Cambridge Laboratories: Proteomics

Cambridge Laboratories is essentially a fee-for-service provider of laboratory tests. It spends less than 0.5 per cent of revenues on research and development and holds relatively few patents for a biotech company. It now has an opportunity to invest $5 million to establish a joint venture with an Australian proteomics company that operates on a drug discovery (royalty) model. The founder of this company believed that his technology could eventually result in the discovery of new drugs that would generate significant royalties. While the proteomics firm has superb technology, some of the intellectual leaders in the field on its staff, and partnerships with some impressive companies, its technology is yet unproven. Cambridge Labs is also concerned that its existing relationships with big pharmaceutical companies could be jeopardized if it begins to take an intellectual property position in proteomics. In addition, the Australian company consists primarily of PhDs in molecular biology, while Cambridge Labs is dominated by business executives whose primary focus is generating strong financial returns for shareholders. The cultural differences between an Australian science-oriented laboratory and a publicly traded American outsourcing company become apparent during the negotiation phase of the joint venture proposal. Students are asked to evaluate the joint venture and consider whether the cultural and strategic differences can be reconciled.