02 David SAP at Ranbaxy

Ranbaxy Global Information Technology SAP at Ranbaxy The Good, The Bad and The Ugly
SAP Summit Mumbai June 6, 2007 David Briskman VP and CIO

Global IT
Privileged and Confidential
We Deliver Value Everyday

Copyright 2008 Ranbaxy Laboratories Limited
1 1
Agenda
About Ranbaxy IT at Ranbaxy The Good, The Bad and The Ugly
R/3 APO
Q&A
Global IT

Copyright 2008 Ranbaxy Laboratories Limited 2
Ranbaxy Mission Statement
To become a Research based International Pharmaceutical Company
Global IT

About Ranbaxy
Over 12,000 Workforce
Princeton NJ, North America
London, Europe
Sales in 125 Countries
Ground Presence in 49 Countries

Singapore Asia Sao Paulo, Brazil South America
Gurgaon ,India
Indias Largest pharmaceutical company Global IT

2007 Sales ~ US$ 1.6+ bn

Business Model
Global Reach
Developed Markets
North America, EU, Japan
Product Portfolio
Generics Branded Generics Branded & OTC
Emerging markets
India, Romania, CIS, Africa
Research & Dev.

New Chemical Entities Generics / NDDS* Complex / Niche/ FTF* The India advantage
Manufacturing
Dosage Form API* - Vertical Integration In-house / Outsource The India advantage
We Deliver Value Everyday Global IT * NDDS - Novel Drug Delivery System, API Active Pharmaceutical Ingredients, FTF First to File
Global Presence
Global IT

Global Manufacturing Presence

25 Plants in 11 Countries
Plants approved by all key regulatory bodies Ability to manufacture complex molecules Quality Engineering Cells operational at all locations High degree of backward integration Stringent quality control and cost leadership Successful partnership with vendors for quality compliance
Romania
USA
China
Ireland Malaysia
Active Pharmaceuticals Ingredients (APIs)Facility, Mohali
Dosage Forms Facility, Paonta Sahib]
India
Nigeria
Global IT
+South Africa, Japan, Brazil We Deliver Value Everyday
Vietnam
7
Global Supply Chain of Ranbaxy

Suppliers Plants API Formulation Markets
Own Plants (Mohali, Poanta Sahib, Toansa, Dewas) API RM / Advanced Intermediate suppliers
Regional Plants (USA/EUROPE)
In-country stocking points (JAX)
Direct- todistributor API Contract Manufacturers Global Plants (Dewas, Paonta Sahib,Goa, Jejuri)
API suppliers RW (India) Other RM suppliers C&FA (India) Stockists
PM Suppliers
Contract Manufacturer / Third Party / FG Imported
Global IT
API customers
8
Supply Chain Complexity

Suppliers Plants API Formulation Markets
Supply Side Own Plants (Mohali, Complexity Poanta Sahib,

Toansa, Dewas) API RM / Advanced Intermediate suppliers
Regional Plants (USA/EUROPE)
In-country stocking points (JAX)
API suppliers
Other RM suppliers
Backward Integrated (21 DF & API plants) 40+ API Contract Contract Manufacturers Manufacturers 30+ Third Party Suppliers ~ 1000+ Raw Materials 15000+ Packaging Materials
Demand Side Complexity

Direct- todistributor
Global Plants (Dewas, Paonta Sahib,Goa, Jejuri)
Customers in 125 countries 6 Distribution models ~7000 SKUs 3 new product introductions RW C&FA (India) per day
(India)
Stockists
PM Suppliers
Contract Manufacturer / Third Party / FG Imported
Global IT
API customers
9
Research & Development

Dedicated Facilities for Innovative & Generics Research > 1400 R&D Personnel ( ~ 250 PhDs) 8-10 NCE molecules in pipeline 4 NDDS platform technologies ~ $ 100 Mn total spend (6.4% to sales)
Collaboration in Drug Discovery Research (DDR) R&D I Out-licensing in DDR R&D II
Out-licensing in Novel Drug Delivery Systems
Global IT
We Deliver Value
R&D EverydayIII
R&D IV
10
Global Sales (2005 - 2008e)

CAGR* ~ 19%
$ Mn
2000
1607
~ 1900 e
1600
1339 1178
1200
800
400
Global IT
2005
2006 2007 We Deliver Value Everyday
2008
e - estimate 11
Copyright 2008 Ranbaxy Laboratories Limited * 3 year CAGR on like-to-like basis .i.e. excluding allied businesses divested in 2005
Recent Acquisitions & Alliances
Terapia (Romania) Be-Tabs (South Africa) Allen (Italy) Ethimed (Belgium) Mundogen (Spain)
Derma Brands (BMS)
Zenotech (India) Krebs (India) Jupiter Biosciences(Ind.) Cardinal Drugs (India) Orchid Pharma (India) Auto-injector Tech.(USA)
Global IT

