Running Head: Group Case 2

Group Case 2

Biocon India Group

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Introduction

The paper shall delve into Biocon, the Indian Pharmaceutical company which started as a drug

and enzyme manufacturer and slowly progressed into an all-inclusive healthcare product

manufacturer firm. The paper shall provide key insights on the distinctive competencies of the

company, its market competitors and where it stands in the market, a list of the competitive

advantages which makes it stand out and lastly few recommendations for the future

improvement of the company’s business.

Body

1. Distinctive Competencies

Biocon had started with a completely new approach of developing drugs and enzymes which

its competitors did not use. It also segmented to various other fields and transcended into new

realms in the healthcare industry.

Some of these distinctive competencies can be provided as below:

1. Solid state Fermentation: Revolving the initial success of Biocon in its erstwhile days,

where its capability to re-create a unique process of fermentation which was prevalent
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among the Japanese countries. The company used a simplified process of fermentation

which accompanies a better control with reduced inefficiency as well as waste. Biocon

used these resources to create enzymes which can be sold to the healthcare market

(Thite, 2014). Infact Biocon was the first company to use the process of solid state

fermentation for producing healthcare products. Some of the statins it launched includes

Lovastatin, Provastatin, Simvastatin and Atorvastatin etc.

2. Biological and Chemical Research: By early 1990, the scientists of Biocon had been

developing substantial abilities on not only in manufacturing and brewing but also in

chemical as well as biological researching. Hence Syngene became a new business of

Biocon as a separate unit. It was the first CRO in India to provide services to the biotech

and the pharmaceutical companies, specifically international in the fields of molecular

biology, chemistry as well as informatics. The company also gives substantial volumes

of reagents, target molecules as well as custom molecules for early stage drug

development and discovery.

3. People and Manpower: Biocon India had a collaborative culture with significant values

like trust, openness and collaboration. The company prioritizes a team of key scientists,

senior leaders as well as lab employees who closely collaborate to discuss ideas and

exchange views and opinions with colleagues from Biocon (Suryanarayan, 2003).

4. Clinical service trials: The company offers a series of services in clinical trial services

to recognize the development of drugs especially for new drugs.

2. Identification of Company Competitors

The key competitors of Biocon includes Sun Pharma, Cipla, Piramal Enter, Ranbaxy and

Lupin.

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("Biocon Competition, Biocon Comparison with Competitors", 2018)

1. Ranbaxy: It is an Indian pharmaceutical company with its year of inception in 1961.

Till the year 2013, Ranbaxy had been into export of its pharmaceutical products across

almost 125 countries before its acquisition by Sun Pharma. The company has its

manufacturing units in 8 countries. It is a subsidiary company and the key people

includes Arun Sawhney is one of the key persons of the company.

2. Sun Pharma: The company was established in the year 1983 and is a public company

traded as NSE SUNPHARMA. The founder of the company is Dilip Sanghvi and its is

headquartered in Mumbai, Maharashtra. The company’s key products include generic

drugs and Pharmaceuticals.

3. Lupin: It is the 10th largest generic pharma company based on its revenue across the

world. The company was established in the year 1968 by Desh Bandhu Gupta. It is

headquartered in Mumbai, Maharashtra. The present CEO of the company is Vinita D.

Gupta.

4. Cipla: It is a biotechnology and a pharmaceutical company in India with its

headquarters in Mumbai, India. The company has been in the development of medicines

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for treating several arthritis, cardiovascular diseases etc. It is a public type company

and traded as NSE: Cipla. The company’s year of inception is 1935 and was founded

by Dr. K. A Hamied. The present chairman of the company is Umang Vohra ("Biocon

Competition, Biocon Comparison with Competitors", 2018).

5. Piramal Enterprises: Erstwhile the company was denoted as Piramal Healthcare

Limited and is a diversified company with its headquarters in Mumbai. The company

was founded in the year 1988 and is a conglomerate with key people including Swati

Piramal, Ajay Piramal etc.

3. Competitive Advantage over company competitors

The kinds of Competitive Advantage which can be applicable for the competitors of the

company includes as below:

a. Innovation: Biocon was its first of its kind in India to simplify the complicated process

of fermentation and use it to healthcare market. With the help of this technique the

company has gained a foothold in Canada, Eastern Europe, Mexico and even in South

East Asia (Jain, 2013).

b. Product Differentiation: Not only manufacturing healthcare products using solid state

fermentation process, Biocon’s competitive advantage also lies in its key abilities to

discover drugs and undergo a research development process. Recently, it has been heard

that the company will be launching an oral insulin along with several oncology drugs.

