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MANAGERIAL ANALYSIS & COMMUNICATION

Section - C

Team Details

MARKETING SPARTANS

Sr.no. Roll number Name

1. P39119 Ajay Singh Meena

2. P39125 Arjun V S

3. P39126 Arkopal Saha

4. P39128 Arunmozhi Ramanathan

5. P39154 Pratik Bhingardeve

6. P39158 Rishabh Bhatia

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Case No: 05

CIPLA
Executive Summary:

In 2003, after 8 years of India joining the WTO, India signed the Agreement on trade related
aspects of Intellectual Property Rights (TRIPS) in 1995. The agreement called for India to
recognise 20 year product patents on most inventions including pharmaceuticals by 2005.
India poised to enforce international patents in just two short years. The Chemical, Industrial
& Pharmaceutical Laboratories popularly known as CIPLA LTD. is a multimillion dollar
pharmaceutical giant, specifically working on generic pharmaceutical products, or in other
words, is focused on developing generics to cater to the bottom-of-the-pyramid consumers
and also to export the low cost medicines to other countries like Africa. Currently Mr. Yusuf
Hamied is CEO of company. He as a visionary thinks that Pharmaceuticals and life saving
medicine industry should remain free of the patent laws, be it on humanitarian grounds. The
CIPLA manufactures the drugs patented by huge MNC’s, which spend enough resources in
R&D of the same, by reverse engineering for generic substitutes and cutting on costs owing
to Indian National Patent Laws and low cost labour. After the TRIPS agreement CIPLA CEO
has a conundrum to tackle to as much of the product line of the company become unsalable
with introduction of the new enforcements in 2 years time. Over and above, the sanctions will
open the Indian Pharmaceuticals market and all the MNC pharmaceutical companies will
eagerly come to India to stabilise the loss of around 500 million dollar sales annually,
because of low cost generic manufacturers like CIPLA meeting the threshold at a much lower
cost.

The best strategy to counter is to take advantage of the sanctions and other measures without
disturbing the overall TRIPS strategy. Since TRIPS caters to a multipronged and a multitude
of arenas, CIPLA could approach WTO with an evocative plan of marginalising the
stringency of the TRIPS for pharmaceuticals industry in specific.

Stake Holders:

1) CIPLA Ltd. - The Chemical, Industrial and Pharmaceutical Ltd. was founded in
1935 by Mr. Khawaja Abdul Hamied, a German educated chemist and
entrepreneur. He was very enthusiastic to take ahead Cipla. Mr. Khwaja had good
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relationship with high profile political leaders, likes of Mr. Jakir Hussain, called
upon by father of nation Mahatma Gandhi, to start a national university. On the
request of Mahatma Gandhi, CIPLA supplied medications to support British in
war effort. After Mr. Khwaja passed away, his son took over and with his
expertise, led the expansion trail of the company to manufacture 400 drugs,
including anti-asthmatic, anti-cancer, anti-inflammatory and anti-AIDS
medications. Its three out of five plants were approved by US food and drug
administration as well as WHO. CIPLA was one of the first Indian companies to
be appreciated for its stringent run atmosphere.
2) Mr. Yusuf Hamied – CEO, CIPLA Ltd.
3) Mr. J.P. Garnier – CEO, GlaxoSmithKline, which is one of largest company in
USA in Pharmaceutical sector. He had objections raised concerning the working
of CIPLA Ltd. because he felt that Indian firms were able to dramatically undercut
their prices and win market share because they didn’t have to bear steep R&D
costs.
4) WHO (World Health Organisation) - is part of UN dealing with health related
issues on global scale.

Main Report

I. Situation Analysis
(a) Statement of Objectives:
To find a solution to the conflict of interest upcoming due to change in patent laws
after signing of TRIPS and the company’s production, which will be deemed
unsalable.
To find a solution to provide low cost medicines and save the company working on
this perspective, i.e., looking at the greater mass good by working on the basis of
humanitarian approach.

(b) Decision Problem Statements:

CIPLA is facing a challenging future due to implementation of TRIPS agreement.
CIPLA is a major player in generics productions at low cost, and is under threat due
to new patent policy. CIPLA has been fighting long battle against global players to
use generic drugs in locations facing severe epidemics. They were fairly successful
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in making global headlines during this situation. The sense of accomplishment

received while working for the South African people helped them create a positive
image in global community, international media and doctors also supported them.
CIPLA was able to create pressure on westerns pharmaceutical majors to cut prices
significantly. CIPLA was successful in understanding the pertinent problems
associated with AIDS treatment programme. To concrete the truthfulness, South
African government were also convinced of the low cost which CIPLA was offering
for the medicine. They were working on humanitarian approach, and had introduced
a drug, Triomune – which was a combination of three patented drugs which makes
the treatment therapy relatively easy. Patient was required to consume only one pill
rather than going through the distress of eating three pills daily. It was beneficial to
consumer also because not all companies were coming up manufacture consumer
comfortable drug. However, due to shifting patent laws, usage of this drug might be
under scanner in coming future.
What can be the future action that can be taken regarding the situation? How can the
effect of patent laws be countered in view of protecting both the company’s image
and sales, and the humanitarian interest?

(c) Criteria for Decision Making:

i. Save the produce by the company.
ii. Protect company working on the motif of doing human good than just earn
profit.

II. Decision Process:

(a) Generating Alternative Solution:
i. CIPLA should approach WTO with an evocative plan of marginalising the
stringency of the TRIPS for pharmaceuticals industry in specific.

ii. Another alternative can be, lobbying since he is very influential person of this
country having high profile political connections and founder of Indian Drug
Manufacturer’s Association.
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iii. Third can be rather than worrying about new entrants, his company should focus
now on other areas like exporting off – selling the patent expired drugs as soon as
possible.

(b) Chosen Decision:

Lobbying is not an effective and good solution. Moreover, with the change of power
many other difficulties may arise for the company. Political scenarios should always
be avoided for the best interest of everyone.
Secondly, disposing of drug because of the change in patent laws, is one of the worst
ideas as the company’s true essence of working for the people, i.e., on humanitarian
grounds would not be the only thing to be hit, but the trust on pharmaceutical
industry will also be affected.
Since TRIPS is an intellectual property right agreement, it should not be completely
expelled as it, in its true essence, provides exclusivity to subject’s thought out ideas.
Patent rights should be protected but in some exceptional cases, mostly on
humanitarian grounds, one should look at larger perspective and good for masses. So
going with the first decision, the conundrum of protecting CIPLA’s production and
also the rights of people to access low cost drug for themselves would be like
splitting two apples with one spearhead.