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Table of contents

Introduction

1. The theoretical basis of marketing in a company

The modern role of marketing in a company

The role of marketing audit

The practice of applying marketing audit

New tendencies of marketing audit perfomance

2. Analysis of biotechnology market

Biotechnology market description

Market lifecycle stage

PEST-Analysis

Five Forces Analysis

3. Marketing audit results analysis

Company characteristics

Analysis of the internal environment of the organization

Survey analysis description

Recomendations

Conclusion

List of references

Application 1 Interview Transcripts

Transcript 1 General Director

Transcript 2 Commercial Director

Transcript 3 The owner and founder



Introduction

marketing audit biotechnology environment

Nowadays many opportunities exist in the field of Russian biotechnology. A huge number of foreign scientists come to our country to work and receive experience from hi-end projects.

A huge variety of studies are concentrated on the marketing communication mechanism in hi-end medical technologies. When the first DNA testing company appeared in the end of the 20^th century, more and more facilities decided to enter this high competitive market in order to gain the best clients. Hence, the ”Genoanalytika” started its activity on Russian scene in 2002. Notwithstanding, its services are perceived not quite clear due to widespread mass-media and society ignorance. However, there is a big amount of clients on this high-potential market.

Prior research on biotechnology business sphere has addressed a wide range of issues such as the role of science-background and the role of spin-offs in technology commercialization. Moreover, exact firm studies typically address issues of firm survival and growth with little emphasis on how the companies deal with and what type of managerial activity they perform.

The biotechnology branch is a unique area of the global market. The most important tendency here is that the traditional techniques of treatment become less popular while hi-tech innovative ways increase their audience sharply. The important role of such innovative breakthrough technologies is a good seen signal not only on a once view but at all. For example the “Genoanalytika” company (privately held personal genomics and biotechnology company based in Moscow, Russia.) raised up approximately 20 million roubles. Moreover, today, this young and developing company is a good example, for a reason that they provide both B2B and B2C services for their clients while others provide mostly B2B services. “Genoanalytika” has its branches in more than 150 cities across Russia.

Gene-research industry is extremely dependent on the quality of its services. The reason for this dependence is that both B2C and B2B interconnections have an effect on people's health and lives. The other reason is that future demand on such kind of service is fully made from the present satisfaction of the present client and that is why this industry involves best practices, best employees, best managers and best resources to be successful.

However, the company cannot be successful on this market if nobody knows about it. Today marketing plays a great role in company's life and its strategy. In 1999 Philipp Kotler said that Marketing is a critical force that push the company through barriers on the market. Today marketing in a company is considered as a “must-have” tool of being successful. Due to this instance in my paper I will conduct the marketing audit of the “Genoanalytika” Marketing function.

The object of the study is the Marketing activity of "Genoanalytika” company

The subject of this paper is directions of improvement of the marketing activity by "Genoanalytika".

The aim of the study is to develop specific proposals and recommendations on improving the marketing function of the company "Genoanalytika" based on the theoretical and practical research.Tasks that have to be done in order to achieve these goals:

1) To study theoretical bases of marketing activity in the industry and approaches to its improvement;

2) Analyze the marketing environment of the company "Genoanalytika"

3) Conduct interviews with employees involved in the marketing of the company;

4) Conduct the marketing audit for the company

5) Conduct surveys with customers involved in process of marketing

6) Develop proposals on improving the marketing function of the company "Genoanalytika"

To clarify the scope of the project, we need to identify the limitations of study: thin time-frames, novelty and underdevelopment of biotechnology market in Russia

In a period of several years, we faced a number of economic problems connected with a variety of political issues. These factors lead Russian community to the financial troubles. However, the Russian government still donate big amounts of money into Biotechnological industry and so, companies still have place for their maneuvers.

The significance of my work stays on the uniqueness of the biotechnological industry. This market is highly innovative and experimental and also it is an object of today's discussions in scientific area. The significance of this new market still grows rapidly as its innovations are made constantly. Below, I will define and analyze the features and barriers of the biotechnological industry and the role of marketing in it.

In order to achieve my aim of study, I will investigate the modern role of marketing in a company, its practical appliance ability, and possible ways of its development in the future. Next part of my study will include the analysis of environmental factors that have an effect on the company's activity such as rivalry, competitors, barriers of entry, etc. and indoor factors analysis. The practical part of the study is mainly devoted to the company specific activity and features of its internal organizations. The effectiveness of marketing function in a company highly affects on its development and activity strategy. That is why in my paper different types of improvement of marketing functioning will be analyzed. I will consider Kotler's strategies aimed at the quality control enhancement and also I will try to apply lean techniques on the activity of the company.

