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Biocon – Case Assignment Questions Essay

1. Assuming Biocon receives approval for BIOMAb, should it launch the drug immediately or conduct phase 3 trials before launch? Elaborate the various elements of your action plan. If Biocon receives approval for BIOMAb, the management team will need to carefully consider what the best course of action is moving forward. If the company elects to launch the drug immediately, they will be able to have the first mover advantage, reaching the market before their closest competitor, Erbitux. BIOMAb will also be able to put themselves on the map as they would be the first ever, proprietary drug developed and marked by an Indian firm for Indian patients. The Indian regulatory authorities may also cause a lengthy Phase 3 trial due to their lack of experience with bringing a proprietary drug to market, as evidenced during BIOMAb’s Phase 2 trials. However, even with all of the above listed considerations in mind, Biocon should conduct the phase 3 trials before launching the BIOMAb. BIOMAb is a superior product to Erbitux, as shown in the 100% response rate when combined with chemo and radiotherapy.

There are also fewer side affects, a more patient friendly treatment plan, and BIOMAb will be able to offer the drug at a discounted price. Even if BIOMAb is not able to be the first drug to the market, they will be able to make up for those potential loses in the long run. BIOMAb will be entering this marketplace for the first time, and the company will want to enter the market with as strong of a message as possible. BIOMAb is entering this market for the long run, and overcoming any perceptions of shortcuts, lack of quality, or anything less than cutting edge will last well beyond the life of the BIOMAb product. There are only 300 oncologists in this market Biocon cannot afford to miss. While awaiting Phase 3 approval, Biocon can roll out its direct sales force, offering its suite of generic oncology drugs. This waiting period will give the sales force an opportunity to develop roots in the marketplace and to raise awareness of BIOMAb before it is even on the market.

The Phase 3 approval process will serve as an advantageous ramp up time so that Biocon is fully prepared to enter the marketplace on better footing with BIOMAb. This time will also enable Biocon to better develop the infrastructure they will need to optimize its direct distribution channel. Biocon is a new player in bringing a new drug to the market and they will want to ensure that the quality of their product is maintained from the manufacturing floor into the doctor’s office. Assuming that BIOMAb indeed loses its first mover advantage, its value proposition will be its results, which are dependent on properly controlled product. Biocon wants to become a permanent fixture in this market and the company needs to do everything in its power to deliver its value proposition of innovation, quality, and affordability.

1. How big is the current and future market opportunity in BIOMAb?

The current market opportunity that Biocon is currently targeting with BIOMAb is composed of the Head and Neck cancer patients within India. More specifically, Biocon is focused, in the short term, on those Head and Neck cancer patients that can afford to pay, estimated at 1,900 patients. These patients will be the ones officially marketed to, but given the Indian’s markets preponderance for using drugs “off the label”, the unofficial market can be target at all cancer patients in India that currently able to afford treatment, 7,114 patients. Given India’s continued economic growth rate (9% annually) and ever expanding population base (1.4%), all of the preceding numbers are certain to grow in the relatively short term. The compounded impact of these different rates will cause these India based estimates to grow exponentially year over year.

In the long run, BIOMAb in India is just the tip of the iceberg. CIMAB and Biocon’s current joint venture is to develop and market the molecule on the Indian subcontinent. If Biocon is able to thoroughly manage and develop all aspects of the supply chain (manufacturing, distribution, sales, marketing, etc), Biocon would have good reason to go back to the negotiating table with CIMAB. The success of CIMAB’s other partner, YM Bioscience, is not guaranteed and there is no reason that Biocon cannot unseat them in the long run. If Biocon is able to achieve this, along with the Phase 3 trials, the worldwide Head and Cancer would be open to the company, to say nothing for the “off label” prescriptions. Given the worldwide population growth, economic expansion, and aging populations, the long-term market for BIOMAb is practically limitless.

3. Who is the buyer for BIOMAb? What is the decision making unit in this case? What are the benefits that each member of the decision making unit seeks from BIOMAb?

