Management Theory and Practice (15EHSO402)

Assignment – 1

Name: Simran.Hiremath

Branch: Biotechnology

USN: 01FE15BBT041

Case Study – 1

Innovations in the Biotech and Pharmaceutical Industries in India

Biotechnology is an emerging sector in India. It accounted for just 2 percent of

the global biotechnology market in 2003. However, it is estimated to grow
exponentially over the next five years, with an expected global market share of
10 percent. India has been leveraging its strong information technology (IT)
base, human expertise and low cost research and development (R&D), to
establish and strengthen its presence in the global biotechnology market.
Biotechnology is believed to be the next major driver of growth in India, after
Information Technology in the 1990s. The Government of India (GoI) has taken
special initiatives to promote India's biotech industry.

The GoI has more than doubled the biotech research Plan outlay, from Rs 6.22
billion in the Ninth Plan (1997-2002) to Rs 14.5 billion in the 10th Plan (2002-
2007). Apart from funding, the GoI has eased the regulatory framework by
approving genetically modified crops and recombinant-DNA products (rDNA);
as well as ethical stem cell research.

In 2002, the GoI made changes to the Patents Amendments Act (second
amendments). These changes were intended towards making Indian patents
comparable to WTO and TRIPS. Inventions relating to the method of treatment
of plants are to be made patentable. Patent protection has been made available
for micro-organisms; earlier, all life forms were excluded from patent
protection. The term of a patent is 7 years for food and drugs, and 14 years for
others. The government intends to make changes in the terms of patents in order
to bring them in line with the TRIPS agreement, in which the term is set at 20
years from the date of application for a patent. Other than the GoI, some state
governments have also taken initiatives for the development of biotechnology in
their states. Andhra Pradesh (AP), Karnataka, Tamil Nadu and Maharashtra
were in the forefront. In 2000, the AP government set up the Genome Valley to
host almost all the major players in the field of biotechnology. It declared an
area of approximately 600 sq. kilometres as the Genome Valley.

The AP government aimed at providing high quality infrastructure at a

reasonable cost with integrated services to biotech manufacturing units by
setting up a series of Biotech Parks. One of the parks that were set up was the
ICICI Knowledge Park (IKP); this was done in partnership with ICICI Bank.
IKP has been leasing out bare and ready-to-use modular laboratory units each of
3,200 sq.ft. area as well as plots of land for setting up customised R&D centres.
IKP has also been providing a range of infrastructure and administrative support
services to create a congenial stress-free environment. Tamil Nadu was
planning to set up biotechnology enterprise zones to use the bio-resources
available with the state. The Maharashtra government also has been promoting
biotech parks and R&D centers. The Karnataka government has formulated a
biotechnology policy for the promotion of the biotechnology industry. It set up
the Institute of Bioinformatics and Applied Biotechnology (IBAB) in
partnership with ICICI in the year 2001.

The Evolution of the Industry

The history of biotech industry in India dates back to 1896 when the Plague
Research Laboratory was established by Dr.Waldemar Mordecai Haffkine in
Mumbai. In 1925, it was renamed the Haffkine Institute.

Biocon India Ltd

Biocon India Ltd. (Biocon) was established in November 1978 by Kiran

Mazumdar Shaw, as a joint venture with Biocon Biochemicals Ltd. of Ireland.
It started out as a manufacturer of industrial enzymes, and evolved into an
integrated biotechnology enterprise focused on the development of
biopharmaceuticals, custom research, clinical research and enzymes.
Biocon had two subsidiaries Syngene International Pvt, Ltd. (Syngene) and
Clinigene International Pvt, Ltd. (Clinigene). Syngene provided chemistry and
molecular-based custom research services in early stage drug discovery and
development.

Shantha Biotechnics

Shantha Biotechnics (Shantha) was founded by Varaprasad Reddy (Reddy) in

1993. He was the main promoter together with Yusuf bin Alawi Abdullah, the
then Foreign Affairs Minister of Sultanate of Oman.

Looking ahead

The consumption of biotech products in India was estimated to be $1.5 billion

by 2007 and was likely to grow to $4.5 billion by 2010. Industry experts believe
that the brain drain in these areas may slow down as India is developing the
infrastructure and policies to facilitate the growth of biotechnology.