It is also important to understand correctly all business processes of the company so 3 n-depth interviews with several managers of the company were executed in order to understand problems of the enterprise. This will help me to conclude the present situation and form the recommendations of improving marketing function effectiveness in the company.



1. The theoretical basis of marketing in a company

The modern role of marketing in a company

Marketing is a process that affects our lives. We are consumers, but many of us are part of marketing, as sellers, wholesalers, competitors, suppliers of raw materials and so on. As we know, the concept of marketing is constantly being revised. Marketing defines actions that create value through exchange between the parties. This concept is a traditional definition of marketing (Котлер, 2007).

Figure 1 Marketing participants

While marketing is increasing its influence on the activities of the enterprise, the managers face an important question about the place that should be assigned to marketing in the company. In particular, what is the value of the marketing function, if any, in the organization?

If we go back several years and look at the principles and approaches that were used in marketing at that time, we will see that marketing was viewed not as a function, but as a special set of values and processes, in the implementation of which all other business processes participate.

From this perspective, marketing becomes the work of each member of the organization, while reducing the role of marketing, but significantly increasing its impact on the success of the enterprise. McKenna in one of his articles states: «Marketing's future is not a function of business, but is the function of business» (2007).

Latest empirical literature on market orientation is the deepest evidence of this change in the future. Despite the fact that it was defined in different ways, several empirical studies of business organizations show that an organization-wide orientation toward the market has a positive effect on the financial performance of firms and their new products.

Today, in the process of work, every company, setting new ambitious tasks, simultaneously faces a lot of problem situations inherent in the market economy. The real problem of carrying out entrepreneurial activity was the problem of seeking effective demand. It is not enough to produce goods, it is necessary to organize all the work in such a way as to profit from the sale of this product.

To do this, managers need a clear idea of what the consumer's wants or needs. Typical situations and tasks that need to be addressed (Morgan, 2011):

* Putting a new product on the market.

* Output of the product to new regional markets.

* Decision on investing the project in the absence of accurate information about the market.

* Insufficient effectiveness of promotion and advertising methods.

* Competition.

* Customers expectations about the goods are not true.

* Dissatisfaction of customers with the level of provided goods / services.

* Drop in sales.

* Low prestige of products / services / companies.

* High input costs

Modern marketers consider marketing in two aspects. First, as a system that is focused on tactics and a strategy of active adaptation to market changes. And secondly, marketing is the activity on the market, implemented according to special plans and programs. In terms of development, three main types of marketing are distinguished: distribution marketing (the activity is aimed at the sale of goods, advertising, transportation, etc.); Functional marketing (activities related to the production and sale of goods, price policy, promotion and market research); Marketing management (the concept of managing the creation, production and sale of goods).

The main essence of marketing is that it is not only one of the important directions for improving the management of production and sales of products, but also represents a complex social and economic complex of measures to meet the needs of consumers. Therefore, it is important to consider marketing as the basis for management and planning in the enterprise. Since marketing determines the behavior of an enterprise (firm) in the market, it is part of market relations. However, one of the main problems of a modern manufacturer is management, which is why the system of scientific management of production becomes an integral element of marketing.

Currently, the activities of various enterprises are reoriented to marketing as a concept of market management. This concept is intended not only to create marketing services, but also to change the entire management philosophy. Management of all activities of the organization on the principles of marketing designates the use of marketing as a management philosophy, when all units plan and evaluate their activities from a marketing perspective (Акулич, 2012).

According to the definition of Professor Philip Kotler, marketing management is: "Analyzing, planning, implementing and monitoring the execution of programs aimed at maintaining, expanding and creating beneficial relationships with the buyer to achieve the objectives of the enterprise." (Котлер, 2007) Marketing management is connected with the regulation of demand, and it is connected with the regulation of relations with consumers. The process of marketing management consists of four main aspects: market analysis (marketing research, collection and processing of information about the marketing environment, consumer and enterprise markets), selection of target markets (research of demand volumes, development and selection of the company's strategy, segmentation of the market); The creation of a marketing policy (it includes: the production of goods, the definition of distribution channels, the determination of price policy and the promotion of sales); Implementation of marketing developments.

Marketing management implies the implementation of all management functions, but most often distinguish three main functions: marketing strategies, marketing planning and marketing organization. The organization of marketing is another component of marketing management. To determine the structure of marketing management, it is necessary to establish separate elements in the subject of marketing management, to clarify their relationship and co-ordination in the process of making managerial decisions and their implementation. Such relationships and subordination can be different. All this determines the variety of existing types of organizational marketing structures that include a functional organization built on the principle of responsibility of each group or their employee for the performance of a separate functional task, a commodity organization built on the basis of the division of marketing into separate fortified groups of goods, a market organization built By the principle of division of duties of individuals of a subdivision or their groups for different markets, a mixed (matrix) organization.

