A Research

Report On
Corporate Social Responsibility in
Pharmaceutical Industry India
Submitted In Partial Fulfillment of the Requirements
For The Bachelor degree of commerce
(2015-2016)
(Calcutta University )

By
Punam Kedia
Roll No. ---------Bcom Final year

Project Guide

DECLARATION

I hereby declare that this report is original based on my own work and that this
Report or any part thereof has not been submitted by me for any other degree or
course requirement. All references have been duly acknowledged.

Name: Punam Kedia

Batch: 2015-16

Signature of student

PREFACE

The conceptual knowledge acquired by management students is best manifested in the projects.
As a part of curriculum of Bcom third year, I have got a chance to prepare a report on corporate
social responsibility in Pharmaceutical industry India. The present project gives a perfect vent
to my understanding of the Human Resource specially the most modern concept of CSR and
Community Relations.
The project report entitled Corporate Social Responsibility in Pharmaceutical industry
India.
The report will provide all the information regarding the CSR policies & practices in
Pharmaceutical industry India and their importance in Organization.
I also hope that this report will be beneficial for my next batches and for those who are related to
this topic.

ACKNOWLEDGEMENT
On the very outset of this report, I would like to extend my sincere & heartfelt obligation towards all the
people who have helped me in this work. Without their active guidance, help, cooperation &
encouragement, I would not have made headway in the project.
I am extremely thankful and pay my gratitude to my faculty guide ----------------- for her valuable
guidance and support for completion of this project.
Any omission in this brief acknowledgement does not mean lack of gratitude.
Thanking You
Punam Kedia

1. Introduction
Indian corporations, like those in other countries, have had a long tradition of being engaged in
social activities that have gone beyond meeting a corporations immediate financial objectives.
However, since the late nineties, CSR activities have increasingly come under the lens both of
policy makers as well as of corporations stakeholders as governance issues acquired increasing
prominence. At the policy level, the formal focus on CSR started in India with the issuance of the
Corporate Social Responsibility Voluntary Guidelines in 2009 by the Ministry of Corporate
Affairs (MCA, 2009) that culminated in the enactment of Section 135 of the Companies Act 2013
(MCA, 2013) making CSR spending as well as CSR disclosure mandatory for specific types of
companies. Significantly while CSR issues have been gaining in prominence across countries,
India became the first country, and at the time this article is written, the only country to have
made CSR activity mandatory for large and profitable companies incorporated into law. In all
other countries CSR efforts by corporations have been kept largely voluntary, with only a select
number of countries mandating corporations to disclose such activities.

Chapter 2: Literature review

2.1. CSR definition
The dilemma on the relevance of CSR in corporate activity is inextricably linked with defining
the scope of CSR for a corporation. A review of the existing literature on CSR reveals that there
is a diversity of opinions and ambiguity on the elements that constitute socially responsible
behavior on the part of corporates.2 Arriving at an agreed-upon definitional construct for CSR is
important, first from the point of view of the entity which is responsible for CSR, i.e., the
corporation, and second from the point of view of the entity that is impacted by CSR, i.e., the
society at large, and finally from point of view of the entity that seeks to connect the firm and
society, i.e., the regulator. In any national context, the debate on the extent to which CSR
activities should be regulated should at least begin with a consensus among these three entities on
what constitutes CSR.
The term (CSR) is a brilliant one; it means something, but not always the same thing, to
everybody. To some it conveys the idea of legal responsibility or liability; to others, it means
socially responsible behavior in an ethical sense; to still others, the meaning transmitted is that of
responsible for, in a causal mode; many simply equate it with a charitable contribution; some
take it to mean socially conscious; many of those who embrace it most fervently see it as a mere
synonym for legitimacy, in the context of belonging or being proper or valid; a few see it as a
sort of fiduciary duty imposing higher standards of behavior on businessmen than on citizens at
large. (Votaw 1972, p. 25)
As the following discussion will show, even after three decades have past since Votaws
observations, CSR is still notoriously difficult to define as a concept despite an ever-growing
body of scholarly and popular work. Matten and Moon (2004) identify three reasons that lie at
the root of this conundrum. Firstly, it is a complex concept with inherent value judgments that
have relatively compliant application rules. Secondly, a plethora of concepts is used
synonymously with CSR, and scholars disagree over the extent of their similarity and
interchangeability. The third reason complicating the process are the regional and contextspecific approaches to CSR. The following section presents a review of the CSR and corporate
sustainability discussion with its related aspects in the light of these considerations. McWilliams

et al. (2006) rightly observe that CSR continues to be a fertile ground for theory development
and empirical analysis (McWilliams et al. 2006, p. 2). In general, therefore, CSR relates to those
responsibilities of corporate operations that go beyond the financial aspects of its performance.
Classic management and economic theories have tended to adopt a functionalist viewpoint
toward business and capitalism.
The definition of CSR has evolved over the years. A sample of such definitions found in the
academic literature and those advocated by international agencies are provided in Box 1.
Country-specific perspectives on CSR including India are provided in Box 2. As is evident from
the two Boxes, CSR has been conceptualized in terms of a wide range of corporate behavior,
starting at one extreme with the maximization of shareholder profits within the rules of the game
(Friedman, 1970) to the other extreme of an all-encompassing objective of balancing economic,
social and environmental objectives to serve shareholder and stakeholder interests as defined by
UNIDO, World Bank and the World Business Council for Sustainable Development (WBCSD).
The notion of CSR in-built in most of these definitions is that CSR is essentially a voluntary
activity that serves as a bridge between the corporation and the society, with the goal of the
corporation re-defined from maximising only shareholder interests (the shareholder primacy
view) to the interests of all its stakeholders.

