Biocon Limited is facing significant price pressure in their business cash cow, which primarily consisted of the production of active pharmaceutical ingredients (API). To combat this commoditization, Biocon leadership has chosen innovation-driven strategy. This new strategy consisted of licensing and developing proven molecules from strategic partners to jump over the competition and creates large biological molecules in India. The company realized that its transition from API to innovation-led company focused on new biologics will require patience and risky thinking. Although there was some similarity in the biotechnological aspects of both approaches, regulatory bodies, the way of product development and market access terms were changed dramatically - almost diametrically opposed. Biocon analyzes of strategic decisions, and the risks and challenges associated with the transition from production to innovation-led company. How will they balance short-term pragmatism compared to long-term vision? Do they have the appropriate human resources for expansion and innovation? Is their India-centric strategy is necessary as 86% of their end-market demand in the U.S., Europe and Japan? Fortunately, the first signs of their innovation-driven strategy showed positive signs and obvious results - such as their biogenetic insulin and monoclonal antibodies launch in India. Their flagship oral insulin project, with planned $ 100 million budget, meeting its milestones and results. Many critical business problems, described in detail in this case. However, given their fully integrated business model and a significant industrial base, the odds are in favor of Biocon to overcome these problems and lead the biotechnology revolution in India.
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by Krishna G. Palepu, Ananth K. Chepuri Source: Harvard Business School 35 pages. Publication Date: May 29, 2007. Prod. #: 107083-HCB-ENG
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