Biocon Ltd.: Building a Biotech Powerhouse 515INTRODUCTION
In November 2005, Biocon Ltd. was the
largest biotechnology enterprise in India and
the 14th largest biotechnology company
globally (see Exhibit 1). Kiran Mazumdar-
Shaw, chairman and managing director, was
excited about her goals for the future: to
achieve annual revenues of $1 billion^1 and to
secure a place among the top 10 global
biotech firms by 2015. Based on the sales
turnover of $167 million for the year ending
March 2005, achieving these goals would
mean generating a six-fold increase within
the next decade. To this end, Mazumdar-
Shaw envisioned building a vertically inte-
grated biotechnology enterprise with a
strong discovery orientation.
Since Biocon’s inception in 1978,
Mazumdar-Shaw had been pursuing a
sequential growth strategy, adding businesses
that were interlinked and progressively more
complex. Each business—enzymes, biophar-
maceuticals, research services and, of late,
drug development—provided a stepping
stone toward her vision of making Biocon a
biotechnology powerhouse. Under her lead-
ership, Biocon had consolidated its core skills
in enzymes (known to be the building blocks
of biotech), established a footprint in bio-
pharmaceuticals (which helped generate reg-
ular cash flow), and partnered with global
firms (serving as launching pads for drug
development). Now, she believed that
Biocon was ready to take the leap into the far
riskier, and potentially far more rewarding,
realm of drug discovery. Yet she knew that
the board of directors of the company, whose
consensus was crucial, was anxious to realize
the vision without jeopardizing the financial
viability of Biocon.^2
Said Mazumdar-Shaw:The risk in drug discovery for a company is
the risk of failure. Only one in 5,000 mole-
cules reaches the clinical trials stage. Only one
in 500 undergoing clinical trials reaches the
commercial stage. We have nine molecules
today at Biocon in various stages of develop-
ment. All these are based on partnerships
with global companies. Some have reached
clinical trials. They will all hopefully reach
commercialization stage by the end of the
decade. But, there are no certainties. The
variables are many.
Biocon has been using a de-risked busi-
ness model since the beginning. As we make
a transition from drug development to drug
discovery, we must learn to manage risks.
This requires a change of mindset. It is like
the difference between gambling in a casino
within a fixed budget where you know how
much you would lose and any gain would
therefore be treasured, and gambling with
large sums in order only to win. Managing
infinite risk has not been part of the tradition-
al mindset at Biocon.A meeting of the board of directors,
already convened, was less than a week away.CASE 9
Biocon Ltd.: Building a Biotech Powerhouse
by Alson Konrad, Charlene Nichols-Nixon, and R. ChandrasekharSource:R. Chandrasekhar prepared this case under the
supervision of Professors Alison Konrad and Charlene
Nichols-Nixon solely to provide material for class discus-
sion. The authors do not intend to illustrate either effec-
tive or ineffective handling of a managerial situation. The
authors may have disguised certain names and other iden-
tifying information to protect confidentiality.
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Version: (A) 2006-09-13.