Tuesday, March 12, 2019
Case BIOCON LTD. Building a biotech powerhouse Reasons for success of Biocon Ltd. in the then(prenominal) Sequential growth strategy Biocon added businesses like enzymes, biopharmaceuticals, research services and medicine development that were interlinked. Consolidation of core skills Biocon had consolidated its core skills in enzymes (known to be the building blocks of biotech), established a footprint in biopharmaceuticals (which helped generate symmetrical cash flow) and partnered with global firms (serving as launching pads for medicine development).Biocons Integrated assembly line Model Biocon, along with its subsidiaries Syngene and Clinigene, handles the entire lifecycle of a drug right from breakthrough to commercialization (it has least expertise in commercialization). o Discovery Syngene molecular Biology Synthetic Chemistry Biocon Microbial Fermentation Biodiversity Bio butt oning o learning Clinigene Clinical Research Clinical Development Clinical Trials o comm ercialisation Biocon Generics, main contributor to revenue Bulk of their revenues came from generics.A generic drug typically cost 20 per cent to 80 per cent less(prenominal) because the product was not burdened with legacy expenses of research, development, clinical trials and merchandiseing. Patent of Pla situationor Biocon secured a U. S. patent for a reactor it developed, known as plafactor. The patent gave the club exclusive global rights to use and license the technology for the manufacture of drugs involving genetically engineered microorganisms in a solid-state fermenter.Diversified and Specialized From the companys origins making enzymes for the breweries industry, Biocon had expanded and diversified into related fields during the next ii decades. Biocon specialized in four broad areas enzymes, biopharmaceuticals, custom research and clinical research. Fermentation offered combative advantage The importance of enzymes for Biocon lay in the fact that the business was a s pringboard for one of the companys competitive advantages. Fermentation was a core skill that offered Biocon a leverage in stage 3 of the value chain of biopharmaceuticals.The companys fermentation capacity gave it both the ability to scale up an industrial process and the platform on which to pursue find-led growth. Threats to sustaining this performance in future more competitive market Every biotech player big and small, was seeking a foothold in generics. The biopharmaceuticals space, in which Biocon had built a niche, was thus enough more crowded and competitive day by day. Changing regulatory Environment The regulatory environment that had made generics such an attractive sphere of influence in India was changing.The organisation of India had introduced a full-fledged patents regime. In the past, the Indian government had granted patents for the process of manufacturing a drug, not for the drug itself. Patent security system of Statins Biopharmaceuticals represented 80 per cent of Biocons turnover, with the production of APIs for statins write up for 45 per cent of revenue. Statins would lose patent protection in 2008 in the United States. As a result, the dollar value of the global market for statins would shrink from $22 billion to $3 billion.There were in addition determine pressures from low-cost Chinese competitors. Commercialization Relative to the companys otherwise activities Biocon had the least expertise in this final stage of drug discovery and development. Investments were being made in creating the manufacturing capacity for industrial scale-up. Commercialization would also require compliance with manufacturing standards, deployment of a sales force and development of expertise in marketing and promotions aimed at physicians and end-customers.Greater rent on Biocons financial resources Biocon had operated for a long time in the realm of commodities, characterized by business-to-business sales. Making the transition to drug disco very and development would involve growth competence in several key areas building a portfolio of promise drug candidates to move through the development pipeline, project management skills to urge on this process, regulatory compliance, manufacturing and marketing. The need to develop capabilities in these areas would place greater demand on Biocons financial resources.