After studying the Biocon India case study, describe the strategic choices facing Biocon. What are the key factors to that decision?
The Background
Biocon India was established in 1978 by Kiran Mazumdar-Shaw, the Managing Director, as a joint venture with Biocon Ireland to bulk manufacture enzymes. In 1989, Biocon Ireland was acquired by Unilever. As part of Unilever, Biocon began producing enzymes for Unilever’s food business. In 1998, Biocon India bought out Unilever’s share in the company and became an independent, privately-owned entity. And, the Biocon India Group started expanding into the pharmaceutical industry. The firm started to mass-produce generic drugs and established a subsidiary, Syngene. The group followed a successful pattern to develop its capabilities to catch up with new opportunities.
However, it started to face a common issue that all companies must resolve. Break out the present limit. If Biocon India Group were to grow, then it needed to expand. To Mazumdar-Shaw, this seemed certain. In order to become more competitive in the highly soaked generic pharmaceutical market, Mazumdar-Shaw believes the company needs to expand and have the capability to perform and run clinical trials. Ultimately, a new subsidiary, Clinigene was established, which will be responsible for the company’s clinical trials. The problem is that although the resources are limited and the whole new business is also not yet been proved profitable, the firm still has to make the decision on innovation or keep trapped in the competitive generic pharmaceutical market.
To understand this decision, we must know the value chain of the pharmaceutical industry. When global pharmaceutical firms choose to outsource, they tend to focus on three areas of the drug discovery and development value chain which are Research, Clinical trials, and Manufacturing. Research and development are drug discovery usually required considerable quantities of particular molecules with which to experiment. A drug typically went through four phases of clinical trials to determine whether it worked consistently without toxicity or major side effects. It requires finding the patients, working with hospitals and doctors, and managing the data. And finally, Manufacturing. Once the drug was tested and approved, it could be into mass production. However, this stage tended to be the least value-added compared to the previous three stages and also the most price-competitive.
The SWOT Analysis
Now, back to the strategic choice made by Biocon. I reckon that the value chain is clearly the first key factor that pushed the firm to make such a decision. It was an opportunity to grow, expand, and reduce its dependence on the price-competitive market, which was a threat to Biocon India. However, to capitalize on offering services in clinical trials in which Biocon India did not have enough experience in the past is a risky thing and also one of its weaknesses. That connects to the second factor, Biocon India prided its culture on openness. At Biocon, there are no hierarchies, all of the employees are treated equally and have a seemingly open door policy, one of the key elements of the culture at the company is the trust among colleagues. Thus, the new project can get fully supported internally and also effectively executed. It is a significant strength of Biocon India. As we can see that the SWOT Analysis(Strength, Weakness, Opportunity, and Threats) plays a crucial role in the decision. In addition to the opportunity, during the time of this expansion, clinical research in India was also beginning to take off. Suddenly, it was a rapidly growing business. So, it encouraged Biocon India to take a bet based on its strategic management. Moreover, the leadership of its director, Mazumdar-Shaw, was one of the key factors as well. Leading with trust is what successful leaders all have to learn.
The Structure
Structurally, the director Mazumdar-Shaw and her team decided to establish Syngene, a separate company within Biocon India Group, to serve pharmaceutical and biotech companies in the areas of synthetic chemistry, molecular biology, and informatics. It is a product and service division that provides excellent coordination and the team members identify with the services rather than just a single function. Moreover, Biocon India launched another new subsidiary, Clinigene. Clinigene aimed to offer a broad range of clinical trial services. Although it was not clear whether its parent group, Biocon India, would need its capability or not, Mazumdar-Shaw still expected Clinigene to sustain itself with external clients. Clinigene is also a successful divisional structure that concentrating on fewer product lines.
Reference
Biocon India Group, a case study by Kalegaonkar, A., Locke, R., & Lehrich, J
-, D. R., By, -, Rai, D., & here, P. enter your name. (2022, January 3). Patent laws in India : Basics you must know. iPleaders. Retrieved April 30, 2022, from https://blog.ipleaders.in/what-is-a-patent-law-in-india/
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