IT Top Priorities
People Retention, Development and Recruitment Accelerate Product to Market Time Enable Supply Chain Excellence Deliver Business Intelligence
Global IT

IT Overview at Ranbaxy
Mix of enterprise applications like SAP R/3, APO, BW, Pharma-co-vigilance, Document Management, Sales Force Automation and host of local applications including
workflows based applications and a strong web presence A highly scalable and fault-tolerant Infrastructure across the globe MS Exchange as global communication platform Major thrust on Information Security Business Continuity Plans for key systems Disaster Recovery setup for SAP R/3 environment.
Global IT

Global Infrastructure Foot print
Swede n UK Canada Ireland Germany France Poland Ukraine Belgium Portugal Spain US Mexico Senegal Guatemala Ivory Coast Nigeria Cameroon Morocco
Russi Lithuani a Latvia a Belarus Austria Romania Italy Hungar y Egypt UAE Sri Ugand Lanka a Kenya Malaysia Mauritiu s Zimbabw e South Africa Kazakhsta n China Nepal Myanm India ar Vietnam Thailand
Japan
Bulgaria
Cambodi a Singapor e
Peru
Brazil Namibia
Ranbaxy Locations - 49 Overseas Locations with Exchange Server - 10 Locations With RPC \ Http from Corporate - 12 SAP R3 Locations - 19
Australia
Global IT

11-Jun-08
2007 Operating Statistics Keeping the Lights On

IT Helpdesk Handles Approx 110, 000 calls annually and resolve 99% within SLA period Typical month has 15 million external attacks and 3500 Virus Attacks IT Firewall Protects the business
2000 SAP users doing > 3,000,000 transactions in SAP annually
Global Data Centers having > 425 Servers across enterprise with averaged uptime 99.5% Keeping the Business Connected
10000 Userids & Mailboxes managed globally
Global IT

Some Certifications
Focus on IT Security & Processes First major Pharma organization in India to get certification
Global IT

Some Certifications
SAP CCC
Focus on SAP Support Processes and Documentation First company in Asia pacific to get certified by SOCA route First company in India to get recertified 3rd time
Global IT

SAP R/3 is our Transactional Backbone
~ 75% of global turnover and more than 100 sites worldwide run SAP We Deliver Value Everyday Global IT One System - Global Single Instance
19
RANBAXY: SAP Overview

SAP R/3 Footprint All the modules of SAP R/3 are implemented and used. Single R/3 instance used globally. 17 Company Codes and 12 Representative Offices 12 Manufacturing Plants; Various C&F and Warehousing Locations and Logistics Partners SAP R/3 System Metrics 2.3 TB in a single central R/3 database. Live in > 100 locations across globe with 1900+ users. 8,50,000+ dialog steps / day 0.8 seconds average dialog response time. 99.9% Uptime.
Global IT

Current Ranbaxy Locations using SAP R/3

Company Codes (21) India (1), USA(6), UK(1), Ireland(1), Fr ance(2), Germany(1), Russia(1), Malaysia(1), Canada (1), Belgium (1) Sweden (1) China (1), South Africa (3) Representative Offices (12) Asia(3), Africa(3), CIS(6) Manufacturing Plants (14) India(8), US(2), Ireland(1), Malay sia(1) China (1), South Africa (1) C&F Locations (44) India (C&F 39, RWH 3, IDWH 2) Global IT
Logistics Partners Germany (caremaxx), UK (CPD Logistics) France (CSP - batch process)
Subcontractors & Loan Licensees India(4) 59 LLs and 25 Subcontractors through Back Office
Shared Service for Accounts Payable

SAP Components Used / Under Implementation

R/3 4.6c MS Windows 2003 MS SQL 2000 ~ 1900 Users ~ 100 Locations ~ All Modules
Global IT
SCM 4.0 HP-UX / Oracle ~ SNP ~ PPDS ~ DP
BW 7.0 CRM 4.0 XI 3.0 EP 7.0 SEM 6.0 HR 4.6c Solution Manager 4.0

SAP R/3 Journey in Ranbaxy

Russia, Romania, Poland, Brazil - 2009 ECC Upgrade & Rollouts - 2008, South Africa 2008 Belgium, Sweden, China- 2007 Malaysia 2006 Germany, Rep Offices 2005 France, Russia (Front Office) 2004 Ireland, UK, LLs / CMs in India 2003 4.6.c Upgrade 2002 Complete India 2001 US 2000 First go-live in India April 1999 Project Start April 1998
DONE TOTAL AROUND 100 SITES
Global IT
SAP R/3 System Statistics

