1

Page

Program & Batch:

PGDM (2016-2018)

Term:

SECOND

Course Name:

ORGANISATIONAL DESIGN AND DYNAMICS

Name of the faculty:

Dr. D.P. SAHOO

Topic/ Title:
Original or Revised Write-up:

ORGANISATIONAL STRUCTURE AND

INNOVATION WITH BIOCON STUDY
ORIGINAL

Group Number:

10

Contact No. and email of Group

Coordinator:

9958058151
Mkt16shubhamjain@imt.ac.in

Group Members:

Sl.

Roll No.

Name

160103129

Shubham Jain

160103108

Rahul Sinha

160103113

Ruchit Ralli

160103118

Sandeep Pbs

160103124

Shashank Vashist

160103

Soumik Debnath

16103144

Tarigopula Sri Charan

16103149

Utkarsh Goyal

16103162

Sahil Dhingra

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Introduction

Biocon is the first Indian biotech company established in Bangalore, was a fully integrated
healthcare company that delivered innovative biopharmaceutical solutions. Biocons cost
effective drug development capabilities and manufacturing capacity helped them from
discovery to development of drugs and commercialization. Indias globally competitive cost
base and human resource to invest in R&D was leveraged by Biocon.
In 1974, Kiran a fresh brew-master from Ballarat College, Melbourne aspired to follow her
father, Indias first master brewer, working with the UB Group. But, being male-dominated
job she could best have worked in the quality assurance not in operations. At that time, she
accepted an offer in Scotland. Around that time, Les Auchincloss, founder of Biocon Ireland,
contacted her to know whether she would be interested in manufacture and market industrial
enzymes in India. Kiran stayed back after this offer. In November 1978, Biocon was formed
with Rs 1 lakh seed capital as a 70:30 joint venture of the Irish company and Kiran
Mazumdar. Initially, the company manufactured and exported papain, a plant enzyme and isin
glass, a marine hydrocolloid, these were key products for the brewery industry. Later, Kiran
made it a full-scale biotech company.
Kiran moved her focus towards niche, enzymes manufactured by surface fermentation. These
were imported from Korea and Japan at that time. Biocon decided to learn but did not have its
own R&D. In 1984, Biocon focused on R&D to develop enzymes for the Biocon Group
worldwide, using solid state fermentation process technology also known as koji
technology.
In early 1980s, Kiran met a student, Shrikumar Suryanarayan from the IIT Madras. Two years
later after completing MTech from IIT Delhi he met Kiran and she offered him to start an
R&D for Biocon. He accepted and designed the first fermenter in Biocon. This new reactor
could contain micro-organisms and could mix contents while fermentation was in process.
Things could be added and taken out at any time without disturbing the process, and it
consumed less energy. This was named Plafractor. The new fermenter helped in bulk
production and critical fermentation.
Biocons master of solid state fermentation became their strategic weapon. They were making
drugs of US$20 billion through fermentation.
In 1988, Biocon Ireland was sold to Unilever. Biocon had wide range of products into
specialised food enzymes, bakery enzymes and textile enzymes. In 1997 Unilever sold its
specialty chemicals business worldwide to ICI. As the partnership was becoming a roadblock
in diversification Kiran decided to move independently. In 1989, Helix Biotech Limited was
incorporated as a Pharmaceutical Biotechnology Company, which merged with Biocon in
1997.
Biocon had a unique way to blend chemistry and fermentation and started providing
pharmaceutical and biotechnology majors customised solutions in synthetic chemistry and
molecular biology. This was due to their reputation for meticulous IPR protection.

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On 27th March 2000, Plafractor got US patent, which helped Biocon to license the technology
and gave proprietary position in pharma manufacture at low operational cost.
In the late 90s, Gordon Ringold told Kiran about the possibilities of clinical research.
Clinigene was incorporated in December 2000 as a wholly owned subsidiary of Biocon to
conduct longitudinal clinical studies in selected disease segments. Clinegenes laboratory was
the first Indian laboratory to receive certification from the College of American
Pathoogists(CAP), required by large pharma companies to provide clinical research services.
Clinegene, specialised in Phase I-IV clinical trials and studies, using databases in diabetes,
oncology, lipidemia and cardiovascular diseases.
The core competency of Biocon was in fermentation and a substantial majority of their
products were produced through fermentation techniques. They also used synthetic chemistry
techniques either entirely or in combination with fermentation techniques. Biocons growth
strategy was driven by innovation in both biopharmaceutical business.
Biocons fully integrated business model spanned the entire drug value chain, from preclinical disease recovery to clinical development to commercialisation. Business in custom
research (Syngene), clinical research(Clinegene) and biopharmaceuticals(Biocon) were the
streams of multiple revenues balance risk, drive innovation, deliver products and accelerate
growth.

