The fields applied to Modern Biotech

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Modern biotechnology has been applied to wide range of fields globally such as agriculture, industry and medicine to genetically modify foods, creating bio-fuels and bio-enzymes and in diagnosing diseases and designing new drugs. With the drug manufacturing processes shifting gradually from chemistry based to biology, by 2025 70% of the conventional therapies are expected to be replaced by bio-drugs as they attack the genetic cause of a disease.

The Indian biotechnology industry is dominated by the top 20 biotech firms contributing to 64% of the country's sales. Companies were operating on products like enzyme to move into molecules, migrants from pharmaceutical and some occupying niche market with specific skill sets. The Indian companies were broadly classified into these three categories and the majority of revenues coming from generics.

A generic drug is a copy of the original pharmaceutical product in quality and safety standards containing the same active pharmaceutical ingredient (API) but less in price because it does not involve R&D, clinical trials and marketing expenses. This is used as a platform to get into drug discovery by all drug companies as there is regular flow of revenue from generics which has a huge market locally as well as in other countries.

MISSION AND OBJECTIVES

With the mission 'to be an integrated biotechnology enterprise of global distinction', Biocon Ltd., started its bio-revolution in India in the year 1978. Under the leadership of Kiran Mazumdar-Shaw, Chairman and Managing Director, Biocon had pursued a sequential growth strategy by adding interlinked businesses which were progressively more complex. Bicon was the 14th largest in the world and the largest in India in 2005.

With a vision of making Biocon into a biotechnology powerhouse, she had consolidated the enzymes which are the building blocks of biotech, ensured regular cash flow by establishing in biopharmaceuticals and created the launch pad for drug development by partnering with global firms. The goal to be in the top 10 global biotech companies with revenue of $1 billion by 2015 means a six fold increase in 10 years. To ensure this, Biocon was getting ready to take the path of drug discovery which is far more risky but far more rewarding potentially.

SWOT ANALYSIS

Strengths:

First and largest biotech company in India and ranked 14th in the world

Large pool of intellectual employees

Core competency in molecular biology, a major differentiator

Ability to scale up an industrial process and to pursue discovery led growth with its fermenting capacity.

Providing quality clinical research services at attractive prices through its subsidiary, Clinegene

Syngene, another subsidiary, takes care of the research process outsourcing business in the areas of synthetic chemistry and molecular biology

In-house R&D team with several filed patents and robust drug pipeline

Strategic partnerships with global biotech firms for development

Debt free and cash rich organization

Able and effective leadership of Kiran Mazumdar-Shaw, Chairman and Managing Director

Weaknesses:

Lack of venture capital

Relatively low investment in R&D

Financial viability to expand the drug discovery activities

Clinegene yet to grow into the capacity of a clinical research organization

Development activities limited to known targets and molecules

Least expertise in commercialization, the final stage of drug discovery and development

Lack of competencies to move from the area of commodities to drug discovery and development

Opportunities:

Many major players outsourcing parts of the value chain to India and China for low cost production.

Global generics market expected to increase as many patented drugs reaching expiry

To develop and increase the capabilities of Clinigene and Syngene to develop the wide spectrum of clinical research and to capture the growing research process outsourcing business

Many venture capitalist eyeing India for de-risking

Broaden the clinical trials and research with large population having wide range of disease

Exploring the unknown targets and molecules

Widen the presence through strategic partnership, mergers and acquisitions

Large potential for exports

Expand the market for statins outside US and Europe

Threats:

Increased competition in the generic drugs space with low prices

Patent protection for statin expiring in 2008 expected to shrink the value of statin in the global market

Risk of failure in drug discovery is very high

Missing link between research and commercialization in the route to drug discovery

Value of currency in internationally and in India

Change in government regulations

STRATEGY FORMULATION

According to Michael Porter, an organization stabilizes itself by leveraging its strengths and they come under one of the two aspects - cost advantage and differentiation. Three generic strategies result by applying the strengths in broad or narrow scope and they are cost leadership, differentiation and focus.

