mass production of generic drugs

1111111111 MITS I oa n MANAGEMENT
Biocon India Group Archana Kalegaonkar, Richard Locke, Jonathan Lehrich
08-081 November 4, 2008
“Earn as you learn.” For 25 years this unofficial philosophy had served Biocon well. Starting out in the enzyme business in 1978, the Bangalore-based firm had gradually expanded into the pharmaceutical industry. Expertise in manufacturing enzymes led to mass production of generic drugs, which in turn gave Biocon the experience to establish Syngene, a subsidiary contract research organization (CRO) serving the global pharmaceutical market. At each stage Biocon had built on both its recently developed capabilities and the political, biological, intellectual, and financial benefits of the Indian environment to move into new areas of opportunity. By early 2003, Biocon had parlayed earning and learning into a firm that boasted 800 employees and annual revenues of US$75 million.
Yet the time had come to consider whether this growth model was reaching its limits In the eyes of Biocon India Group’s Managing Director, Kiran Mazumdar-Shaw, Biocon’s newest subsidiary, Clinigene, seemed an ideal way to capitalize on the company’s technical strengths by offering services in clinical trials. There was concern, however, that Clinigene could also be an enormous distraction, consuming precious resources in an area in which Biocon had little direct experience. Moreover, if Clinigene did prove profitable, its very success could be a Pyrrhic victory: the subsidiary could rapidly outgrow its parent and damage the company’s hitherto collaborative culture. The growth could even sidetrack Mazumdar-Shaw and Biocon’s directors into pursuing a possibly futile dream of creating one of the only fully integrated drug discovery and development companies in India. Yet if Biocon chose not to pursue the promise of Clinigene, it might be trapped forever in the brutally competitive generic pharmaceuticals market, unable to tap its potential as an innovator. Springboard, pitfall, or detour: Mazumdar-Shaw knew that the shareholders expected her to predict Clinigene’s and Biocon’s future correctly, and soon.
This case was prepared by Archana Kalegaonkar (MIT Sloan MBA, Class of 2003) under the supervision of professor Richard Locke, and revised by lecturer M. Jonathan Lehrich. Copyright © 2008, Massachusetts Institute of Technology. This work is licensed under the Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 Unported License. To view a copy of this license visit or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.
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