2.2. CSR in India

The first formal attempt by the Government of India to put the CSR issue on the table was in the
issuance of Corporate Social Responsibility Voluntary Guidelines in 2009 by the Ministry of
Corporate Affairs (MCA, 2009). Prior to this, the importance of CSR was discussed in the
context of corporate governance reforms, such as in the Report of the Task Force on Corporate
Excellence by the Ministry of Corporate Affairs (MCA, 2000). While the report made a business
case for CSR as well as highlighted the social benefits stemming from it, the discussion was
recommendatory in nature and there were little actionable points. It is in the Voluntary Guidelines
of 2009 that the core elements of a CSR policy was spelt out that included care for all
stakeholders, ethical functioning, respect for workers rights and welfare, respect for human
rights, respect for the environment and activities to promote social and inclusive development.
The Guidelines specifically drew a distinction between philanthropy and CSR activities, and
highlighted the voluntary nature of CSR activities that go beyond any statutory or legal
obligation. The Guidelines of 2009 were followed in 2011 by the National Voluntary Guidelines
of Social, Environmental & Economic Responsibilities of Business, also issued by the MCA
(MCA, 2011).

2.3. Development of the Theoretical Concept

Hardin (1968) popularized the concept of the tragedy of the commons, which highlights the
conflict that inevitably result from resource allotments between individuals and the community.
He argues that multiple sources limitless demands on a finite resource would lead to overexploitation and mistreatment of the resource, ultimately depleting it completely. This idea led to
the first insights into modern sustainability in the Limits to Growth discourse of the 1970s
(Meadows et al. 1972), although earlier scholars have advocated about balancing nature
conservation with economic activities (cf. Lumley and Armstrong 2004). Nevertheless, until the
1992 Earth Summit in Rio, neither politicians, nor NGOs, nor business leaders had given the
concept of sustainability/CSR center stage as a principal human challenge for the 21st century
(cf. Hockerts 2003).

Then again, the ideas of business entities social sensibility and good citizenship are hardly novel,
and can be traced back a long way. As the following discussion on earlier literature demonstrates,
the mainstream concepts of corporate social responsibility and sustainable development
essentially convey the same message as sustainability, and academics frequently use them
synonymously with (corporate) sustainability.
Social concerns began to infiltrate management education after the Second World War, with
social responsibility first emerging as an academic topic in the 1950s. Bowen (1953) was a
pioneer in delineating the social responsibilities of businessmen, stating that corporate social
responsibility refers to the obligations of businessmen to pursue those policies, to make those
decisions or to follow those lines of action which are desirable in terms of the objectives and
values of our society (Bowen 1953, p. 6). This was a landmark initiative to define the concept,
and earned Bowen the designation Father of corporate social responsibility (cf. Carroll 1999, p.
270). Among the notable contributors to the literature in the 1960s are Davis (1960), Frederick
(1960) and McGuire (1963). Davis argued in favor of social responsibility from a managerial
viewpoint, and stated that it referred to those decisions and actions of managers that were taken
for reasons at least partially beyond the firms direct economic and technical interest (Davis
1960, p. 70). Frederick viewed the concept from a stakeholder perspective, and held that
businessmen should oversee the operation of an economic system that fulfills the
expectations of the public (Frederick 1960, p.60). McGuire (1963) drew a more succinct
definition by asserting that businesses must accept a social responsibility that extends beyond
economic and legal obligations. In this period, the publication of Rachel Carsons landmark book
Silent Spring in 1962 launched the worldwide environmental movement in the wake of
environmental disasters brought on by corporate negligence and ignorance in the U.S. (Carson
1962). Inspired by the mass social movements of the 1960s in Europe and America, public
acceptance of companies social responsibilities also began to gain ground.
Profuse theorization on and conceptualization of companies social responsibilities emerged from
scholars in the fields of sociology, management and business ethics in the 1970s (cf. Carroll
1979, Ackermann and Bauer 1976, Davis 1973, Johnson 1971). Similar to Frederick (1960),
Johnson (1971) also held a stakeholder view and considered managers corporate social
responsibility as utility maximization, rather than profit. Carrolls (1979) CSR model proved to
be immensely popular, and has been cited widely. He conceptualized four hierarchical but
mutually inclusive responsibilities for a corporation: economic (to be profitable), legal
(regulation-compliant), ethical (acting in a righteous and fair manner) and philanthropic
(contributing to a broader civic society for educational, cultural or recreational purposes).
Building on Carrolls work, Wartick and Cochran (1985) ventured to formulate a general model
for corporate social performance (CSP).
Eventually, the 1980s and 1990s saw the concept of corporate social responsibility evolve
theoretically and receive much empirical attention (cf. Wood 1991), and complemented the
growing trend of theoretical focus on the environmental dimension. 1999 saw the publication of
Natural Capitalism, espousing for the first time that companies can combine positive financial
results with pollution reduction, if they rethink certain operating procedures and use of materials
(cf. Hawken et al. 1999). This book popularized the idea of natural capital and challenged the
conventional notions of accounting that cataloged environmental impacts of a firm as
externalities. The natural capitalism theory focused heavily on resource efficiency, and advocated
ways to exploit the market systems for environmental advantages.

