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Alkem Labs - Strategy Analysis
Alkem Labs - Strategy Analysis
STRATEGY ANALYSIS
1 Table of Contents
2
Overview ............................................................................................................................7
Organisation Structure.......................................................................................................... 14
Competitors Profile............................................................................................................... 17
7.1
7.2
7.3
7.4
8.2.3
Focus on research and development............................................................................ 23
8.2.4
Developing differentiated product portfolio ................................................................. 24
8.2.5
Use of strategic international and domestic acquisitions and partnership arrangements to
enhance growth ........................................................................................................................ 24
8.3
Pharmaceuticals Porters Five Forces ................................................................................. 25
Competitive Rivalry .................................................................................................................... 25
Threat of new entrants ................................................................................................................ 25
Threat of Substitutes................................................................................................................... 25
Bargaining power of suppliers .................................................................................................... 25
Bargaining power of customers ................................................................................................... 25
8.4
SWOT Analysis of Indian Pharmaceutical Industry.............................................................. 26
9.1
Dr. Reddys ....................................................................................................................... 27
Business Strategy ...................................................................................................................... 27
Value net analysis...................................................................................................................... 27
PARTS Analysis .......................................................................................................................... 29
Technology Strategy .................................................................................................................. 30
International Strategy ................................................................................................................ 30
9.2
Sun Pharma....................................................................................................................... 31
Strategy outline......................................................................................................................... 31
Growth Strategy........................................................................................................................ 31
Strategic moves in 2015-16 ........................................................................................................ 32
9.3
Cipla ................................................................................................................................. 32
Key strengths and capabilities .................................................................................................... 32
Growth strategy ........................................................................................................................ 32
Market Strategy ........................................................................................................................ 33
10
11
Future Scenario.................................................................................................................. 36
12
13
Conclusion.......................................................................................................................... 40
14
References ......................................................................................................................... 41
15
Annexure ........................................................................................................................... 42
15.1
2 Industry Background
2.1 The Global Pharmaceuticals Industry
The pharmaceuticals industry is one of the largest industries in the world and comprises companies
that are involved in the development, production and marketing of pharmaceutical products.
Its continued growth has been driven by factors such as an increase in elderly populations and a
growing middle class in emerging economies that have boosted the demand for pharmaceutica ls.
The increased focus by governments to improve healthcare infrastructure that provide people with
greater access to treatment and medication has also contributed to the growth in the global
pharmaceuticals industry.
According to IMS Health, the size of the global pharmaceuticals market is expected to grow at a
CAGR of approximately 4.1% between 2014 and 2019, to reach sales of approximate ly
US$1,294.6 billion by 2019, compared with US$1,057.1 billion in 2014.
(Source: Market Prognosis Global 2015-2019 dated May 2015, published by IMS Health)
The Global pharmaceuticals industry can be broadly classified into the following three categories:
(i)
Regulated and Semi-Regulated Markets
(ii)
Patented and Generic Products
(iii)
Geography.
broadly classified into the domestic and export segments in terms of the target geographica l
sales markets.
The chart below illustrates the outlook of the Indian pharmaceuticals industry by sales in the key
segments:
Table 1 Indian Pharmaceutical Industry by sales
2009-2010
Domestic formulation (`
billion)
Formulation exports (US$
billion)
Bulk drug exports (US$
billion)
Total market (US$ billion)
417.1
20142015 2019-2020
Past 5 year Future 5 year
(projected) CAGR up to CAGR up to
2014-2015
2019-2020
745.8 1,359-1,484
12.3
13-15
5.2
11.7
18.9-20.4
17.7
11-13
6.3
20.3
12.9
36.8
20.4-22.3
61.9-67.4
15.2
12.6
10-12
11-13
Increasing
Increasing
Increasing
Growth in
Population
Disposable Income and Government Expenditure in the Healthcare Sector
Insurance Coverage
Lifestyle Related Diseases
international operations accounted for 74.7% and 25.3%, respectively, of its net revenues from
operations. Its consolidated net revenues from operations grew at a compounded annual growth
rates (CAGR) of 22.3% in the period from fiscal year 2011 to fiscal year 2015.
Its domestic operations are further divided according to the various therapeutic areas in which It
operate. In the last fiscal year, It had a portfolio of 736 brands in India. It has been among the top
ten pharmaceutical companies in India in terms of domestic sales for the past 12 years. Its domestic
business has grown at a CAGR of 17.6% in the period from fiscal year 2011 to fiscal year 2015.
According to IMS Health, It was the third-fastest growing company in terms of sales in this period
among the ten largest pharmaceutical companies in the Indian domestic formulations market.
Net revenues from operations from its international operations have grown from 12.6% of its net
revenue from operations in fiscal year 2011 to 25.3% of its net revenue from operations in fiscal
year 2015. As part of its international operations, It focus on the United States, through its
marketing subsidiary, Ascend Laboratories LLC (Ascend).
Its most significant therapeutic areas in domestic market are anti-infectives, gastro-intestinal, pain
and analgesics, and vitamins, minerals and nutrients. These therapeutic areas accounted for 80.7%
of its total sales in the domestic market for fiscal year 2015. It has established products in various
therapeutic areas in India, including:
Anti-infectives is the largest therapeutic area in the pharmaceutical industry in India. It has
consistently been ranked number one in terms of revenue in this therapeutic area for the
past ten years. For fiscal year 2015, It had the largest market share of 11.2% out of a total
market size of `106,551.1 million. Its key anti-infective brands are Clavam (for fiscal year
2015, It had the second largest market share in its molecule category, which had a market
size of `13,891 million), Taxim-O (for fiscal year 2015, It had the second largest market
share in its molecule category, which had a market size of `7,685.5 million) and Taxim (for
fiscal year 2015, It had the largest market share in its molecule category, which had a
market size of `1,974.8 million).
Gastro-intestinal (in which It had the third-largest market share of 5.6% out of a total
market size of `84,091.1 million for fiscal year 2015). Its key gastro-intestinal brands are
Pan (for fiscal year 2015, It had the largest market share in its molecule category, which
had a market size of `5,027.4 million) and Pan-D (for fiscal year 2015, It had the largest
market share in its molecule category, which had a market size of 4,944.8 million)
Pain/ analgesics (in which It had the third-largest market share of 5.0% out of a total
market size of `62,688.5 million for fiscal year 2015)
Vitamins/ minerals/ nutrients (in which It had the sixth-largest market share of 3.7% out of
a total market size of `60,179.1 million for fiscal year 2015)
In addition to the above categories, It have a fast-growing portfolio in other therapeutic
areas such as neuro-psychiatry, cardiology, dermatology, diabetology and oncology. In
these therapeutic areas, it has built brands which include Olkem for hypertension, Donep
for Alzheimers disease, Glucoryl-M for diabetes, Kojiglo for hyper-pigmentation and
Melbild for hypo-pigmentation.
Having established itself in the Indian pharmaceuticals market, it has expanded internationa lly
through both organic growth and certain strategic acquisitions in the United States, which is its
key focus market. Its products are sold in 56 countries, either directly through its Subsidiaries or
indirectly, through supply, distribution and other arrangements with various global companies and
local distributors.
In July 2010, It acquired The Pharmanetwork LLC in the United States, the holding company of
Ascend, which provided us with the commercial platform through which It was able to market and
sell its portfolio of products in the United States. Ascend was established in 2003 and had its own
portfolio of generic products in the market prior to its acquisition. Ascend has relationships with
major chains, wholesalers, managed care companies, distributors, food and grocery stores and
pharmaceutical retailers in the United States. Further, in December 2012, It acquired
manufacturing assets from NORAC, Inc. in the United States, focused primarily on manufactur ing
specialty APIs and providing contract research and manufacturing services. Recently, in June
2015, It acquired a formulation manufacturing facility from Long Pharmaceuticals LLC in the
United States that has semi-solids, liquid and nasal formulation manufacturing capabilities.
