value drivers are identified for each value activity. [5]
In the 1990s, The value chain framework quickly made its way to the forefront of management thought as a powerful analysis tool for strategic planning. The simpler concept of value streams, a cross-functional process was developed. [5]
The value-chain concept is now extended beyond individual firms, and applied to whole supply chains and distribution networks. The delivery of a mix of products and services to the end customer will mobilize different economic factors, each managing its own value chain in local value chains. The industry wide synchronized interactions of local value chains create an extended value chain, now global in extent. Porter terms this larger interconnected system of value chains the "value system." A value system includes the value chains of a firm's supplier (and their suppliers all the way back), the firm itself, the firm distribution channels, and the firm's buyers (and presumably extended to the buyers of their products, and so on). [5]
Development practitioners in South America, and the United States International Development Agency (USAID), have also adopted the use of value chain analysis as a means of identifying poverty reduction strategies by upgrading along the value chain. Although commonly associated with export-oriented trade, development practitioners have begun to highlight the importance of developing national and intra-regional chains in addition to international ones. [8;9]
In the Biotech tropicana Systems poverty reduction strategy, we innovate a "three levels” value chain, that we use for guidance to establish our cost (cost advantage) and complexity (differentiation) standards in technology design, to achieve higher competitiveness in the resource-poor settings. Products developed in the Biotech tropicana Systems achieve cost and complexity effectiveness, by adding value at a first technology development level, a second technology implementation level, and a third technology distribution level. Examples of application of the Biotech tropicana systems three levels value chain include SMARThivDRmos, [10], SMARThivPACK [3], and SMARThivGLOBALmos. [11] The systems acquired higher competitiveness in the resource-poor settings, through value adding activities, aiming to reduce cost (Porter’s cost advantage), and complexity (Porter’s differentiation), while improving quality, in monitoring HIV patients in the resource-poor settings.
The United Nations task force on science, technology, and innovation discussed approaches, for developing world firms to enter the global value chain. The task force stated in part: "The global economy is now characterized by the integration of trade but the fragmentation of production of goods and services across national boundaries. The global economy consists of many product value chains, which encompass the full range of activities—R&D, design, production, logistics, marketing, distribution, support services—required to bring a product from its conception to its end use and beyond. These activities are carried out in an unprecedented number of developing and developed countries. Some activities command a higher proportion of value-added than others. To have a chance to climb up the technological development ladder, local firms in developing countries had to first enter the chain and then gradually move up it to engage in higher value-added activities. An analysis of value chain linkages provides insights into how these linkages facilitate or impede technological and industrial upgrading in developing countries. Policymakers in developing countries need to understand how and why existing global value chains are structured and function the way they are and how these chains will change over time. Three variables influence how global value chains are governed: the complexity of transactions, the codification of transactions, and the competence of suppliers. The more complex the transaction, the greater the possibility for global value chains to be organized in one of the three network governance patterns: modular, relational, and captive value chains. Global value chains will be organized as modular supply chains if explicit codification schemes exist to allow easy exchange of complex information between buyers and suppliers and suppliers are competent enough to receive and act on such codified information. If suppliers are not sufficiently competent, buyers may have to keep the activities in-house, leading to more vertical integration, or outsource such activities to a supplier in the captive value chains that have to be tightly controlled and monitored. If a codification scheme in the form of known standards or protocols does not exist, buyers may have to rely on highly idiosyncratic methods based on intensive interaction to work with the suppliers in relational value chains. Value chain governance patterns will change if any of these factors changes. For example, if a new technology renders an established codification scheme lowering the competence level in the supply base, one might expect modular value chains to become more relational. If there are difficulties finding competent suppliers, captive networks or vertical integration would then become more prevalent. Conversely, rising supplier competence might foster a move of captive networks toward the relational type, and better codification schemes might give rise to more modular networks. One should not expect such chains to spread automatically or that the East Asian strategy of plugging into such chains can be adopted by other countries. The value chains that drove the East Asian growth, particularly the electronics value chains, may not be accessible to new entrants. The global high-tech production system is now well established in Asia, and China’s entry is strengthening its regional cost, productivity, and technology base. Future policy should not be based on the assumption that countries in Africa, the Middle East and North Africa, or most of Latin America and the Caribbean will be to enter these chains. Most developing countries will have to identify niches and opportunities in other value chains.” [12] (technology report, pages 128-129).