On a more inclusive level, Freeman (1984) formulated the stakeholder theory, which proposed
that the firm must meet the expectations of external groups or individuals who may have an
effect on the firms performance. The rationale behind the stakeholder theory is that it would be
beneficial for firms to link up with stakeholders (as opposed to only shareholders) to legitimize
and maintain their license-to-operate (Howard-Grenville et al. 2006). Donaldson and Preston
(1995) expanded Freemans theory and maintained that the normative base of the theory to
engage in stakeholder activities should be regarded as fundamental.
A more moral take on the stakeholder theory is found in the corporate stewardship theory (cf.
Worrell and Appleby 2000, Davis et al. 1997, Donaldson and Davis 1991), which adds a new
dimension to the CSR and business ethics debate. This theory suggests that firms should
exclusively focus on carrying out their social duties and responsibilities, without regard to the
financial consequences of such acts.
Jones (1995) introduced an instrumental theory for stakeholder management, enhancing the
stakeholder theory and surmising that the high returns on regular and trusting interaction with
stakeholders make firms strive for better ethical performances and give them significant
competitive advantages.
In a similar line of thought, the concept of corporate citizenship emerged (cf. Marsden and
Andriof 1998). As a broader concept, corporate citizenship (CC) deals with businesses interplay
in society beyond their economic roles, and Birch (2001) regards this as the next step to CSR.
According to Carroll (1999), it is an extension of the operationalization of businesses role in
society in the management literature. Matten and Crane (2005) clearly separate it from CSR, and
argue that CC is strategic in nature, whereby assuming that stabilities in the social, environmental
and political scenarios are profitable for business (Windsor 2001, Wood and Logsdon 2001).
Crouch (2006) agrees with Matten and Crane (2005) that CC is not synonymous with CSR, and
that CC views the organization in a wider perspective (than CSR). However, regardless of
scholarly debate upon the depth and breadth of these (closely-related) concepts, quite a few
global companies (e.g. Novartis) treat CC and CSR as synonymous.
Strategic application of CSR can also be discussed within the perspectives of the resource-based
view of the firm (RBV) (cf. Barney 1991, Wernerfelt 1984). This view presupposes that firms
need to exploit their resources (e.g., assets, capabilities, competencies, firm attributes etc.) in
such ways that these resources become sources of sustainable competitive advantage. In his 1995
article on the natural-resource-based view of the firm, Hart applied the RBV framework to a
firms environmental responsibilities (Hart 1995), stating that there is a positive correlation
between environmental responsibility and financial performance. While Russo and Fouts (1997)
confirmed Harts assertions, their contemporaries Preston and OBannon (1997) found a few
negative correlations. However, as Roman et al. (1999) show in their comparative compilation of
studies investigating the social and financial performance link, negative correlation between
these two have been increasingly rare or inconclusive in later years, while the literature on
positive correlations has become increasingly robust.
In summation, a number of theories in management science (and economics) have contributed
toward developing a modern CSR concept. There have also been concepts within the CSR realm
that stress various nuances of the notion. Nevertheless, the theoretical maturation of CSR has not
yet been concluded. The following section discusses scholarly attempts at defining CSR.

2.4. Concentric Circle & CSR

In 1971, the Committee for Economic Development issued a report throwing light on different
dimensions of responsibilities to be fulfilled by the corporate. The responsibilities of corporations
are described consisting of three concentric circles.
(a) Inner Circle: Clear cut, basic responsibilities for the efficient execution of the economic
function, products, jobs and economic growth.
(b) Intermediate Circle: Encompasses responsibility to exercise this economic function with a
sensitive awareness of changing social values and priorities. Eg. With respect to environmental
conservation, hiring and relations with employees, expectation of customers for information,
safety factors, etc.
(c) The Outer Circle: Newly emerging and still amorphous responsibilities that business should
assume to become more broadly involved in actively improving the social environment.

2.2. Classification of Social Responsibility

1. Responsibility towards itself: - It is the responsibility of each corporate entity run business
and to work towards growth, expansion and stability and thus earn profits. If the corporation is to
achieve social and economic ends, organizational efficiency should be boosted up.
2. Responsibility towards Employees: - Employees are the most important part of an
organization. Following are some of the responsibilities which a business entity has towards its
employeesTimely payment
Hygienic environment
Good and impartial behavior
Health care through yoga
Recreational activities
Encouraging them to take part in managerial decisions
3. Responsibility towards shareholders: - It is the responsibility of corporate entity to
safeguard the shareholders investment and make efforts to provide a reasonable return on their
investment.
4. Responsibility towards state: - Out of the profit available, the state is entitled to a certain
share as per the income tax laws. Utmost transparency has to be exerted regarding the profit
&loss account and the balance sheet.
5. Responsibility towards consumers: - The Company should maintain high quality standards
at reasonable prices. It should not resort to malpractices such as hoarding and black marketing.
6. Responsibility towards environment: - It is the responsibility of the organization to
contribute to the protection of environment. It should produce eco -friendly products. Moreover,
industrial waste management must be taken care of.

2.3. Social Responsibility Models

There are some models which describe the evolution and scope of social orientation of
companies. Notable ones include Carrolls model, Halals model and Ackermans model.
2.3.1. Carrolls Model

Archie B. Carroll has defined CSR as the complete range of duties business has towards the
society. He has proposed a 3-d conceptual model of corporate performance. According to
Carroll, a firm has the following four categories of obligations of corporate performance: -

HIERARCHY OF RESPONSIBILITIES OF BUSINESS

Economic: The firm being an economic entity, its primary responsibility is to satisfy economic
needs of the society and generation of surplus for rewarding the investors and further expansion
and diversification.
Legal: The laws of the land and international laws of trade and commerce has to be followed and
complied with.
Ethical: Ethical responsibilities are norms which the society expects the business to observe like
not resorting to hoarding and other malpractices.
Discretionary: Discretionary responsibilities refer to the voluntary contribution of the business
to the social cause like involvement in community development or other social projects
pertaining to health and awareness of the masses.
2.3.2. Halals Model

