Biocon Ltd.: Building a Biotech Powerhouse 519shrink in value, it will continue to grow in
volume. Biocon will differentiate itself from
competitors in the making of APIs by contin-
uing to deploy our core skills in fermentation
(unlike our competitors taking the synthetic
route). We will also move beyond making
APIs to supplying formulations to innovator
companies. The turnover from biopharma-
ceuticals segment (comprising statins,
immunosuppressants and insulin) should
progressively move up to $600 million by
2015.
An industry analyst confirmed the
strength of Biocon’s approach:
Most aspiring entrants into drug discovery
have core skills in synthetic chemistry. Biocon
is at the recombinant protein end. Its core
competence is molecular biology. It is equal-
ly involved in synthetic chemistry but its
competence in molecular biology is a big dif-
ferentiator. A biological process of manufac-
ture ensures that the end product is less intru-
sive, when embedded within a biological sys-
tem, ensuring seamless delivery. The risk of
failure of clinical study is lesser for a biologi-
cal drug than for a synthetic drug. It also
costs less to manufacture.Clinical Trials
Biocon’s clinical trials were handled by
Clinigene, a subsidiary set up in 2000.
Clinigene was leveraging the country’s large
population and its low-cost pool of qualified
medical and scientific professionals to pro-
vide quality clinical research services at attrac-
tive prices and to facilitate rapid establish-
ment of trial groups. Biocon was focused on
providing Phase I to Phase III clinical trials
for new drug molecules. The cost of clinical
trials comprised about 70 per cent of the
total development costs. According to a
McKinsey report, up to 30 percent of global
clinical trials were to take place, by 2008,
outside the United States and Western
Europe. India was the preferred destination
because of two advantages: speed of patient
enrollment and shorter timelines.^8
The market for clinical trials in India was
valued at $70 million in 2002 and growing at
20 percent per annum. There were 30 clinical
research organizations (CROs) in India.
They had developed capabilities across a wide
spectrum of the research and development
(R&D) value chain, offering cost efficiencies,
high rates of patient recruitment, and docu-
mentation quality to global clients. The rapid
proliferation of CRO units had created
intense competition in this space, with the
possibility of a shakeout in the near future,
leading to consolidation. The top three play-
ers were Quintiles India with revenues of $18
million, SIRO Clinpharm with revenues of
$10 million, and iGate Clinical Research
with revenues of $7 million. Clinigene, with
revenues of less than $0.5 million, was yet to
build up its capability as a CRO.Custom Research
In 1993, Biocon had formed a subsidiary,
Syngene, to capture the growing business of
research process outsourcing (RPO). The
RPO business was driven by a compulsion
among drug companies to reduce R&D costs
and shorten product evaluation times. In a
competitive space comprising full-service
global drug development companies, in-
house R&D divisions of pharmaceutical and
biotechnology majors, universities and teach-
ing hospitals, Syngene had positioned itself
as a provider of RPO in two areas: synthetic
chemistry (where it was partnering with
established pharma companies in their search
for new chemical entities) and molecular
biology (where it was involved, in partner-
ship with biotechnology firms, in the search
for novel therapeutic agents in disease seg-
ments, such as cancer, arthritis, and AIDS).
Its main competitors were newer, smaller
entities with a specialty focus, aligned to a
specific disease or therapeutic area.Drug Discovery
Typically, the route to drug discovery consist-
ed of three sequential stages: research, devel-
opment, and commercialization.