Strategic Analysis Report: Biocon India Group's Business Strategies

This report provides a comprehensive strategic management analysis of the Biocon India Group, a biopharmaceutical company based in Bangalore, India. It begins with an introduction to the company, its history, and its market presence. The report then delves into a stakeholder analysis, identifying and evaluating the various stakeholders including employees, customers, suppliers, creditors, investors, government, and the community. Following this, an industry analysis is conducted using Porter's Five Forces to understand the competitive landscape of the pharmaceutical industry. The report assesses the power of suppliers and buyers, barriers to entry, the threat of substitutes, and competitive rivalry. Subsequently, the strategic capabilities of Biocon are evaluated using the VRIN framework (Value, Rarity, Inimitability, and Non-substitutability). Finally, the report suggests applicable business and corporate strategies for the company, offering insights into its potential growth and future direction. The analysis aims to provide a clear understanding of Biocon's strategic position and the challenges and opportunities it faces.

Biocon India Group
Strategic Management Analysis
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Table of Contents
Introduction................................................................................................................................2
1.2 Stakeholder Analysis............................................................................................................2
Employees..............................................................................................................................3
Customers...............................................................................................................................3
Suppliers.................................................................................................................................4
Creditors.................................................................................................................................4
Investors.................................................................................................................................4
Government............................................................................................................................5
Community.............................................................................................................................5
Stakeholder Mapping.............................................................................................................5
2.2 Industry Analysis.................................................................................................................6
Power of Suppliers.................................................................................................................6
Power of Buyers.....................................................................................................................7
Barriers to Entry.....................................................................................................................7
Threat of Substitutes..............................................................................................................8
Competitive Rivalry...............................................................................................................8
3.1 Strategic Capabilities...........................................................................................................8
4 Business and Corporate Strategies........................................................................................10
Conclusion................................................................................................................................11
References................................................................................................................................12

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Introduction
Biocon is an innovation oriented biopharmaceutical company which is based out of
Bangalore, India. Kiran Mazumdar-Shaw is the chairman and managing director of the
company. The started its business with enzyme business in the year 1978 and now it
expanded its wing into the pharmaceutical industry (Suryanarayan, 2003). The
pharmaceutical products of the company are sold in various markets such as India, United
States, and various European countries. There are multiple subsidiaries of the company and
key ones are Syngene International Pvt Ltd, and Clinigene (Kalegaonkar et al, 2008). The
company has achieved appreciable growth since its inception and is looking forward to gain
the benefit out of the changing market place and need.
This paper is concerned with analysing the various strategic aspects of the company to
understand the opportunities and challenges that lies ahead. The second chapter focuses on
the stakeholders’ analysis of the company. The third chapter will focus on analysing the
pharmaceutical industry in which the company is active at present. The fourth chapter
analyses the resources and capabilities of the company using the VRIO/VRIN criteria. The
fifth chapter suggests applicable and possible business and corporate strategies for the
company. The final chapter gives conclusive remarks on the overall study of the company’s
strategies and possible growth.
1.2 Stakeholder Analysis
Stakeholders refer to the individuals or entities that are associated with the company in one
way or the other and will be impacted by the rise and fall of the company (Donaldson &
Preston, 1995). There are various stakeholders of the Biocon India Group that has been
discussed in the sub-sections of this chapter. As the company is into the field of

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pharmaceutical, therefore it becomes an important aspect that the stakeholder analysis is
considered carefully. There are various entities who will be impacted by the actions of the
company.
Employees
The employees of the company are the most important stakeholder. These stakeholders
contribute directly to the growth of the company and get impacted by the decisions of the
company. The employees of Biocon have been given enough freedom and flexibility to
conduct their everyday activites. The company has ensured that the working environment of
Biocon stay conducive for the individuals with the presence of all kinds of facilities.
Moreover, the provision to help grow those who are meritorious has instilled the culture of
growth. The employees strive for more and learn more. The interesting thing that has been
identified is that the company do not expect any ideas or major contribution from the
employees for at-least two years from their joining as it considers that usually it takes two
years to open up in Biocon.
Customers
The customers of Biocon are from wider geography, ranging from US, Europe, and India.
The customers are also directly impacted by the decisions made by the company. The
customers of the company are either entity from the distribution channel like distributors,
retailers, end consumers, government (for free distribution purposes), private hospitals, and
others. The customers are depended on the company’s decisions of price fluctuations and the
support it provides to the customers. Biocon has kept its price moderate in all its market
which has helped its customers stay with the company with good relations. The company
should ensure that the decisions does not put any adverse impact on the customers as they are
the reason company exists in the market.

