A REPORT

ON
INDUSTRIAL VISIT TO
ALKEM LABORATORIES LTD., SIKKIM

Submitted To:
2015
Mr. Eugene A Reuben
Submitted by:
ANMOL CHOWDHRY 14DM042

ANURAG GARG 14DM046

RUCHI AGGARWAL 14DM168

SABIR RAHIM 14DM169

SAFIUDDIN SYED 14DM170

SAGAR DESHMUKH 14DM171

SAHIL CHATTWAL 14DM174

SAHIL VOHRA 14DM175

SAKSHI TULI 14DM176

Alkem Laboratories Ltd.
TABLE OF CONTENTS
INTRODUCTION..........................................................................................................................................................3
COMPANY DETAILS ....................................................................................................................................................4
a) The Indian Pharmaceuticals Market: ...............................................................................................................4
b) Alkem Laboratories Ltd.: .................................................................................................................................4
c) Basic Product Information: ..............................................................................................................................4
d) The Alkem Sikkim Plant:..................................................................................................................................5
e) Financial Status:..............................................................................................................................................6
HR PRACTICES: ...........................................................................................................................................................7
MANUFACTURING PROCESS: ......................................................................................................................................8
Vials Process: .........................................................................................................................................................8
Tablet Manufacturing: ...........................................................................................................................................8
 Dispensing ..................................................................................................................................................9
 Granulation............................................................................................................................................... 10
 Compression ............................................................................................................................................. 10
 Coating ..................................................................................................................................................... 11
 Inspection and Packing.............................................................................................................................. 12
THE ALKEM SUPPLY CHAIN ....................................................................................................................................... 12
 Suppliers:.......................................................................................................................................................... 12
 Distribution and Logistics:................................................................................................................................. 12
PROMOTIONAL STRATEGIES: .................................................................................................................................... 13
OBSERVATIONS AND LEARNING OUTCOMES:............................................................................................................ 15
SIKKIM-A LAND OF OPPORTUNITY:........................................................................................................................... 16
CONCLUSION ........................................................................................................................................................... 17
REFERENCES............................................................................................................................................................. 17

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Alkem Laboratories Ltd.
INTRODUCTION
As part of the curriculum for the PGDM course offered by the Birla Institute of Management
Technology (BIMTECH), students are required to visit an industry where they learn about the
different challenges faced by real life professionals in managing different areas of businesses
like Marketing, HR, Finance and Operations. This helps the students to obtain an insight about
the working of these industries and appreciate the efforts of managers in these industries.
We were taken to Sikkim for the Industrial tour, where there were six different
industries to be visited by different groups of students. The industry allotted to us was Alkem
Laboratories Ltd. which is a generic pharmaceuticals manufacturer. This report presents our
learnings from the industrial trip and other information about the company and the
advantages of Sikkim as a tax holiday zone.
We have found the visit to be quite interesting, beneficial and knowledgeable. We have tried
our level best to prepare an effective & creditable report.

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Alkem Laboratories Ltd.
COMPANY DETAILS

a) The Indian Pharmaceuticals Market:

The Indian pharmaceuticals market has characteristics that make it unique. First, branded
generics dominate, making up for 70 to 80 per cent of the retail market. Second, local
players have enjoyed a dominant position driven by formulation development capabilities
and early investments. Third, price levels are low, driven by intense competition. While
India ranks tenth globally in terms of value, it is ranked third in volumes. These
characteristics present their own opportunities and challenges.

b) Alkem Laboratories Ltd.:

Established in 1973 and headquartered in Mumbai, India, Alkem began operations as a
health care marketing company. Alkem has since grown to become India’s seventh largest
pharmaceutical company with sales revenues exceeding USD 500 million with a CAGR of
16% over the last five years.
Alkem, one of the India’s leading generic and specialty pharmaceutical
companies, is a significant player in the branded drugs and generic drugs space. With a
wide ranging presence across acute and chronic therapeutic segments with substantial
brand share in the Central Nervous System, Gastro-intestinal, Anti-diabetic, Anti-
osteoporosis, Anti-malarial, Cardiovascular, Immunosuppressant, and Nutraceutical
segments, Alkem leads the Indian market in the Anti-infective and Pain Management
segments.

c) Basic Product Information:

Alkem’s success is highlighted by its leadership in the Anti-infective and Pain
Management segments. Of its portfolio of 800 brands, 3 brands, Taxim (Cefotaxim),
Clavam (Amoxicillin + Clavulanic Acid), and Sumo (Paracetamol) are ranked among the
top 25 brands in India, while 14 feature among the top 300 brands in the Indian market.
Alkem was the first Indian company to develop, manufacture & market the following
products in India:

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Alkem Laboratories Ltd.