Halals return on resource model of corporate performance recognizes the fact that the corporate
social responsiveness is a quite difficult task as no corporate posture is value free. A firm can
only attempt to form a workable coalition among groups having diverse interests, engaged in
creating value for distribution among members of coalition. The social issues may become
conflicting beyond a certain level of economic activity. The coordination between economic and
ethical decisions is necessary so that the future of the firm and shareholders may be safeguarded.
2.3.3. Ackermans Model
This model defines CSR in three different phases:

First phase - Top management recognizes social problem

Second phase The Company appoints staff specialists to look into the issue and find measures
to tackle it
Third phase - Implementation of the strategy derived by the specialists

2.4. Corporate Social Responsibility as a Strategy

CSR needs a proper and step by step implementation. Andrew (1980) has developed an approach
to the question of strategic choice. His four key questions suggest the approach that companies
may follow in determining their level of CSR activity. Those four questions are following:
a. Determining Organizational Competencies: what can we do?
b. Looking at Industry threats and opportunities: what might we do?
c. Examining the values of key implementers: what do we want to do?
d. Determining the social responsibility: what ought we to be doing?
By finding out answers to these questions managerial decisions can be molded towards serving a
strategic need. This means CSR in practical terms is an ongoing process, constantly monitoring
the environment and inter and intra firm relationships. Burke Lee and Jeanne M. Logsdon (1996)
suggest that there are five dimensions of corporate strategy that are critical to the success of CSR
process in terms in terms of value creation by the firm. They are:
a. Centrality - CSR initiative activities should be close to the firm's mission and objectives.
b. Specificity- Strategic CSR initiatives should specifically benefit the firm. The firm should be
able to capture the benefits of CSR initiatives.
c. Proactivity- CSR initiatives should focus on the dynamics of stakeholder expectations i.e. to
capture the changes in socio-environmental , political and technological factors.
d. Voluntarism- CSR decisions should be discretionary and thus they should be taken up by the
firm voluntarily.
e. Visibility- Strategic CSR initiative should build firms image and add up to the goodwill by
creating positive media attention. It can also mitigate negative image of the firm.
The linkage between strategy and CSR is quite noticeable. As strategy implies choice there exists
many opportunities to not only generate multiple options but also the choice between different
modes of action, in a manner to attain corporate objectives more effectively. The question of
trade-off rests between a body corporate defining a path of action that is governed by the need
and desire for profits and social responsibility as well. A managerial decision- making grid can be
thought of to help corporate generate multiple options.
Corporate Social Responsibility becomes strategic when it fetches substantial economic benefits
to the firm, in particular, supporting the core business activities and thereby contributing to the
accomplishment of its mission in the optimal manner enriching the firm and the society as well.

Chapter 3 Research Methodology

This section of the research study describes the methodology to be undertaken by the researchers
to obtain the research data in order to reach the research finding. It is a process of academic
activity and is composed of identification of the problem, hypothesis construction; systematic
process of data collection and data evaluation; deduction of the final inference and lastly,
concluding the entire research and structuring a set of conclusions (Wilkinson, 2003).

3.1. Research design

The nature of this report is Exploratory Research. Exploratory Research is defined as an
investigation into a problem or situation which provides insights to the researcher. The research is
meant to provide details where a small amount of information exists. It may use a variety of
methods such as trial studies, interviews, group discussions, experiments, or other tactics for the
purpose of gaining information.
This studys principal research question is primarily of an explorative nature, seeking to
understand how Indian pharmaceutical companies view and act with regard to CSR. As the
previous discussions revealed, there is a dearth of literature exploring this phenomenon in the
field. Although there have been various studies suggesting the probability of emerging theories
within the context, there is still a lack of concrete conceptual evidence to serve as a basis for
further research.
This project adopts a multiple case study approach, with an in-depth analysis and a comparison
of the CSR context in selected Indian pharmaceutical companies. A multiple case study approach
is considered more reliable than a single case study, as it strengthens the external validity (Yin
1994, Dyer and Wilkins 1991). As Yin (1994) observes, scholars within political science and
sociology have distinguished between the components of the multiple case study approach and
judged the comparative case method to be a distinctive form, but the two terms are used
interchangeably within organizational and management research. Consequently, in keeping with
the tradition, the terms multiple case approaches and comparative case method are used
synonymously in this study.

3.2. Data sources

This is a research paper based on secondary data analysis. Data for this project is being collected
from secondary sources like books, journals, magazines, websites and newspapers. Different
books on CSR have been used to gather information on the topic; further different websites on
CSR and also information regarding Tata power have been used.

3.3. Reliability & Validity

Researcher needs to ensure high reliability and validity of its research instrument in order to
proof authenticity of instrument used and applicability of findings. It facilitate in analyzing the
effectiveness of instrument used for collecting information for the research. For the purpose of
this paper, questionnaire has been selected as major research tool, so reliability is aimed at
evaluating accuracy and relevance of the research. Another important aspect is validating the
research instrument and its finding by ensuring its applicability in real world scenario; for
instance to extent to which these findings can be implemented by other companies to improve
CSR in their businesses. There are different types of validity associated with research instrument,
it include internal and external validity. Internal validity can be ensured by developing questions
in such a manner that it can help in achieving desired information whereas external validity of

research can be shown by analyzing the extent to which findings can be generalized to other
industry (Tashakkori, 2003).

Chapter 4: Biocon Limited

Building an Indian Social Case for Sustainability
4.1. Company Background
Biocon Limited (Biocon) pioneered the biotechnology movement in India, and is among the
leading biotechnology companies in Asia. In terms of market capitalization, it occupied the top
spot in Asia and the 16th spot in the world in 2005. Based in Bangalore, it is the brainchild of
visionary woman entrepreneur Kiran Mazumdar-Shaw.

