Final answer:
Orphagenix is employing Porter's Differentiation Focus strategy by developing orphan drugs for diseases with fewer than 200,000 patients, thus targeting a specific niche market and avoiding competition with large pharmaceutical companies.
Step-by-step explanation:
The biotech firm Orphagenix's strategy of developing orphan drugs to treat diseases that affect less than 200,000 people is an example of Porter's Differentiation Focus strategy. This approach involves targeting a specific segment of the market and offering unique products or services that meet the specific needs of that segment. In the case of Orphagenix, they differentiate themselves by focusing on a niche market of orphan diseases, which large pharmaceutical companies typically overlook due to the smaller patient population. By doing so, they avoid direct competition with these larger companies and can potentially charge premium prices for their specialized drugs, as they fulfill a unique need.
To understand why differentiating in this manner can be effective, it's important to recognize the concept of a core competency. Businesses often find more success when they concentrate on a few specialized products or services rather than trying to cater to a wide range of markets, as this focused approach allows for more tailored solutions and branding.