Biocon Case

Situation Analysis:1) Biocon has traditionally been an enzyme manufacturing firm (from 1978 to
1996) with expertise in various fermentation processes
2) In 1996, the firm entered into the biopharmaceuticals market, but was
mostly into the manufacture of generic medicines
3) Most successes of Biocon can be attributed to its production process
efficiency and a good knowledge of the Indian drug market
4) BIOMAb was the first proprietary drug by Biocon. It was developed by
CIMAB, of Cuban origin, and licensed to Biocon for further development. Its
intended use was for head and neck cancer.
5) Biocon had no prior knowledge of manufacturing or marketing oncology
drugs.
6) Biocon also did not have prior experience of getting regulatory approval
for new drugs. Equally, Indian regulatory authorities lacked the knowhow
of new drug approval process.
7) Market for head and neck cancer drug is large in India, but a majority of
patients rely on out-of-pocket expenses for treatment.
8) Merck was expected to launch its own drug for head and neck cancer
called Erbitux by end of 2006.
Problem Statements:1) Should BIOMAb be launched immediately after the phase-2 success or
should Biocon wait for phase-3 results before going ahead with the
launch?
2) What would be the right marketing mix (product, price, promotion and
distribution channel) for the launch of BIOMAb?
Suggested Solutions:Biocon has three alternatives for the launch of BIOMAb.
1) Launch BIOMAb immediately after phase-2 results
a. Positives:i. First mover advantage in an untapped market
ii. Current approval sufficient for market launch
b. Negatives:i. Lack of Biocons history in manufacturing cancer drugs can
lower BIOMAbs credibility
ii. Competing drug, Erbitux, already phase-3 tested and can
work as a disadvantage for BIOMAb
iii. Under-developed sales channel can affect the success of
BIOMAb
2) Launch BIOMAb simultaneously with a host of cancer generics
a. Positives:i. Additional revenues from generics can support other
activities
ii. More face time for medical-reps in front of doctors
b. Negatives:i. Dilute the BIOMAbs unique position as Biocons proprietary
offering

3) Launch BIOMAb after phase-3 trials and after developing a sales channel
for cancer drugs
a. Positives:i. Success at Phase-3 will put BIOMAbs clinical testing at par
with its competitor Erbitux
ii. Well-developed sales channels will ensure smooth delivery of
product
iii. As the launch of Erbitux, which would have entered the
market by then, would have created awareness amongst
customers, BIOMAb can be sold as an improvement over
Erbitux owing to its better performance in clinical trials
b. Negatives:i. Losing out on the first mover advantage
ii. BIOMAb will have to play catch-up game initially
As can be seen from the above statements, each option has some positives and
some negatives. However, on closer examination, one can see that option 3, i.e.
launching BIOMAb after phase-3 trials, seems to be more prudent. Given
that Biocon had had little experience in marketing cancer drugs prior to launch of
BIOMAb it is best suited to spend some resources in building the appropriate
sales channel for the product using some generic cancer drugs prior to the
launch. This time can simultaneously be used to get the Phase-3 trials report.
Phase-3 trials are also important for Biocon as it is a new player in the cancer
drug market and a more tested product will add to its credibility.
With regards to the marketing mix for BIOMAb, the following can be stated:1) Product:- Technically, the product has proven itself to be better than
Erbitux, its only competitor. Thus losing out on first mover advantage need
not be a major worry. The identity of BIOMAb as the first proprietary drug
by Biocon is important for Biocons future and hence the launch of BIOMAb
should be separate from any generic drug launch.
2) Price:- As majority of patients belong to middle-income group and the
source of payment is out-of-pocket cash, pricing should be such that this
mass market can be catered to. Also, the fact that only a fixed dosage of
BIOMAb is required as compared to the continuous dosage of Erbitux can
be used to indicate the patients of the cost effectiveness. Given the plant
investment to be $25 million, as per the estimates of VP (Finance), the
pricing can be anywhere between $2000 to $3000 per dose and this would
lead to a break even period of about 2-4 years.
3) Promotion:- It is imperative to target both the oncologists and the patients
and their families. While patients rely heavily on the doctors prescription
in such cases, families too need to be educated about product usage. This
translates into a requirement of extremely well-trained medical reps who
have good exposure to handling cancer drugs. The 100% success rate and
no skin rashes can be important messages to carry.
4) Place:- Direct selling can be a good option as it would cut down margin
leakage along the traditional channels. This becomes more important as
the product cost is high and pricing needs to be competitive. Also, special
handling requirements (that of refrigeration) and lack of any need of
emergency supply of the drug means that direct selling can be a viable
option.