In the Biotech tropicana Systems, in our quest for linkages to global value chains, we innovate two approaches. Firstly, we adopted and adapted the "center for global” business structural development model, by setting our headquarter in the well established United States Biotech business environment. [13] Secondly, we acquire higher competitiveness, by avoiding competition for market with the United States Biotech Corporate giants, in the developing world, by reversely engineering linkages between our "generic” products and the "standard” products of the giants. Based our market model, introduction of our generic products in a market, will promote the introduction of the products of the Biotech giants, in the same market. Below, we discuss how our reversely engineered value chain achieves higher competitiveness, using our SMARThivGLOBALmos model, for demonstration.
Discussion:
In engineering the SMRThiVGLOBALmos global value chain, we relied on the following premises:
a) The United Nations technology task force findings that : "The value chains that drove the East Asian growth, particularly the electronics value chains, may not be accessible to new entrants. The global high-tech production system is now well established in Asia, and China’s entry is strengthening its regional cost, productivity, and technology base. Future policy should not be based on the assumption that countries in Africa, the Middle East and North Africa, or most of Latin America and the Caribbean will be to enter these chains. Most developing countries will have to identify niches and opportunities in other value chains. [12] (technology report, page 129).
b) The findings by Suzanne Crow, of the Burnet Institute in Australia of "chaotic” distribution of existing standard HIV surveillance technologies in the developing world, [14]
c) The World Health Organization health technology donation guidelines. [15]
An analysis of the premises above clearly indicates that establishment of a successful linkage to a global value chain controlled by larger businesses, is a serious challenge to a small business, in a developing country. The developing country small business will first have to understand the structure and function of the global value chain, and then applied the acquired knowledge to compete for a niche with other small businesses, particularly with developed world small businesses, having market interest in the developing world. Small businesses located in the developed world, acquire a selective advantage over those in the developing world, not necessarily for being better, but just for being located in the proximity of the larger businesses that controlled the value chain. Proximity facilitates access to inbound logistics of the larger business, such as production chains.
Instead of going through such multiple levels competition with small and larger businesses in the developed world, in the Biotech tropicana Systems, we reformulate the hypothesis. Instead of going to the larger businesses to compete for a niche, so what if we have the larger businesses coming to us to compete for a niche. We did exactly that, by applying knowledge in development. (technology report, cover page). Two major factors determined, who go to who: market control, and incentives. Larger businesses controls the market through value chains, they design. Larger businesses also provide incentives through both inbound and outbound logistics, they have the means to secure. Both small and larger businesses are for profit organizations, that are driven by market opportunities. Therefore, a small business can have the larger businesses look for niches in its value chains, if it can control the market, and create incentives for the larger businesses. The Biotech tropicana Systems achieves market control and incentives generation, for HIV surveillance technologies in the developing world, by reversely engineering its owned value chain: SMARThivGLOBALmos.
To acquire competitive advantage and higher performance, SMARThivGLOBALmos took advantage of the structural organization of the Biotech tropicana Systems. The location of the Biotech tropicana Corporation headquarter into the United States well established Biotech environment confers SMARThivGLOBALmos both inbound and outbound logistic advantages. These logistic advantages are further reinforced by the "center for global” structural organization of the Biotech tropicana Systems, by providing choice of additional operational sites for raw materials and services at the best competitive cost, on a global scale, so as to increase added value.