Number of HR Records Number of User Exits Number of Z-Programs Number of Transactions steps per day Number of Unique transactions per day Number of Sales related Orders Per day Number Purchase related Orders per day Number of Goods Receipts per day Number of Material Movements per day Number of Process Orders per day Number of Plant Maintenance orders per day Number of Inspection Lots per day 20900 103 3071 920000- 930000 2200- 2300 3200 355 1350 6630 580 200 250 872
Global IT

SAP Resourcing
One global team (CoE) under single head with people in India, US and EU (primarily India) Day-to-Day Support is offshored in India All Implementations done with internal team APO Internal Team with partner for support New Age Products Internal Team with spot expertise External expertise is used to augment internal team only when required
Global IT

SAP R/3 at Ranbaxy
It is good to know which is which
Global IT

R/3 The Good

CCC 3 consecutive times and SAP ACE 2007 System enablement of Shared Services: 2006-07 Electronic Banking and EDI (charge backs etc) Streamlining and uniformity of processes across organization Faster integration with new entities / M&A Online analysis of Supply Chain performance based on several Key Performance Indicators Online reporting of inventory, sales and receivables resulting into enhanced productivity Successful handling of Multi Lingual SAP settings Successful management of Statutory and regulatory checks and audits by having systematic processes in place
Global IT
R/3 The Good

Digitization of approval process - use of workflows Centralized database for masters and transactional data resulting into Enhanced visibility and control on Global Spend Electronic Banking is used in most of the locations using automatic payments System based Audits Enables selling in regulated markets
Overall SAP has led to increase in sales, reduction in inventory, increase in productivity etc.
Global IT

SAP Returns Macro Level

Quantified Savings in Many Areas: 1. Increase in Sales In US due to integration with customers In India due to integration with CFAs 2. 3. 4. Reduction in receivables Reduction in inventory Savings due to productivity
ROI estimated at 200%

Global IT

R/3 The Bad

R/3 is still cumbersome to use Perception of value still requires effort Data rich but information poor For small sites it is digging a small hole with a back hoe
Global IT

R/3 The Ugly

Master Data Material Codes Vendor Codes Customer Numbers Total Number of Recipes User Roles 235,700 77860 116960 59871 9000
Global IT

SAP R/3 at Ranbaxy Next Steps

Complete ECC 6.0 Upgrade Complete BW & SEM Implementations
Financial Consolidation Common and Market Specific KPI Dashboards Business Planning and Simulation
Complete R/3 Roll-outs to top markets Clean-up Master Data Application consolidation of minor systems Plan HR ESS Deployment
Global IT

Commencement of APO
Key driver for implementing an APO at Ranbaxy was the increasing complexity of the Supply Chain due to rapid business growth.
FG SKUs: >7000 Active RM+PM SKUs: >20000 Active Countries: >100 Manufacturing plants: 16 own DF plants, 5 own API plants and > 40 Contract Manufacturers and Loan Licensees 4 New Products introduced everyday
Global IT

Project Objectives and Expectations

Supply chain Planning for Enhancing Customer service To Ranbaxys Universal Markets
Immediate Objectives
Transform the supply chain to substantially improve customer service levels in the short term whilst maintaining optimal inventory levels
APO Implementation Provide integrated planning capability Improve analytical capabilities such as What-If analysis Provide automation of planning tasks Sustain/enhance Spectrum benefits
Spectrum
Provide End to end Supply Chain Visibility Increase flexibility and responsiveness of supply chain Support Ranbaxys vision and growth plan
Medium Term Objectives

Build Ranbaxys supply chain capability to be a source of competitive advantage the global generics market
Global IT

SPECTRUM+ : Implementation of APO

Project Spectrum+ started in April 2004 to implement SAP APO at 5 markets and six manufacturing plants to cover:
Forecasting Distribution Requirement Planning Deployment Planning Production Planning and Detailed Scheduling
APO Modules to be implemented:

DP (Demand Planning) SNP (Supply Network Planning) PPDS (Production Planning and Detailed Scheduling)
Overall project duration

Spectrum Spectrum+ Global IT
: 12 months (starting April 2003) : 30 months (starting April 2004)

Overview of APO Architecture at Ranbaxy

APO (Advanced Planner and Optimizer) is an integrated suite of modules covering all key functional areas within Supply Chain Planning area.
SAP-SCM(APO)
Demand Planning Supply Network Planning Production Planning/ Detailed Sch. Scheduling Available To Promise Transportation Planning
BW
Integration Layer
Transaction System
Non R\3 Transaction System