Biocon began its journey as an enzyme company in 1978 and has evolved into a fully integrated
biopharmaceutical enterprise focused on healthcare. It is engaged in drug development, clinical
testing and the commercial production of biopharmaceuticals, as well as industrial enzymes. It
was also the first biotech company from India to be listed in the stock market. A fast-growing
company, Biocon markets its product in over 50 countries and has a local office in New Jersey,
USA. It employs approximately three thousand employees, of whom 15 percent are women. At
the end of financial year 2006, Biocon's posted revenue was USD 157 million, with profits of
USD 30 million.
4.2.

Company History

Biocons Chairperson and Managing Director Kiran Mazumdar-Shaw initially trained as a brewmaster in Australia, and worked as a consultant upon her return to India in 1975. After a while,
she moved to the UK and came in contact with Ireland based company Biocon Biochemicals
Ltd., who offered to set up an establishment with her in India to produce bio-products from
locally sourced raw materials. Thus, Biocon India came into being in 1978.
From its Inception on November 29, 1978 until today, the timeline of Biocon can be divided into
three different segments, underpinning the lifeline of the company according to corporate focus
and maturation rate. These are described as follows.

4.3. The Initial Establishment Phase

From the setting up of the joint venture between Biocon Biochemicals Ltd. and Mazumdar in
1978, this phase lasted until 1989. Biocon India began its journey mainly as a producer of
enzymes to be used in consumer alcohol and animal feed. Its first products include two essential

products commonly used in the brewing industry a plant enzyme called Papain and a marine
hydrocolloid50 named Isinglass. The equity stake in Biocon India was divided as 70-30 between
Mazumdar and Biocon Biochemicals.
The following years saw the initiation of two subsidiaries, Biochemizyme India Ltd. established
in 1982 focused on enzyme R&D, while Helix Biotech Ltd. established in 1989 was primarily a
pharmaceutical biotechnology company. Both of these had other shareholders and investors, both
from India and Ireland. After a multiple change of hands, Biocon India consolidated majority of
the shares, and these companies began operating in 1992 and 1998 respectively. It was also
around this time that Biocon expanded its R&D activities into koji technology, a Japanese solidstate fermentation process technology to develop new enzymes. This proved to be a highly
successful endeavor at later stages, with Biocon profits touching the one million USD mark by
late 80s. In 1989, Mazumdar received the distinguished civilian award Padma Shree from the
Indian Government for her contribution to the advent of biotechnology in India.

The Intermediate Transition Phase

This period in the lifeline of Biocon (1989-2002) exhibited its transition from an Enzyme
producing outfit to a modern and integrated biotechnology company. It began with a change of
ownership, when the global MNC Unilever acquired Biocon Biochemicals in 1989, and merged
it with its subsidiary Quest International. This translated in Unilever owning the 30 percent of
Biocon India as well. Unilever invested heavily in the up and coming Indian company and even
offered to buy out Mazumdar in the early 1990s when the Indian Government increased the
foreign equity investment cap for Indian companies. Mazumdar however, held on to her shares
and ventured into exploring the contract research field. The result was the formation of Biocon
subsidiary Syngene International Private Ltd. in 1993. Biocon continued to hone its expertise in
fermentation technology, opening up business opportunities with pharmaceutical producers. In
1996, Biocon entered the biopharmaceutical market with the production of statins, which are
drugs for lowering cholesterol. Meanwhile, Unilever sold its specialty chemicals division (of
which Quest International was a part) to European chemical giant ICI in 1997, and agreed to sell
its shareholding in Biocon to the Indian promoters. With ICI selling its shares to Mazumdar,
Biocon India became an independent entity. In 1999, Mauritius-based investment company
Glentec International bought out rest of the stake of Unilever in Biocon and the subsidiaries
including Biochemizyme (Incidentally, Glentec was set up by Mazumdars husband John Shaw).

In 1999-2000, Biocon acquires all of Glentecs shares, and amalgamated Biochemizyme and
Helix into Biocon Ltd.

Becoming an independent company, Biocon entered into an aggressive expansion plan, which
culminated from 2002 (in the Growth Phase as discussed below). It had already entered the
human healthcare field around 1997. The Statin production was very successful and contributed
to 78 percent of Biocons turnover by 2000. 2000 was also the year that Biocon established
Clinigene, a subsidiary that would focus on longitudinal clinical studies in selective disease
segments. In May 2000, Biocons proprietary bioreactor PlaFractor based on solid matrix
fermentation received a U.S. 2001 and world-wide patent. Biocons first fully automated
submerged fermentation plant to produce specialty pharmaceuticals was also commissioned in
2000. It gained the approval of the USFDA to market cholesterol-lowering lovastatin, the first
Indian company to achieve this feat. The Biocon Biopharmaceuticals Private Limited (BBPL), a
joint venture with Cuba-based CIMAB SA was formed in 2002 to produce drugs for cancer
treatments.

4.4. The Current Growth Phase

The phenomenal growth of Biocon continued through the new millennium. This is characterized
by expansions into new fields of business, as well as new strategic partnerships. As a means to
support its ambitious capital expansion plans, the company went for an initial public offering
(IPO) in 2004, with an aim to raise INR three billion (about USD 67 million 51). It issued 10
million equity shares under the IPO, equivalent to 10 percent of its post-issue capital at a face
value of INR 5.00. The bid opened on 11 April at INR 435 against an offer price of INR 315, and
closed on 18 March. The IPO was an extraordinary success, with Biocon closing the first day of
listing on the bourses with a market value of USD 1.11 billion. With the issue being subscribed
32 times, it became the second Indian company to cross the one billion USD mark on the day of
listing. With a 40 percent direct control of stake following the issue, Mazumdar became the
richest woman in India, and occupied the 15th position in the countrys billionaire list.

