Korea entry strategy (biocon) Hypothetical

Market entry strategy for

Mihir Pandit [PC-09]Jigar Raval [PA-08]Vipul Patil [PA-20]

Bhakti Shethia [PC-20]Sneha Agarwal [QA-17]

OUTLINE

Biocon-Snapshot

Country Choice-Why South Korea?

External Challenges :Drivers and Restraints

Forecast trends

Entry Mode Strategy

Target market and Positioning

Strategic Implementation

Controls

BIOCON SNAPSHOT

VISION

Biocon is an emerging, global Bio-pharmaceutical enterprise that is focused on developing affordable products and services for patients, partners and healthcare system across the world.

Biocon is committed to:

• Reducing therapy costs of chronic diseases.• Research and marketing partnership that provide global access.• Leveraging the India cost advantage to deliver high value, licensable R & D assets.

Source: http://www.biocon.com/docs/Biocon_H1FY1_MediaPrstn.pdf

http://www.worldlifeexpectancy.com/country-health-profile/viet-nam

http://www.biocon.com/docs/Biocon_H1FY1_MediaPrstn.pdf

COMPANY PROFILE




COMPANY PROFILE




PRODUCT PORTFOLIO




PRODUCT PIPELINE

2 New drugs in late stage clinical trials




CEO PERSPECTIVE: WHY SOUTH KOREA?

Focus on high growth product classes

Continuous monitoring of Biobetters globally.

Scalable production facilities

Parallel product registration in developed markets products launch quickly and gain advantage.

Partnerships with CROs will help speed up the drug development and registration process.

COUNTRY CHOICE

Why choose South Korea Biosimilar

market?

•Long history in manufacturing biologicals •A regulatory pathway for biosimilars

Requires upfront investment and infrastructure for the development, much lesser than biologics

Source: Frost & Sullivan analysis

Exports are expected to contribute as much as 50% of the total revenues.

•Government’s policy to promote the biosimilars industry •Korean Food and Drug Administration (KFDA) •BLA (biologics license application)

By 2030, its total number of retirees is forecast to be approaching 40% of the population.

http://www.icis.com/blogs/asian-chemical-connections/2012/11/south-koreas-demographicchall/#sthash.2x5UWyfc.dpuf

•Universal coverage of population through social health insurance (SHI) since 1989•High out-of-pocket payment, amounting to 35-40% of total health expenditure•Social insurance for long-term care, introduced in July 2008

COUNTRY CHOICERank Disease Deaths %

1 Stroke 38497 17.19

2 CHD 20496 9.15

3 Lung Cancer 16437 7.34

4 Diabetes Melitus 13766 6.15

5 Stomach cancer 12794 5.71

6 Liver cancer 11797 5.27

7 Suicide 11408 5.10

8 Road traffic accident

7570 3.38

9 Colon cancer 7562 3.38

10 Liver disease 7406 3.31

Biocon’s Product portfolio is very suitable to penetrate market

Source : WHO health statistics

2010 2011 2012 2013 2014 2015 2016 20170.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

20.0 20.4 20.8 21.8 22.9 24.1 26.0 28.1

30.0 30.6 31.2 33.1 35.137.2

40.945.05.0 5.1 5.2

5.45.6

5.9

6.2

6.6

6.0 6.2 6.46.9

7.48.0

9.0

10.1

Human Growth Hormone Erythropoietin

Monoclonal Antibodies GCSF

COUNTRY CHOICEBiosimilars Market: Revenue forecasts (Korea), 2010

Years

Reve

nues

($m

illio

n)

Source: Frost & Sullivan analysis

Biosimilar market is growing very rapidly and South korea in particular, with plan to become a leading biosimilars player.

ENVIORNMENT

1. 35% R&D biosimilar Investment in 2012 while in chemical drug development accounted for just 12 %.

2. Tailored consulting programme by KFDA

3. “Columbus” Project in 2011

4. Out of 36 biosimilars 47% are Mab included in korean pipeline.

5. Global leader with 17 mAb portfolio by 9 korean co.

6. Paradigm shift away from imitation towards innovation by focus on biobetters.

Regulatory enviornment Operating environment

1. New pricing system

2. Pharma industry competitive enhancement plan:

3 criteria:

Four benefits from govt:3. Drug price benefit4. Tax system support5. Financial support6. R&D support

• Chalebols: Business conglomerate like Samsung and LG

• Samsung to invest 389 million in biosimilar devlopment.

