International Business - Biocon Ltd.

1.0 Introduction

This study sought to identify and critically evaluate the strategies used by Biocon Limited, headquartered in Bangalore, India to internationalise. There are four parts in this study. The first part introduces the background of the company. The second part covers the strategies used by the company to internationalise which are exports, wholly owned subsidiaries, mergers and acquisitions, joint ventures, strategic partnerships and global alliances. The third part is the recommendation of strategies for the company to sustain its competitive advantage. The summary lies in the fourth and last part of this paper.

2.0 Company Background

Founded in 1978 by an Indian entrepreneur Kiran Mazumdar-Shaw, Biocon Limited was incorporated as a joint venture between the founder and Biocon Biochemicals Limited of Ireland. It started off as an enzyme-manufacturing company, supplying blended enzymes for brewing, textiles, animal feeds and biofuels until the mid-1990s where it changed its focus to lucrative biopharmaceuticals segment. The company brings biopharmaceutical solutions to the global market through the process of discovery, development and commercialization. The company’s portfolio spans in therapeutic areas such as diabetology (dealing with diabetes), nephrology (dealing with diseases and physiology of kidneys), oncology (dealing with tumours), immunology (dealing with immunity) and cardiology (dealing with diseases and abnormalities of the heart). The company’s products are approved by key regulatory agencies such as US, EU, Japan, France, Brazil, Mexico, Turkey, and GCC (Gulf Cooperation Council) with 12 anchor brands, as well as, 7 biologics (2 novels and 5 biosimilars) were taken from lab to market as of 2016 (Biocon.com, 2016b).

3.0 Internationalisation Strategy

Biocon expands globally in emerging and developed markets through modes of non-equity (exports and contractual agreements) and equity (greenfield investment, mergers & acquisitions, partnerships, and joint ventures). According to the sequential theory of internationalization (also known as the ‘Uppsala Model’), firms generally internationalise through a regular process involving four sequential stages known as the establishment chain. They are intermittent exports, exports via agents, overseas sales via contractual agreements with local firms, and foreign direct investment in overseas market (Wall, Minocha, and Rees, 2015). Biocon started as a joint venture between Kiran Mazumdar-Shaw and Biocon Biochemicals Ltd. of Ireland rather than exporting activities which explains some companies such as Biocon do not conform to the sequential theory of internationalization.

As of 2016, the company has seven wholly owned subsidiaries and two step down subsidiaries achieved through greenfield investments and acquisitions with four of them located in India and five in foreign countries (Biocon.com, 2016a). Additionally, Biocon’s growth is largely driven by gradual expansion of export in developed (US, EU, UAE and Japan) and emerging (Asia, Africa, East Europe and Latin America) markets which can be seen in their 2010-2015 annual reports, their exports contributed 51-69% of the company’s total revenue. As of 2016, their products are available in nearly 120 countries (Biocon.com, 2016b).

Additionally, Biocon has established joint ventures, strategic partnership and global alliances with strong local and regional partners in various countries for licensing, co-developing/manufacturing, and marketing (Biocon.com, 2016b). Also, according to a study of Internationalization of India Inc. by Thite, Wilkinson and Budhwar 2016, Biocon prefers to create a worldwide distribution network for its business through partnerships rather than increasing its market share immensely through acquisitions which, the company believes, can have adverse effects on the company’s business. Below provides information on Biocon’s overseas expansion which is mainly sourced from the company’s website Biocon.com

3.1 Wholly Owned Subsidiary

Biocon Pharma Limited

Based in India, Biocon Pharma Limited is a subsidiary of Biocon Limited. It takes part in developing and manufacturing pharmaceutical drugs for purchase in the global market. The company exports its products mainly to the United States and European Union. Although it is involved in development and manufacturing, as of 2016, it has not been involved in commercial operations. Currently it is setting up a pharmaceutical drug manufacturing facility at Biocon Park, a special economic zone, in India for oral solid dosage form which is used to enclose pharmaceutical drugs with apportioned dose such as tablets or capsules.

Syngene International Limited

Based in India, Syngene is a subsidiary of Biocon Limited. It is a custom research facility for pre-clinical discovery, development and manufacturing custom novel solutions for pharmaceutical, biotechnology, agrochemical and chemical industries. It covers the areas of biology, chemistry, formulation development, pre-clinical and stability services, and manufacturing for medical supplies.

Clinigene International Limited

Based in India, Clinigene is a subsidiary of Biocon Limited. It is a clinical research facility to provide clinical research solutions to worldwide pharmaceutical and biotechnology firms. It leverages on advanced biotechnology and experienced clinical research professionals, conducting complex clinical programmes from early to late phases in a wide array of therapeutic areas. It also provides services for but not limited to human pharmacology, clinical services, bio-analysis, medical writing, safety management and regulatory services. In 2014, Clinigene was amalgamated with Syngene International Limited (ZaubaCorp.com, 2016).

Biocon Research Limited

Based in India, Biocon Research Limited is a subsidiary of Biocon Limited which takes part in biologic discovery and development. It also acts as a support for the Biocon group in scientific areas of clinical development. Its current business is largely focused on researching antibody and insulin products.

Biocon Academy

Based in India, Biocon Academy offers industry-oriented biosciences education for Biotechnology and Engineering students, providing them with world class industry training at various Biocon facilities to acquire knowledge, skills and experience in the related field and internship opportunities at Biocon. Besides that, the academy also offers international certificate programme in Biosciences for international students in partner with Keck Graduate Institute of Claremont, United States, preparing them on their global career in Biotech (KGI.edu, 2016; BioconAcademy.com, 2016).