In the United States, It have filed 66 abbreviated new drug applications (ANDAs) (of which 18
have received final approval and two have received tentative approval), of which 29 Itre Para IV
filings including first-to-files (FTFs) and one new drug application (NDA) (that has received
final approval). Please refer to Its International Operations Its United States Operations for
details. It sell a range of high-quality, cost-effective generic drugs to major drug chains,
pharmaceutical retailers, wholesalers, food and grocery stores, distributors and managed care
companies in the United States.
In addition to the United States, Australia is also an important focus market for us. In June 2009,
It acquired a majority stake in an Australia company, Pharmacor Pty Ltd (Pharmacor) to enable
us to enter the Australian market. Pharmacor targets individual pharmacies, pharmacy groups,
pharmacy co-ops, aged care and hospitals to offer prescription drugs and over-the-counter generic
medicines. It have also built its presence in other developed and emerging markets in Europe,
South-East Asia, Latin America, Africa and the CIS through its Subsidiaries in these countries as
well as through building relationships with international companies and local distributors. Please
refer to - Its International Operations for details.
It have a total of 16 manufacturing facilities: 14 manufacturing facilities at five locations in India
and two in the United States. Five of its facilities are USFDA, TGA and UK-MHRA approved. Of
the Indian manufacturing facilities, 12 are for manufacturing formulations and two for
manufacturing APIs. Please refer - Its Manufacturing Facilities for details.
It have strong research and development capabilities which enhance its portfolio of products. It
have fits research and development facilities, two in India and two in the United States. As of June
30, 2015, It employed 483 scientists in research and development functions. Please refer Research and Development for details. For fiscal year 2015, its expenditure on research and
development amounted to 4.5% of its net revenues from operations.
It generates demand for its products in India through its field force of medical representatives, who
frequently visit prescribers across specialties to market its product portfolio and also visit
pharmacies and distributors to ensure that its brands are adequately stocked. As of June 30, 2015,
It had a field force of 5,856 medical representatives spread across all the states in India.
Its consolidated net revenues from operations for the years ended March 31, 2015, 2014 and 2013
was `37,831.7 million, ` 31,260.0 million and `24,952.3 million respectively. The following table
sets forth certain information regarding its net revenue from operations for its geographic
segments. Its United States subsidiary, ThePharmaNetwork LLC had consolidated net revenues of
`6,459.7 million for fiscal year 2015.
Table 2: Revenue growth
(in ` million)
2015
Geographic segments
Domestic
International
Total
28,262.1
9,569.6
37,831.7
23,607.2
7,652.8
31,260.0
2013
20,475.1
4,477.2
24,952.3
10
Board of Directors
Domestic Business
International Business
Support Functions
President- R&D
CFO
11
4.1 Key managerial personnel and their responsibilities:The key managerial personnel of the Company are as follows:
Mr. Prabhat Agrawal, aged 38 years, is the Chief Executive Officer of the Company.
Mr. Rajesh Dubey, aged 49 years, is the Chief Financial Officer of the Company.
Mr. Girish Jain, aged 50 years, is the President, Research and Development, of the Company.
Mr. Arvind Sharma, aged 55 years, is the President, Sales and Marketing, of the Company.
Mr. Manish Narang, aged 45 years, is the Senior Vice President, Legal, Company Secretary and
Compliance Officer of the Company.
Mr. Rajbir Sandhu, aged 54 years, is the Senior Vice President, Sales and Marketing, of the
Company.
Mr. Amit Ghare, aged 44 years, is the President, International Business. He is responsible for
regulated markets including U.S., Australia, Europe, North America, South America and Asia.
Mr. Anil Arora, aged 51 years, is the Senior Vice President, Manufacturing of Company. He is
responsible for global manufacturing operations.
Mr. Mukesh Tiwary, aged 49 years, is the Vice President, Sales and Marketing, of the Company.
Mr. K.R. Prakash, aged 47 years, is the Vice President, Head Corporate Quality, of the
Company.
Mr. Satyavan Manikani, aged 47 years, is the Assistant Vice President, Strategy and Business
Development, of the Company.
Mr. Ambrish Kumar Srivastava, aged 57 years, is the Vice President, Regulatory and Medical
Affairs, of the Company.
Mr. Venkatesh S., aged 48 years, is the President and CEO of Ascend Laboratories LLC,
Subsidiary in the United States
12
focus on brand building and driving the growth of focused set of the brands with
high growth potential;
identification of gaps in product portfolio for the introduction of new products;
growth in prescriptions and prescriber base in key specialty areas;
invest in the training and effectiveness of field force; and
Increasing market shares in those geographies where market shares are lower than
the national average.
13
Organisation Structure
Alkem laboratories follows a simple yet effective organisation structure, where a separate
Research council and Management council works independently beside the Director. The
functionalities under Director are broadly divided under three arms, namely1. Technical infrastructure divisions
2. R&D divisions
3. General Administration and Facilities
Director
General, CISR
Research Council
Technical Infrastructure
Divisions
Computer Centre
Laboratory Animals
Facility
Knowledge Resource
Centre
Sophisticated Analytical
Instrument facility
Laboratory Engineering
Management
Council
Director
R&D Divisions
Bio Chemistry
Botany
Clinical & Experimental
Medicine
Endocrinology
Medicinal & Process
Chemistry
Microbiology
Molecular & Structural
biology
Parasitology
Pharmaceuticals
Pharmacokinetics &
Metabolism
Pharmacology
Toxicology
Administration
Accounts
CSIR Dispensary
Canteen
Field Section
Services
Business Development
Unit
14
Anti-infectives is the largest segment in the pharmaceutical industry in India. The company has
consistently been ranked number one in terms of revenue in this therapeutic area for the past ten
years. For fiscal year 2015, they had the largest market share of 11.2% out of a total market size
of `106,551.1 million. its key anti-infective brands are Clavam (for fiscal year 2015, had the second
largest market share in its molecule category, which had a market size of `13,891 million), TaximO (for fiscal year 2015, had the second largest market share in its molecule category, which had a
market size of `7,685.5 million) and Taxim (for fiscal year 2015, had the largest market share in
its molecule category, which had a market size of `1,974.8 million)
Gastro-intestinal (in which the company had the third-largest market share of 5.6% out of a total
market size of `84,091.1 million for fiscal year 2015). Its key gastro-intestinal brands are Pan (for
fiscal year 2015, had the largest market share in its molecule category, which had a market size of
`5,027.4 million) and Pan-D (for fiscal year 2015, had the largest market share in its molecule
category, which had a market size of 4,944.8 million)
Pain/ analgesics (in which the company had the third-largest market share of 5.0% out of a total
market size of `62,688.5 million for fiscal year 2015).
Vitamins/ minerals/ nutrients (in which the company had the sixth-largest market share of 3.7%
out of a total market size of `60,179.1 million for fiscal year 2015)
15
Dermatology and aesthetics has always been the focus area for Alkem. They have a basket of
products ranging from acne, skin infections, melasma, moisturizers, dermatitis, alopecia and skin
revitalization. Some of the highlights are
Melbild (brand of Decapeptide) was the biggest new launch in Dermatology segment in
2015
The company acquired Clindac-A (leader brand in Clindamycin topical market) from
Galderma
Renocia (range for Alopecia available as Solution, Shampoo and Conditioner) is an inlicensed product from South Korea and leader in its segment
Oncology is a branch of medicine that deals with the prevention, diagnosis and treatment of cancer.
Alkem has dedicated division for anticancer products, it is Cytomed division. Cytomed division is
serving the need of cancer medication to Indian cancer patients since last 14 years. As far as
anticancer medicines are concerned Alkem Cytomed has hormonal preparations, cytotoxic drugs
and
targeted
therapeutic
drugs
in
its
product
basket.
Alkem recently entered into the era of bio similar drugs by launching Rituximab (Cytomab) which
is a monoclonal antibody. Monoclonal antibody is the novel targeted therapy and the most
advanced form of drugs which are used to cure or to stop complicated chronic diseases. Rituximab
is highly recommended by oncologists as targeted therapy for treatment of one of the cancer NonHodgkin
lymphoma
arthritis
(RA).