Human Capital
The key factor behind Biocons success was the ability to attract and motivate good people.
Key people of Biocon like Suryanarayan were all long timers and were hanpicked by Kiran
Mazumdar. They had been working with the company for so long that it was either Biocon or
nowhere. The Head of Human Resources, Nirupa Bareja, was a doctorate in Marine Biology
and stayed with the company as it had a good atmosphere. Charles Cooney, Professor of
Chemical and Biochemical Engineering at Massachusetts Institute of Technology met Kiran
when he visited Bangalore as Director of Astra Research Centre. Arun Chadavarkar, a
doctorate from MIT, was the brightest student of Cooney was going to join Unilever as his
father had worked in Hindustan Unilever. But he joined Biocon to head its technical function.
Murali Krishnan, President of Biocon Group, Finance, was helping Biocon in 1981 and he
was simultaneously studying for Chartered Accountant. Although he joined the company and
did not finish his CA degree. Ajay Bhardwaj, headed the Marketing Department, came to
Biocon from Max India with a salary cut. Anindya Sarkar, a Ph.D. in Microbiology from
Kolkata, got a call from Biocon. He joined the R&D division and was heading the Intellectual
Property Division. Kirans husband John Shaw was a 30-year veteran at Coates Viyella
Group and was surprised to see such an open culture in Biocon. He quit Coates and
immediately joined Biocon to head the International Business Division.

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Inorganic Growth

Biocon emerged as an integrated biotechnology enterprise having presence in

biopharmaceuticals, enzymes, custom research and clinical research. In terms of revenue
Biocon was Indias largest biotechnology company. Biocon became the first Indian company
to be approved by US FDA in 2001 for manufacturing lovastatin, a cholesterol-lowering
molecule and Biocons proprietary bioreactor. Plafractor was granted a US and worldwide
patent.
Biocon became the first company worldwide to develop human insulin on a Pichia expression
system in 2003. Biocon established Biocon Biopharmaceuticals Pvt. Ltd.(BBPL), a joint
venture with the Cuban Institute CIMAB, to develop and market a range of MAbs and Cancer
vaccines. BBPL leveraged the expertise of CIMAB in developing and manufacturing
immunotherapy products which used to be largely imported into India. This partnership
resulted in the launch of Indias first anti-cancer drug, BIOMAb-EGFR.
INSUGEN, the new generation bio-insulin was launched by Biocon in 2004 which was
manufactured in Asias largest human insulin plant. After this it got into strategic partnership
with Vaccinex, to discover and develop humanised antibodies focused on cancer,
inflammation and autoimmune diseases. This helped in combining unique capabilities of
Vaccinex to discover fully human monoclonal antibodies using its proprietary antibody
discovery technology and Biocons expertise in clinical research and biologists
manufacturing. This helped two monoclonal antibodies, BVX-10 and BVX-20moved into
pre-clinical stages.
In 2005 Biocon signed a product licensing agreement with Bentley Pharmaceuticals Inc. for
its intranasal spray formulation for Insulin administration. The license agreement helped in
covering 85 countries which granted Biocon exclusive as well as co-exclusive rights to
develop and market throughout Asia, Africa and the Middle East. In addition, Biocon also
entered into a long term supply agreement with Bentley under which Biocon provided
Bentley and its licensees, with a competitive supply of Insulin for worldwide markets.
Biocon signed a Memorandum of Understanding (MOU) with Karolinska Institute, Sweden,
to collaborate in research and research-education initiatives. Karolinska Institute was
Swedens leading Medical University. The institutes reputation helped to nominate The
Nobel Prize for Medicine and Physiology every year. As a result, the firms partnered in
product development, joint PhD studies at Karolinska Institute, joint research programmes.
These were sponsored by Biocon in association with Karolinska Institute.
The year 2006 brought great achievements for Biocon. Biocon inaugurated Biocon
Biopharmaceuticals, Indias largest multi-product Biologics facility at Biocon Park.Biocon
also made a licensing agreement with multinational healthcare company, Bayer Health