Solution of case study:

1] Keywords

Innovation, Pharmaceutical industry, Biotech industry, Reverse Engineering,

TRIPS, Genome Valley, Biotechnology Enterprise Zones, Bioinformatics,
Nicholas Piramal, Value Chain, Shanta Biotech, Biocon India Ltd., Kiran
Mazumdar Shaw.

2] Facts

1. Understand how the Biotech & Pharma industries are evolving in India.
2. Understand the relationship between the Biotech & Pharma industries
3. Understand the innovations in both the industries
4. Learn about the competencies developed by certain companies in both the
industries
5. Learn about the growth opportunities for both the industries

3] Conclusion

In India, the pharmaceutical industry is an established industry, whereas the

biotechnology industry is in the nascent phase and has been recognized as a new
driver of growth. There are more than 150 biotech companies in India and
established pharmaceutical companies are also diversifying into biotechnology.
The report takes a look at the Pharma & Biotech Industries in India; how they
have evolved, the relationship between the two industries, the innovations that
have taken place in these industries, the emerging trends and the opportunities
for the future and how the government is facilitating its growth. The report
examines the competencies that India has developed in the Pharma & Biotech
industries. It explores how these companies are endeavouring to provide better
healthcare products at better prices through their expertise in pharmacology and
biotechnology, and also provide high quality outsourcing services to
international clients.

Case study – 2

Software and IT Services in India

According to the National Association of Software and Services Companies

(NASSCOM), from 1997 to 2002, the Indian Information Technology (IT)
industry's revenues grew by 120% from $5 billion to $11 billion. During this
period, several IT companies in India achieved global recognition as end-to-end
IT solutions providers, ranging from basic software development to IT
consultancy. Prominent names in the industry included Tata Consultancy
Services (TCS), Infosys Technologies, Wipro, Satyam Computer Services and
HCL Technologies. The industry also comprised relatively smaller IT
companies such as i-flex Technologies and Ramco Systems (Ramco), which
specialized in niche IT segments like banking and manufacturing software. The
IT industry grew rapidly following the liberalization of the Indian economy in
1991. It made a small beginning with companies providing enterprise software.
Indian software companies started by undertaking off-shore assignments and
were soon offering value-added services. Slowly, the companies graduated into
making their own products, both for domestic needs and market abroad several
companies, primarily in the US, decided to outsource coding assignments to
India in their bid to reduce manpower costs. They were attracted by the English-
speaking workforce in India, who could write programs at a much cheaper rate
compared to those in their home country. During the initial years, the work done
by the Indian companies was confined to writing proprietary software for
foreign companies. However, as their operations expanded, they enhanced their
project management capabilities. In the mid and late 1990s, the
telecommunication infrastructure in India was strengthened, coupled with the
decreasing telecom costs. Off-shoring became very economical for foreign
companies. With this, more and more foreign companies started depending on
India for services including installation of software packages (e.g. SAP),
offering IT consulting and carrying out R&D to develop new products. Several
major Indian software companies like Infosys, Wipro and TCS started offering
IT consulting to cash in on the experience gained over the years in the industry.
Along with this, the companies also started offering specialized services such as
architectural design. A few Indian players were also concentrating on setting up
state-of-the art, front- end consultancy firms in the West. Commenting on the
emergence of Indian IT companies on a global platform, Jayant Sinha, a partner
in the Delhi office of the strategic-consulting firm, McKinsey & Company, said,
“It happened in a stealthy fashion. For a long time, the likes of IBM, Accenture
and EDS ignored the Indian IT-services companies as simply capturing the
labour arbitrage between India and the West. They took their eye off the ball,
and when they looked up, the Indian companies were suddenly right behind
them. These [Indian] companies are really starting to inflict some hurt on the
global multinationals." Notwithstanding the optimism, a few analysts felt that
the Indian companies still had a long way to go to meet the strength of IBM in
IT services, including consultancy (Refer Exhibit I). The significant growth in
revenues earned by Business Process Outsourcing (BPO) services in the past
couple of years resulted in the emergence of several small and medium
companies in India. Moreover, several large companies like TCS and Satyam
started offering BPO services to cash in on the boom.