SMARThivGLOBLmos creates incentives for the United States Biotech Corporate Giants, by engineering linkages between its generic products and the standard products of the giants. In designing our products, we always deliberately introduce linkages, in a manner that introduction of our products, in a market will promote the introduction of the products of the giants in the same market. We will lose some share of the market to the giants, but in return we will acquire a competitive advantage in accessing the logistics of the giants. We applied this approach in designing our SMARThivGLOBALmos HIV surveillance technologies distribution model, for the developing world. The major breakthrough in SMARThivGLOBALmos platform is the attainability principles for large scale "individual centered” HIV drug resistance monitoring, in the resource-poor settings, as established in the SMARThivDRmos component of SMARThivGLOBALmos. SMARThivDRmos is an HIV drug resistance monitoring system, adapted to the economy and expertise level of the resource-poor settings. [10] We design our SMARThivLOBALmos model so as to create grounds for a symbiotic coexistence, between SMARThiVDRmos, and the standard HIV drug resistance monitoring systems developed by the United States Biotech Corporate giants. Two US Biotech giants, Applied Biosystems (Alameda, California), and Bayer Diagnostics (Tarrytown, New York) hold the monopole on these systems. Bayer Diagnostics recently acquired the biggest competitor of the US giants, the Canadian Visible Genetics, Inc. The highly automated standard HIV drug resistance systems, well established in the developed world for years, failed to conquer the developing world market. The high cost and high complexity of these systems deter funders of the developing world HIV patients monitoring program, who simply avoided them. The Biotech tropicana Systems SMARThivGLOBALmos creates grounds for the introduction of these systems, in the developing world. To achieve the introduction of standard HIV drug resistance monitoring in the developing world, the Biotech tropicana Systems invented three major innovations in the SMARThivGLOBALmos model: a) a departure from the traditional country ownership, for the innovation of a regional value chain that crossed country borders, in monitoring HIV patients in the resource-poor settings, b) a departure from the traditional public ownership, for a new private ownership, in monitoring HIV patients in the resource-poor settings, and c) the achievement of symbiotic complementarities between the Biotech tropicana Systems generic SMARThivDRmos, and the standard HIV drug resistance monitoring systems. Compared to the DNA hybridization based generic HIV drug resistance monitoring systems, such as the Biotech tropicana Systems SMARThivDRmos characterized by low throughput, high sensitivity and specificity, limitation to known HIV drug resistance mutations, low cost, and low complexity, the standard HIV drug resistance monitoring systems are characterized by high throughput, low sensitivity and specificity, ability to detect new mutations through DNA sequencing, high cost, and high complexity. The Biotech tropicana Systems achieve a symbiotic coexistence between its generic SMARThivDRmos and the standard HIV drug resistance, by incorporating the standard systems in the SMARThivGLOBALmos regional value chain model. As indicated in the major characteristics, each system (generic or standard) has its strengths and its weaknesses. By mixing the two systems in one value chain, the weaknesses cancel each other, and the strengths add up to increase the overall value added of the chain. By extending the chain beyond national economies, to regional economies, the cost burden of the standard systems is diluted, generating Porter ‘s cost advantage. Furthermore the low cost of the generic systems, will further dilute cost, thereby permitting a large scale implementation of HIV drug resistance monitoring in the resource-poor settings. Privatization creates grounds to overcome the expertise barrier, as the US giants operate in the private sector, and will be willing to provide the necessary expertise, if the chain creates market for their systems, in areas these systems previously failed to penetrate. In incorporating the standard systems, in our SMARThivGLOBALmos value chain, we loose share of the markets to the giants. However, we create grounds for higher performance in monitoring HIV patients in the resource-poor settings. Expertise input will generate expertise spill over, that can be harnessed, organized, and re-invested beyond health technology innovation toward food security, bio-energies, and environment innovations; areas in which the Biotech tropicana Systems operate.
To achieve higher performance, our model violates the country ownership principles endorsed by the two biggest donors in the fight against HIV/AIDS in the developing world, the Global Funds [16], and the United States Presidential Emergency Plan for AIDS Relief (PEPFAR). [17] However, this violation should not be a major barrier to the implementation of our value chain. Both the Global Funds, and the PEPFAR implementation frameworks contained windows to accommodate the private sector.