In December 2004, Biocons market capitalization stood at just over USD one billion. In the
2003-2004 financial year, the revenue increased 39 percent to over USD 121 million from the
year before. Biopharmaceuticals business increased by 33 percent and contributed to 79 percent
of the sales, while R&D revenue increased by 75 percent. This led to a 63 percent growth in net
profit. The financial performance continued to be impressive through 2004-2005, with income
increasing a further 34 percent. Biopharmaceuticals posted a growth of 28 percent, while

Syngene and Clinigene grew by 71 percent. Total revenue stood at USD 157 million at the end of
2006. Overall, the company registered a 31 percent growth from the previous year.
Meanwhile, Biocon entered into a number of strategic partnerships with companies around the
world, with an aim on joint research, discovery and distribution for certain drugs. In 2004,
Biocon entered into strategic partnership with North Carolina based Nobex Corporation a
privately held developmental stage drug delivery company. This research collaboration foresees
the co-development and commercialization of oral insulin for diabetes treatment at a global scale.
Later in 2004, it announced another strategic research collaboration with Vaccinex Inc. a
privately held biotech company based in Rochester, New York. This partnership aims to discover
and co-develop fully human therapeutic antibody products for cancer, inflammation and
autoimmune diseases.52
While Biocon would be responsible for proof of concept, product and process development, both
companies would be jointly responsible for global clinical trial and marketing. The BBPL joint
venture with CIMAB continued successfully meanwhile. Corporate analysts believe that Biocon
owes its success largely on its ability to interpret the future demands in the field of Indian
biotech, and molding the company to fulfill them. Chairperson and Managing Director (CMD)
Mazumdar leads the company from the front, and her energetic persona influences the employees
through and through.

The phenomenal achievements of Biocon did not go unnoticed, and accolades and honors poured
down upon both the company and Mazumdar. Gracing the cover pages of leading business
magazines also became regular. The New York Times in fact christened her Indias Mother of
Invention on their 16 August 2003 issue. Along with winning numerous businessperson of the
year award, came government tributes. The local State Government awarded her the Daughter of
Karnataka Award in 2003. In 2005, the Indian Government honored Mazumdar with the highly
prestigious civilian award Padma Bhushan for her contribution in the growth of biotech
industries in India. The following table presents a summary of the major events in the lifeline of
Biocon Limited, since its inception in 1978 until present.

4.5. Structure of the Biocon Group

As seen in Figure 12, Biocon Group's corporate structure comprises of Biocon Limited (the
Holding Company), along with its two subsidiaries, Syngene International Private Limited
(Syngene) and Clinigene International Private Limited (Clinigene). It also consists of the joint
venture company BBPL Biocon Biopharmaceuticals Private Limited.

The Biocon Group

Syngene

Clinigene

BBPL

Figure 12: The Corporate Structure of Biocon Group

(Source: based on company information)
Syngene
Contract research gained much popularity in the 1990s, and subsequently many international
pharmaceutical players began to engage in outsourcing of R&D. Biocon also looked for
opportunities to expand in this area, and as a result Syngene was incorporated on November 18,
1993. A 99.99 percent owned subsidiary of Biocon, Syngene is a Custom Research Company
(CRC) specializing in synthetic chemistry and molecular biology. It provides customized R&D
services in early stage drug discovery anddevelopment to third party pharmaceutical and
biotechnology sectors. They boast of state-of-the-art facilities, dedicated connectivity and highly
qualified researchers [] on a strong platform of confidentiality and intellectual property
protection,53 and claims to offer competitive value advantage to their clients in the field of
outsourced R&D.
Clinigene
Incorporated on 4 August 2000, Clinigene is a 100 percent owned subsidiary of Biocon that
conducts clinical studies on disease segments, e.g. non-insulin dependant diabetes, lipidemia 54
and asthma. Clinigene has two major units the Clinical Lab and the Human Pharmacology
Unit. Clinigene's Clinical Lab offers clinical trials, research/cohort studies and laboratory
services. They have been accredited by NABL (National Accreditation Board for Testing and

Calibration Laboratories), the Indian Governments arm for accrediting scientific research
laboratories. It is the first lab in India to be accredited by CAP (College of American
Pathologists), setting a benchmark for other laboratories in India. The clinical lab strives to
achieve the highest industry standards in all aspect related to clinical testing, e.g. by using predefined databases and visit-specific collection kits, and succeeds in offering fast and accurate
trials. The human pharmacology unit carries out a variety of bioavailability,55 bioequivalence and
other pharmacokinetic56 studies on human volunteers at a premier Bangalore hospital. Clinigene
pledges to operate by high bioethics standards, and its study processes adhere to local and
international regulatory requirements such as the ICH-GCP guideline57 of the USFDA.

BBPL
CIMAB SA is the commercial branch of Centro de Inmunologa Molecular (CIM), one of Cubas
leading scientific research centers focusing on biopharmaceutical products. In 22February 2002
Biocon entered into joint venture with CIMAB to form Biocon Biopharmaceuticals Private
Limited (BBPL). BBPL manufactures and markets biotech-based life saving drugs. CIMAB has
core competency in production of drugs for cancer treatment, also the focus of BBPL. While
BBPL was decided to produce drugs for cancers of the head and neck area initially, a successful
research collaboration would lead to producing drugs for other cancer treatment as well. Biocons
equity participation in BBPL is 51 percent.
4.6. CSR at Biocon
Biocons CSR activities are largely centered on social aspects that relate to healthcare and
education. The HR division of the company organizes activities such as vaccination drives
against polio and hepatitis B in the area, usually carried out by staff volunteers.

