Strategic Analysis of Biocon India Group: Five Forces and Value Chain

This report provides a comprehensive strategic analysis of Biocon India Group, a leading pharmaceutical company. It begins by examining Biocon's mission and vision statements and how these support the development of a sustainable competitive advantage. The report then employs Porter's Five Forces model to analyze the attractiveness of the pharmaceutical industry, assessing the bargaining power of suppliers and buyers, the threat of substitutes and new entrants, and the intensity of existing rivalry. Furthermore, the report evaluates Biocon's resources and capabilities using the value chain framework, detailing how the company creates value through primary and supporting activities such as inbound and outbound logistics, operations, and marketing. The analysis also discusses how Biocon can further develop and improve its operations to enhance its competitive position and overall performance within the pharmaceutical industry. The report concludes with insights into Biocon's strategic approach, its competitive landscape, and its potential for sustainable growth.

Assignment
Strategic Management
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1.1. Write a mission and a vision statement for Biocon India Group. How will these
statements support the development of sustainable competitive advantage:
Write a mission and a vision statement forBiocon India Group. How will these statements
support the development of sustainable competitive advantage?
Biocon provides training and education to the biotechnological and engineering graduates who
are looking forward their career in pharmaceutical industry. They assist the students by provding
them proper studying material and facilitate learning to the students in schools and colleges.
They provide health acre services in rural areas and make them aware about diseases that can
commonly speard among them. They are ready to face challenges and become a part of social
responsibility for the country.

Mission:- To train and develop industry ready talent for the biopharma sector to enable global
competitiveness
Vision:- To become an advance learning center that will provide the study of best
biosciences that is required for enhancing the career of Biotechnological and engineering
graduates.
Sustainable competitive Advantage
To have a sustainable competitive in the market it is important to enhance Biocon in such
a way that will prove to be an aspect that will differentiate Biocon from other companies
in the same industry. Biocon must outperform its results as compared to other companies.
They can achieve their competitive advantage when their profits are higher than other
companies in the same industry. They should also ensure that they maintain their profit
margins and do not drop them with time. Sustainability will focus on certain standards
which they have set in front of their customers. Maintaining those standards should be
their main motive, only then they can achieve their mission and vision statements. Biocon
focuses on providing biopharmaceuticals, Customer research and clinical
research.Sustainable competitive advantage can also be achieved by maintain good
vendor relations. Their suppliers and vendors should not change at intervals. Biocon
should have unique merchandizing which will help them to have their presence in the
market in a unique way (Biocon General Information, 2016). Private label bands on the
product will help them promote their brand. Biocon can achieve this by creating higher
customer value. This can be done by ensuring the simple 4 steps.

 Customer Excellence
When we talk about customer excellence we mainly focus on the customers with whom Biocon
deals with. Biocon should provide the best customer excellence by giving them the best product
than other companies in the same industry. This can be done by understanding the customers’
requirements and making their experience better. Focusing on customer requirements and
expectations should be their focus. Customer research will include study of customers and what
they need in the product. Satisfy their demands and make the product available in time.
Customers must be committed and loyal to buy their products. They should have the perfect
brand positioning in the minds of the customers.
 Operational Excellence
The operations which they carry out in their laboratories should have the best and upgraded
technologies. The engineers and the Biotechnological employees should have the best
knowledge about the pharmaceuticals that they are working on. The machines used for the
operations should be hygienic and perfect combination of chemicals. It should be monitored
manually by the expects to personally ensure the quality and standards of the pharmaceuticals.
 Locational Excellence
Biocon can achieve the locational excellence by making their product available at the stores
where they have walk-ins of their customers. They should ensure that their customers do not go
empty handed when they come to buy their product. Distribution of the products should be done
in a smart way.
 Product excellence

The products that Biocon offers should have differentiating aspects which stand out from the
other companies in the same industry. The product should offer the best customer service in the
industry. Their customers should help Biocon to have word mouth publicity in the industry.
Basically, when we talk about sustainable competitive advantage we must ensure that the
customer is happy with the product and we provide the best service to our customers. The
customers should experience the best product. Biocon also provides training and education to the
students hence the education material that they provide to their students should contain all the
material that will encourage them to become a professional excellence in the pharma industry.
The training and certification provided by them will give them a confidence of working in the
industry and exploring their talents. This will help them to boost their career and work for the
country to provide best products and services. Sustainable competitive advantage can be
achieving only by maintain the standards to the product and services and ensuring that these
standards are maintained over years and years. Biocon have always given the best to their
customers and now its time for them to maintain this and place an example in front of other
companies in the same industry.