The buyer for BIOMAb is (are) the income provider(s) of the family, whose member (s) has (have) been affected by head and neck cancer or another indication, since off-label usage is very common in India. The structure of India’s health care system is such that it is estimated that 95% of BIOMAb’s patients (end users) are going to be self-paying. Therefore, the cost of treatment will be transferred to the earning member of the family. Adult patients have the right to make treatment decisions for themselves, so patients and their families are the decision makers for BIOMAb in this case. As the case states, the oncology doctors are the main influencers, as they diagnose and make ultimate recommendations to their patients as to how extensive the treatment should be. The benefits that each member of the decision making unit (i.e. patients and their families) seeks include BIOMAb’s effectiveness in the treatment of head and neck cancer in conjunction with radio and chemotherapy, minimal side-effects (immediate side effects, as well as those that might be associated with long-term use), and drug’s affordability.

Should phase-2 trials be conducted by Biocon for other indications, the patients will also want to seek same benefits from the drug for other types of cancer. Based on the information provided in the case, BIOMAb’s effectiveness and minimized side effects are a given. After all, phase-2 trials proved that the tumor was killed 100% of the time when the drug was used in combination with radio and chemotherapy. Moreover, unlike competition, BIOMAb did not produce skin rashes because due to the drug’s unique formula. An important factor will be affordability. Wealth distribution is very uneven in India, and 1/4 of the nation’s population earns less than the government-specified poverty threshold of $0.40/day (Wikipedia). The patients, as well as their doctors, will want to make sure that they can afford to complete treatment to ensure best possible outcome.

BIOMAb has a tremendous advantage in this category compared to Erbitux, as it calls for a definite (i.e. six-dose) treatment cycle; total treatment cost can thus be effectively quantified. Another benefit that patients will be seeking is the ability of BIOMAb’s sales reps to educate them and their families. Although this is not one of the drug’s literal benefits, it will be a crucial factor since patients’ face time with doctors and specialists is very limited in India. Pre-educating end users and their families on the benefits, side effects, and other specifics of the drug will ensure that oncologists’ time with each patient is maximized.

4. Develop a detailed launch plan for BIOMAb. Provide your rationale for the product portfolio, pricing, channel, and communication decisions. Biocon’s launch of BIOMAb is complicated by several factors. The first of these is the lack of phase 3 clinical trials, which would theoretically provide more evidence of the drug’s efficacy and safety on a larger patient pool. This is complicated by the fact that BIOMAb’s competitor comes in the form of a drug called Erbitux, which does have phase 3 trials completed and global acclaim. Biocon’s fear is that if they do not launch before Erbitux, they will lose the first to market advantage they feel necessary to succeed. In this case Biocon should take the time to complete phase 3 clinical trials on the basis of what patients and their families expect from a cancer drug. It was already stated that Erbitux had worldwide acceptance due to having extensive trials not limited to head and neck cancer that proved it was both safe and effective.

In the eyes of the consumer the single most important concern here is that the drugs are going to work and that death can be avoided. Being first to market has the risk of offering only a temporary advantage until Erbitux actually becomes available. At this point if phase 3 trials are finally completed and the results are not favorable there would be severe consumer backlash and possibly action from the government. Finally, Biocon mentioned being able to appeal to doctor’s via existing relationships in order to get their product sold. Realistically, doctors care more about clinical trials as a means of deciding what drugs to offer. By moving forward with phase 3 trials Biocon would have real data to give these doctor’s the “hard sell.” The strategy is not just to maximize profit, but build a sustainable brand built on trust and results in the pharmaceutical industry. Building upon that is the question of whether or not to sell generics in addition to BIOMAb and when to sell them. The argument given was that selling generics would give the sales force good experience and at the same time build a solid revenue base.

Biocon should indeed take this route for these very reasons. This will allow them to still bring in revenue while the phase 3 trials of BIOMAb take place. Once the trials are complete, selling them alongside BIOMAb will allow them to capture more of the market when in front of doctors who want to have offerings for price conscious patients. On top of the first two concerns is the issue of price and what impact it would have on both market size due to affordability and perceived quality in comparison to Erbitux. Biocon, after confirmation of the extraordinarily high effectiveness of BIOMAb should charge $6000-7000 per dose or rather whatever would be equivalent to a few steps more than Erbitux. Biocon’s CEO desires to build a brand not based on low price but rather the value provided by the products. The hindrance to this route of course is the Indian cultural perception of what the price should be and the fact that many people cannot afford such cost. However, Biocon is already well aware that their effective target market is small so for those people the price is potentially less important.