However, it felt the need to further consolidate its existing activities in this regard, as well as take
up more concentrated projects. As a result, the Biocon Foundation was initiated in December
2004 with the aim of identifying and implementing projects that would have a positive social and
economic impact in the surrounding community. The Biocon Foundation operates the micro
health insurance program, which is discussed in the following section B.4.2.

4.6.1.

Basic Understanding of the Triple Bottom Line

Similar to most Indian corporate entities, Biocons fundamental understanding of the triple
bottom line is corporate citizenship focused and relying heavily on the social side. The Biocon
management believes that a companys social responsibility is based on four pillars: first and
foremost is community investment, followed by positive employee relations, good environmental
practices and sound ethical conduct. It is worth mentioning that the top management team
perceives employee relationship and ethical business practices as components of social
responsibility.

4.7. The Economics of ARY

Similar to its neighbors in South Asia, health insurance is viewed as a luxury, and not a necessity
in India. The established health insurance companies focus their attention on the urban affluent
rung of the society offering expensive packages, and consequently, only 10 percent of the
population has some form of health financing scheme. However, for a country that does not have
a national health service, the costs of a major illness can easily spiral sky high, and owing to this
reason many are reluctant to seek proper medical care for their ailments. The situation is direr in
the rural areas, where access to medicines and experienced health practitioners are few and far
between to begin with. So, there was clearly demand for the services of a scheme such as ARY in
the areas where the scheme was launched.

It is interesting to note that Biocon does not necessarily use its own medicines for the ARY
scheme, but sources them through a third party (Karuna Trust). It provides the infrastructural
support for the clinics, training costs for the clinic workers and sponsors the auxiliary programs.
The medical know-how comes from Narayana Hrudayalaya (i.e. which medicines to stock up on,
which treatments to cover, etc.).
The roots of the ARY scheme can be attributed to the bottom-of-the-pyramid model propagated
by Prahalad and Hart (2004). As indicated by the bottom-of-the-pyramid approach, ARY is a
model of business liaison at the bottom rung of the financial pyramid. Since the recipients are
actually paying for the services that they receive, the Biocon Foundation and its partners

establish a business relationship through the ARY program, somewhat moving away from pure
philanthropy. In fact, Biocon prefers it to be a fee-paying service, as they feel the transaction
makes the recipients value the scheme more in comparison to benefits they would get free.

4.7.1.

Premium and Eligibility

ARY operates under two premium schemes. The Individual Scheme comes to INR 180 (approx.
CHF 6.00) per member per year. Enrollment as part of the family scheme has three levels: INR
180 per member per year for two members, INR 150 (approx. CHF 5.00) per member per year
for three members, and INR 120 (approx. CHF 4.00) per member per year for four or more
family members.

At the pilot phase, the applicants residency in Anekal Taluk was the first eligibility criterion. It
subsequently brought the neighboring Kanakpura Taluk under its wing. The successful applicants
need to produce proof of residence for themselves and their family in the Taluk through, e.g., a
ration card, voters ID card, driving license, passport, PAN 59 card or bank account. Residents
between 0 and 70 years are eligible to apply.

4.7.2.

Benefits and Services

The benefits of the scheme include free outpatient consultation, generic medicines at special
rates, diagnostic tests at discounted rates, hospitalization, and free surgical interventions. There
are certain conditions applicable to obtaining the insurance plans benefits. For example,
treatment is only available in a general ward of one of the network hospitals.
The scheme includes a cashless facility for surgical treatment to the value of the covered amount.
Over 1,600 listed surgical treatments, such as hernia operations, appendicitis, hysterectomy as
well as cardiac bypasses are covered. The scheme covers both pre- and post-operative surgical
treatments.
Hospitalization (without surgery) is covered for three days, which includes the fees in respect of
the room, professional fees and routine investigations. Individual members are allowed one
admission per year (for a maximum of three hospital days). Members enrolled under the family
pack are eligible for a maximum of 50 percent of the total number of enrolled members. The
cover excludes medicines and medical consumables, e.g., oxygen and ventilator charges.

The Biocon Foundation supervises the scheme, thus ensuring that the members get the services to
which they are entitled. The Karuna Trust handles the marketing and distribution of drugs for the

network hospitals and BioCare pharmacies, thus reducing the price of the medicines considerably
due to economies of scale.

4.7.3.

Auxiliary Programs

Desai reveals that in the first months of the projects pilot year, an overwhelming 90 percent of
the patients had water- and sanitation-related ailments. This prompted Biocon Foundation to set
up a supplementary Hygiene Promotion Program for the members. She states,

When the people realize the link (between good hygiene practices and
wellbeing), and realize the benefits they get, the (hygiene promotion)
program will become sustainable.

The hygiene promotion team conducts a set of three sessions at each venue. The first session
deals with personal hygiene issues, the second with environmental health issues, such as waste
disposal, dealing with drainage and blockage, sanitation, potable water etc. These two sessions
are followed by a review session. Two local NGOs helped design the hygiene promotion program
and are responsible for running it: the Belaku Trust, a local NGO focusing on women and
childrens health and Grameen Koota, a Karnataka-based

4.8. Social Sustainability

Biocons involvement with social advancement goes back a long way. Even before it became a
high profile, billion-dollar company, smaller steps were taken in this regard. One example of
which is the subsidized meal canteens for the companys unskilled labor to ensure that they have
at least one square meal a day. Biocons social sustainability-related activities have come far
since then. Apart from the concentrated ARY program, Biocon conducts a number of social
advancement initiatives run by the HR department. The successful implementation of these
programs has brought accolades for Biocon in the form of various CSR awards, both local and
national. Based on their beneficiaries, these activities branch off in two directions: internal and
external.
As mentioned earlier, Biocon views positive employee relationship as a form of social
responsibility. HR activities such as employee training, in-house development, internship etc.
therefore fall under this heading. Biocon has a comprehensive internship program for both local
and international students at graduate and post-graduate levels. At any point in time, it has an

average of 45 interns working at various departments. Biocons HR practices have led it to be a

top employer of choice in India, and it enjoys a low turnover rate of three percent. Biocon
provides its employees with facilities such as an in-house healthcare center, and an annual health
camp where the doctors of the Clinigene subsidiary conduct check-ups on site. This has also
helped Biocon to reduce spending to one-tenth of the previous costs by cutting down on traveling
time to outside facilities.60
Another employee facility is a crche for the employees children, which was set up across the
street from the company HQ in partnership with the missionary institution St. Francis School.
Both male and female employees can use this crche for their children. Every employee is also
entitled to an education allowance, which pays all expenses for up to two children at the primary
school level. Similar schemes are available for employees who wish to further their studies.