Enzene Biosciences a dedicated research unit of Alkem laboratories, which is currently working
on number of monoclonal antibodies. Several other bio similar drugs are in pipeline and soon will
be available for the affordable cure of Indian patients.
In addition to the above categories, the company has a fast-growing portfolio in other therapeutic
areas such as neuro-psychiatry, cardiology and diabetology. In these therapeutic areas, it has built
brands which include Olkem for hypertension, Donep for Alzheimers disease, Glucoryl-M for
diabetes, Kojiglo for hyper-pigmentation and Melbild for hypo-pigmentation.
For fiscal year 2015, the company was the leader in the largest therapeutic area (anti-infective)
with a 11.2% market share and was ranked third in terms of market share for both the gastrointestinal (with a market share of 5.6%) and pain/analgesics therapeutic areas (with a market share
of 5.0%), in each case, in India. Revenues from the anti-infectives, gastro-intestinal and
pain/analgesics therapeutic areas in India grew at a CAGR of 10.1%, 17.5% and 12.0% in the
period from fiscal year 2011 to fiscal year 2015. In the same period, these therapeutic areas in
India as a whole grew at a lower CAGR of 6.8%, 12.8% and 10.9%, respectively. They are also
among the top ten companies in the vitamins, minerals, nutrients and gynaecology therapeutic
areas in terms of Indian market share for March 2015.
16
7 Competitors Profile
7.1 Dr. Reddys Laboratories
Dr. Reddys Laboratories a global organization, founded by Mr. Anji Reddy with products across
the pharmaceutical value chain designed to offer solutions for unmet medical needs and better
access to existing medicines. Their offerings cover Active Pharmaceutical Ingredients (APIs),
Branded Formulations, Generic Drugs, Biologics, Specialty Products and New Chemical Entities
(NCE). The main corporate mandate is to create greater access to affordable medicines and reach
patients worldwide.
DRL have a strong presence in key generics markets globally. Medicines and services are available
in North America, Europe and the emerging markets of Asia, Africa and South America.
The headquarter is in Hyderabad, India, with a presence across 26 countries. Manufactur ing
facilities are supported by 5 technology development centers, 2 integrated product development 3
R&D centers.
Dr. Reddy's began as a supplier to Indian drug manufacturers, but it soon started exporting to other
less-regulated markets that had the advantage of not having to spend time and money on a
manufacturing plant that would gain approval from a drug licensing body such as the U.S. Food
and Drug Administration (FDA). By the early 1990s, the expanded scale and profitability from
these unregulated markets enabled the company to begin focusing on getting approval from drug
regulators for their formulations and bulk drug manufacturing plants in more-developed
economies. This allowed their movement into regulated markets such as the US and Europe. In
2014, Dr. Reddy Laboratories was listed among 1200 of India's most trusted brands according to
the Brand Trust Report 2014.
Global generics
Active
Ingredients
Proprietary
products &
others
Pharmaceutical
Services
17
~5% market share 13 specialized divisions catering to wide range of therapeutic areas
Market leader in 3 therapies Respiratory, Urology, ARV
7 brands in the top 100 (2nd highest for any company)
Largest field force in India with ~9,400 employees
More than 85% of medical practitioners in India prescribe Cipla products
Focus on enhancing patient awareness, medical education
Network of 6500 distributor partners helps Cipla reach 700,000 pharmacists
The Global business of Cipla includes Africa, Middle East, Latin America, Asia-Pacific (excluding
India), Russia, Australia & New Zealand Presence across 120+ countries
Relationship with 100+ partners Market leader in many countries High focus on Africa contributes
50% of international sales Strong tie-ups with governments and funding agencies Strengthened
front end presence over the last 18 months in 16 markets, examples include Morocco, Algeria,
Yemen, Sri Lanka, Uganda.
API
Repiraotry
Cipla Global
Access
Veterinary
18
The 2014 acquisition of Ranbaxy will make the company the largest pharma company in India,
the largest Indian pharma company in the US.
API
Global
Consumer
Healthcare
Business
Branded
Generics
Business
Cardiovascular (prils and statins), Diabetology, Asthma, Pediatrics, CNS, GI, Anti-Infectives and
NSAIDs therapy segments, not to mention global leadership positions in the Anti-TB and
Cephalosporin segments.
Lupin is
5th largest and fastest growing top 10 generics player in the US (5.6% market share by
prescriptions, IMS Health, September 2015)
2nd largest Indian pharmaceutical company by market capitalization
9th largest generic pharmaceutical player in Japan
4th largest generic pharmaceutical company in South Africa (IMS Health, March 2016)
Global
Formulations
Business
Active
Ingredients
API group into making further inroads into markets such as US,
Europe, Japan and exploring new opportunities in emerging
markets like China, Brazil, Mexico, Korea and Russia
Advanced Drug
Delivery
Biotechnology
20
21
from operations in fiscal year 2011 to 25.3% of our net revenues from operations in fiscal year
2015.
Their business is subject to extensive regulation. If they fail to comply with the applicable
regulations prescribed by governments and regulatory agencies, our business, results of
operations and financial condition could be adversely affected.
Their top 20 brands account for a majority of their domestic sales. Additionally, certain
therapeutic areas and certain states generate a significant portion of their total domestic
revenue. Their business, prospects, results of operations and financial condition may be
adversely affected if any of their top 20 brands or their other products in key therapeutic or
geographic areas do not perform as expected or if competing products become available
and gain wider market acceptance.
Any manufacturing or quality control problems may damage their reputation for high
quality products and expose them to litigation or other liabilities, which could adversely
affect financial results.
Any shortfall in the supply of our raw materials or an increase in raw material costs or other
input costs may adversely impact the pricing and supply of our products and have an
adverse effect on their business.
Significant portion of their sales in the United States are from our top five customers and
top five products.
Their international operations expose them to complex management, legal, tax and
economic risks, which could adversely affect their business.
They have entered into a number of related party transactions, which may be on less
favourable terms for the Company.
The availability of counterfeit drugs, such as drugs passed off by others as our products,
could adversely affect goodwill.
23
24
Indian Pharma companies will face competition from big Pharma companies backed huge
4
financial muscle
3
Bargaining Power
of Buyers
Bargaining Power
of Suppliers
Threat of Rivalry
Threat of Substitutes
Figure 9:Porter's 5 forces
Threat of Substitutes
Threats of substitutes is low however, homeopathy and Ayurvedic medicines could act as
substitutes
Difficulty to manufacture APIs such as steroids, sex hormones and peptides gives
bargaining power to suppliers
Generic drugs offer a cost effective alternative to drug innovators and significant savings
to customers
25
Strength
Matured
Industry- Large
Home Market
Fast Changing
Lifestyle
Low cost
manufacturing
Quick adoption
of new
technology
Increasing
population and
per caipta
Income
Weakness
Lack of pricing,
Power impact
growth
Low margins
Lower investment
in R&D
Highly fragmented
industry
Intense
competition
High exposure to
global marketsboth political and
currency risk
High input costs
due to inflation
Opportunity
Threat
Potential to
absorb high
priced products
Opening of OTC
segment
Large number of
drugs going off
patent
Increasing
penetration of
Insurance
industry
Biosimilars
Non tariff
barrier imposed
by developed
countries
Internal
fragmentation
Chinese
intrusion into
domestic
markets
Small number of
discoveries
Outdated sales
and marketing
methods
Increasing
influence of
foreign MNCs
26
9 Competitor Analysis
9.1 Dr. Reddys
Business Strategy
Dr Reddys core purpose is to provide affordable medicines to enable people lead healthier lives.
Through its branded and unbranded generics company offers low cost alternatives to highly priced
innovative brands. Some examples are company successfully introduced Fluoxetine (generic
version of Prozac), Donepezil hydrochloride tablets (generic version of Aricept), Venlafa xine
(generic version of Effexor XR) and Letrozole (generic version of Femara). Company capitalizes
on low labour and manufacturing costs in India by producing and exporting these generic drugs to
other markets. It also capitalizes on economies of scale achieved through centralized production.
