518 ENTREPRENEURSHIP CASE
would not be a dependable employer. No
banker was keen to talk to me across the table
for a line of credit. As a businesswoman, I
was a risk. I got the financing only after I met
a member of the tribe at a friend’s wedding.
No property owner in Bangalore was willing
to rent office space for me. I was not reliable.
All these I could take in my stride. It was
while dealing with raw material vendors that
I faced the cutting edge of gender bias. Some
of them said that should I hire a male manag-
er with whom they could deal directly! At
Biocon today, 30 per cent of employees are
women. We have women at senior manage-
ment levels.From the company’s origins making
enzymes for the breweries industry, Biocon
had expanded and diversified into related
fields during the next two decades. By 2005,
Biocon had achieved revenue of $167 million
(see Exhibit 4) and was the market leader in
Indian biotech. It had issued an initial public
offering (IPO) in March 2004 which valued
the company at $1.1 billion. Biocon special-
ized in four broad areas: enzymes, biophar-
maceuticals, custom research, and clinical
research (see Exhibit 5 and Exhibit 6). In
order to become an integrated biotech enter-
prise, the company needed a portfolio of
drug development candidates.
Enzymes
The global enzymes market generated $3.7
billion per annum in 2004 and was forecast
to grow at 6.5 per cent over the next five
years. It had three broad segments: Industrial
enzymes (used in detergent, starch, fuel, tex-
tile, leather and alcohol industries) compris-
ing 55 percent of demand, food enzymes
(used in manufacture of wine, juice, beer,
bread, alcohol and cheese) comprising 35
percent, and feed enzymes (used in animal
feeds) comprising 10 percent of demand.
Two European players—Novozymes and
Danisco, both based in Denmark—together
held more than 70 percent of the global mar-
ket share. Biocon was a relatively small play-
er, with less than one percent global share. Its
main competitors included niche players,
such as Shin Nihon Chemical Company Ltd.
of China.
The importance of enzymes for Biocon lay
in the fact that the business was a spring-
board for one of the company’s competitive
advantages. Fermentation was a core skill
that offered Biocon a leverage in stage 3 of
the value chain of biopharmaceuticals (see
Exhibit 7). The company’s fermenting capac-
ity gave it both the ability to scale up an
industrial process and the platform on which
to pursue discovery-led growth. The compa-
ny had earmarked $100 million towards
expansion of fermentation facilities in
2005/06.The proportion of Biocon’s revenue
generated by enzymes was likely to remain at
between 13 and 15 percent for the foresee-
able future.
Biopharmaceuticals
The global generics market was set to grow
as dozens of blockbusters were slated to
come off-patent over the next few years.
Moreover, governments, insurers and health
care organizations in developed countries
were actively promoting generics as part of
an initiative to reduce the cost of health care.
An even more important trigger, from
Biocon’s perspective, was that global drug
companies were outsourcing many parts of
the value chain to low-cost producers, such
as India and China. Biocon was expanding its
biopharmaceuticals capacity at a capital cost
of $35 million.
Biopharmaceuticals represented 80 per-
cent of Biocon’s turnover, with the produc-
tion of APIs for statins accounting for 45
percent of revenue. Statins would lose patent
protection in 2008 in the United States. As a
result, the dollar value of the global market
for statins would shrink from $22 billion to
$3 billion. There were also pricing pressures
from low-cost Chinese competitors.
Said Mazumdar-Shaw:Beginning 2008, we will have to look for
new markets, outside of the U.S. and Europe,
for statins. Even through the market will