Why Has Biocon been so successful?
Bioconis a fully integrated biopharmaceutical company located in Bangalore, India thatis focused on biopharmaceuticals, custom research and clinicalresearch.
They have fivesubsidiary companies that include Syngene, Clinigene, Biocon Biopharmaceuticals, AxiCorp,and NeoBiocon.
Biocon,Syngene and Clinigene together employee nearly 3600 biologists,chemists, medical practitioners, engineers, and general administrators.
Biocon delivers productsand solutions to partners and customers in over 50 countries.They are the largest biotechnologycompany in India.As of 2008, Biocon was ranked as the 7
largest biotechcompanyin theworldbased onthenumber of employees.Biocon was founded in 1978 as a joint venture betweenBioconBiochemicals Ltd. (BBL)of Ireland and an Indian entrepreneur, Kiran Mazumdar-Shaw.
When Mazumdar-Shaw sawBBL being acquired by Unilever plc and ICI Ltd., she held onto her stock and formed BioconIndia.Since its inception, Biocon has evolved from an enzyme manufacturing company to afully integrated biopharmaceuticalenterprise.
Theyhave received numerous accolades throughthe years for such achievements as the first biotechnology company to receive ISO 90001certification in India, first Indian company to manufacture and export enzymes to the US andEurope, first Indian company to receive US funding for proprietary technologies, and only thesecond Indian company to cross a market capitalization of $1 billion on the first day of listing.Mazumdar-Shaw, the co-founder of Biocon,remains the chairman and managing directorof Biocon.Sheand herhusband John Shaw own over 60 percent
of the company’s stock. Not
only hasMazumdar-Shaw accepted numerous awards through the yearsforthe success of Biocon, she has received numerous awardshighlighting her own successes(to includereceiving
one of India’s highest civilian
honors,alifetime achievement award, business leader of the yearinBiotechnology,andBestEntrepreneur).
Biocon’s success began at its inception with Mazumdar
Shaw’s sequential growth
strategy for the company.Each business she addedto the company addedto the mission of Bioconby providinga steppingstone toward making Biocona biotechnology powerhouse.
These “stepping stones” included consolidatingBiocon’s core skills in enzymes, establishing afootprint in biopharmaceuticals, and partnering with global firms. Biocon’s successes in these
areas, led Mazumdar-Shaw to pursue an even riskier adventure into the world of drug discovery.Thebulk of Bi
in their early yearscame from their success in generic drugmanufacturing. Generic drugs typically cost 20 to 80 percent less to manufacturebecause theproductsarenot burdened with legacy expenses of research, development, clinical trials andmarketing (as theoriginalpharmaceutical productswould be).Biocon, like many other drugcompanies, used a large portion of their generic revenue to finance their breakthrough into drugdiscovery. However, increased competition in the biopharmaceutical market, led Biocon to therealization that their success in generics alone, would not allow them to reach their global
Case | HBS Case Collection | May 2007 (Revised September 2008)
by Krishna G. Palepu and Ananth Chepuri
Biocon Limited was facing significant pricing pressure in their cash cow business, that primarily consisted of manufacturing Active Pharmaceutical Ingredients (APIs). To combat this commoditization, Biocon's leadership had chosen an innovation-led strategy. This new strategy consisted of licensing and developing proven molecules from strategic partners to leapfrog competition and create large molecule biologics in India. The company understood that its transition from an API to an innovation-led company focused on new biologics would require patience and a risk-taking mindset. Although there was some commonality in the bioprocessing aspects of both approaches, the regulatory approvals, product development paths, and market-access timelines were dramatically different--almost diametrically opposed. Analyzes Biocon's strategic decisions, as well as the risks and challenges associated with migrating from a manufacturing to an innovation-led enterprise. How would they balance short-term pragmatism versus long-term vision? Do they have the appropriate human resources to scale and innovate? Is their India-centric strategy appropriate, since 86% of their end-market demand is in the U.S., Europe, and Japan? Fortunately, early indications with their innovation-led strategy were showing positive signs and demonstrable results--such as their biogenetic insulin and monoclonal antibody launch in India. Their lead oral insulin project, with a planned $100 million budget, was meeting its milestones and deliverables. Many critical business challenges are detailed in this case. Nevertheless, given their fully integrated business model and significant manufacturing base, the odds are in Biocon's favor to overcome these challenges and lead India's biotechnology revolution.
Keywords: Globalized Firms and Management; Innovation and Management; Leading Change; Growth and Development Strategy; Risk Management; Organizational Change and Adaptation; Biotechnology Industry; India;