Biocons external social responsibility activities center on pediatric healthcare, with polio and
hepatitis B vaccinations being the major initiatives. Biocon is a partner of Rotary Internationals
Toward a Polio-Free World project. The HR department organizes the Biocon Pulse Polio
Program, whereby employees volunteer to administer polio drops to children under the age of
three.

In addition to healthcare, Biocons second focus is on education. Firstly, this consists of

advancing rural education and knowledge creation. Initiatives in this category include various
scholarships, awards, practical assistance to the economically disadvantaged, and installation of
science laboratories and libraries. The company provides rural schools with financial assistance
during their construction, buys computers for them and trains their teachers to use computers.
The company provides sponsorship for organizations that work with physically and mentally
challenged children, such as Mitra Jyothi, Shristi Special Academy, Christel House, National
Association for the Blind etc.

Secondly, Biocons educational support activities comprise academic sponsorships. The company
provides financial assistance to national and international institutes with regard to biotech
projects. It also provides sponsoring for two Bangalore-based educational institutions: an
entrepreneurship development center at local business school the Xavier Institute of Management
and Entrepreneurship (XIME), and faculty chairs at the Institute of Bioinformatics and Applied
Biotechnology (IBAB), a local government research institute.

Biocon also undertook purely philanthropic activities during major natural disasters. The
company and individual employees volunteered time and resources during the Gujarat
earthquake in 2001 and the Indian Ocean tsunami in 2004.

4.9. Environmental Sustainability

With regard to the environmental impact of biotech products, Biocon propagates a message that
is similar to that of the rest of the Biotechnology Industry: biotech byproducts have a positive
impact on environmental pollution.61 The Company nevertheless still puts considerable emphasis
on environmental pollution prevention and proper waste disposal. Biocons environmental
sustainability stems from its endeavors to compete and operate at the international level that go
beyond Indian regulatory requirements. The company has state-of-the-art health and safety
guidelines, and these are rigorously implemented at all levels of the manufacturing cycle. The
Biocon manufacturing unit is an ISO 14001-certified facility.

Biocon has been involved in a number of environmental awareness programs in Bangalore city.
The most prominent of these was its partnership with the Bangalore Agenda Task Force (BATF),
a private public partnership in the urban governance of the city. Biocon assisted in BATFs solid
waste management initiative Swachha Bangalore, a door-to-door collection of household wastes.
Furthermore, Biocon erected eco-friendly traffic booths and bus shelters in Bangalore that have
solar powered lights and feature environmental awareness messages. Apart from its partnership
with BATF, Biocon played a role in the greening and beautifying of a considerable part of Hosur
Road, the highway that leads to the corporate headquarters.
4.9. Managerial Attitudes toward CSR at Biocon
Positioning among its Peers

With its long-term association with various healthcare and environmental awareness programs,
and the resulting visibility in the media, the latter and NGOs regard Biocon as a leading
corporation with regard to CSR initiatives. It therefore comes as no surprise that the Biocon
management too claims that their company is the leading CSR-oriented corporation in India. It is
interesting to note that while very proud of their work in the social sustainability area, Biocon
employees are reluctant to compare themselves with their peer companies, stating that social
responsibility comes from within Biocon, led by the CMD Mazumdar. As Desai states,

Financial versus Environmental/Social Sustainability

While Biocon has earned plaudits for its social sustainability activities, and these activities have
been a crucial component of Biocons corporate identity, their integration into its core business
strategies has yet to occur. Ensuring a robust financial bottom line is still the first priority.

Management of CSR at Biocon

The CSR programs in Biocon are managed under two divisions. Biocon Foundation is in charge
of the micro-health insurance program, headed by the manager of the Biocon Foundation. The
HR division coordinates all the other initiatives, i.e. on one hand the internal HR development
programs, and on the other the external social sustainability programs such as immunization
camps, crche, etc. The deputy manager of Human Resources heads these activities. He is also
responsible for providing the department of corporate communications with the relevant
information for conveying the activities to both internal and external audiences.

5. Conclusion
Biocon definitely thrives on the positive publicity that is generated by involvement in CSR
issues. Though it considers ARY to be its flagship CSR initiative, it does undertake a host of
other programs. It has a robust employee development scheme, ranging from the initial one-hotmeal-a-day to health check-up, education allowances etc. It also engages its employees in its
CSR initiatives within the community such as immunization camps. For both its employees and
the community, health and education related initiatives occupy considerable standing and Biocon
has made laudable advances in this regard. Comparatively, the environmental initiatives seem
weak, and its involvement with the BATF can be interpreted as a service to the community as
well. Although health, education and women empowerment were listed as the three areas were
Biocon conducts its social initiatives, in reality there were no specific initiatives for promoting
women empowerment.

Looking at Biocons CSR practices through the lens of Gandhian trusteeship, one can surmise
that the company has made some strong strides toward fulfilling its role as a social trustee.