After choosing the structure of marketing management, you should perform selection, recruitment and placement of personnel. In accordance with the arrangement, it is necessary to determine the rights and responsibilities of each employee of the marketing management service. The employees of this service, in their practical activities, should necessarily interact with employees of departments and services of enterprise management, ensuring the adoption of the best management decisions that will ensure the most effective entrepreneurial activity of the enterprise (Савчук, 2014). Thus, marketing is one of the fundamental disciplines for professional figures who need to know: how to describe and break the market into segments; How to assess the needs and preferences of consumers; How by means of the price to convey to the consumer the idea of the value of a good or service; How to properly advertise a product or service; How to sell the goods, so that consumers would like to purchase it.

The role of marketing audit

Whichever place a company occupies on the market, its activity implies constant improvement of production and promotion technologies. Providing this continuous movement forward, the company's employees become its hostages: they perform the same functional tasks on a daily basis or in an emergency mode solve the problems that should be solved "yesterday". Sooner or later a thinking manager has a desire to stop, take a breath, look around, evaluate the work done, understand how correctly the direction of development of the organization is chosen and how competently its marketing business processes are built. Is everything done to make effective management decisions, are responsible persons provided with objective marketing information, do they have the opportunity to choose from several options optimal?



Figure 2 Marketing audit content

The most effective way to assess the effectiveness of marketing activities - conducting marketing audit (Шкардун, 2014). Like marketing itself, marketing audit is a relatively new phenomenon for Russia, although most domestic companies have faced the need to manage their activities, focusing on the needs of customers and the situation on the market. The reason that this tool is used in our country extremely rarely, and the top management of many companies does not welcome its application, is very prosaic: such an audit will reveal miscalculations in business management, the responsibility for which must be borne by the management of the enterprise or firm. Who wants to blur his reputation, be disappointed in a seemingly well-established marketing system, and sometimes just cut the branch on which you sit. For the same reason, not all aspects of the firm's activities are subject to the same thorough scrutiny. Often, marketing audit is openly ostentatious, and the lack of an integrated approach to its conduct can be explained by the lack of qualified specialists or the lack of professionalism of outside auditors. Even realizing the benefits of the marketing approach to business, not all leaders who seek to keep pace with the times, successfully cope with the task of good governance. The reason is the lack of information on how efficiently and efficiently the marketing and sales units function. Marketing audit, which came out of management audit and formed as a separate direction less than ten years ago, allows you to collect and analyze such information.

One of the results of the economic crisis in 2008 for Russian marketing was the market's rejection of exclusively performers with a narrow specialization, unable to generate ideas, to show creativity, to put forward proposals for improving marketing business processes (Соловьев, 2010). Such employees are less and less in demand, and the further development of marketing and marketing education will only strengthen this trend. Marketing audit will help to understand, what people work in the profile division of the company, what are their qualifications and potential.

Marketing audit provides an opportunity to stop, take a look at what has been achieved, "sharpen the axe" - formalize and optimize business processes, after which the company will "cut" with more force, more precisely, achieving maximum effect from its activities. For the first time, the definition of marketing audit was given by F. Kotler, who in 1967 described it as "something different and more comprehensive than other marketing control efforts". According to Kotler, marketing audit should be comprehensive, objective, systematic and periodic. Given these characteristics, Kotler formulated the definition of marketing audit that remains relevant to the present time: "A comprehensive, systematic, independent, recurrent comprehensive study of the marketing environment, objectives, strategies and activities of the enterprise to identify problem areas and opportunities, and the development of an action plan for Improve the situation" (Котлер, 2007).

Since then, the authors of most books and publications on marketing audit have focused primarily on the procedure for conducting the audit. In scientific circles there is still no unified opinion on the content of this process. Each author tried to introduce something new, suggested methods and tools that were suitable for specific cases, but did not have a universal character. So, Kotler (in his later work "Marketing Management" (Котлер, 2003)) and Brownley (Brownlie, 2007) pointed to the need to use a set of questionnaires when conducting a marketing audit. They recommended that structured questionnaires be prepared to collect information from relevant internal and external sources. In the book "Marketing Audit" (Wilson., 2014) Wilson suggested using diagnostic questions and presented a checklist of such questions.

