Strategic Management

BIOCON INDIA GROUP CASE

STUDY

Submitted To: Submitted By:

DR. RAMESH BAGLA SHALINI SHOUBHYA
 QUES:- What are the advantages and disadvantages of starting and operating a
pharmaceutical firm in India

ANS :- Advantages: Advantages of starting and operating a pharmaceutical firm in India are manifold,
especially for domestic players. These advantages can be clubbed under the following broad heads

• Diverse population for clinical trials : Clinical trials are a necessary step in the drug discovery and
development chain. Due to its vast population, non-stringent laws regarding clinical trials, low
cost of conducting such experiments and a genetically diverse population, Indian CROs for clinical
trials have become popular with many MNC pharma's

• Low cost operations : Pharma operations, especially R&D, are much cheaper in India and China
compared to USA, Germany, Canada.

• High quality work force : India has several well-renounced research institutions, that produce
quality PhD graduates in the field of biology and chemistry every year. Examples include IISc,
NCBS, CCMB, CDRI, etc. The relative expensive of hiring these Indian graduates is much lower that
the cost of hiring PhD graduates from universities and research institutions outside India. Apart
from this, India also produces a substantial number of pharma- science graduates. Indians also
score in terms of being able to speak English
Disadvantages :

• Weak patent laws : The product patent laws apply for a limited period of time, after which the
products come in the generic domain.

• Ethical issues in clinical trials : significant proportion of the population is uneducated, holding
clinical trials on such people entails many ethical questions. It can lead to tarnishing of the
company image. In the highly competitive Indian pharmaceutical industry and the effects of social
media vigilantes, image tarnishing can lead the company to incur significant losses.

• Highly competitive market : there are already more than 20,000 domestic players in the
domestic market.

• Entry of international players : Since the 2005 product patent act, more MNCs are looking at
India as a viable investment location due to the low cost of manufacturing, high quality work
force and substantial domestic market
 QUES:- Is the Indian CRO market attractive? 

ANS :- The Indian CRO market was and is extremely attractive. The 2002 prediction of Indian
CROs’ share in the global market was predicted at 20%. The reason for the lucrativeness of CROs
in India was that the outsourcing of critical R&D tasks to CROs based here was low cost, work
produced was of high quality, the workers spoke fluent English – making communication much
easier compared to other countries like China, thus freeing the parent company to concentrate on
its core competencies, at a more optimum level of utilization of resources. Indian CROs are
focused primarily on serving the need for bio-equivalence and bio-availability studies in market,
which constituted the low-to-medium segment of the value chain. In the 2000s, few
companies offered services in clinical trials. A large, well established pharma company like Biocon
could very well leverage its name and reputation to lure pharmaceutical MNCs into outsourcing
critical and sensitive, higher valued clinical trial work to Clinigene. In India, very few pharma
companies had their own CROs at the time, compared to foreign countries.
QUES:- What is the best way for Biocon India group to expand

Answer:- In the context of the case study timeline (2000), Biocon India lacked presence only in the animal
studies and clinical trials segments of the typical drug development and discovery value chain. The senior
board was on the look for more opportunities to expand, preferably in line with their philosophy of “earn
as you learn”, with the ultimate goal of making Biocon a fully integrated drug discovery and development
company.

Short-term : The first most logical direction to expand in, thus, was the field of clinical trials, with the setup
and expansion of Clinigene. Biocon was still a long way from developing its own original drug formulations,
but developing expertise in clinical trials through contracts from other organizations would only serve
Biocon well in the long term, when the time was ripe for the development of their own formulations.
Biocon had three alternatives regarding the working of Clinigene

• As a subsidiary that took low value work from other organizations, thus making it less capital and effort
intensive to setup and maintain. As and when the need arose, and relevant capabilities were developed,
Clinigene could pick up higher value work. But the pharma industry was growing at a rapid pace, especially
in the services outsourcing sector. Not capturing the opportunity fully would not provide a substantial
return on the investment and pain involved in setting up Clinigene, which was already 2 years old in 2000.
.
. Long-term :
• Biocon should look beyond Syngene and Clinigene in the long term for expansion, and focus on
innovation and build upon its core competencies
• Look out for Strategic Partners in developed countries to boost the revenues, by breaching
untapped international markets
• Partnering with incubators and research centers
• Consciously try to build a brand
• Start work on the development and release of its own drugs and formulations. This was not a
viable option for the short term because of the resource intensiveness of the process, and the
DPCA and IPA acts.
• Setting up operations in other states of India to benefit from the attractive sops provided by
different states for the pharma industry. Overall though, in the short-term, passive-aggressive
expansion of Clinigene, with carefully crafted plans to take care of all contingencies, seemed to be
the way forward for Biocon.