Company also produces and markets APIs/bulk drugs at low costs to both domestic and exports
market. Thus company follows overall cost leadership business strategy in case of Generic drugs
and APIs.
Dr Reddys is also using its R&D to bring differentiated formulations and New Chemical Entities
(NCEs) into the market. Its strategy with respect to these products is overall Differentiation as it
tries to bring new effective drugs into the market.
Dr Reddys operates in highly dynamic environment due to intense rivalry in the industry and
changing regulations.
Companys strategy from beginning is to provide low cost and high quality drugs to the customers.
In this direction it has launched generic versions of many patented drugs (Lipitor, Prozac, etc) and
made good profits. Company has launched 65 products last years and is planning to launch another
55 products this year. It is not big work for company as it has already launched these products in
several other markets.
27
Made an agreement with GSK to sell its products in markets other than India through GSKs global
marketing network. This step will increase the market access to Dr Reddys in some emerging
economies like Brazil, Latin America, Africa, the Middle East and Asia Pacific, excluding India.
The Company has entered into an agreement with its customers for the API segment to set-up their
facilities near the manufacturing operations unit of Dr. Reddys. This has ensured higher switching
costs for the buyers of Dr. Reddys.
Dr Reddys is fastly making steps to provide its drugs to rural customers. It has put together a new
brand portfolio for such markets (Redikate, Redihealth and Redihope, to name a few) based on the
insight that rural prescriptions are often different from urban prescriptions. Dr Reddy's is trying
three models to reach the customers in rural areas:
The first plan is to use local entrepreneurs who can diagnose ailments like hypertensio n
and refer patients to doctors. They could be paid for every referral. The model, like
Hindustan Unilevers Shakti, is self-sustaining and scalable
The second plan is to link people through health camps. In fact, Dr Reddy's has held
anaemia camps in the last three months for 50,000 villagers, of which 40 per cent were
found anaemic
The third plan is to use the infrastructure of agencies and programmes which are already
there in villages, like the World Health Foundation and ITC's e-choupal
Substitutors
Dr Reddys is in all game to increase its market share in India. Seeing that urban markets are
saturated with huge presence of competitors from domestic and foreign MNCs, it is putting as its
efforts to quickly penetrate into rural markets. It has increased its field force by adding 1000
representatives to quickly setup network with doctors and medical practitioners in the rural areas.
The problem is Substitutors are also eager to join the rural bandwagon. So company is making fast
steps to quickly capture the market and gain the first mover advantage.
In US markets, company has been aggressive in litigious para IV filings to launch new generic
drugs. In the late 1990s Dr. Reddy's was the original action hero in taking on the large
multinationals and launching generic versions of their products. It was also the early one to start
the trend of settling with multinationals to arrive at a middle ground to launch drugs. In 2006
company changed its US strategy to special therapy segments from core segments in the face of
lost litigations against Pfizer.
As an additional differentiation, Dr. Reddy's is increasing its focus on bio generics, an area not
many large companies are focusing on. It already has three products, though it competes with
Roche, the innovator company of the drugs.
9.1.1.1 Suppliers
Dr Reddys API manufacturing plants supply most of the raw materials required for the companys
formulations manufacturing. This gives the company lot of flexibility and control with regards to
raw materials supply and also minimizes the raw materials cost which forms almost 40% of total
cost. In case of other required materials it uses broad base of suppliers in order to minimize the
risk arising from dependence on a single supplier. It prescribes strict supplier code of conduct and
requires its suppliers to be US FDA approved plants.
28
Complementors
In order to enhance business, Dr Reddys frequently seeks to acquire or make strategic investme nts
in complementary businesses or products, or to enter into strategic partnerships or alliances with
third parties. In September 2005, it entered into a co-development and commercializa tio n
agreement with Denmark based Rheoscience A/S for the joint development and commercializa tio n
of Balaglitazone (DRF 2593), a partial PPAR-gamma agonist, for the treatment of type 2 diabetes.
During the year ended March 31, 2011, it entered into collaborations with discovery biotechnolo gy
companies to initiate new chemical entities (NCEs) and differentiated formulations programs in
the therapeutic areas of interest. In addition company has in house R&D division working on
several differentiated formulations, biosimilars, ANDAs for generics and new molecule
innovations. Some of its developments were in Clinical trials and human trials phases.
PARTS Analysis
Players: In the Indian Pharmaceutical market players are mainly the domestic companies and foreign
MNCs. As the industry is highly fragmented and competition is high, these players are always on their
toes to retain and increase their market share. Other players include Suppliers (in most cases the
companies themselves), Indian Government and Regulatory framework, US FDA, buyers (doctors,
hospitals, retailers and patients), Alliance partners (R&D houses).
Added Values: Dr Reddys has done much value add activities from its inception. It is successful in
bringing many low cost generic version drugs making them affordable to many customers across. It did
so by taking litigation gambling of fighting Big Pharma through para IV filings. It entered into alliance
with GSK to market and distributes its products to Latin America and Asia pacific markets where GSK has
strong distribution network. It formed alliances with other domestic and foreign R&D houses to
innovate new molecules, differentiated formulations and ANDAs. It cut down its API manufacturing
business as it became little value add due to decreased margins. It sources raw materials for its generics
manufacturing from its own API plants, thus reducing supplier dependency, costs and increasing
flexibility.
Rules: It followed GMP (Good Manufacturing Practices) to manufacture high quality products. It
enforced strict supplier code of conduct to ensure high quality of raw materials supplied.
Tactics: Company played generics tactic in US. It used its R&D to develop ANDAs and launched these
generics in US to gain the market share. In expanded though acquisitions and alliances in international
markets and became the worlds top five generics producer. But, throughout it ignored domestic
market. Failures in some International markets (Germany) made the company rethink its strategy and
made company realise that it is cost competitive but not cost conscious. It moved its focus now to only
its top five markets and is aiming to be in top 5 in all these markets. It has fired all its cylinders and is
aggressively launching various products across to gain the market share. It sees huge Indian rural market
potential and it making fast steps to gain first mover advantage in this market. . In 2002-03 when the
Indian Pharma companies were at crossroads of choosing between R&D and generics development, it
has chosen a R&D route different from the competition. As the company consistently believed in R&D
and product innovation to develop new molecules. It formed alliances in this regard with foreign R&D
houses.
29
Scope: DR Reddys started as API manufacturer. It soon increased its product scope to bring in Generics
and branded formulations seeing the patent expiries and capitalizing on Indias process patents rule. It
increased its market scope by rapidly expanding into countries like UK, Russia, Germany , etc. It formed
alliances to expand into other small markets. Now it is all guns to gain domestic share and is rapidly
laying path to capture rural in roads.
Technology Strategy
Generics Generic Drugs are low cost reinforced versions of actual patented drugs.
Here, the core concept, basic mix and linkages are not changed
Biosimilars High Quality and bio equivalent alternative of the innovative drugs. Here
the core concept is not changed but the architecture is changed to bio equivalents
International Strategy
DR Reddys has followed Global international strategy. It produced standardized drugs mostly
through its plants in India, and marketed and sold in different international markets. It has achieved
economies of scale through centralized manufacturing in six FDA approved plants in India. It also
benefited from low labour and manufacturing costs in India.