The Indian IT Software Industry:

I-Flex:

Based in Bangalore, i-flex operated in the Banking, Financial Services and

Insurance (BFSI) segment of the software industry. The company started as an
Offshore Development Agency (ODA) for Citibank in 1989. The operations
continued until 1992, when Citibank spun off its software operations to create
Citicorp Overseas Software India, which later emerged as i-flex. I-flex
differentiated itself from other software companies by focusing on developing
unique banking products. Unlike most companies in the industry, which focused
on offering small-time services like writing software codes, i-flex decided to
develop its own unique banking products and services.
Ramco Systems:

Headquartered in Chennai, Ramco focused on consistently upgrading its

product offerings in tune with changing customer and industry requirements.
Established in 1989, the company emerged as a global provider of enterprise
solutions. The company, over the years, specialized in developing Enterprise
Resource Planning (ERP) products.

Infosys:

Infosys is one of the most successful companies in the Indian IT software and
services industry. This can be gauged from the fact that during 1999 and 2004,
the company registered an eight-fold increase in its revenues from $121 mn to
$1.06 bn. Among the IT majors, Infosys was known for its relentless customer
focus and extending its relationship with them to a new level by entering into
specific partnership agreements.

TCS:

While Infosys stressed partnering with clients and serving them better, TCS
extended customer relationship to the next level – developing relationships with
the customer's customers. For instance, hardware vendor Compaq (prior to the
HP-Compaq merger) was one of the major customers of TCS. Two of its
products – Compaq NonStopTM and Himalaya TM systems arena were
developed by TCS.

Embedded Systems:

According to the International Data Corp (IDC), the global market for
embedded systems (ES) and devices was worth $1 tn in 2003. Of this, the
embedded software, which activated the hardware, was $21 bn as per Business
world estimates. Analysts felt that there was a huge untapped potential for
making several innovative embedded system devices like pace makers, which
are embedded in weak hearts.

BPO:

The BPO market in India witnessed significant growth since the early 2000s.
According to the market research firm – Gartner Inc, the BPO market is worth
$1.8 bn in 2003-04, an increase of 38% over $1.3 bn in 2002-03. Gartner has
predicted that by 2007, the market will be worth $13.8 bn. In mid-2004, India
was the global leader in the BPO and ITES industry with 70% market share. In
view of the huge growth opportunity in the BPO industry, several leading IT
services companies in India have joined the BPO bandwagon.

The Challenges Ahead:

In several segments within the IT sector, Indian companies are acquiring global
competencies and giving a tough fight to competitors across the world. In BPO,
several new segments with high growth potential are slowly emerging. Despite
the promising potential, Indian IT companies face several challenges to sustain
growth rates.

Solution of Case Study:

1] Keywords:

Software Industry in India, IT services Industry in India, BPO Industry in India,

Innovations in IT Sector, i-Flex, Ramco Systems, Infosys Technologies, Tata
Consultancy Services (TCS), Embedded Systems.

2] Facts:

1. Study the trends in the IT software services and BPO industry in India.
2. Examine the competitiveness of the leading and niche players in the IT
industry.
3. Understand how smaller companies in a highly competitive software
industry can grow by focussing on the niche segments of the industry.
4. Understand how large IT companies can use their expertise gained over
the years to add value in their clients businesses.

3] Conclusion:

The report discusses the growing importance of Indian IT companies in the

global software services and BPO industry in India. It examines the
competitiveness of Indian companies in various segments of the industry
including enterprise software, embedded systems, engineering design services
and Business Process Outsourcing (BPO). It discusses how, within the industry,
smaller focussed players like I-flex and Ramco Systems have carved a niche for
themselves by concentrating on key verticals such as Banking, Financial
Services and Insurance (BFSI) segment and developing globally successful
products. The report explains how bigger IT companies in India like Infosys
Technologies and TCS are strengthening relationship with their overseas
customers. It also examines the challenges faced by the Indian IT companies
and the BPO industry.