SMARThivGLOBALmos is a reverse value chain, engineered and controlled by a small company, Biotech tropicana Systems, that create market niches for the United States Biotech Corporate Giants. SMARThivGLOBALmos further achieves higher performance by optimizing the implementation of existing standard HIV surveillance technologies, in the developing world, so as to comply with the World Health Organization (WHO) technology donation guidelines. Our explorations showed that, for years, numerous standard HIV surveillance technologies have been introduced in the developing world, often in violation of the WHO technology donation guidelines. Many of these technologies are "left-behinds” from clinical trials conducted by developed world laboratories, in the developing world. Some are introduced as donations from developed world governments, and non governmental organizations. Others are paid for through various programs such as the Global Funds, on behalf of developing world governments. Many of these systems failed to operate beyond the implementation evaluation testing level, either because of lack of expertise, or lack of funds to secure expensive kits. We aligned the implementation of these "abandoned” standard technologies, with the WHO guidelines, through expertise input, using the expertise nucleus created in connection with SMRThivDRmos HIV Drug Resistance Interpretation Unit (BTI-DRIU). [10]
The Biotech tropicana Systems SMARThivGLOBALmos platform is a three "slices” (levels) value chain: a first technology development level, a second technology implementation level, and a third technology distribution level .
At the first technology development level, SMARThivGLOBALmos acquires a competitive advantage in market control, for HIV surveillance technologies in the developing world, by demonstrating superior performance at the technology development level, through accumulation of added values at different sub levels of its value chain. SMARThivGLOBALmos is a component of the Biotech tropicana SMARThivTECHS, a platform of component technologies designed to achieve individual centered "three tests”, in monitoring HIV patients, in the developing world. SMARThivGLOBALmos achieves market control through a highly competitive adaptation of its component technologies, to the developing world economy and expertise level, at the first technology development level. [3] SMARThivGLOBALmos acquired competitive advantage primarily through its SMARThivDRmos component. SMARThivDRmos is an HIV drug resistance monitoring system, for the developing world. SMARThivDRmos reduced cost (Porter’s cost advantage), and complexity (Porter’s differentiation), of hybridization based HIV drug resistance monitoring methods, by transferring complex steps to computer execution. [10]
At the second technology implementation level, SMARThivGLOBALmos acquires competitive advantage, by developing the SMARThivPACK "three tests” Combo kit the (pack) [3], and by inserting the pack into the Life Box, and an Alternative A-Life Box. The Biotech tropicana Life Box and A-Life Box were previously described. [18;19]]. The Life Box is a "close system” designed to be implemented in "precedent free” HIV patient monitoring centers, as a block. The Alternative A-Life Box is an "open system” designed to accommodate existing technologies in a given laboratory, particularly the "abandoned” standard technologies. The expertise nucleus of the SMARThivDRmos HIV drug resistance interpretation unit (BTI-DRIU) provides the necessary expertise for implementation of the A-Life Box. In designing the SMARThivPACK, the major value adding innovation we developed, is the reduction of a three variables equation ( CD4, Viral load, and drug resistance ) into a single variable pack. We first construe a pack containing the tree tests (CD4, viral load, and drug resistance tests). We then move the pack as a single variable along the slices of a typical Porter’s value chain, to acquire added value through cost and complexity reductions, and create grounds for its widespread use, in resource-limited situations. [3] Previous studies considered each test separately, as a single variable. The George Washington University based Forum for Collaborative HIV Research had two separate CD4 team and viral load teams. [20] Simulations of our single variable pack model showed that, just by grouping the three tests into one variable, a number of barriers to achieving our cost and complexity standards cancel each other. Such gains in added value could not be achieved by considering the three tests separately, using the "old way” three variables approach.