2.2. By employing relevant data from the case, conduct a five forces analysis of the
Pharmaceutical Industry. What do you conclude about that industry’s attractiveness?
Five forces analysis of pharmaceutical industry:
Porter’s model is based on determining the competitive arena of industry in which a business is
operating. The five competitive forces of the model describe the factors impacting the actual
operations of a business (Porter, 1980). By knowing and understanding competitive forces in
industry and its impact on business, Biocon India Group can better equipped to prepare strategic
plans. The analysis enables the Biocon India Group, pharmaceutical company to focus on the
aspects that can impact their business and also gives chance to realign their resources, if needed.
The five basic competitive forces on which competition in pharmaceutical industry depend is
given below:

Figure: Five forces analysis
1. The bargaining power of supplier’s Technical expertise
Biocon India Group Company has low cost of switching suppliers. The suppliers of
pharmaceutical companies could be the intermediates and raw material providers, biotechnology
plants, the head offices at overseas which supply finished product. The inputs taken from
suppliers have little impact on the costs and hence, we can say, suppliers of Biocon India Group
have low bargaining power (Chandrasekhar, 2006). It is important to determine the power of
suppliers because the more power they have the more impact they can tend on business.
Suppliers could responsible for increasing prices, or reducing quality of goods and services etc.
2. The bargaining power of buyers:
Buyers at Biocon India Group need special customization, but at the same time product or
medicines are important for them. The influence of buyers on business needs to be considered.
The pharmaceutical companies’ customers include patients, healthcare organizations boards, the
PBAC, the chief pharmacist etc. Customer can affect competitive advantage of company and can
impact industry stability in various ways. They can ask for price reduction, demand higher
quality and better services.
3. The threat of the substitutes:
The power of substitutes entering to Indian market in competition of Biocon group is low.
Substitute products of Biocon group need higher costs. The substitute product performs same
function as the original product and has the power to take away demand. But in case of Biocon
India group’s products substitution, rival company would requires higher costs to product similar
functioning product or medicines. Hence, the threat of substitutes is low for Biocon. In market

there are limited numbers of substitutes for Biocon’s products. It is important to take track of
alternative products in Indian pharma industry. The company also has patent to protect their
products.
4. The threat of new entrants
The threat of new entrants in pharmaceutical industry is relatively low as compare to other
industries in India. The new entrants need to break number of hurdles before making entry like
arrangement of high capital, equipped with all technological advancement, high learning curve of
the industry (Enright, 1994). Entry barrier to the pharmaceutical industry is high. Other hurdles
in this industry for new entrants and that are
 economies of scale - manufacturing, R&D, marketing, sales,
 distribution product differentiation - established products, brands and relationships
 capital requirements and financial resources
 access to distribution channels: preferred arrangements
 regulatory policy: patents, regulatory standards
5. Intensity of existing rivalry:
Indian government policies limit the competition in the industry. Biocon India Group company,
headquarter in Banglore is one of the leading pharmaceutical chain in India and hence, it has
relatively few competitors. Other than this, the pharmaceutical industry in India is fastest
growing and various new companies are entering into the business every year. Though the
companies are small or entry-level in comparison to Biocon but they can make slight difference
to the sale of the company’s products. The company also has the fast industry growth rate which
is difficult to match for the competitors.

Pharmaceutical industry’s attractiveness:
The Indian pharmaceutical industry has transformed its way in past few decades. The Indian
Pharmaceutical industry is setting new grounds the field of drugs research and development.
Starting from importing large amount of drugs from global major suppliers and reprocessing and
now becoming independent developer. The industry is formed with the integration of three
significant factors which make it so attractive for investment. Those factors are:
 The process patent regime
 Price controls
 Exemptions to Small Scale Industries (SSIs)
The major attractiveness of the Indian pharmaceutical industry is its commitment towards the
development of infrastructure, and technological competency augmentation. The industry has
crossed $5 million sales with its wide range of products. Another attractive supplement of the
industry is its implementation of Good Manufacturing Practices and with the help of these
practices, the industry now producing bulk drugs for all the demanding and major therapy
segments. Indian industry has been producing most cost effective techniques in time efficient
scales with help of organic synthesis and process engineering.

