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

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 PGP/14/280 PGP/14/303

Alok Kumar PGP/14/279 Mahtaab Kajla PGP/14/283 Shruti Kabdal PGP/14/304

Lokesh Singh Naveen Vyas Sneha Ramteke

Situation Analysis 

Biocon was the first Indian company to manufacture and export enzymes to US and Europe in the year 1979.

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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

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To develop the marketing mix (Four Ps) for BIOMAb

Alternatives

Immediate launch of BIOMAb

Launch of generic products followed by launch of BIOMAb

Simultaneous launch

Pros:  First mover advantage  No competition during entry

Pros:  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

Pros:  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:

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Cons:  First mover advantage lost

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

 Oncologists might be skeptical due to non availability of phase 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.

 Stiff competition from already existing Erbitux in the market

launch a proprietary drug

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.

Estimated Capital Investment Price /Dose Cost of Goods Sold/ Dose R&D /Dose Marketing Expense Profit /Dose Break even doses

Price Analysis $25,000,000 $1,000 $250 $150 $275 $325 76,923

$25,000,000 $2,000 $500 $300 $550 $650

$25,000,000 $2,500 $625 $375 $688 $813

38,462

30,769

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No. of Incidences No. of Affordable Patients No. of doses per person Total no. of doses per year Break even period (years)

Market Analysis 190000 1,900 6 11,400 6.75

190000 1,900 6 11,400

190000 1,900 6 11,400

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.

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