CASE STUDY ON BIOCON INDIA GROUP

Course: MGT 368

Section:05
Faculty: Muhammad Maruf Ibne Wali (MfW)

Submitted By:

B M Tauhid Hasan Rifat

ID: 1330845030
 • What are the advantages and disadvantages of starting and operating a pharmaceutical
firm in India?

Answer:

Advantages:

1. Indian patent laws has provided a huge boost to the manufacturing of generic drugs in India, to
the extent that India holds 20% of the global market share in generic drugs.

2. Due to India’s 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 pharmaceuticals.

3. India has a well-established pharmaceutical industry. There are now more than 20,000
pharmaceutical companies in India and they rank 3rd in the world terms of volume and 14th in
terms of value.

4. The Domestic market in India is valued at $13.8 billion. Besides, India is a major exporter of
low cost generic drugs.

5. The pharmaceutical operations cost, especially R&D, are much cheaper in India and China
compared to USA, Germany, Canada.

Disadvantages:

India has a highly competitive market with more than 20,000 domestic players in the domestic
market.Due to the low cost of manufacturing, high quality work force and substantial domestic market
more MNCs are looking at India as a viable investment location.
 • Is the Indian CRO market attractive?

Answer:

Yes, The Indian CRO market is quite attractive.

Some of the reason of this is because of the outsourcing of critical R&D tasks to CROs based here
is low cost, work produced are 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.

• What is the best way for Biocon India group to expand and what factors should it
consider?

Answer:

I believe the best way for Biocon India group to expand is by giving separate focus to both
Clinigene and the core Biocon individually.

For Clinigene:

One of the ways Clinigene can expand is through the field of clinical trials, with the setup and
expansion of Clinigene. As we can see from the case, Biocon still has a long way from developing
its own original drug formulations. So if Clinigene develop significant expertise in clinical trials
through contracts from other organizations, that would serve Biocon well in the long term, when
the time was right for the development of their own formulations.

For Biocon:

As for Biocon, they should focus on their long term for expansion, and work on innovation and
build upon its core competencies and start working on the development and release of its own
drugs and formulations.

So overall, I think the best way to begin expansion was for Biocon to broaden the sphere of
operations of Clinigene, thus establishing its foothold in the entire value-added chain of the drug
development and discovery process. The ultimate goal was to come out with its own innovative
drug formulations
Factors Biocon should consider:

Organizational culture: As Biocon focuses on a totally different corporate culture, the first thing
they need to focus on is weather Clinigene will follow a similar corporate culture or not. But
judging from the nature of work, I believe both should focus different corporate cultures, Biocon
focusing on informal corporate structure while Clinigene focusing on a more formal and
hierarchical corporate culture.

Separate Focus: To avoid other operations of Biocon from suffering due to increased focus on
Clinigene, the expansion should be begun gently. In the beginning, a small team of executives
should be assigned exclusively to Clinigene. Clinigene would continue working in the low-
medium segments of the value chain, while an expansion plan was drafted and required manpower
and projects were scouted. This would take 1-2 years. Within 2 years, Clinigene operations would
be sustainable enough and organically growing to run on their own without significant attention
of the senior executives being diverted from other major operations.

Risk divergence: Pharmaceutical industry by its inherent nature raises quite a few moral and
ethical questions in its operations. In this factor, Biocon currently holds a favorable position in
the eyes of Indian Government and people. But the test and trials conducted by Clinigene may
result in some kind of bad impression about the company and its moral standards. So for this
very reason, I believe both companies should focus on being a separate entity and building their
image differently. By this, even if Clinigene raises some moral and ethical questions in the long
run, this will not hamper the image of Biocon and controlling the damage would be easier than it
would have been if those were both together.