This shall be hitting the market within the next 5 years and shall eliminate the injection

of insulin. Apart from its Research and development, the company has as well

progressed to include Clinical Trials as one of its key services under its new subsidiary

called Clingene.

c. Intermediate business Model: Biocon had been using an intermediate business model

of diversification and blockbuster. It is because the company shall be launching a

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blockbuster drug with a few years which has been forecasted to produce a substantial

level of sales for a few drugs and generating funds which shall involve a high cost of

treatment. The business model as well includes a horizontal integration which means

acquiring extra activity of business at same level (Suryanarayan, 2003).

d. A talented workforce: Biocon has a team of key scientists, senior leaders as well as lab

employees who closely collaborate to discuss ideas and exchange views and opinions

with colleagues from Biocon. The efficient workforce at Biocon helps in creating new

ideas and concepts which can foster the innovation of the company in its new product

development in the healthcare industry.

e. Organizational Structure: Biocon Limited is divided neatly into 3 main concerns

including Clingene, Syngene and Biocon. The company called Syngene is mainly

involved with an early clinical lead molecule based discovery, while Clingene takes

care of the clinical Development segment. Only Biocon is indulged in manufacturing

of enzymes for healthcare products using the solid state fermentation process. This clear

segregation, helps the organization to channelize its operations better and more

efficiently. Un-necessary divisions causes confusions and unavoidable inefficiencies in

the organization’s administration and management (Jain, 2013).

4. Porter’s Five Forces Model

a. Power of Suppliers: Benefits of volume occurs. There is a local availability of inputs

standards. Due to several suppliers, there are low switching costs. The Suppliers will

be able to go for a forward integration. The cost of Raw materials make nearly almost

50% of the overall expenses.

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b. Threat of substitutes: There are no substitutes for the kinds of medicines manufactured

by Biocon. However Biotechnology remains as a persistent treat for the products of

synthetic pharma (Suryanarayan, 2003).

c. Industry Competition: It is highly competitive. The top 5 players have nearly

18%market share. There is also a lower fixed cost as well as high working capital.

d. Barriers to Entry: There is relatively low barriers to entry. The policies of the

Government are supportive for entry purposes, however regulation of price and issues

pertaining to it exists. There is also an existence of economies of sale, product and

proprietary technology will exist soon.

e. Power of Buyers: There is no bargaining power of end consumers. The identity of the

brands exists, but lies only with doctors. There is a less price sensitivity. It is also a high

fragmented market. Hence, the concentration of buyer in the industry is relatively low.

5. Recommendations

The below includes the list of recommendations, which I would like to give:

a. Take calculative risks for Clingene to explore the new market of Clinical tasks

management with clinical trials of safe businesses which are having lower value

b. Buy a new clinical service CRO, which can add relevant expertise as well as client

relationships and at the same time preserve Biocon culture.

c. Using Novel Technologies for discovery of new and effective drugs along with a

substantial usage of in vitro as well as animal data for predicting the pharmacological

drug action, thus diminishing the rates of failure ("Nephros collaborates with Biocon

1", 2016).

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d. Usage of Genomic as well as nano technology knowledge for the development of drugs

with a greater level of acceptance for addressing the needs of personalized medicine.

e. Owing to high rates of attrition as well as regulatory pressure, it can cause a highly

developed legalized framework to secure the patent sales.

Conclusion

The paper has been able to indicate the distinctive competitiveness of the company- solid state

Fermentation, chemical and biological research, people and manpower and lastly clinical

service trials. The key competitors of Biocon includes Sun Pharma, Ranbaxy, Cipla, Lupin and

Primal Enter etc. The competitive advantages of the company includes its innovation,

intermediate business model, talented workforce, organizational structure and lastly includes

product differentiation. The Portal Five Forces model shows that the company has a high power

of suppliers, a lower entry of new comers, a lower power of buyers, a high industry competition

and lastly no threats of substitutes.

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References

Nephros collaborates with Biocon 1. (2016). Membrane Technology, 2016(1), 2-3.

http://dx.doi.org/10.1016/s0958-2118(16)30004-0

Thite, M. (2014). An Interview with Kiran Mazumdar-Shaw, Founder, Chairman and

Managing Director of Biocon. Global Business Review, 15(1), 147-150.

http://dx.doi.org/10.1177/0972150913515981

Biocon Competition, Biocon Comparison with Competitors. (2018). Moneycontrol.com.

Retrieved 5 February 2018, from

http://www.moneycontrol.com/competition/biocon/comparison/BL03

Suryanarayan, S. (2003). Current industrial practice in solid state fermentations for secondary

metabolite production: the Biocon India experience. Biochemical Engineering Journal, 13(2-

3), 189-195. http://dx.doi.org/10.1016/s1369-703x(02)00131-6

Jain, P. (2013). Economics behind the internationalization of Biocon India Ltd. Emerald

Emerging Markets Case Studies, 3(7), 1-20. http://dx.doi.org/10.1108/eemcs-08-2013-0163