However, Biocon can market the fact that it is a six dose treatment path rather than indefinite dosages like Erbitux so in the long term people save money. Additionally they can get creative here and offer something like Walmart’s layaway program. Patients can agree to pay in equal installments up until their dosing day. On that final day when payment is received they are administered the dose. Payments for the next dose begin and the cycle repeats until the dosage time. Additionally, Biocon is concerned about the sales methodology with regards to going through the usual channels of CFAs, wholesalers, and pharmacies or selling it directly to doctors. By going through the typical channels they have the advantage of reaching more doctors who have existing relationships with certain sellers.

In this case though, it would fit more with their overarching strategy to sell direct. The higher cost of the drug would be less apparent when not being sold side by side with competitor drugs through a pharmacy or wholesaler. This would also allow Biocon to sell the generic drugs and BIOMAb side by side as a complete market solution for price conscious people. The savings from not having a middleman can be passed on to the doctors via multi-patient discounts or similar. Finally, the quality of the product could be ensured since BIOMAb requires such delicate handling. This is important for the Biocon brand image moving forward as there can be no slip ups when it comes to delivering a product critical to treatment of cancer.

The direct sales also tie in with overall marketing communication planning since Biocon would not only control distribution of the product, but also the sales communication. Biocon should take this time during sales to educate doctors on the results of the phase 3 trials and provide materials for patients that explain the availability of Biocon reps during their treatment cycles. Biocon reps, as mentioned in the case, should educate the patient on their product and provide other helpful cancer information and family services in the form of support group references, etc.

5. How has Biocon’s strategy and positioning evolved over the years? What role does BIOMAb play in Biocon’s overall strategy? Biocon’s strategy and positioning have greatly evolved over the years. The company started as an enzyme manufacturing company that exported its products from India to the United States and European food processing industry. During this time the company developed an expertise in various fermentation processes. The company soon realized that the global enzyme market was limited to about $1 billion and decided to change its strategy and position itself to compete in the biopharmaceutical market, which was a $10 billion dollar market that was rapidly approaching $80 billion. Biocon was positioned nicely to move into the space and compete in the generic drug sector. They were particularly positioned well to manufacture statins. Statins were a great fit for them because they were small molecules that were easy to manufacture and Biocon already possessed the technical capability to do so drawing on its strength in the fermentation process and enzyme manufacturing.

This short-term strategy to enter the market focused on developing globally competitive processes that relied on their existing expertise to manufacture drugs whose patents were expiring. After successfully entering into the pharmaceutical market through statins, the company was ready to continue on a growth path and move on to their medium/long term phase by entering into larger molecules in the form of insulin. Again, Biocon identified a large and rapidly growing market where they saw their expertise in fermentation giving them an edge and ability to compete. The results were consistent with their first direction change and they were again very successful gaining over 10% of the Indian insulin market share. During this phase of their strategy they partnered with Clinigene to conduct clinical trials comparing it to the market leaders. The current phase of Biocom’s strategy is to shift the company’s focus to the development of proprietary drugs.

Management again saw that the market they were competing in would soon shrink due to the maturing of the Indian drug market and they would experience enormous price pressure as a result. Their vision for the company was to develop drugs that no other companies had yet succeeded in bringing to market, and in doing so reaping the benefits of the huge payoff. BIOMAb is the essence of the final and long-term stages of Biocon’s overall strategy. They are using their collaborative strategy to partner with CIMAB thus giving Biocon the opportunity to develop and market the molecule. This is a huge step towards the long-term goal of moving the company to a discovery and development focused biotech firm.

BIOMAb is very important to this next phase of the company’s growth. In the past they have relied on their expertise and experience carrying over from the enzyme development background. However in this next phase they are entering into uncharted territory and as a result will need to prove they have the capability to adapt their expertise and continue to be successful in areas that are outside of their experience scope. The success of the BIOMAb phase of Biocon’s overall strategy will be key to the future of the company and could indicate that the strategy they have in place will continue to provide the growth and profitability they seek as a biotech firm.

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