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Care(BHC). This gave exclusive marketing and trademark rights for INSUGEN for the
Chinese market.
Biocons subsidiary, Synegene successfully got a cooperation agreement with Innate
Pharmaceuticals AB, Umea, Sweden to jointly develop, manufacture and market virulence
blockers to counteract bacterial diarrhoea disease.
Biocon gave an exclusive license to Ferozsons Laboratories Limited for marketing Indias
first anti-cancer drug BIOMAb EGFR in Pakistan. Biocon decided to choose Ferozsons
Laboratories Limited as its exclusive licensee based on the leadership position that company
had in oncology.
In 2007, Biocon and Neopharma, a n Abu Dhabi-based pharmaceutical company signed an
MOU to establish a joint venture to manufacture and market a range of biopharmaceuticals
for the GCC (Gulf Cooperation Council) countries.
Biocon launched it Nephrology Division and a comprehensive portfolio of renal therapy
products. Syngene and Bristol-Myers Squibb (BMS) entered into research partnership.
A MOU was signed with Deakin University, Australia, to establish Deakin Research Institute
in Bangalore.
In June 2007, Biocon decide to focus on biopharmaceuticals and divested enzymes division
for US$115 million to Novozymes. Biocon and Abraxis Bio Science, entered into an
agreement wherein Abraxis licensed rights to develop a bio-similar versio of G-CSF
(Granulocyte-Colony Stimulating Factor) in North America and the European Union.
Biocon acquired 70% stakes in a German pharma company, AxiCorp GmbH for 30 million in
2008. This acquision helped Biocon to market and distribute a range of pharmaceuticals
including biologics, bio-similars and other products in Germany and Europe.
The same year Biocon entered a strategic partnership with IATRICa. Inc. to co-develop an
exclusive new class of immunoconjugates for targeted immunotherapy of cancers and other
infectious diseases.

Biotechnology Industry in India

Biotechnology is defined as the use of technology to exploit the biological systems and
processes. It covers any techniques which uses living organisms to make or modify products,
to improve plants or animals or to develop micro-organisms for specific use. With
development of the modern technology conventional techniques of producing biotechnology
products using traditional microbiological fermentation have evolved. The modern
technology involves the use of cell fusion techniques, genetic engineering, structured based
molecular design and recombinant DNA technology and hybridoma technology.
India had a small market share of the global biotech market, but had the capabilities to
become number one player. The consumption of biotech products was expected to quadruple

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within a decade. India had been practicing the conventional biotechnology for decades and
modern biotechnology was new in India. In 1999, the total biotech market was valued at $1
billion, which was just 1.5% of the global industry, but was expected to grow to $4.5 billion
by 2010. Human health biotech accounted for 60% of the total sales, while agro-biotech and
veterinary-biotech together accounted for 15% of the total revenue and medical devices,
contract R&D and reagents and supplies constituted the remainder 800 companies which
were operating in all sectors of biotechnology, but only 25 were working in the modern
biotech sectors.
Indias rich biodiversity, varied species of flora and fauna, varied climatic zones, world class
IT service, large population in terms of demography, large agricultural sector was a perfect
environment for the development of biotech companies. India also provided huge market for
products and services.
India with its rich human capital, which was strongest asset for knowledge based industry,
and large English-speaking base. India produces roughly 2.5 million graduates in IT,
engineering and life sciences, about 650000 postgraduates and nearly 1500 PhDs qualified in
biosciences and engineering each year. India was progressing in all the modern techniques
like bioprocess engineering, skills in gene manipulation of microbes and animal cells,
recombinant DNA technology of plants and animals. India had the strength and capabilities in
this industry and many biotech companies choose India as their strategic location which
provided a large market for products and services and also provided low-cost qualified
workforce to work for in the R&D division.
The role of Indian Government had been very crucial in the development of Biotech sector
from very beginning and there were large number of R&D institutions set up by the
Government.
The strengths of India and the rising public interest in this sector, growing investment by
traditional business houses, tax incentives and the significant foreign investment, helped
Indian biotechnology to emerge as significant player on the global biotech map.

