Indian Institute of Management

Kozhikode

Marketing Management

Case Analysis: Biocon: Launching a new cancer drug in India

Submitted to: Prof. Rahul Kumar Sett

Submitted By:

PGP/14/258 Alok Kumar PGP/14/279 Lokesh Singh

PGP/14/280 Mahtaab Kajla PGP/14/283 Naveen Vyas
PGP/14/303 Shruti Kabdal PGP/14/304 Sneha Ramteke
 Situation Analysis

 Biocon was the first Indian company to manufacture and export enzymes to US and Europe in the year 1979.
 It was primarily into enzyme manufacturing from 1978 to 1997.
 Eventually, in 2001, it started manufacturing insulin.
 Formed a Joint Venture with CIMAB to develop and market BIOMAb in India

About BIOMAb:

 First proprietary drug to be launched by an Indian Company.

 Provided an opportunity for Biocon to learn about the mammalian cell technology.
 Would help Biocon to build new research and marketing capabilities.
 Specially aimed at head and neck cancer treatment.
 Target segment for BIOMAb was the strongest in India with 21% of cases and 27% of
deaths worldwide from head and neck cancer occurring here.
 In India, head and neck cancer constituted 28.1% of total cancer incidents and 26.73% of
cancer deaths.
Problem Identification

 To take a decision on whether BIOMAb should be launched immediately after 2nd phase trials or wait for 3rd
phase results
 To develop the marketing mix (Four Ps) for BIOMAb

Alternatives

Immediate launch of Launch of generic products Simultaneous launch

BIOMAb followed by launch of
BIOMAb

Pros: Pros: Pros:

 First mover advantage
 No competition during entry
 Opportunity to strengthen sales
capabilities before the launch of
BIOMAb
 Availability of phase three results
will justify the launch of
BIOMAb later
 As Erbitux will enter first, it
would facilitate the process of
educating patients for this genre
of drugs
 Could provide a better
opportunity to make a
compelling pitch to Oncologists
 Sales representative are likely to
get more face time with the
doctor
 Additional revenues to support
other involvements

Cons:
Cons:  It may dilute Biocon’s image as
Cons:  First mover advantage lost the first Indian company to

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 Oncologists might be skeptical  Stiff competition from already launch a proprietary drug
due to non availability of phase existing Erbitux in the market
three results
 Monetary, legal and social
implications in case of unexpected
behavior of the drug are
tremendous.
 Biocon has limited sales
capabilities and zero experience in
selling and marketing oncology
drugs.

Recommendations

Product:

Biocon should delay the launch for the 3rd phase results as it lends more credibility to the
product. Meanwhile, they should build their own sales capabilities by launching cancer generics
till phase 3 trials are completed. After completion, BIOMAb should be launched independently.
Lower price of and better attributes would help gain market share and make up to some extent
for loss of first mover advantage.

Price:

Biocon should launch product at $2000 per dose . As can be seen from the calculations below,
the product would break even in 3.3 years as against 6.75 years with a price of $1000 per dose.

Although it would break even sooner with a price of $2500 per dose, keeping in mind the Indian
consumer, a price of $2000 would seem reasonable (lower than that of its competitor) and would
also be safe enough so as not to project a low quality image for the product.

Price Analysis
Estimated Capital Investment $25,000,000 $25,000,000 $25,000,000
Price /Dose $1,000 $2,000 $2,500
Cost of Goods Sold/ Dose $250 $500 $625
R&D /Dose $150 $300 $375
Marketing Expense $275 $550 $688
Profit /Dose $325 $650 $813
Break even doses 76,923 38,462 30,769

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 Market Analysis
No. of Incidences 190000 190000 190000
No. of Affordable Patients 1,900 1,900 1,900
No. of doses per person 6 6 6
Total no. of doses per year 11,400 11,400 11,400
Break even period (years) 6.75 3.37 2.70

Place:

The product should be sold directly to doctors because drug sold through traditional channels
will increase the cost by 25.6% whereas direct selling will increase costs only by 1.5%. Also
considering market size is relatively small 24x7 services may not be required. As it has to be
refrigerated all the time and handled carefully, local pharmacy adds little value.

Promotion:

Biocon should highlight the fact that BIOMAb had shown 100% response in patients when used
in combination with radio and chemotherapy. They should use the fact that it does not produce
skin rashes to their advantage. Biocon should also leverage BIOMAb’s Indian origin.