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Suppliers
The suppliers of the company are considerably dependent on the company. The change in the
prices of the company does impact the cost structure and whether the suppliers would prefer
to continue with the company at the changed prices. Moreover, if the company loses the
suppliers due to the poor decisions then it is likely that it will impact the future growth of the
company. The company has so far forged good relationship with its suppliers. Suppliers are
the strategic partners of the company that support in the effective decision making of the
company.
Creditors
These are the individuals or the entities who have lent money to the company on certain
interest to run the business. At present, the major creditors of the company are the banks who
have given substantial sum to the company. It is important that the company shows promise
for its growth in the days to come. The promise of growth is the only reason that motivates
the creditors to keep the money with the company or to lend more to them for the future
investments. Till now, the company has done appreciably well and there are lesser chance
that any creditor would not prefer to lend money to the company for its future venture.
Investors
The investors of the company are also considered as the major strategic partners that
contribute in the growth of the company. The active involvement of the investors comes from
the point that the company shows considerable opportunity to grow in the future. It becomes
an important aspect that the company make informed decisions that do not adversely impact
its customers. The money procured from the investors ensures that the company keep
investing in its major projects for growth. Biocon has earned appreciable reputation since its

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inception and this is the reason it has gained good amount of investments from various
shareholders.
Government
The government is another important shareholder which is concerned with the decisions
company make regarding research and development or production of particular medicine.
Due to being in the pharmaceutical sector, it is important that the company make decisions
that put positive impact on the society and its sustainability. Any counter-health decisions are
likely to attract the negative feedback from the government and most probably it will impact
the functioning of the business. The compliance to all the rules and regulations and following
the ethical methods to product pharmaceutical products is what government expects from
companies like Biocon.
Community
The community is generally indirectly associated with the companies as stakeholders.
However, in the case of Biocon, its production of medical products can have negative or
positive ripple effect on the society. Therefore it is important that the company takes
decisions that are in greater good of the society. Consequently it also builds the reputation of
the company and paves ways for its strong sustainable business. Therefore, it can be stated
that both, community and Biocon, are interdependent.
Stakeholder Mapping
The stakeholder mapping has been done using the Power/Interest Matrix (Newcombe, 2003).
Given below is the power interest map for the stakeholders identified above for Biocon:
Interest
Low High

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Power Low A (Minimal Effort) B (Keep Informed)
High C (Keep Satisfied) D (Key Players)
The stakeholders in group A require minimum effort on monitoring and they are employees,
and customers. The stakeholders in group B are those who need constant information and
they have the ability to influence other stakeholders. They are creditors and investors. The
stakeholders in the group C are of low interest, but they may transform into passive to active
stakeholders if need arises. They are government and community. The stakeholders in group
B are considered powerful and interested and their support is important. They are suppliers.
2.2 Industry Analysis
As per the pharmaceutical market is concerned, there are numerous companies that are in
direct competition to Biocon. This chapter is concerned with pharmaceutical industry
analysis. The industry analysis is concerned with understanding the various external forces
that impact the functioning of the business (Lawrence, 2002). The Porter’s five forces have
been considered to analyse the pharmaceutical industry in which the company is currently
active. These forces are power of suppliers and buyers, barriers to entry, threat of substitute
products, and competitive rivalry.
Power of Suppliers
In the pharmaceutical industry, the power of suppliers is comparatively low and this is the
reason the company is able to successfully produce products at relatively lower price.
Moreover, the company easily gets the resources that are required to produce the particular
product and, therefore, mend the prices as required. The pharmaceutical industry has
numerous suppliers providing almost similar materials at minimal price differences and,

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therefore, the company can afford to switch between these suppliers without the fear of any
switching costs. Apart from that, the company can save money on the material procurement
due to the locally available raw materials which again reduces the dependency on suppliers to
a greater extent.
Power of Buyers
The power of buyers in the market can be stated to be low. The reason behind this is the type
of product this company is selling. The pharmaceutical products are the necessity that cannot
be denied by anyone. Moreover, there is no particular influence in the market that can push
the customers to purchase the medicine of particular brand as the main decision makers are
the doctors. Therefore, the doctors or the practitioners can be identified as the major
influencers and taking them into confidence is enough for the company to move its products
into the market. However, due to the government regulations, the company is unable to gain
intended profit and try to earn revenue from the limit available.
Barriers to Entry
The pharmaceutical industry can be considered to be easily accessible to the people willing to
move into the business. However, due to the government regulations and policies which are
required to be followed such as safety standards, or product standards, make it a challenge for
new businesses to strengthen its feet (Goodman, 2008). Moreover, the companies need to
build credibility in this market which is the most important for anyone willing to stay active
in this industry. Therefore, it can be stated that the new companies will face considerable
challenge in building the same reputation as the established companies like Biocon and thus it
will take a considerable amount of time in ensuring sustainable growth.

