520 ENTREPRENEURSHIP CASE
Research. Syngene and Clinigene were
already leading the research endeavors at
Biocon, providing a valuable platform on
which to move progressively into drug dis-
covery. Clinigene had acquired competencies
in stages 7, 8 and 9 (see Exhibit 8). While
stages 5 and 6 were being outsourced by
Biocon because it did not have the necessary
in-house skills and because it cost less, the
company was building up competencies in
stages 10, 11 and 12. Syngene had so far
acquired only the basic skills in stages 1, 2, 3
and 4 of the drug development cycle. Biocon
was also in the process of building up manu-
facturing capacities for industrial scale-up.
The company had an in-house R&D
team, set up in 1984, to complement its
biopharmaceuticals business. It comprised
98 scientists and technologists who had
filed several patents. Biocon was investing
between 10 percent and 15 percent of
turnover on in-house research. The company
had also launched a biodiversity program
in 1995, with the mandate to collect,
catalogue and conserve rare and diverse
species of indigenous bacteria, yeast and
fungi. The program had identified and char-
acterized more than 3,000 unique micro-
organisms of Indian origin, several of them
with novel traits. The collection was seen as
a valuable tool in discovering new biotech
products.
Partnerships with biotech start-ups were
also seen as a key element of the company’s
strategy because they further helped Biocon
to integrate backward into discovery
research.
Said Mazumdar-Shaw:
Biocon is committed to finding biotechnolo-
gy solutions in global health care. In our pur-
suit of therapeutic areas for drug discovery,
we have identified two focal points of disease
research: diabetes and cancer. The numbers
are compelling. There are 177 million diabet-
ics in the world. One in four of them is an
Indian. Nine million new cancer cases are
diagnosed every year worldwide, of which
over half are fatal. The highest incidence is of
head and neck cancer. Biocon has developed
oral insulin, which will go on Phase I trials in
early 2006. Biomab, an antibody for head
and neck cancer, will hopefully be the first
molecule off the block from Biocon in terms
of market entry. It should generate annual
revenues of $250 million for the company in
the next few years if we get the necessary
approvals and market it well.Development. Building on its capabilities
in clinical trials, Biocon had taken tentative
steps toward involvement in the develop-
ment stage of drug discovery. The company
had limited its activities to known targets and
known molecules. It also relied upon part-
nerships with global biotech firms (see
Exhibit 9), as a way of sharing development
costs. For example, the antibody that Biocon
was developing with CIMAB, its Cuban
partner, was for head and neck cancer, a
known target. The new delivery technology
it was developing was for insulin, a known
molecule.
Said Mazumdar-Shaw:
Many international venture capitalists are
beginning to see an “India strategy” a power-
ful way to de-risk their own investments.
Risk capital has been drying up in the U.S.,
of late. The probability of funding increases
with the progress of drug development—the
farther along a drug is, the more likely some-
one is to fund it. Since venture capital com-
mitment is greater after proof-of-concept,
valuations increase exponentially along the
development curve. Proof of concept is when
the lead compound has been identified.
Partnering with India is, for many compa-
nies, a fast-track way to climb the valuation
chain. The platform technologies for the nine
molecules, which Biocon has taken on for
development, were built by our individual
partners who invested in drug research. They
have partnered with us to take the drug devel-
opment process forward. Biocon saves costs
on drug research. Its partners save costs on
drug development. It helps both ways.