36
Source: SAP
Global IT

Current APO Planning Statistics

Demand Planning Product Locations Planned: >90000 Locations Planned: >150 SKUs Planned: >10000 Number of Jobs run >500 pm Supply Planning FG SKUs Planned: > 7000 RM SKUs Planned: > 20000 Work Centers Planned: >1500
Global IT

APO at Ranbaxy - The Good

First Market rollout took place in March 2005. Rollouts happened at the following markets and plants till December 2006: Markets: India, US, UK Germany, Russia & CIS Plants: DF Dewas; API Mohali, Dewas, Toansa Measurable results being realized in Forecast Accuracy and Improved Customer Service Project continues to deliver results as it is deployed to more markets
Global IT

APO at Ranbaxy - The Bad

Project has taken much longer than expected Significant issues with maintaining both internal and external expertise base Early customizations causing on-going support requirements After 2 years, project team lost focus
Global IT

APO at Ranbaxy The Ugly

Original Implementation Partner Fall-Out Project got Lost for 12 months PPDS was over-engineered to solve everything and did not deliver workable schedules Steering Teams focused on technical issues Project was perceived as failure
Global IT

For a Few Dollars More..

Called in SAP Value Engineering
Global IT

What did Value Engineering Find

Supply Chain
RM & PKG Suppliers Matls Invent. Purchase Orders Inventory Turns API Mfg. DF Mfg. BSR Logistics BSR Invent. GIT Regl W/H CFAs Regl Invent. Regl Office/ Customers
DF Schedule NDR - API Mfg. Commits Commit Vs. Actual SC/MFG NDR Global NDR-Plant Requirement Vs. Commit SC
Process
Demand Forecast
KPIs & Org. RM/PKG Purch.

WIP - MFG
FG Inventory Turns SC
Fcast Accuracy Marketing
DIFOT Markets
DF API - SC API FG MKTG/MFG
Benefits from Spectrum

1. Standard process across the enterprise for improved accountability/ownership, structured/timely planning, and coordination/communication across the supply chain 2. Cross functional SC organization for process management, monitoring and KPI reporting 3. S&OP Process to resolve as many discrepancies and mismatches as possible early in planning 4. Initial improvements and business benefits, but system wide benefits not fully realized
Opportunities for Improvement in Spectrum+

1. Improve visibility and velocity of information on a single platform for a flexible and responsive SCM system. 2. Increase type and detail of data needed for exception mgmt (e.g. opport.. demand) and prioritization (e.g. MTO) 3. Early S&OP process to minimize surprises and achieve more efficient supply-demand mismatch 4. Longer/detailed planning horizon to improve optimization opportunities (e.g. Mode mix, mode selection, procurement)
Global IT

VE Recommendations for Spectrum+: Summary

Area SAP APO PPDS Project Objectives & Ownership Issues & Concerns Functionality gaps and product usage issues Implementation objectives Sr. Executive ownership Recommendation SAP to assess architecture and recommend resolution to key PPDS issues Revise objectives from Spectrum Automation to Single SC Platform Across Ranbaxy Senior Ranbaxy Executive to own and drive Spectrum+ implementation and roll out SAP Executive support in issue resolution Committed project team of SMEs and product experts for PPDS and SCM Ensure stakeholder ownership and participation during development, roll-out and adoption Address training requirements and put in place an on-going APO support organization Focus on integrating the solution components and then increasing depth Focus on key markets and DF manufacturing Improved order promising and fulfillment Manage supplier base and DM purchasing
SAP Support SAP Executive support Subj. Matter Expertise Change Ranbaxy end user & usage of Management system Adoption across enterprise and continuous improvement Implementati Focus within business functions on Scope & Vertical Integration Focus Future Capabilities Order Promising Supplier Relationship Management
Global IT

Spectrum+ and APO

At key decision point
Re-invest or Divest
Critical Issues
Ranbaxy Senior Executive Ownership SAP Support and APO Capability Change Management and Project Team Burnout
Value Engineering Study Conducted

Significant Value Exists Recommended SAP Proof of Concept with Waldorf Supply Chain Center of Excellence
Global IT

The Cavalry Arrived.