Cost leadership strategy: This strategy is specifically targeted for a broader market and calls for low price with a standard quality. The price could be equal to the average market price which will increase the profits or the price could be below the average price which will increase the market share.

Differentiation strategy: This strategy is followed by producing with unique attributes which are valued by the customers as different from competition. The price could be high because of the uniqueness of the product and there are no substitutes available in the market.

Focus strategy: This strategy helps to achieve either the cost advantage or the differentiation by focusing on a narrow segment of the market. This strategy will help to serve the customers better and create customer loyalty.

RECOMMENDATIONS

Being the largest biotech company in Asia in terms of market capitalization, Biocon's strategy to achieve its goal would be differentiation. Biocon serving its partners and customers in over 50 countries need not be looking at cost leadership or focus strategies. To succeed in the differentiation strategy, the following strengths are pre-requisites which incidentally Bicon already possesses.

Product uniqueness: Biocon is the first company, globally to manufacture human insulin, INSUGEN, using a Pichia expression system. Biocon launches BIOMAb EGFR India's first anti-cancer,   therapeutic Monoclonal Antibody-based drug for treating solid tumors of epithelial origin, such as head & neck cancers. Bicon has more than 150 granted patents for which the Intellectual Property is either shared or owned by Biocon.

Access to Research & Development: Syngene, a subsidiary of Biocon, is a customer research organization offering services for early stage drug discovery and development in the fields of synthetic chemistry and molecular biology. Clinigene, also a subsidiary, offers clinical trials from phase I to V as a research organization and offers international pharmaceutical majors, studies on novel and generic molecules.

Creative and skilled professionals: Biocon employs more than 3500 qualified professionals ranging from biologists, chemists, medical practitioners, pharmacologists, engineers and analysts out which 5% have PhD degrees and 41% of them are post graduates. Syngene unit has more than 150 scientists working on drug discovery, chemical synthesis, and molecular biology.

Concrete Mission: To be an integrated biotechnology enterprise of global distinction. Essential to this mission is excellence in:

- Intellectual asset creation through discovery, research and development

- State-of-the-art manufacturing capabilities

- Internationally benchmarked quality and regulatory systems

- New medical insight through disease specific clinical research

- Customer relationship through outstanding products and services

- Human resource development through training, mentoring and empowering

- Management of research and business partnerships

Reputation for quality and innovation: ISO 9001 accreditation in 1993 and recertification for ISO 9001:2008, Implemented an integrated Environment, Health and Safety management system, USFDA approved facilities, Received a number of CoPP (Certificate of a Pharmaceutical Product) certificates as per WHO norms are the few accolades and accreditations earned by Biocon.

IMPLEMENTATION

The suggested strategy can be presented to the board highlighting the pros and cons of the strategy. The strategy can be implemented through various programs, necessary budgets, and proper procedures. Necessary care must be taken in organizing the resources and obtaining the consensus of the employees before implementing the strategy. The success of implementing the strategy strongly depends on the way it is implemented, which will have a great impact on the organization.

Biocon needs to develop competency in key areas such as building product development pipeline, necessary management skills to execute the process, taking care regulatory compliance, marketing plans and most importantly the required financial resources which will be heavy on Biocon. Generics market crowded with competition and low prices, it cannot be the only source for the route to drug discovery for Biocon. Biocon should create market for statins outside US and Europe.

With more and more major players in international players looking at India for outsourcing the parts of value chain, Biocon should be able to capture the market of research process outsourcing. With many venture capitalists eyeing India, the opportunities are bright for Biocon to take care of the financial requirements. Bicon can gain considerably from strategic partnerships and mergers also.

CONCLUSION

Under the effective leadership and able guidance of Kiran Mazumdar-Shaw, the chairman and Managing Director, Biocon has grown from making enzymes for the breweries industry to diversified fields for almost three decades. With the corporate mission having three-pronged strategy on disease prevention, improved healthcare and child education, Biocon is sure to go a long way in improving the lives of India's rural communities. Bicon and Kiran Mazumdar-Shaw have come a long way and they have a long way to go.

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