In his work he notes: "Marketing audit can not be confused with the revision of the market. Marketing audit is an analytical tool for identifying, evaluating, measuring, motivating and performing actions to achieve better results. "And most importantly: "Audit is a familiar phenomenon in business, it almost always studies what has already been done. Marketing audit assesses and analyzes before decisions are made, it is conducted to ensure that all sources, even those that do not make an obvious contribution to marketing, influence it, are fully involved in order to maximize their potential.» (Wilson., 2014). According to Wilson, the auditor should use the checklist to collect data on the marketing operations of the company, and then evaluate the results in accordance with the criteria (expectations) that were developed for the company and the market in which it operates. In addition to the questions in the book, tables for ranking the answers and special forms are presented. Wilson emphasizes the importance of using benchmarking in the company. The checklist, according to Brownlee, should be considered as a starting point, it needs to be modified to suit the specific situation in which the audit is carried out. The main advantage of the checklist is that its use makes it possible not to lose sight of any important point.

The role of marketing audit in improving the activities of a company

It is very important to understand that there are no ideal enterprises. No matter how successful the enterprise is, it is still imperfect in some ways, there are elements that need improvement.

The purpose of the audit is to identify the mistakes that most affect the efficiency of the enterprise, and determine how to eliminate them (in other words, how to influence certain elements of the marketing system to solve the problems).

The effect of marketing audit is Kotler P., Gregor W., Rodgers W. The marketing audit comes of age //Sloan Management Review. 2011. - Т. 18. - №. 2. - С. 25-43.:

1) the formation of an objective view of the marketing system in the company;

2) identification of the most significant problems of commercial activity;

3) optimization of marketing activities;

4) making balanced, rational, effective strategic decisions;

5) creation of tools for marketing management and evaluation of such activities;

6) defining clear criteria and points of control of results.

A feature of marketing audit is its equal applicability to existing enterprises or firms, to already existing types of business, and to new projects. At the same time, it does not matter whether it is a large or small business

The practice of applying marketing audit

The prerequisites for the creation of such a direction as marketing audit emerged in the US during the period of economic growth (1950-1970), which led to a decrease in the relevance of traditional marketing solutions: competitors began to pursue an active policy regarding the launch of new products, distribution and advertising.

Enterprises were faced with the fact that marketing policy was adjusted almost monthly. At that time, the US market positively perceived any marketing activity. The constant change in the market situation served as a source of both opportunities and problems, which required a periodic reorientation of the marketing activities of enterprises. The first mention of the marketing audit refers to the early 1950's. Rudolf Dallmeier, former CEO of Booz Allen & Hamilton, in 1952 confirmed in the media the fact of conducting marketing checks at his company.

In 1959, the American Management Association (AMA) published a collection of articles on marketing audit entitled "Analysis and improvement of sales activities." In 1967, Kotler gave the first scientific definition of marketing audit. Practical application in the strategic assessment of the market position of the company marketing audit as a method of determining the potential of the company received only in the 1970s.

In Russia marketing audit as an independent commercial direction of external consulting originated in the early 2000s. The impetus for this was the publication of O. Wilson's book "Marketing Audit" and a series of articles by V.D. Shkardun in the magazine "Marketing and marketing research." Until 2003, this service was an integral part of management consulting.

The results of a study conducted among Australian companies indicate a positive relationship between marketing audit and market share increase, with the positive impact of the audit on the market share indicator being stronger than on the financial aspect of the overall business. The authors point out the possibility of conducting similar studies in other countries with a different culture and traditions of doing business. Equally interesting for specialists are the procedures of marketing audit in various industries and markets with different levels of development. In his work "Productivity of marketing, marketing audit and systems for assessing marketing activities. Integration of different points of view " Morgan, Clarke and Guner argue that evaluating the effectiveness of the company's marketing activities (ROI indicator) is crucial when choosing a strategy for further business development. Morgan N.A., Clark B.H., Gooner R. Marketing productivity, marketing audits and systems for marketing performance assessment: integrating multiple perspectives // Journal of Business Research., 2009. Vol. 55(5). P. 363-375. According to the authors, audit represents the first attempt to assess the effectiveness of marketing. However, from the point of view of practical application, this approach is not without serious drawbacks. The problem consists in the lack of sufficiently qualified independent auditors, in the often negative attitude of managers to conduct internal marketing audit, in the lack of information, in the inability to contact top managers on certain issues. All this explains why the practice of marketing audit was not widely used. Thus, we can distinguish two problems that companies that want to use this tool face: 1) the lack of generally accepted, uniform procedures and algorithms of marketing audit; 2) the high cost of this process. Many researchers agree that the modern theory of marketing audit has a number of significant shortcomings. It considers audit not as a systematic control, but rather as a method of identifying problems that does not involve further search and justification of the methods for their solutions. In the specialized literature, practical examples of the use of this tool are rarely found, mainly the authors concentrate on studying the theoretical and conceptual aspects of marketing audit.