30
Strategy outline
Focus on s uper
s peciality
pres criber a nd
thera peutic niche
s egments such as
ps ychiatry,
neurology
Ma rketing
s tra tegy cl early
focus sed on
opti mizing profits
Pri ci ng strategy
ba s ed on par with
the l eading players
Product s ta rtegy is
to provi de a
compl ete ra nge of
products i n a given
pres criber format
Attra cti ve
i ncentives on
a chi ving targeted
s a les
Growth Strategy
Create Sustainable revenue streams
Cost leadership
Business development
31
In-licensed Tildrakizumab (a monoclonal antibody targeting IL-23) from MSD for treating
chronic plaque psoriasis
Entered into a joint venture with Intrexon Corporation for developing gene-based therapies
for ocular diseases
Acquired Dusa Pharma in US - Enabling access to patented drug-device combinatio n
useful for treating Actinic Keratosis, a dermatology ailment
Acquired InSite Vision - Focuses on developing new specialty ophthalmic products, has
three late stage programs
9.3 Cipla
Growth strategy
Strong Product Development & Filing Capabilities
Continue to invest in pipeline
Ensure on-track progress for development and filing timelines of top 50 projects
Accelerate execution plan for in-house biologics clinical trial for Bevacizumab, proofof-concept for 2-3 other products
32
India growth plan to target above market rate of growth, with focus on in-licensing and
new product introductions
Retain momentum in South Africa and continue to focus on building private market share
Retain leadership in key front-ends, such as Yemen, Sri Lanka, North Africa and Iran, with
focus on respiratory, oncology and global access segments
Enhance scale of US DTM play through seamless integration of InvaGen and Exelan
businesses
o
Launch 8-10 products from Cipla pipeline, including some in limited -com peti tio n
areas
Market Strategy
Strategic Tie-Ups
Cipla has set up a wholly owned subsidiary, Cipla FZE situated at Jebel Ai Free Zone in Dubai,
United Arab Emirates. This is the part of strategy to explore the growing markets in Middle East
countries through exports. Cipla entered agreement with Pentech Pharma of USA for marketing
a range of generic products for American market. Pentech is involved in developing therapies for
lifestyle and quality of life conditions. This will further boost its export performance.
Low-risk business model
Robust partnership model CIPLA has entered into global tie-ups with various generic players
(like Watson, Mylan, Barr and Ivax) for supplying its generic products. This strategy enables Cipla
to leverage local market knowledge of its partners and utilize its own R&D, product development,
and manufacturing skills. Cipla's offer to sell anti- aids drugs at one-third the price to developing
countries like South Africa or any other country. The questions were raised against the strategy
the company follows but Cipla is not committing any illegal or unethical act as it is entitled to sell
anti- aids drugs in any country that does not have the requisite patent protection. Cipla is not using
pirated technology since India does not have a product patent regime. Therefore, Cipla has the
right to develop and reverse engineer any pharmaceutical product not protected by the country's
laws. Therefore, the issue is whether Cipla is selling its products below its costs or is it able to sell
cheaply because it has not incurred any research and development (R&D) expenses like
multinationals incur in developing drugs. Cipla is entitled to "make hay while the sun shines', in
other words, capitalize on a sympathetic patent law in India, but keeping in mind that after 2010,
the world (and Indian) pharmaceutical industry will become a "jungle', where only the "fittest' will
survive.
33
Market Position
It includes companys diversification strategy and policy in terms of demographic profile, products
and market segments in an effort to maintain steady revenue and profitability. Pharmaceutica l
industry is identical with high variety types of product that generates wide range of profits.
Managements strategy to focus on higher margin products is important. We also need to consider
the companys research and development (R&D) capabilities, including the cost allocation to its
total sales and policy related to new products to be invented.
Operating Management
It implies how well the company manages its daily business operation, as a failure to effective ly
and efficiently manage the operation would adversely affect the companys future operating
results. The companys cost control strategy and policy is also diligently assessed, as the
companys strong ability to control costs is crucial, particularly for low margin nature of generic
pharmaceutical. Generally, larger players have competitive advantages, as they have stronger
bargaining power and economies of scale in purchasing, logistics and advertising. Condition and
utilization of the equipment and the integration of technologica l improvements will also become
important factors to achieve the companys degree of efficiency in its operational activities.
This factor examines the company's strategies to distribute products (how well the company adopts
to the needs of retailers, how well the distribution matches the retail forms, how well the company
manages distributors, what kind of linkage/relationship/agreement between the company and
distributors) and examines others related factors that can ensure continuous product availability in
the market in an effort to support sales. The companys ability to maintain good relationships with
its business network (including with distributors and retailers) as well as terms and condition of
the cooperation are further assessed in rating determination.
34
It is of prime importance to the pharmaceutical industry where new innovative products are
protected This creates an entry barrier and can be a route to above-average profits in the industry.
A technological breakthrough can have a sudden and dramatic effect on a firms environment. It
can spawn sophisticated new markets and products or significantly shorten the anticipated life of
a manufacturing facility. This applies to the pharmaceutical industry where technology is driving
innovation and research is currently centered at the molecular level to come with up with new
therapies for illnesses such as cancer, acid related disorders and metabolic illnesses.
Industry profitability
It is one of the critical success factors of a profitability is the maintaining goal of a business
organization no matter how profit is measured or defined. Profit over the long term is the closest
indication of a firms ability to satisfy the principal aims and desire of employees and stock
holders.
Financial Policy
This includes a review of management's philosophy, strategy and policies toward financial risk
(historical, current and future). It also includes examination of management's financial targets
(growth, leverage, debt structure and dividend policy), hedging and other policies in an effort to
reduce the company's overall financial risk (historical vs. future). The company's track record on
fulfilling its previous financial obligations is also examined to determine the degree of its
commitments and willingness and consistency to pay obligations on a timely basis.
Capital Structure
This contains company's historical, current and projected leverage (total and net debt in relation to
equity and EBITDA), debt structures and composition (rupiah vs. Foreign currencies, short-term
debt vs. long-term debt, fixed rate vs. floating rate). Management of its liabilities is also thoroughly
reviewed.
Human resources
It represents a valuable intangible asset. Latest study research indicates that human resources are
progressively becoming the key success factor in organizations especially in strategy
implementation. However, employees have to be motivated in order for them to work hard. The
employee motivation comes in terms of rewards. Some employees are motivated through
recognition which often may be through financial rewards. Action plans and short term objectives
that clarify personal and group roles in a firm's strategy that are also measurable, realistic and
challenging. This is very important for the pharmaceutical industry where personal selling through
medical representatives is the widely used promotional mix in reaching the target audience.
Apart from above other important critical success factors in the pharmaceutical branch are
customer orientation and social responsibility.
35
11 Future Scenario
11.1 Indian Scenario
The Indian pharmaceuticals market increased at a CAGR of 17.46 per cent in 2015 from
USD 6 billion in 2005 and is expected to expand at a CAGR of 15.92 per cent to USD55
billion by 2020
By 2020, India is likely to be among the top three pharmaceutical markets by incrementa l
growth and sixth largest market globally in absolute size
Indias cost of production is significantly lower than that of the US and almost half of that
of Europe. It gives a competitive edge to India over others.
Increase in the size of middle class households coupled with the improvement in medical
infrastructure and increase in the penetration of health insurance in the country will also
influence in the growth of pharmaceuticals sector.
Indias patient pool is expected to increase to over 20% in the next 10 years, mainly due to
the rise in population.
Following the introduction of product patents, several multinational companies are
expected to launch patented drugs in India
Pharma companies have increased spending to tap rural markets and develop better
infrastructure. The market share of hospitals is expected to increase from 13.1% in 2009 to
26% in 2020.
With increasing penetration of chemists, especially in rural India, OTC drugs will be
readily available.
The Indian government has taken many steps to reduce costs and bring down healthcare
expenses. Speedy introduction of generic drugs into the market has remained in focus and
is expected to benefit the Indian pharmaceutical companies. In addition, the thrust on rural
health programs, lifesaving drugs and preventive vaccines also augurs well for the
pharmaceutical companies.
Rising levels of education are set to increase the acceptability of pharmaceuticals.
36
The Government of India plans to incentivize bulk drug manufacturers, including both
state-run and private companies, to encourage Make in India initiative and reduce
dependence on imports of Active Pharmaceutical Ingredients (API), nearly 85 per cent of
which come from China.
The Department of Pharmaceuticals has planned to launch a venture capital fund of Rs
1,000 crore (US$ 148 million) to support start-ups in the R&D in the pharmaceutical and
biotech industry.