3.2. Evaluate Biocon India Group resources and capabilities by utilizing the value chain
framework. How is the company creating value? Discuss how could the company develop
and improve further in respect to this?
Biocon is a Bangalore based company which has 2 subsidiaries, one which is a customer
research organisation and the other is the clinical research organisation. They work on making
various medication for diseases such as diabetes, cardiology, neurology and oncology.Value
chain framework helps to understand what are the criteria’s that should be followed to create
company values in the minds of the customers. Value chain frame work is a combination of
primary activities and supporting activities. When these activities come together they give out
the best results. Biocon also uses this framework to make their products and services successful
in the market. Company is developing further byimproving their primary activities. These
activities when upgraded to the higher scale will help them improve their processes and
techniques. This can be done by working on few aspects as shown in the diagram above.

Primary Activities
 Inbound Logistics
Inbound logistics include logistics starting from when the raw material arrives at the
manufacturing centre, includes the entire biotechnological process till the final
product is ready to go out from the manufacturing unit. Inbound Logistics will
include the internal process of the company.
 Operations
Operations is an aspect which works on the operational level by considering the
process of pharmaceutical companies. Operations include all the management
functions coming together to achieve a common goal or objective. These operations
include the supply chain management system of the company. Biocon uses unique
supply chain management system as compared other companies in the companies of
the same industry.
 Outbound logistics
Outbound logistics include outdoor facilities which includes making the products
available in the market. It includes the process starting from when the material is out
for delivery till it reaches the final customers. The entire transportation unit comes
under outbound logistics.
 Marketing and sales
Marketing and sales will include activities that will promote the Biocon product and
services. There are various strategies that can be used to promote the product in the
market. Private bands and banners on the product will help them to make it easy to
recognize their product in the market in front of the customers (Ghemawat, 2005).

Sales will have the selling aspects. The target customers should be defined before
initiating the sale of the product. Selling their education material becomes a
challenge for Biocon but when it comes to brand image and their content they have
the best in the market as compared to other companies. They also promote their
products as services through various health campaigns and social welfare programs.
 Services
After sales services come under this category. The after sales service should be
perfect on then the customers will be happy with the product. They should have toll
free numbers and contact details where the customers can contact them in case to
them arise any problem or issue. Proper training should be given to the customers
about the product and make them aware about the unique features that the product
has which differentiates the product from other products in the market.
Supporting activities
 Firm Infrastructure
The Firm Infrastructure should have all the facilities that is required for smooth
functioning of the system. They should have all the necessary systems and
equipment’s which are required to study the specimens of the diseases.
 Human Resource management
Human resource management includes people who take care of the human
resources that will be working with Biocon. The recruitment process, including
the entire process of interview and selection is done by this team. The team that
will be working on study of the diseases should have complete knowledge about
what are the causes and symptoms of these diseases (Balaban, 2010). They should

be able to educate and train the other team members or the new joiners about what
Biocon mainly works upon. Spreading the correct knowledge and hiring the right
people should be their main motive.
 Technological development
Technological development is taken care by the engineers who work for Biocon.
It is the responsibility of these engineers to ensure that the company uses the
upgraded technologies and system to make their products. The software’s that are
used to prepare the training and education material is also done by this team.
When they work on therapeutic areas they should make sure that the technology
they use is trust worthy and have good effects on medication.
 Procurement
Procurement includes acquiring the material that is required to make the product
or service. This will include relationships with the suppliers who will make the
raw materials available to Biocon. Materials that are used to study the diseases
should be made available on time to have effective results.