• Extreme pressure on local generics.(limited resources)

• EU-FTA: July 2011• US-FTA March 2012• Tariff abolition• Strengthen IPR protection

• Current negotiation with ASEAN countries and other countries.

• Korean govt planning to invest 1 trillion won.

• Democratic union party if elected-renegotiate .

Local Industry and FTA’S

ENVIORNMENT

EXTERNAL CHALLENGES:

DRIVERS:

1. Strong experience + Active government support

2. Accessibility +Cost

3. Focus on high growth G-CSF &Mab

4. Early mover advantage

5. Strategic partnership: Korean Biosimilars co. +foreign co.

6. Exmple: Samsung+ Quintiles

RESTRAINTS:

1. Large capacities for approval (FDA/EMEA/PMDA)

2. Deep pockets.

3. Cost Effectiveness Major threats in Asia

4. Ambiguity in nomenclature.

5. Reluctance by physicians

EXTERNAL CHALLENGES:

Forecast assumption

1. Market volume

2. Biosimilars penetration

3. Biosimilars market share

4. Economy indicators

Revenue forecast discussion

Among four segments1.Erythropoitins : Example: Espogen by LG life science

2.Human growth hormone: Example: Euotropin

FORECAST TRENDS

ENTRY MODE STRATEGY

Source: http://www.imshealth.com/ims/Global/Content/Home%20Page%20Content/IMS%20News/Biosimilars_Whitepaper.pdf

http://www.imshealth.com/ims/Global/Content/Home%20Page%20Content/IMS%20News/Biosimilars_Whitepaper.pdf

ENTRY MODE STRATEGYCurrent Scenario: Innovation is not an easy game and my business model proves it can be done through partnering. One problem with India has been that we are not good at innovation. My model has

been about partnering for innovation. - Kiran Mazumdar Shaw

New Proposition : Strategic alliance with LG life science ltd as an entry mode strategy.

Vision : To become a "top-tier life sciences company with world-class new drugs"

Main aim: Risk sharing & Increasing competitive strengths

• To enter the South Korean market • Health profile of South Korea• Extensive sales & marketing network • R& D resources & know-how• Emerging as a global top brand in the

diagnostic field• To add to the existing product

portfolio

RATIONALE FOR SELECTION

ENTRY MODE STRATEGY

COMPETITIVE ADVANTAGE OF ALLIANCE HURDLES

Fast entry into the foreign market Minimum risks Better understanding of the host country Access to new technology More efficient production & innovation

Price – plays a key role Competition with local Biosimilars Huge promotional investment Changing regulatory policies Conflicts of control

TARGET MARKET

Aging korean population demanding affordable therapy for diabetes, cancer & Cardiovascular diseases

Large pool of patients Prevalence of diabetes- 8%, Incidence of disease – 0.4% per year Insulin therapy Huge demand for affordable products Non-small Cell Lung Cancer drug market Majority of patients in stage III or IV at the time of diagnosis

POSITIONING

Commodity Differentiated

BIOSIMILARS

• Payer driven• Acute treatment• Price driven• Lower risk of immunogenic reaction• Fully understood mode of action

• Chronic treatment• Limited competition• Higher risk of immunogenic reaction• Mode of action not clear• Influenced by multiple stake holders

PLACEPROMOTION

STRATEGIC IMPLEMENTATION

PRODUCT PRICE

• Tailor go-to-market approach • To local dynamics, both in terms of sales force model and marketing offering• Target Therapy areas• Build trust and network development

• Human Insulin• Insulin Lispro• Monoclonal Antibodies• Oncology products• Specialty and primary care products

• lower cost biosimilar drugs•Value based pricing•Payer Strategy

• South Korea• Export drugs to Asia and developed countries (EU, USA) through LG’s distribution network

CORRECTIVE ACTIONCOMPARE ACTUAL Vs PLANNED PERF.

CONTROLS

SETTING STANDARDS MEASURING ACTUAL PERFORMANCE

• Build lasting, collaborative relationships with our customers• To check the above, consumer satisfaction and feedback website• Doing what’s right – for patients, customers and employees

•Transaction strategy to balance and grow portfolios• Identification and evaluation of investment opportunities• Financial Report

• This is the point of decision making• A thorough understanding of highly complex and dynamic healthcare systems • To be done quarterly initially and take proactive actions

•In case of failure ,send a specialized team to assess the situation(risks and benefits of continuation). • Quality system design and optimization• GCP, GLP, GMP and cGMP compliance and risk mitigation

PUBLIC OPINION

India- Global leader in Biosimilars