Crystal Gazing
Kiran Mazumdar Shaw directed the company through many changes, first moving from being
enzyme maker to stains and when competition came from Chinese competitors she shifted
focus to bio-pharma. Now she wants to develop her three main businesses-Biocon, Syngene
and Clingene and the company as a major biopharma company.
Kiran is aware about the fact the real opportunities lies in the US and western Europe, where
huge investments are done in pharmaceuticals every year. But, she also knows that entering
these markets are difficult because there as regulatory charges are high and there are many
large competitors, much larger than Biocon. Therefore, she feels Biocon wont be able to
make money for at least 4-5 years in the US market and along with that there will be huge
competition from big players like Agen and Biogen who are also trying to enter Indian

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market. This leaves only one option of acquisitions. Kiran is certain that she will not go to
market to borrow money but may leverage the borrowings completely. Considering that
Kiran has successfully steered her company through previous evolutions, would you bet
against her?

Innovation and Organisation Structure

Administrators say their organizations utilize numerous organisational ways to
deal with drive innovation and that the achievement of these endeavours relies
on upon coordinated methodology and C-level support. These are among the
discoveries from the most recent McKinsey review on innovation, one which got
some information about the organisational innovation structures set up at their
organizations, the vital and monetary destinations these structures have set, and
the general population and procedures required in accomplishing development
results.
Almost 66% of administrators report wide innovation portfolios that incorporate
more than one sort of organisational model, and about half say their
organizations utilize isolate development works that attention on growing new
business openings, sit at organization central command, and are under three
years of age. While 86 percent say the structure of their different capacities
emphatically impacts results, the outcomes recommend that the most essential
components for achievement are the degree to which development is
incorporated in corporate procedure and to which organization pioneers bolster
and connect with innovation endeavors. These different capacities are destined
to report specifically to the CEO and to associate formally with C-level pioneers,
yet over a wide range of auxiliary models and rates of accomplishment in
meeting budgetary objectives, respondents refer to similar perpetual difficulties:
to be specific, rivalry with transient needs and coordination of the capacities'
vital destinations with whatever is left of the business.

Evolving Innovation function

In general, the outcomes show that organizations depend on different
hierarchical ways to deal with execute innovation: 62 percent of officials report
the utilization of numerous auxiliary models to drive development endeavours.
Inside this portfolio, respondents frequently refer to the utilization of
independent innovation functions,2and the biggest share (33 percent) rank the
making of new items and administrations as their organizations' essential centre
throughout the following one to three years. Their reactions about the different
structures uncover some key similitudes that portray today's innovation work:
one that spotlights on new business openings, is collocated at organization

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central command, was built up under three years back, and reports
straightforwardly to the CEO.3

Today's innovation capacities are probably going to assume liability for new
thoughts through to prototyping while reporting in-market triumphs also; 51
percent say their capacities have effectively propelled no less than one in-market
item, administration, or business. Fundamentally, however, there is no
unmistakable accord among administrators (and their organizations) on which
hierarchical model is perfect (Exhibit 1). Just 4 percent, for instance, rely on upon
development hatcheries, which were basic in the years of the website blast.

The outcomes additionally show that development capacities' area, funds, and
proprietorship have moved after some timeparticularly, between the capacities
set up over ten years back and those that are under three years of age. Among
administrators whose capacities are more established, 46 percent say these
structures sit at organization home office, contrasted and 65 percent at the
organizations with more youthful capacities. More youthful capacities additionally
are likelier to concentrate on benefits (Exhibit 2). Maybe as anyone might expect,
in light of the fact that they have had less time to create and dispatch new
developments, the more youthful capacities have had less market victories: 31
percent with these capacities say they have effectively propelled no less than
one in-market offering, contrasted and 83 percent of those with more seasoned
capacities.

Factors for Success

An innovation function's success is not just a matter of development, however;
while there is continuous civil argument on how isolate from or adjusted to
corporate procedure an organization's way to deal with advancement ought to
be, the outcomes from a few inquiriesand our own experiencecertify that
system (especially one that is engaged, obviously enunciated, and coordinated)
is critical to effective results. At organizations where advancement is completely
incorporated into technique, officials are six times as likely as those without
coordinated system to say their different capacities meet their money related
goals effectively.4More organizations with incorporated methodologies
additionally share hierarchical components over the portfolio (Exhibit 3) a
practice that our experience proposes is a help to development programs by and
large. Furthermore, 57 percent of all respondents (the biggest share) refer to
clear vital centre among the elements that are most vital to their capacities'
prosperity.