At the third technology distribution level, SMARThiVGLOBALmos acquires competitive advantage through extension to a regional value chain, beyond national boundaries. Previous distribution plans, for HIV surveillance technologies, were confined within national boundaries through sponsored country owned programs such as the Global Funds and the United States PEPFAR programs. Confinement within national economies limited, the transfer of complex and expensive standards HIV surveillance technologies, to the resource-poor countries. As previously discussed by Fiscus et al; the economy and expertise level of these resource-poor settings, render the transfer of such complex and expensive standard HIV surveillance technologies, not permissible within the norms of expert set standards. [21] By crossing national boundaries, SMARThivGLOBALmos regional value chain creates grounds for the transfer of these complex and expensive standard HIV surveillance technologies, to the resource-poor settings, within the norms of expert set standards. Extension of the value chain from national to regional economy, dilutes the cost and complexity barriers. The larger regional economies can accommodate the standard technologies, even within the budget of the resource-poor countries. To mitigate expertise level barriers, and any other region specific barriers, we design our SMARThivGLOBALmos to be operated in the private sector, under the Biotech tropicana FACILITATOR support system.
Traditionally larger businesses design and control larger value chains, and generic technologies tend to compete for market with standard technologies. The Biotech tropicana Systems SMARThivGLOBALmos model demonstrates that this traditional balance of forces may be changed from competing interest, to a symbiotic coexistence beneficial to all parties. Our model promotes both technology and expertise transfers. Expertise harnessed from one field, may be extended to additional fields, to promote innovations.
Application extensions will create needs for more, alternative and standard technologies, thereby increasing the developing world technology market, and creating grounds for integrating the developing world into the global economy, not as passive aid recipients, but as active contributors, to the advancement of mankind. The change in the balance of forces introduced by our reversely engineered products, will break the circle of poverty in which the resource-poor settings are trapped, and should reverse the trend toward sustainable development, consistent with objectives set forth in the United Nations Millennium Development Goals (UN MDG), and the United States Millennium Challenge Corporation (US MCC).
Based on our model, the "old way” competing interest between alternative and standard technologies, will be replaced by a "new way” symbiotic coexistence. As developing countries emerged, and innovation in developing countries increased, both contemporary alternative and standard technologies, will loose in selective advantage, for more sophisticated technologies. The ability to innovate more sophisticated and better adapted technologies, will become the driven force in evolution of humanity. The emergence of the Information and Communication technologies (ICT) already renders the traditional country boundaries obsolete, and speed up the globalization of the world economy. New forms of grouping in the human communities will emerge, not driven by the traditional forces such as ethnicity, race, religion, or national origin, but driven by knowledge affinities. A new civilization is emerging, a digital civilization, driven by knowledge.
Conclusion:
We reversely engineered a value chain that alters the traditional balances of forces between small and larger businesses, to reverse the traditional competing interest between generic and standard technologies, for a symbiotic coexistence: SMARThivGLOBALmos.
The short Philosophy of the "old way” versus "new way” competition, is as old as mankind itself. The old way feeds the poor through various forms of assistance. At the turn to the new millennium in 2000, the "new way” in the United Nations Millennium Development Goals (UN MDG), ad the United States Millennium Challenge Corporation (US MCC) are saying: "we don’t want to feed the poor anymore, but teach the poor how to feed himself.” In this new approach, knowledge becomes the driven force.
The Biotech tropicana Systems explorers are the forefront, in turning the visions set forth by the authority in the UN MDG and the US MCC, into reality on the grounds. No force on that planet will overturn this new trend.
Available in Innovation: Applying Knowledge in Development.
http://mcc.gov/
References:
[8] Mitchell, J., Coles, C., and Keane, J. (2009) Upgrading along value chains: Strategies for poverty reduction in Latin America London, UK: COPLA Global - Overseas Development Institute.
[9] Microlinks (2009) [Value Chain Development Wiki http://apps.develebridge.net/amap/index.php/Value_Chain_Development] Washington, D.C.: USAID
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