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Threat of Substitutes
Considering the current advancements in the technology and the future expected medical
products like biotechnology, it can be stated it might pose threats to the existing
pharmaceutical products. However, sighting the pace with which these technologies are
coming, it can be stated that there is no major threat to be seen in days to come. There are still
millions who suffer from various diseases and companies are unable to fulfil their need with
the current production. Therefore, the growth in the existing pharmaceutical products can be
assumed. Therefore, it would be wise to say that the there is no threat to the products from
any kind of substitutes and the company can move ahead with the usual pace.
Competitive Rivalry
As stated previously, there are numerous players who are active in the market at present and
the competition in the pharmaceutical industry is very tough. There are few top
pharmaceutical companies that cover major part of the market share such as Pfizer, Novartis,
Merck & Co, Sanofi, and others. Biocon does not cover the major business segment and still
in move to compete with these bigger players (Agrawal et al, 2006). However, it can be
stated that with the right strategic consideration, the company might be able to step ahead of
its competitors.
3.1 Strategic Capabilities
Strategic capabilities keep the organization ahead of the competition (Stalk et al,, 1991).This
section is concerned with the analysis of the strategic capabilities of Biocon using VRIN
(Value, Rarity, Inimitability, and Non-substitutability) criteria.
Talent: Biocon has done well in attracting and retaining since its inception. It can be
understood from the fact that the company considers at least two years of an employee at the

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company as ice-breaker period. Talent is valuable, rare, and it cannot be imitated by other
organizations. Moreover, the talent can be substituted to some extent but not for the key
areas.
Speed: The current venture of the company into testing through Clinigene reflects the
advanced steps company takes prior to others in a particular market. It is good at exploiting
the opportunities and creates new products and services. The speed of acting towards
particular strategy is valuable, rare, inimitable, and non-substitutable.
Shared Mind-Set: The employees working within the organization share the similar passion
and have same working culture. The company also ensures that the employees hired for the
company shares same cultural values and mind set. It fits on all criteria of VRIN.
Accountability: The employees hold themselves accountable for the actions they undertake.
This ensures and increases the trust factor within the organization. One of the interesting
things is that the employees are managed based on their merit which is an important factor
behind the accountability orientation. It also fits on VRIN criteria.
Collaboration: The employees effectively collaborate among them and work effectively. Not
only the internal but the external collaboration of the company is appreciably well. The
company has forged good relationship with its suppliers. It stands on all VRIN criteria.
Learning: The motto of the company has been ‘learn and earn’ and it has stood by that motto.
It has been found that the company provides enough opportunity to learn to its employees and
its employees are also learning and applying the same into the growth of the company. As per
VRIN is concerned, the learning can be imparted by the competitive companies but whether
it will be accepted by the employees is a matter of observation.

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Innovation: Biocon has always stayed oriented towards innovation and the main goal of the
company has been to indulge into enough research and development that can help in getting
new opportunities. The company culture has also fostered innovation. This can be understood
from the fact that the company allows its employees to share ideas after two years at the
company which orients towards innovation led culture. It fits on all VRIN criteria.
Experience: The experience of the company is valuable. The company is in existence for the
past few decades and has gained enough experience for the Indian, American, and European
market. This has ensured that the company build upon this experience to capture more market
and grow further. It is completely true to VRIN criteria.
4 Business and Corporate Strategies
There are multiple strategies that can be suggested to Biocon to ensure the sustainable
competitive advantage in the pharmaceutical global competitive environment. Some of these
strategies are given below:
Differentiation Strategy: The differentiation strategy is concerned with the positioning the
company in the market in such a manner that it stands out from the other (Harrigan, 1988;
Dubey & Dubey, 2009). As observed, the company has entered into product testing market
with the establishment of Clinigene. It is obvious that the establishment of such facilities in
the Indian market will attract attention from the various ethical gurus who would try to point
finger on the company’s action. However, as there is no other company into this field in the
country, the survival of the company in this area will provide strong competitive advantage.
The only thing it has to ensure that it spends considerable amount of money towards building
positive image about the activity in which it is orienting (Lee, 2012).

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Cost Strategy: The second most important strategy that can be suggested to the company at
this stage is the cost strategy (Moss & Schuiling, 2004). The cost strategy refers to the
consideration of lowest price possible to beat the competition and act as cost leader in the
market. Though, it is the most challenging strategy to pursue as there are numerous
companies that are into this strategy. However, due to the nature of the products the company
is selling, cost leadership seems to the only resort for the pharmaceutical products. The
company can also engaging in building strong relationship with the suppliers, buyers
(distributors and retailers), and promoters (doctors).
Conclusion
In the end it can be stated that the company is doing appreciably well for the past few years
and is expected to do good in the days to come. The only thing that is to be kept into
consideration is that the innovation should remain at the top. Moreover, venturing into the
new businesses is likely to provide better differentiation advantage.