However, system remains an advancement challenge for some organizations.

One and only third of officials report that advancement is completely coordinated
in their associations' corporate-level techniques, and almost half say

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incorporating the different capacities' vital goals with those of their centre
organizations is one of their capacities' most noteworthy difficulties.

Aside from coordinated methodology, different achievement components rise up

out of the outcomes. Fifty-six percent of administrators recognize C-level and
initiative support as a driver of progress (second just to clear vital core interest).
The outcomes recommend that this support additionally connections to great
results: 36 percent whose development capacities answer to the CEO say they
meet budgetary targets adequately, contrasted and 27 percent whose capacities
answer to other organization pioneers. Comparative examples hold for the
capacities that cooperate much of the time with the C-level group and whose
pioneers are effectively required in development (Exhibit 4). Of course, the
officials whose capacities have more obligation regarding their esteem chains
say their capacities are more compelling at meeting goals, regardless of whether
they are benefit centred; the capacities in charge of thoughts, confirmation of
idea, launch, and scaling report more in-market triumphs, as well. At last,
officials say topography may likewise attach to achievement. The capacities
situated close ability or target markets have more market achievement and meet
destinations more successfully than others, however they are more outlandish
than the capacities at or close HQ to connect with routinely with organization
pioneers.

Differences in theory and outline

While the outcomes make a reasonable photo of today's advancement workits
practices, victories, and difficultiesthey additionally uncover a few regions of
uniqueness and mirror a bigger philosophical pressure in development. As for
monetary destinations, approach shares of administrators say their capacities
exist to turn a benefit or have no budgetary focuses by any stretch of the
imagination. As per respondents, organizations are part on measuring singular
development execution: 30 percent say their capacities utilize an
indistinguishable execution measurement from whatever is left of the
association, while 32 percent report the utilization of advancement particular
measurements and another 23 percent fall some place in the center. The
quantity of full-time representatives additionally differs, with 35 percent of
officials reporting ten or less full-time counterparts working in their capacities; 30
percent say no less than 51 full-time-proportionate representatives take a shot at
development.

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Reactions additionally wander on the different capacity's monetary goals, which

can be particular to its structure: hatcheries, advancement focuses, and
propelled innovations foundations have a tendency to be utilized as cost focuses
or not set budgetary targets, while new-business improvement capacities,
developing business-openings aggregates, and rising advances gatherings are
guided by benefit. This is steady with the finding that the capacities without
monetary targets, for example, advancement focuses, have less duty over the
development esteem chain; a lion's share concentrate on thought era through
verification of idea or model (Exhibit 5). By difference, those with benefit targets
are likelier to bring their developments through market dispatch and scaling.

Be that as it may, paying little respect to the hierarchical structureand the way
that 86 percent of officials say structure affects their capacities' resultsthese
capacities confront similar difficulties. Respondents frequently refer to rivalry
with the business' fleeting needs and coordinating key destinations with those of
the center business as the most noteworthy difficulties their capacities confront,
paying little heed to their structure, vital center, or capacity to meet money
related goals (Exhibit 6). These are cross-cutting and perpetual difficulties for
both the development work and the association all in all.

Looking ahead

While a lion's share say their different capacities' hierarchical structures

affect results, these capacities confront similar difficulties paying little mind to
structure. This finding reaffirms the exemplary requirement for technique (a key
component for accomplishment) to go before structure when organizations
choose to make new development capacities. Organizations ought to likewise
concentrate on different empowering agents, for example, C-level support, which
the outcomes show can drive achievementand take care to tailor the capacity
to existing organization targets and culture. Organizations can't depend on a
solitary advancement work alone to make fruitful results; it must be coordinated
with the whole association.

Before sourcing the suitable ability to guarantee a constant flow of

development victories, organizations should first set up an unmistakable key
center and collect purchase in from the top-administration group. Officials refer
to key center and C-level bolster regularly as the key variables to advancement
achievement, which adjust to our own experience and give a decent guide to
organizations hoping to extend their own development programs.

Whether or not the different development capacity's results are connected

to budgetary targets is neither a dependable measure nor an assurance of
progress. Or maybe, our experience recommends that a superior measure of

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execution is the capacity's prosperity at assuming its separate part in the

development esteem chain, whether it is in charge of thought era alone or for
seeing every thought through to its dispatch and scaling.