At the launch of Cluster Development Program of pharmaceutical sector, Mr. Ananth
Kumar, Minister of Fertilizer and Chemicals, announced that six pharmaceutical parks will
be approved and established this year which will have sufficient infrastructure and facilities
for testing and treatment of drugs and also for imparting training to industry professionals
Vaccines
Human-computer
interfaces
Regenerative
medicines
Vaccines to
prevent
new infectious
diseases
Biomonitiring
technologies
and implants
Vaccines to
treat
chronic diseases
and addictions
Self -regulating
Drug Delivery
technologies
Tissue
replacement
M ind-controlled
Prosthetics
Autologus
replacement
body parts
Vaccines to
prevent diseases
and addictions
Tissue Repair
Artificial organs
and
exoskeletons
Figure 14:New Technologies in Healthcare
37
38
Significant portion of sales in the United States are from its top five customers and top five
Products. Sales to ALLs top five customers accounted for a majority of its total sales in the
United States for fiscal year 2015 and for the six months ended September 30, 2015. If these
customers stop or reduce purchases of products from ALL, it could adversely affect the
business, financial condition and results of operations
The products that ALL commercialize may not perform as expected which could adversely
affect the business, financial condition and results of operations
If research and development efforts do not succeed, this may hinder the introduction of new
products. In order to remain competitive, ALL must develop, test and manufacture new
products, which must meet regulatory standards and receive requisite regulatory approvals. Its
ongoing investments in new product launches and research and development for future
products could result in higher costs without a proportionate increase in revenues.
If ALL inadvertently infringe on the patents of others, its business may be adversely affected.
Patent litigation can result in significant damages being awarded and injunctions that could
prevent the manufacture and sale of certain products or require it to pay significant royalties in
order to continue to manufacture or sell such products. The occurrence of any of these risks
could adversely affect the business, financial condition and results of operations
If ALL cannot respond adequately to the increased competition it expects to face, it will lose
market share and profits will decline. ALL products face intense competition from products
commercialized or under development by competitors in all of its therapeutic areas. It
competes with local companies in India, multi-national corporations and companies in the
countries in which it operates. Many of its competitors may have greater financ ia l,
manufacturing, research and development, marketing and other resources, more experience in
obtaining regulatory approvals, greater geographic reach, broader product ranges and stronger
sales forces. Its competitors may succeed in developing products that are more effective, more
popular or cheaper than any it may develop, which may render ALLs products obsolete or
uncompetitive and adversely affect its business and financial results.
ALL also operate in a rapidly consolidating industry. The strength of combined companies
could affect its competitive position in all of the business areas. Furthermore, if one of its
competitors or their customers acquires any of its customers or suppliers, it may lose business
from the customer or lose a supplier of a critical raw material, which may adversely affect its
business, results of operations and financial condition.
Results of operations are subject to risks arising from exchange rate fluctuations. Although
ALL reporting currency is Indian Rupees, it transacts a significant portion of its business in
several other currencies. Substantially all of its non-Indian revenue is denominated in foreign
currencies, primarily United States Dollars. Additionally, ALL also procure a portion of its
raw material requirements outside India and, as a result, incur such costs in currencies other
than Indian Rupees. ALL is thus exposed to exchange rate fluctuations due to the revenue that
it receives, raw materials that it purchase and its financing arrangements that are denominated
in currencies other than the Indian Rupee.
39
13 Conclusion
The key drivers of growth in pharmaceutical industry include:
1. Rising healthcare awareness leading to an increase in spending on medicines
2. Changing life-styles leading to growing incidence of chronic ailments
3.Improving
health
insurance
coverage driven
by various
measures being
planned/implemented by the Indian government to bring 80% of the population under health
insurance cover
4. Increased access to modern medicines driven by rapid urbanization
The key challenges for the Indian pharmaceutical industry include the following:
Ensuring 24x7 compliance with global cGMP standards; this will involve continuo us
improvement in systems and processes as well as training of the workforce
Government-mandated price controls on pharmaceutical products
Consolidation among customers in the US market
Increasing competition from smaller new entrants
The great companies like ALL are the products of strong values and a determination to
translate those values into tangible outcomes. These iconic companies look beyond industry
challenges, market cycles and behavior and economic volatilities to bring enduring differe nce
to society with the help of great team.
Since foundation in 1973, ALL have emerged as one of the dominant players in the domestic
pharmaceutical Industry .and it is reinforcing footprint on international markets. This
achievement was largely made possible by the determinationand commitment of its
employees .
Rapid change is a constant reality in the pharmaceutical sector globally. With changing
regulatory landscape and intensifying competition, it is imperative for us to learn,adapt and
transform at a rapid pace. ALL must view these changes as an opportunity to raise the bar for
themselves and align their strategies for growth.
40
14 References
[1] What pharma will look like in 2016
http://www.livemint.com/Industry/QqSWwdIchcS59r1oAb1WvN/What-pharma-will-look-like-in2016.html
[2] http://www.businesstoday.in/opinion/deep-dive/expert-view-pharmaceutical-companies-indiachallenges-growth/story/202812.html
[3] Indian Pharmaceutical Industry http://www.ibef.org/industry/pharmaceutical-india.aspx
[4] Lupin Limited http://lupin.com/
[5] Sun Pharmaceuticals http://www.sunpharma.com/
[6] Cipla Limited http://www.cipla.com/en/
[7] Dr. Reddys Laboratory Limited http://www.drreddys.com/
[8] Moneycontrol http://www.moneycontrol.com/
[9] deloitte - 2016 Global life sciences outlook
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Life-Sciences-Health-Care/gxlshc-2016-life-sciences-outlook.pdf
[10]Indian pharma in 2020 http://www.mckinsey.com/~/.../india-pharma-2020-propelling-access-andacceptance.as
41
15 Annexure
15.1 Facility and Production capacity of Alkem Labs:
Facility
1. Alkem - Sikkim
Kumrek
3. Alkem - Baddi
Unit 1
Owned/
Leased
Builtup Area
(sq. ft.)
Land - 19,274
Leaseh
old
Land - 12,441
Leaseh
old
Owne
d
27,
502
Year
of
establ
ishme
nt
Manufa
cturing
capabili
ties
Installe
d
Capacit
y*(in
millions
)
Actual
Production
Major
certifications
and
approvals**
Geogra
phical
focus
2007
Tablet
2,556
1,737.60
WHO-GMP
India
WHO-GMP
India
2012
200
Injecta 134.3
bles
78.1
Dry
syrup
9.2
2.1
Tablet
221.8
132.3
Injecta 135
bles
88.7
Dry
syrup
41.4
24.3
Tablet
46.82
15.85
Dry
syrup
0.12
0.02
Capsul
e
116.42
3.81
Immunosu Global
ppre
ssant Block:
USFDA,
UKMHRA,
TGA
Australia,
INVIMA
Columbia
42
Facility
Baddi
Cephalosporin
Block
Baddi General
block
Owned/
Leased
Builtup Area
(sq. ft.)
Year
of
establ
ishme
nt
NA
2005
NA
11,484
2005
2012
Manufa
cturing
capabili
ties
Tablet
Installe
d
Capacit
y*(in
millions
)
Actual
Production
93
17
Major
certifications
and
approvals**
Geogra
phical
focus
Cephalospo India
r
in Block:
ColumbiaIN
VIMA,
Injecta 52.8
bles
17.6
Dry
syrup
13.6
2.8
Capsul
e
229.2
34.5
Tablet
693
463.4
General
India
Block:
USFDA,
UK-MHRA,
TGAAustrali
a,
Capsul
e
332.6
119.3
ColumbiaIN
VIMA
280.9
95.3
WHO-GMP
Sudan,
UAE,
Malawi,
Ethiop
India
43
Facility
4. Alkem - Baddi
lactam
Owned/
Leased
Builtup Area
(sq. ft.)