Thus, there is a clear deficit of empirical research in this field, focused, in particular, on the practical application of marketing audit, its potential advantages, its impact on the effectiveness of the company's marketing activities. It is necessary to understand the main thing: marketing audit is not a test of the work of the marketing department, but an independent assessment of the state of affairs within the firm and the position of the firm on the market (primarily with respect to competitors). The purpose of the marketing audit is to identify areas in which there are problems or new opportunities, and to formulate / provide recommendations for developing a plan to increase the effectiveness of marketing activities. The most common methodology for marketing audit is finding answers to a series of open questions about the marketing environment, tasks, strategies and operational activities of the firm.

Goals and methods of implementing marketing audit

As mentioned above, marketing audit is an important part of the marketing management process. The difference between marketing audit and actual marketing is that the first is aimed at adjusting and achieving the optimal proportions of the various elements of the marketing mix, i.e. On its actualization, adjusting to changing conditions. The most common methodology for marketing audit is finding answers to a series of open questions about the marketing environment, tasks, strategies and operational activities of the firm. The main objects of study in the audit are the marketing environment and controlled marketing factors (marketing mix) - the so-called basic 4P: product, price, place, promotion. The number of P covered by marketing can be more (now in the foreign literature one can find mention of 13 elements of the marketing complex). In practice, it is necessary to talk about the number of marketing mix elements that the marketing specialists of an enterprise are able to control. We emphasize that this is a real, not formal, control (as is often the case), so 4P is the optimal set of controlled elements that allows marketing (in the face of marketers) to bring tangible benefits to the company. The purpose of the marketing audit is to identify areas in which there are problems or new opportunities, and to formulate / provide recommendations for developing a plan to increase the effectiveness of marketing activities. Marketing audit can be implemented in six ways:

1) self-audit conducted by employees or the head of the marketing department;

2) cross-audit - units (most often marketing and marketing) carry out mutual verification;

3) an audit conducted by higher-level units or organizations is typical for large companies, holdings;

4) the audit conducted by the company's special audit department is especially characteristic for companies with several business lines; The structure of such a unit often includes specialists in the field of accounting and management audit

5) audit carried out by a specially created group (as a rule, it includes representatives of different divisions interacting within the framework of the project activity only during the audit period);

6) an external audit conducted by a consulting company that provides services in the field of marketing audit.

Criteria for a successful marketing audit (Morgan, 2011)

1. Integrity. Audit covers all major marketing activities and is not limited to analyzing certain critical moments. In spite of the fact that audit can be functional, i.e. To affect the specific function of marketing, it is recommended to conduct a comprehensive audit, since there may be a disorientation of the management regarding the real problems of the company. For example, problems with the sale of goods may not be the result of weak training of sales staff or their weak motivation, but a consequence of the poor quality of the product itself and the ineffectiveness of its promotion methods.

2. Systematicity. Marketing audit involves an orderly sequence of diagnostic steps covering the external marketing environment, internal marketing systems and its individual functions. The formulation of the "diagnosis" is followed by the development of a corrective action plan with short-term and long-term proposals for improving the overall effectiveness of marketing activities.

3. Independence. The audit should be objective and not depend on the managers of the company directly involved in making marketing decisions. Of the six methods of conducting an audit, only a self-audit, in which the head of the department uses a special questionnaire to assess the effectiveness of his activities, may not meet the criteria of independence and objectivity, since the likelihood that the manager does not want to "take the rubbish out of the hut" and try to just hide a number of problems. The best audit is carried out by independent consultants who have extensive experience in conducting similar procedures and can devote themselves entirely to this work.

4. Periodicity. Marketing audit should be conducted on a regular basis, and not only when there are serious problems. Many problems arise during the company's prosperity, if they are not diagnosed and not eliminated on time, the consequences can be irreversible. Do not wait for the decline in sales, customer care and other difficulties. It should be audited as early as possible and with a certain periodicity to monitor the change in various marketing indicators.

New tendencies of marketing audit perfomance

As noted in the report "The Future of Audit" (ACCA, 2017), in countries where the audit is still developing, its significance is estimated much higher than in countries with already established practice of audit.

Representatives of developed countries are convinced that, although the process of audit and confirmation is important, it does not allow to receive timely results or to understand in which areas of the company could improve the efficiency of its activities.