4.1 What suggestions could you make toBiocon India GroupSenior Management team to
support their position in achieving sustainable competitive advantage in the
pharmaceutical global competitive environment?
This section is providing important suggestions or recommendation to the top management team
of Mazumdar-Shaw, Biocon India Group to achieve sustainable competitive advantage. Numbers
of value creating strategies are important to adopt to gain and sustain competitive edge over the
competitors in the industry. As a leading pharmaceutical company, Biocon Group has its own
advantages which cannot be matched by other companies but still in fastest growing industry, it
is important to develop strategies. The recommendations enable Biocon to meet its aggressive
goals and objectives. It is important for firm to create and develop value creating strategies that
cannot be implemented by their any current competitor. Hence, the strategies should be rare,
valuable and non-substitutable. Sustainable, competitive advantages are advantages that are not
easily copied and, thus, can be maintained over a long period of time (VanHouten and Miyasaka,
2006). Customer loyalty is very significant factor to achieve competitive advantage.
Achieve Competitive advantage to changing value strategies of Fermentation:
Fermentation is a competitive advantage of the company and it is important for company’s
manufacturing of enzymes. The fermenting capacity of company helps it to improve industrial
process and also build a platform to pursue discovery-led growth. Active Pharmaceutical
Ingredients (APIs) are the key which differentiate Biocon from its competitors and helped to
achieve advantaged (Biocon General Information, 2016). Biocon makes 45 percent of their
revenue from ingredients(API’s) for statins. But, in current situation there is no guarantee that
company will gain any increased volume and order for statins. Company should move for

different patent because if other competitors move in with less priced API’s and steal Biocon
volume then cash flow of company may experience tremendous reduction.
Need to spread resources:
In the field of drug discovery, Biocon need to use more resources because it is facing increased
competition in the field of generics and API’s for statins. The company should need to try
different things other than their traditional area of commodities and business. The significant
change is required towards the field of drug discovery and development. Biocon need to
introduce or determine new competencies in R&D field such as building drug pipeline, project
management, regulatory compliance, manufacturing and marketing. Adoption of these strategies
will surely help the company to generate increased financial strain on its resources. It is time for
Mazumdar-Shaw to take above suggested steps to expand her vision of receiving $1billion
revenue a year.
Company need to improve their brand image in the international market and it can be achieved
through improving their operational activities, marketing their product, setting standard for their
patents and issuing patent from government on India on their strongest patents. The operations
which they carry out in their laboratories should have the best and upgraded technologies.
Employees are important asset of any company and hence, Biocon also need to appoint best
know ledged and skilled engineers and the biotechnological employees in their every branch
across the country. The technology advancements, equipments used should be appropriate
according to the current competitive requirement. Another suggestion is about the procurement
strategies of the company which includes acquiring the material that is required to make the
product or service. From few years company is experiencing clashes with its few suppliers and

they need to improve relationships with suppliers who are providing or can provide quality raw
materials to Biocon. Materials that are used to study the diseases should be made available on
time to have effective results.

References
Biocon General Information, retrieved on Nov 29, 2016 on-line at Biocon’s website,
http://www.biocon.com/biocon_aboutus_factsheet.asp
Biocon General Information, retrieved on Nov 2, 2016 on-line at Biocon’s website,
http://www.biocon.com/biocon_aboutus_factsheet.asp
Chandrasekhar, R. (2006). BIOCON LTD: BUILDING A BIOTECH POWERHOUSE, Richard
Ivey School of Business, University of Western Ontario 906M70, ver. (A) September 13, 2006,
p. 9.
Cappelli, P., Singh H., Singh, J. Useem, M. (2010). The India Way, Harvard Business Press
Enright, M., (1994). The Geography of Competition and Strategy, Harvard Business School, p.4
Ghemawat, P. (2005) Regional Strategies for Global Leadership, Harvard Business Review
Porter, (1980). Competitive Strategy: Techniques for analyzing industries and competitors.
Richard Balaban, “Beyond the Blockbuster,” a research report prepared by Mercer Management
Consulting, www. Amanet.org/PharmaFocus/food_company/mar_04.htm, referenced May 3,
2010.
VanHouten, L. Miyasaka, J. Agullard, K. Zimmerman, J. ( 2006). Adapted from excerpt in
Developing and Effective School Plan: An Activity-Based Guide to Understanding Your School
and Improving Student Outcomes.Handout 4.7-2.