Year
of
establ
ishme
nt
Owne
d
Owne
d
Owne
d
Manufa
cturing
capabili
ties
Installe
d
Capacit
y*(in
millions
)
Actual
Production
Major
certifications
and
approvals**
Geogra
phical
focus
Tablet
21,789
NA
2002
2000
Injecta 24.5
bles
10.3
Dry
syrup
21.1
15.5
Capsul
es
332.6
105.3
Tablet
/
316.6
101.4
Dry
syrup
6.1
0.2
Tablet
/
1,365.
70
Capsul
es
Cephalospo USA
r
in -Block:
USFDA,
UK-MHRA,
TGAAustrali
a,
MCC South
Africa
Includ
ed in
Tablet
s
843.3
Included
in
USFDA,
USA
UK- MHRA,
TGAAustrali
a,
MCC-South
Africa,
WHOGenev
a
44
Facility
6. Alkem - Daman
lactam
Owned/
Leased
Owne
d
Builtup Area
(sq. ft.)
Year
of
establ
ishme
nt
11,930
2004
NA
Installe
d
Capacit
y*(in
millions
)
Actual
Production
Tablet
-
40
32.5
Capsul
es -
254.1
29.8
Dry
syrup
17
3.4
Manufa
cturing
capabili
ties
Major
certifications
and
approvals**
Geogra
phical
focus
IndianGMP,
Global
Injecta 22.4
bles
4.6
1998
Tablet
N/A
N/A
IndianGMP
India
7. Alkem - Daman
Kachigam
Owne
d
8. Alkem Ankaleshwar
Land - 3,997
Leaseh
old
2001
APIs
N/A
N/A
IndianGMP,
Captiv
e
API
plant
for the
US
9. Alkem Mandwa
Owne
d
26,478
1992
APIs#
N/A
N/A
Indian GMP
India
1,880
2015
116.8
61.8
India
45
Facility
Owned/
Leased
Builtup Area
(sq. ft.)
Year
of
establ
ishme
nt
Owne
d
Manufa
cturing
capabili
ties
Installe
d
Capacit
y*(in
millions
)
Actual
Production
Capsul
es
Jelly &
Candy
206.9
115.92
Soft
352.4
gelatin
2015
Tablet
-
172.6
167.9
Capsul
es
565.4
544.5
Dry
syrup
28.1
15.2
Ointm
ent
9.4
2.2
Owne
d
11,988
Geogra
phical
focus
ISO
22000:200
5
certificatio
2015
Leased 5,108
Major
certifications
and
approvals**
Liquids 62.4
53.2
Capsul
es
614
693.1
WHO-GMP,
Kenya FDA,
Tanzania
India
WHO-GMP,
India
India
46
Facility
Owned/
Leased
Builtup Area
(sq. ft.)
Leased 4,422
Owne
d
11,500
Year
of
establ
ishme
nt
2015
2015
Installe
d
Capacit
y*(in
millions
)
Actual
Production
Major
certifications
and
approvals**
Geogra
phical
focus
Capsul
e
65.2
43.5
WHO-GMP
India
Tablet
-
282.7
173.7
Liquid
54.7
46.3
Tablet
-
903.3
823.2
Manufa
cturing
capabili
ties
15. California,
United States
Owne
d
33,000
2012
APIs
N/A
N/A
9001:2008, GLobal
ISO
22000:200
5,
ISO
14001:200
4,
FSSAI
(Food
products),
UAE,
Yemen,
Ethiopia,
Ivory Coast,
Ugand
USFDA
USA
16. St
Louis(Missouri),
United States
Owne
d
75,000
2015
Liquids N/A
, nasal
N/A
USFDA
USA
47
Company
Sun
Abbott
10.8
Cipla
10.8
Mankind
16.2
Alkem
14.2
Zydus Cadila
7.9
Company
Macleods
25.7
Pharma
GlaxoSmithKline 5.7
Pfizer
9.8
Lupin Limited
13.6
Sun
Abbott
6.5
Cipla
4.9
Mankind
3.7
Alkem
3.6
Zydus Cadila
3.5
Macleods
Pharma
GlaxoSmithKline
3.3
Pfizer
2.9
Lupin Limited
2.8
3.3
Company
Dr.Reddy's
Laboratory
SUN
Pharmaceutical
Lupin Limited
Cipla Limited
(Rs Crore)
200910
2010-11
2011-12
2012-13*
2013.14*
2014-15*
Total R & D
expenditure
% to total
turnover
Total R & D
expenditure
% to total
turnover
Total R & D
expenditure
% to total
turnover
Total R & D
expenditure
% to total
turnover
389.7
591.8
624.3
791.5
1263.2
1744.9
8.79
11.26
9.36
6.9
9.4
11.8
159.98
309.61
425.32
310.22
422.39
909.23
8.5
5.09
5.1
13.8
15.09
11.8
411.9
530.09
593.97
770.85
958.28
1118.54
8.7
9.3
8.5
8.1
8.6
8.8
262.68
284.85
323.83
425.14
517.51
844.14
4.6
5.4
8.26
48
Therapeutic Areas
Anti-infectives
Gastro intestinal
Pain/Analgesics
Vitamins/Minerals/Nutrients
Rank
1
3
3
3
Company
Dr. Reddy's
Class of Goods
Unit
Installed
Capacity
Formulations (iii)
Million
Units
Tonne
Million
Units
Grams
Tonne
6363(5581*)
Actual
Production
(Prev Year)
4759(4282)
4087(3831)
11727(10014)
3560(3267)
6656(6578)
1492.9(1866.1)
13426(6951)
1601.2(1316.9)
Million
Kilolitre
Tonne
Thousand
17496.1(16662.4)
3191.5 (1346.4)
689(861.3)
143452.5(96030
17935.3(16632.9)
9009.8(8600.9)
898.9(1021.7)
55256.9(53387.5)
Injection/Sterile
Solutions
k ilolitre
1739(1168)
2525.9(2204.0)
Tablets/ Capsules/
Parenterals /Ointments
Million No.