Andrew Gambier, head of the ACCA audit and confirmation department, said: "Obviously, according to many, the traditional audit process is not sufficiently effective. Investors want to understand how the company could more effectively eliminate risks or maximize profits. Although extensive audit findings have been recognized in the UK and now this practice is beginning to be applied in other countries, it is believed that the audit should be developed in order for auditors to provide more valuable information on a wider range of indicators.

Traditional methods of audit help to reassure regulators and company executives, but the degree of their utility for investors is steadily declining, and therefore questions arise regarding the future of the audit. Heads of enterprises want to receive information in real time; Why in this case we believe that investors are ready to wait for an audit report for several months?

Audits are not dying yet, but they do need to adapt to the digital age. This was perhaps the key message that emerged from the roundtable discussions globally. There was general consensus that the audit report should reduce complexity, allowing users easy access to the information they need: `Complicated audit reports make it hard for readers to comprehend'.

Auditors should consider the use of modern technologies to ensure high quality and timeliness of the audit and to improve its effectiveness. Such technologies are already used in other branches of business.

Marketing audit is quite a new phenomenon for Russian entrepreneurs, but its usefulness, efficiency and potential objectivity make it a very useful auxiliary tool for the company. This tool can be rightly considered an integral part of the marketing management process, because it can help to improve or reorganize the marketing system in time and, as a result, ensure the long-term prospects of the company's products on the market. Currently, the most relevant in marketing audit are the issues of the quality of its conduct and the related problems related to the training of personnel in the field of marketing. Constant changes in the economy suggest fundamentally new approaches to the training and certification of professional marketers who work or plan to work in the field of marketing audit.



2. Analysis of biotechnology market

Biotechnology market description

The global market for biotechnology consists of the production, development, promotion and marketing of various kinds of products that are related to the sphere of high biotechnologies:

* Reproductive medicine

* Genomics and transcriptomics

* Agrobiotechnology

* Bioinformatics and Systems Biology

* Oncogenetics

* Microbiology

Market volume

The world market of biotechnologies for all the time of observations grew quite rapidly, except the year 2013. The leading US companies, which are mostly engaged in the biotechnology sector (Gilead Sciences, Amgen, Biogen and Celgene) (Marketline Research, 2016)have in recent years increased their market capitalization, which is due, first of all, to the latest discoveries in the field of biomedicine.

Table 1

The World Volume of market in a period between 2013-2016
Year	$ Billion	Growth, %
2013	280.2	8.7
2014	292.6	4.4
2015	334.5	14.3
2016	357.9	7.0 (Marketline Research, 2016)

The World Volume of market in a period between 2013-2016

In 2016 the market received a total revenue of more than $ 357 billion, with growth rates of about 7 percent (Marketline Research, 2016)

Figure 3 Global biotechnology industry value

While analyzing the biotechnology industry, the "red" biotechnologies (biopharmacy and biomedicine), owns more than 60 per cent of the market. However, for industrial biotechnologies ("whites", including bioenergetics) - about 35%, agrobiotechnology ("green") and for environmental ("gray") biotechnologies - the remaining 5% of the world market. Some experts also highlight "blue" biotechnologies - related to the study of the aquatic environment (MOEX, 2015)

Market forecast

By 2020, the market is expected to reach a volume of 532 billion dollars. This will mean an increase of about 48.9 percent compared to 2016.



Table 2

Expected investments in biotechnology market

Year	$ billion	Growth, %
2015	357.9	7.0
2016	383.0	7.0
2017	416.1	8.7
2018	452.3	8.7
2019	490.6	8.5
2020	532.9	8.6 (Marketline Research, 2016)

Experts forecast that the investment boom in the biotech market will continue through the results of 2017. So, in the first quarter of 2016, 30 companies were in the focus of investors' attention on the Wall Street. Among them, we can especially highlight the American Versartis, which develops solutions for the treatment of pathologies associated with human growth hormone: the total amount of attracted investments is $ 126 million.

European investors are traditionally less likely to invest in projects at the initial stages of development. Unlike the USA, in Europe there are practically no specialized funds that are well versed in the peculiarities of the biotech industry (a long period of product development and, consequently, a return on investment) and most investors are "broad profile" players. That is why, during the last few years, there has been practically no significant entry into the European stock markets in the field of biotechnology. On the contrary, investors had an unpleasant impression of the market after the failures of companies such as Renovo, Antisoma or Phytopharm (clinical studies did not bring the expected results). (MOEX, 2015)

However, in early 2016, Circassia Pharmaceuticals, the developer of anti-allergenic drugs (the flagship product CAT-spire - a vaccine against cat allergy), managed to attract an impressive $ 332 million on the London Stock Exchange, which gives hope for a renewed interest of investors in the biotechnology industry in Europe.

