Kiran Mazumdar-Shaw wants the biotech company to break into the $1-billion club by 2018. But with stiff competition, restrictions on drug trials and political uncertainty in the Middle East, it will not be an easy target to achieve
Kiran Mazumdar-Shaw is on a tight deadline. Plans she had set in motion at least a decade ago are nearing fruition. According to the timetable, the founder chairman and managing director of Biocon has four years to increase the biopharmaceutical company’s revenues from its current $487 million to $1 billion. This is an ambitious goal but, then, Mazumdar-Shaw (61) is yet to shy away from a challenge. “Risks, after all, are part of an entrepreneur’s life,” says the businesswoman who started the company in a garage in 1978.
In 36 years, Biocon has evolved from an enzyme-manufacturing company to a complex drug discovery and production business. It is the largest biologics company in India (a biological drug is made from a variety of natural sources such as humans, animals or microorganisms), and the fourth largest insulin provider in the world. Its drug discovery pipeline straddles the worlds of cancer and diabetes, two of the five most profitable diseases for big pharma companies.
With the launch of its novel biological psoriasis drug Alzumab in 2013 and its biosimilar breast cancer drug early this year, Biocon has made it clear that it is a determined and hungry player in the competitive pharmaceutical industry. (A biosimilar product is “highly similar” to a pioneer drug and is a follow-on version of original biological medicines.)
And it does not want to lose its momentum. Biocon is getting ready to take its subsidiary company Syngene, a contract research and manufacturing arm, public within the next few months.
A lot, however, could go wrong. Its multi-million dollar insulin production facility in Malaysia will be commissioned in 2016, but its operational status is dependent on clearances from local regulators. Its oral insulin drug, which is touted to be a game changer in managing diabetes, is still under trial. It could take at least another two years to hit the market. If the trials are successful, then Biocon’s future success is assured. If not? Mazumdar-Shaw refuses to entertain that thought. “Getting into novel programmes was a risk. I understand risks well and manage them in a way that it doesn’t impact the company badly,” she says. She has, however, hedged her bets: Biocon’s $1 billion target is not dependent on either the drug or the Malaysian plant.
Meeta Shetty, an analyst with HDFC Securities who tracks the company regularly, says riding risks is not unusual for companies such as Biocon and Dr Reddy’s Laboratories. They not only have research and development (R&D) units but have also established lines of business in generics and branded formulations. “These companies are not just waiting for one under-discovery drug or molecule to click. They have a well-balanced approach. It’s a balanced risk… they do research and keep making profits,” she says.
Biocon follows a similar model. Apart from its research services, Syngene and Clinigene (a clinical research organisation), the company is betting heavily on four streams of revenue. The first is its small molecule active pharmaceutical ingredients (API) business, which supplies drug ingredients to other companies.
In the first quarter of 2015, Biocon filed a set of abbreviated new drug applications (ANDA) with the US Food and Drug Administration (FDA) requesting approvals to market new formulations of existing drugs. Unlike other Indian pharama companies such as Ranbaxy or Dr Reddy’s Laboratories, Biocon had not been selling small molecule generics in highly regulated markets like the US, but is now entering the market. It is putting in place a pipeline of difficult-to-make, technology-intensive molecules to tap the lucrative and growing international generic market.
Its second stream of revenue is its biosimilar drug business which, unlike small molecule generics, has exacting regulatory, clinical and development requirements because of which they are 20 to 50 times more expensive than conventional drugs. Biocon expects its biosimilar drugs to generate 20 percent of its sales by 2018, up from about 5 percent of revenues in FY12.
The third revenue stream includes branded formulations such as Insugen, Erypro Safe (nephrology), Statix (anti-cholesterol) and Telmisat (anti-hypertension), which are sold only in India. The pharma company’s presence in the chronic disease segment in the country is represented by over 80 brands spread across seven therapeutic segments: Diabetes, oncotherapy, nephrology, cardiology, immunotherapy, comprehensive care and bio-products.
And finally, there’s its decade-old novel molecule business. The Bangalore-headquartered company is working on six molecules (three for cancer, and one each for diabetes, auto-immune diseases and ophthalmology).
A pharma expert from a global consultancy says that Biocon has an edge over competition because of its collaborations with international behemoths such as Mylan and Advaxis. “These are big names in the pharma sector. The collaborations work in Biocon’s favour giving it a global edge and credibility,” he says.
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(This story appears in the 03 October, 2014 issue of Forbes India. To visit our Archives, click here.)