MARKET ENVIRONMENT •
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The global biopharmaceutical industry is expected to exceed $165 billion in 2015, from $90 billion presently, reports IMARC. The biopharmaceutical market has benefited from the need for pharmaceutical manufacturers to boost output. The market continues to grow due to biopharmaceutical capacity to outperform traditional small molecule drugs.
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The expected investment of Rs.150-Rs.180 cr in R & D by BIOCON is expected to drive the growth and improve margins. The market for insulin is expected grow in coming years due to growing number of diabetics patients. The deal with Pfizer for insulin will help biocon double its revenues in 5 years. Lastly, global presence through acquisitions, joint ventures and strategic alliances will help the company to increase its turnover with its quality products.
Technological Environment •
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Technology in this industry do affect the revenue and growth significantly. The breadth and scale of Biocon’s manufacturing technologies has helped biocon in transiting from a niche player in specialty enzymes to a global provider of biopharmaceuticals spanning small molecules, recombinant proteins, peptides and monoclonal antibodies.
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The important thing here is time to market which also affects the success of a newly launched product. Most of the companies including Biocon has started externalizing R&D in order to increase number of R&D programs and to expedite time to market.
Economic Environment •
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Indian Economy is expected to grow by 7.6% in 2012-13 from present 6.9%. Per capita GDP is expected to grow by 8.1% in 21012-13. It is also interesting to know that our economy is third largest in terms of purchasing power. There also exist continuous efforts by finance ministry and RBI to derive growth by lowering borrowing rate which will help to lower the cost of debt.
Regulatory Environment •
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exists
Control •
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Central Drugs Standard Organization which central
regulating body for this industry. There is also Drugs and Cosmetics Act 1940 and Rules 1945 for conducting clinical trails. Stringent norms for Patents, Marketing of the product and clinical trials helps the Indian companies to compete globally. 100% FDI in Bio-tech and pharma will help in expansion of production facilities
Political Environment •
Politics has no great role to play in this industry.
Socio-cultural Environment •
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Growing awareness among patients regarding the product, its licensing and quality approval With the increase in population, number of patients will also increase but with greater knowledge base More people have started using bio pharma products which are very successful in curing a particular disease
International Environment •
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Biocon is India's first biotechnology company to export microbial enzymes to USA and Europe. Biocon is ranked among the top 20 global biotechnology companies (Med Ad News), 2008. Biocon has received commercial approval from 23 countries to market and sell its products. Globally, Indian pharma products are said to be price competitive because of the reducing price controls from the government.
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The STATINS, one of the products, alone, has 20% global market share and gives 30% revenue to biocon. Partnership, joint venture and strategic alliance overseas will be very helpful to compete globally. There are foreign players who give tough competition to biocon in terms of installed capacities and greater financial strength.
Environment
Nature of Impact
Impact of each factor
Market
Good growth potential, global presence
Technological
Use of state of the art technology approved by the overseas as well
Economical
Promising future of the economy which is expected to be industry friendly
Regulatory
Strong regulations, protecting the domestic companies
Political
Politics had no great role in the industry
Socio-cultural
Wide consumer base with proper knowledge, Expected huge demand of the
Critical Success Factors •
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This are the factors which are very crucial in the success of the business. This factors needs to be understood carefully before deciding upon the strategies and policies
CSF Probability of Impact
HIGH
Impact on business
HIGH
MEDIUM
Market, Regulatory
Technology, International
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Economic, Sociocultural
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MEDIUM
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LOW
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LOW
Political
Opportunities •
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To do a series of licensing deals overseas for the sale of the product INSULIN which is expected to be the revenue leader of the Biocon. One of its products, IN-105, which is expected to come in near future, has the potential to eventually replace injectable insulin in future. Thus, it will be globally competitive. The global pharmaceutical industry is now focusing on serving the emerging markets which have strong growth prospects fuelled by their rising GDPs, increasing access to healthcare and improving regulatory environment.
Threats •
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The changes in regulation may affect the company. Price controls, if any, may affect the competitive advantage in terms of lower cost. The major dependence on some customers will affect the revenue if those customers are lost. For eg. ajor dependence on Bristol Myers Squibb (BMS) – a large customer for recombinant human insulin and custom research from Syngene. Tough competition from Chinese, U.S. And European companies who have huge installed capacities and greater financial strength.