The Russian pharmaceutical market annually demonstrates double-digit growth rates in monetary terms. (MOEX, 2015) In 2013 its volume increased by 14% and exceeded 1 trillion rubles (32.8 billion dollars). Biotechnology drugs account for 8.5% or 2.8 billion dollars. At the same time in the world pharmaceutical market, the share of biopreparations accounts for more than 20%. In the next 5 years, the anticipated growth rates of the Russian biopharmaceutical market are expected, and by 2018 the sales volume will increase by 80% and amount to 5.1 billion dollars, equivalent to 2% of the world market.

Volume of investments

The year 2015 was marked by a significant increase in the number of transactions in the biotechnology sector. In 2014 biotechnology companies received a total of 6 rounds of investments, in 2015 this number increased almost 7-fold and amounted to 39 transactions. It should be noted that the main merit of the development of the industry still belongs to state funds and venture funds with state participation. (DSM GROUP, 2014; MOEX, 2015) In 2015, there was only one transaction in the biotechnology sector with the participation of exclusively private capital- Maxfield Capital invested in ZdravPrint, which produces individual or those based on 3D printing technology. At the same time, the amount of attracted investments in the biotechnology sector and the average transaction value decreased by 48% and 44%, respectively, and amounted to 18.2 million US dollars (compared to 35.1 million US dollars in 2014) and 0.5 million US dollars Compared with $ 0.9 million a year earlier). In general, such a decline reflects the general trend in the market, the amount of which in monetary terms has significantly decreased due to the devaluation of the ruble. Source URL: https://www.pwc.ru/ru/technology/assets/e-money-tree-rus-2016.pdf



Figure 5 Volume of investments in biotechnology in a period between 2014-2016

The average size of transactions in the biotechnology and industrial technology sectors is in millions of US dollars.

Thus, most of the investments were directed to companies of the early stage (79% of the total amount invested). Investments in companies at the seed stage and the start-up phase accounted for 20% of the financed money, and only one transaction was recorded with the company at the expansion stage.

Among the reasons for the lack of projects at the later stages, one can mention the long duration of the investment cycle and the capital intensity of investments in the biotechnology sector.

In the industrial technology sector, the number of transactions increased from 10 in 2014 to 15 in 2015. The average transaction value decreased by 14% and amounted to 0.6 million US dollars, however, the total amount of attracted investments increased by 65% and reached 8.6 million US dollars (MOEX, 2015).



Figure 6 Investments Volume on different stages of the firm's lifecycle

It is important to note that 5% of investments were made in projects at the expansion stage. The emergence of investments in projects of the late stages is an important frontier, indicating the achievement of the venture capital market in the sector of industrial technologies of the maturity phase.

In addition, the development of these sectors in seeding stage is mainly due to grants: 79% of the grants granted in 2015 were directed to the development of projects in the biotechnology and industrial technologies sectors. (Marketline Research, 2016)

Profitability

For four years, the biotech stocks sector grew faster and faster, and in the health sector last year a new record was set for the number of IPOs and expenses for M & A (purchase of other companies).

The term of patents for many drugs is coming to an end, so companies in this area are desperately looking for new ideas and ways of earning, as well as actively buying up competitors. The problem is that high prices for drugs can be costly to the industry - this is due to both campaigns to reduce the cost of drugs, and a small number of really successful developments in the end.

Private biotech companies are not so big compared to technology start-ups: in 2014, IT companies managed to get $ 19 billion in venture capital investments, and biotechnology and medical - only 8.6 billion (PWC Global Report Team, 2015), according to the PwC report. On the IPO, the revenue of technology companies was also significantly higher, even if we take away the giant share of Alibaba. But in terms of the number of companies that have passed the IPO, the biotechnology sector is actually ahead of all competitors.

In 2014, 102 IPOs of companies working in the medical field were registered in the USA, 71 of them are engaged in biotechnology (this is every fourth IPO in the country). Record 2013 - 55 IPO medical companies (47 working in the field of biotechnology) - easily beaten.

The average yield of last year's IPO on the first day of trading was 13%, and by the end of 2014 - 21%. Such indicators further fuel interest in the sector and push the quotes higher (DSM GROUP, 2014).