7157.4(7216.3)
2085.7(2544.4)
KiloLitres
1181.7(1093.6)
2252.5(2227.2)
(000' Kgs)
API
Generics
Biotechnology
Bulk Drugs (including
Malts)
Cipla
Sun
Pharmaceuticals
(Source :http://pharmabiz.com)
49
Lupin Limited
------------------- in Rs. Cr. ------------------Mar '16
12 mths
Income
Sales Turnover
Excise Duty
Net Sales
Other Income
Stock Adjustments
Total Income
Expenditure
Raw Materials
Power & Fuel Cost
Employee Cost
Miscellaneous Expenses
Total Expenses
Operating Profit
PBDIT
Interest
PBDT
Depreciation
Profit Before Tax
PBT (Post Extra-ord Items)
Tax
Reported Net Profit
Minority Interest
Net P/L After Minority Interest
& Share Of Associates
Total Value Addition
Equity Dividend
Corporate Dividend Tax
Per share data (annualised)
Shares in issue (lakhs)
Earning Per Share (Rs)
Book Value (Rs)
Source : Dion Global Solutions Limited
Mar '15
12 mths
4,667.38
362.81
1,747.34
2,518.58
9,296.11
3,619.59
3,859.34
9.81
3,849.53
434.7
3,414.83
3,414.83
970.4
2,444.43
41.19
2,403.24
5,653.94
337.94
68.86
4,628.73
337.12
68.64
4,187.67
269.01
24.78
3,584.96
179.01
30.43
2,842.46
152.26
25.45
4,505.83
50.59
243.78
4,494.88
54.38
197.43
4,483.76
41.69
154.59
4,475.29
29.95
116.29
4,466.42
19.87
89.85
50
Mar '14
Mar '13
Mar '12
Mar '11
12 mths
12 mths
12 mths
12 mths
12 mths
27,717.82
16,275.48
11,469.68
8,126.94
5,813.05
284.38
195.12
169.82
107.45
85.15
27,433.44
16,080.36
11,299.86
8,019.49
5,727.90
309.91
-1,965.18
-202.02
470.4
351.55
-114.49
76.54
228.48
448.87
205.77
27,628.86
14,191.72
11,326.32
8,938.76
6,285.22
7,248.23
3,195.44
2,583.24
2,270.97
1,813.07
560.77
232.41
187.1
145.65
96.78
Employee Cost
4,429.86
2,074.44
1,534.53
1,187.73
818.95
Miscellaneous Expenses
7,213.39
3,654.84
2,327.23
1,659.69
1,241.74
19,452.25
9,157.13
6,632.10
5,264.04
3,970.54
7,866.70
6,999.77
4,896.24
3,204.32
1,963.13
8,176.61
5,034.59
4,694.22
3,674.72
2,314.68
578.99
44.19
43.16
28.2
73.88
PBDT
7,597.62
4,990.40
4,651.06
3,646.52
2,240.80
Depreciation
1,194.72
409.23
336.17
291.16
204.85
6,402.90
4,581.17
4,314.89
3,355.36
2,035.95
6,402.90
4,581.17
4,314.89
3,355.36
2,035.95
914.69
702.17
845.55
313.19
128.58
5,488.21
3,879.00
3,469.34
3,042.17
1,907.37
936.27
737.53
486.28
385.48
91.31
12.56
4,777.13
5,658.88
3,573.17
2,657.80
1,819.29
12,204.02
5,961.69
4,048.86
2,993.07
2,157.47
Equity Dividend
721.95
310.67
517.79
440.12
362.45
146.97
52.8
88
71.4
58.8
20,711.64
20,711.64
10,355.82
10,355.82
10,355.82
26.5
18.73
33.5
29.38
18.42
123.53
89.44
144.75
118.15
91.57
Income
Sales Turnover
Excise Duty
Net Sales
Other Income
Stock Adjustments
Total Income
Expenditure
Raw Materials
Power & Fuel Cost
Total Expenses
Operating Profit
PBDIT
Interest
Tax
Reported Net Profit
Minority Interest
Share Of P/L Of Associates
Net P/L After Minority Interest & Share
Of Associates
Total Value Addition
51
Dr Reddys Laboratories
Consolidated Profit & Loss account
Mar '15
Mar '14
Mar '13
Mar '12
12 mths
12 mths
12 mths
12 mths
12 mths
15,782.00
15,106.20
13,359.10
11,895.60
9,814.50
84.2
82.9
15,697.80
15,023.30
13,359.10
11,895.60
9,814.50
-192.8
274.1
169.7
95.7
-3
100.3
55.8
319.6
168.5
152.6
15,605.30
15,353.20
13,848.40
12,159.80
9,964.10
4,171.80
4,219.90
3,753.30
3,787.10
2,851.20
315.2
339.1
319.9
335.4
225.9
3,187.40
2,944.60
2,213.00
1,928.70
1,591.20
243.6
192.9
220.7
188
227.8
3,959.30
3,889.00
3,921.00
3,105.40
2,639.90
11,877.30
11,585.50
10,427.90
9,344.60
7,536.00
3,920.80
3,493.60
3,250.80
2,719.50
2,431.10
3,728.00
3,767.70
3,420.50
2,815.20
2,428.10
82.4
108.2
126.7
100.3
105.6
3,645.60
3,659.50
3,293.80
2,714.90
2,322.50
970.5
759.9
647.5
550.2
518.1
2,675.10
2,899.60
2,646.30
2,164.70
1,804.40
2,675.10
2,899.60
2,646.30
2,164.70
1,804.40
523.7
563.2
683.1
637.9
503.5
2,151.40
2,336.40
1,963.20
1,526.80
1,300.90
2,613.50
2,336.40
1,963.20
1,581.00
1,436.20
7,705.50
7,365.60
6,674.60
5,557.50
4,684.80
340.5
340.8
306.2
254.8
233.1
69.3
69.4
52
43.3
37.8
1,706.08
1,703.81
1,701.09
1,698.36
1,695.60
126.1
137.13
115.41
89.9
76.72
685.84
578.3
462.36
375.01
294.23
Income
S ales Turnover
Excise Duty
Net S ales
Other Income
S tock Adjustments
Total Income
Expenditure
Raw Materials
Power & Fuel Cost
Employee Cost
Other Manufacturing Expenses
Miscellaneous Expenses
Total Expenses
Operating Profit
PBDIT
Interest
PBDT
Depreciation
Tax
Equity Dividend
Corporate Dividend Tax
Per share data (annualised)
S hares in issue (lakhs)
Earning Per S hare (Rs)
Book Value (Rs)
52
Cipla
Consolidated Profit & Loss account
Income
Sales Turnover
Excise Duty
Net Sales
Other Income
Stock Adjustments
Mar '14
Mar '13
Mar '12
Mar '11
12 mths
12 mths
12 mths
12 mths
12 mths
11,454.47
10,217.53
8,279.33
7,020.71
6,323.84
109.03
117.14
11,345.44
10,100.39
8,279.33
7,020.71
6,323.84
165.55
265.37
261.91
139.52
91.68
344.22
64.25
290.6
-5.65
138.87
11,855.21
10,430.01
8,831.84
7,154.58
6,554.39
4,632.60
4,030.57
3,335.01
2,831.12
3,029.50
228.29
218.63
233.12
235.35
198.55
Employee Cost
1,973.67
1,542.96
1,036.26
772.52
565.59
Miscellaneous Expenses
2,693.40
2,239.43
1,767.69
1,517.22
1,299.83
Total Expenses
9,527.96
8,031.59
6,372.08
5,356.21
5,093.47
Operating Profit
2,161.70
2,133.05
2,197.85
1,658.85
1,369.24
PBDIT
2,327.25
2,398.42
2,459.76
1,798.37
1,460.92
168.29
145.74
33.91
38.34
25.1
2,158.96
2,252.68
2,425.85
1,760.03
1,435.82
504.71
372.64
330.48
312.22
273.33
1,654.25
1,880.04
2,095.37
1,447.81
1,162.49
1,654.25
1,880.04
2,095.37
1,447.81
1,162.49
Total Income
Expenditure
Raw Materials
Power & Fuel Cost
Interest
PBDT
Depreciation
Tax
400.03
463.38
544.31
306.51
195.36
1,254.22
1,416.66
1,551.06
1,141.30
967.13
48.15
15.93
25.3
12.32
6.21
-2.94
-22.44
1,180.77
1,388.41
1,505.08
1,144.24
989.57
4,895.36
4,001.02
3,037.07
2,525.09
2,063.97
160.59
160.58
160.58
160.58
224.81
32.69
27.29
27.29
26.05
36.72
8,029.60
8,029.21
8,029.21
8,029.21
8,029.21
15.62
17.64
19.32
14.21
12.05
134.26
125.06
112.32
95.03
82.91
53
Alkem Laboratories
Consolidated Profit & Loss account
Mar '15
Mar '14
Income
Sales Turnover
Excise Duty
Net Sales
Other Income
5,160.83
169.29
4,991.54
164.51
3,859.86
116.51
3,743.35
181.04
3,235.97
105.22
3,130.75
169.02
Stock Adjustments
Total Income
90.33
5,246.38
33.68
3,958.07
60.73
3,360.50
Expenditure
Raw Materials
2,097.72
1,766.18
1,472.55
66.3
917.13
53.31
645.87
60.32
520.15
0
0
1,152.49
0
0
0
889.84
0
0
0
714.01
0
Total Expenses
4,233.64
848.23
3,355.20
421.83
2,767.03
424.45
1,012.74
67.06
602.87
81.11
593.47
93.08
945.68
100.58
521.76
70.94
500.39
51.89
0
845.1
0
845.1
0
450.82
0
450.82
0
448.5
0
448.5
Tax
Reported Net Profit
160.6
684.5
59.23
391.59
9.5
439
Minority Interest
Share Of P/L Of Associates
11.38
0
0
0
0
0
673.12
391.59
439
2,135.92
0
1,589.02
0
1,294.48
0
151.85
31.11
47.83
8.85
23.91
4.06
1,195.65
57.25
0
1,195.65
32.75
0
119.57
367.16
0
292.95
250.83
2,220.63
Operating Profit
PBDIT
Interest
PBDT
Depreciation
54