Engaged the SAP Supply Chain CoE Evaluated requirements, model, configuration and results In 10 weeks, delivered re-engineered model and configuration changes Implemented in 2 planning cycles
Global IT

Dewas Performance Post APO PPDS Re-launch in May 07

Improved C Vs A: Dewas has consistently delivered C (Commits) Vs A (Actual) of above 90% since May 2007
May: 94% July: 90%
June: 90% August: Expected to be >=90%
Increase in Throughput: Number of SKUs delivered by Block B used to average between 250-275. Since May, this has gone up to 280-300 with a maximum of 306 in May 2007. Reduction in PM Inventory: There has been a reduction in PM inventory in Dewas to the tune of Rs. 2.4 Cr over May-July 2007. This can primarily be attributed to APO based planning. Dewas is still in stabilization stage. Results shall improve further. Global IT
Addressing the Key Issues

PPDS Functionality / Capability
Proof of Concept with SAP CoE delivered results
Sponsorship
COO engaged actively to spearhead project
Change Management
Project Management changed Once there were demonstrable results, people wanted to be associated with success Moved key project team members into operations
Global IT

APO Key Learnings

Do Not Get Off-Track Do Not Boil the Ocean When in doubt Get SAP Involved Value Engineering should be engaged Recognize the White Elephant in the room As with all SCM Projects There is no black box magic solution, have realistic expectations Fix R/3 First Where Possible - GIGO You do not need R/3 implemented everywhere to roll-out APO and deliver results
Global IT

Next Steps with APO

DP/SNP deployment completion to Rest of World by End 08 PPDS Deployment to existing Dosage Form facilities 1 done, 1 in process Upgrade to SCM 7.0 and reduce original customizations in 2008 Reduce planning cycle time and frequency Continue to quantify business results
Global IT

As in the movie.
Work with the Ugly Overcome the Bad Keep focused on the gold And you will be the Good
Global IT
Ranbaxy Global Information Technology
We Deliver Value Everyday!

Questions ?
Global IT

51 51
Ranbaxy Global Information Technology
We Deliver Value Everyday!

Thank You! Interested in Joining our Winning Team E-mail: david.briskman@ranbaxy.com
Global IT

52 52
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Global IT
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Ranbaxy Global Information Technology SAP at Ranbaxy The Good, The Bad and The Ugly

SAP Summit Mumbai June 6, 2007 David Briskman VP and CIO

We Deliver Value Everyday

We Deliver Value Everyday

Ranbaxy Mission Statement

To become a Research based International Pharmaceutical Company

We Deliver Value Everyday

Sales in 125 Countries

Ground Presence in 49 Countries

Indias Largest pharmaceutical company Global IT

2007 Sales ~ US$ 1.6+ bn

We Deliver Value Everyday

Research & Dev.

Privileged and Confidential

Copyright 2008 Ranbaxy Laboratories Limited

We Deliver Value Everyday

Global Manufacturing Presence

Active Pharmaceuticals Ingredients (APIs)Facility, Mohali

Dosage Forms Facility, Paonta Sahib]

+South Africa, Japan, Brazil We Deliver Value Everyday

Copyright 2008 Ranbaxy Laboratories Limited

Global Supply Chain of Ranbaxy

Regional Plants (USA/EUROPE)

In-country stocking points (JAX)

API suppliers RW (India) Other RM suppliers C&FA (India) Stockists

Contract Manufacturer / Third Party / FG Imported

We Deliver Value Everyday

Copyright 2008 Ranbaxy Laboratories Limited

Supply Chain Complexity

Supply Side Own Plants (Mohali, Complexity Poanta Sahib,

Regional Plants (USA/EUROPE)

In-country stocking points (JAX)

Demand Side Complexity

Global Plants (Dewas, Paonta Sahib,Goa, Jejuri)

Contract Manufacturer / Third Party / FG Imported

We Deliver Value Everyday

Copyright 2008 Ranbaxy Laboratories Limited

Research & Development

Collaboration in Drug Discovery Research (DDR) R&D I Out-licensing in DDR R&D II

Out-licensing in Novel Drug Delivery Systems

Copyright 2008 Ranbaxy Laboratories Limited

Global Sales (2005 - 2008e)

2006 2007 We Deliver Value Everyday

Recent Acquisitions & Alliances

We Deliver Value Everyday

We Deliver Value Everyday

We Deliver Value Everyday

Global Infrastructure Foot print

We Deliver Value Everyday

Privileged and Confidential

2007 Operating Statistics Keeping the Lights On

2000 SAP users doing > 3,000,000 transactions in SAP annually

10000 Userids & Mailboxes managed globally

We Deliver Value Everyday

We Deliver Value Everyday

We Deliver Value Everyday

SAP R/3 is our Transactional Backbone

Privileged and Confidential

RANBAXY: SAP Overview

We Deliver Value Everyday

Current Ranbaxy Locations using SAP R/3

Shared Service for Accounts Payable

We Deliver Value Everyday