Rivalry

It should be noted some duality of the modern biotechnology market, represented by at least two segments. The difference between them is not yet fully understood, but today we can already talk about the specifics of competition on each of these segments (Бурмистров, 2012). One of them is represented by a combination of sub-sectors, which almost do not compete with each other in the areas of specific deliveries of products or equipment. At the same time, the weakness of competition is determined, first of all, by geographical factors. To attribute a number of sub-sectors of the biotechnological sector to the second segment, where competition is strong enough, is possible when considering their development on the basis of the criterion of investment attractiveness, taking into account the alternative costs of investing. In addition, the biotechnology market is heterogeneous according to the cost criterion, in particular, biotechnologies that do not require high costs for their implementation (low-cost) and technologies that require significant budgets (high-cost) can be singled out as extreme cases.

The markets of the developed countries of Western and Eastern Europe, as well as (as far as possible penetration of competing products), the US, Canada and Japan can be attributed to high-cost. We note that we consider these markets primarily as markets, not production.

The countries of the CIS (except for Russia) are typology and geography at once for several markets. So, the market of Eastern Europe can be attributed to Belarus, Ukraine, Moldova, Russia. On the Asian market in a sub-segment with an average level of development of biotechnology are Uzbekistan, Tajikistan, Azerbaijan. The sub-segment of the Asian market with a low level of biotechnology development includes Georgia, Turkmenistan, Kyrgyzstan, and Kazakhstan (Бурмистров, 2012).

According to the type of goods promoted to the market, the most expensive, rare and knowledge-intensive types of biotechnology are the high-cost segment of the biotechnology market. First of all, these are some subsections of medical and industrial biotechnology, ecobiotechnology, biocatalysis technology, biogeotechnology, biosafety and bioethics technology, biotechnological instrumentation and biocorrelation, and military biotechnology. The low-cost segment of the biotechnology market should include the most primitive, efficient and relatively cheap types. Such biotechnologies are used, in agriculture and forestry, incl. Timber processing, in the food industry, and in a number of other industries.

The division of markets into high- and low-cost countries or sectors, however, does not mean that expensive technologies can not appear in a low-cost market, everything depends on the specific parameters of demand, its subjects and their preferences. In the same measure and on the high-cost segment of the world biotechnology market, not only the most advanced, but also relatively cheap products are being used. The proposed classification of markets is aimed at solving the problem of determining the most profitable and potentially promising areas of biotechnology production for promotion to this segment of the market.

Along with the classification of segments of the world market of biotechnologies that we considered, it is possible to offer others. So, for example, by the nature of purchases of products, machines and equipment of biotechnological production, as well as the biotechnologies themselves in the "kit" with the equipment supplied, the entire world biotechnology market can be divided into two segments - regular and situational. Within these segments, to the purchased products of biotechnological production biotechnology, etc. Absolutely different requirements are presented.

In the regular market, quality and low-cost after-sales service and the resource of supplied machines and biotechnological production units also play a role. The purchase price can be very significant, but it is important for the buyer to ensure low operating costs for the machines and mechanisms offered.

For domination, or at least a stable position in the world market of biotechnology, this, of course, is not enough. Russia can not yet compete with the Western powers because of the lag of 10-15 years from developed Western countries, which was the reason for the underfunding of biotechnology science in 1991-2005 (MOEX, 2015). Let us note that today some steps aimed at overcoming the backlog have already been made purchases.

Market lifecycle stage

Based on the data obtained during the analysis of the relevant literature (Котлер, 2005), we will analyze the stage of the life cycle of the biotechnology market. To describe the stage, we use the model of Michael Porter, which described it in his works back in 1980. Porter believed that the intensity and degree of competition is very dependent on the level of maturity of the market, and therefore it sets its own competition rules in the industry. That is why the company must accurately represent the extent to which the market is developed for the formation of the most effective development strategy. For clarity, I'll give the criteria by which you can determine the stage of the life cycle of the market:

Table 3

Market lifecycle Criteria

Market lifecycle Criteria (Marketline Research, 2016)
· The Emergence of the Market · * Growth rate high · * Competition is low · * There are no substitute products · * New technology · * Penetration is low	Market growth * Growth rate high * Competition is low * Substitute goods are * Technology is borrowed * Penetration is low
· Maturity of the market · * Growth rate is low · * Competition is high · * Substitute goods are · * Technology is open · * Penetration high	· Market Downturn · * Drop in sales · * Competition is high · * Replacements · * Technology is open · * Penetration high

If in this context we consider the biotechnology market, then by what I have described above, it becomes clear that the industry is on the edge of highpeak development. The industry is striding with leaps and bounds. At the moment, there are quite a few competitors on the Russian market, because companies that are in the market prefer to find their own unique profile, which nobody is engaged in, so that competition is weak. There are absolutely no substitute services on the market, or they give a result with an insufficient level of accuracy.