 Anaestrazole

 Cefotaxime + Sulbactam

 Satranidazole

 Ceftriaxone + Tazobactam

 Cefixime + Clavulanic Acid

Alkem has also diversified into the health foods area with the following products:

 Jeevan prash – a tasty, Low Calorie & sugar free chyawanprash

 Blocal – Low Calorie Sweetner

 Salt Substitutes, Fat Substitutes and Sucralose based products – Jams, Cookies, Jelly,
Juices & cakes (Calorie Conscious and Diabetics), Cholesterol free edible Oil.

SALES BREAKUP

Chronic Segment Acute Segment

d) The Alkem Sikkim Plant:

The manufacturing facility at Sikkim was built in the year 2007 and is located at Kumrek,
Central Pendam, Rangpo, East Sikkim. The Sikkim plant has two separate and distinct
manufacturing blocks namely:
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Alkem Laboratories Ltd.
- General Block (G – block) equipped for formulation of Non-Penicillin / Non-
Cephalosporin products
- Cephalosporin block (C – block) equipped for formulation of dry powder injectables and
tablets
The production at Sikkim caters to the domestic business.
Average monthly production at Sikkim plant is about 70 lakh injections and 38 crore
tablets.

e) Financial Status:
The following is information on the financial status of the company:

 Negligible Debt; Major Project Cost and Expansion Programs met out of Retained
Earnings
 Low borrowing Cost, Interest Cost progressively becoming nil, Net Income
generated on the Interest Front
 Owns substantial Properties and Tangible Assets

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Alkem Laboratories Ltd.
 Liquidity:
o Accumulated Cash Reserves and Surplus
o Surplus available for Expansion, R&D and M&A Activity
Alkem Labs is considering plans to launch an IPO to raise between Rs. 3000 crores to Rs. 4000
crores which if finalised could potentially be one of the biggest offerings in the pharma space
in a long time. The likely timeline for the IPO is around the second half of FY15 and a proposed
equity dilution of around 25% would value the company anywhere between Rs. 12000-
Rs16000 crore rupees. Merchant bankers are learnt to have been shortlisted by the company.

HR PRACTICES:
The following are some of the HR practices of the company we learned on the Industrial Trip:
 Employees are hired on both permanent and temporary basis.
 Employees up to executive level are paid overtime and from executive level are given
paid leaves in return for overtime.
 Managers are mentors rather than just supervisors.
 All new joiners undergo an induction program that comprises of classroom, research,
production and sales insights combined with on-the-job training. This helps the new
recruits get acclimatized to the realities of the industry, company and business unit.
 As a part of the induction program, employees are made familiar with Alkem business
operations and culture.
 They are provided an insight into the company's values, vision, culture and strategy
rounded off by training in social sensitivity, multiple functions and field sales. This
holistic induction enables employees to understand the realities of the corporate world
and learn things faster and derive the most benefit from the shortest possible time.
 Regular training hours are offered and constant investments are made in the
employees’ development to keep them at the top of their abilities.
 Training programs are tailored according to individual needs and the courses people
take depend on their skills, experience and areas of interest.
 Applications are accepted online and through employee referrals.
 There are one year increments for workers on a grade basis

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Alkem Laboratories Ltd.
MANUFACTURING PROCESS:
Vials Process:
The process starts with the Vial Decartoning which is the first stage in the vial filling
process. The vial are removed from the cartons and transferred to the washing area
where the vials are cleaned to remove solid impurities which can affect the medicines
purity. After washing the vials the solid impurities are removed such as dust etc. and the
vials are ready for sterilization process which will remove the bacteria’s and the impurities
which a human eye cannot detect. After sterilization the filing process takes place. At
Alkem two types of products are filled in the vials.
 Powder Medicine
 Liquid Medicine

After the product is filled in the vials the vials are capped with a rubber cap which protects
the medicine from bacteria’s and solid impurities. Last and final step is the sealing of vials
with an Aluminum cap which holds the cap tight and avoids the rubber cap from coming
out.

Tablet Manufacturing:
The manufacturing of tablets is a complex multi-stage process under which the starting
materials change their physical characteristics a number of times before the final dosage
form is produced. Firstly the raw material is obtained from the ware house unit. They
calculate the exact amounts required for production of one batch of tablets and deliver
accordingly into the production unit by the pass box. The raw material, before entering is
tested by Quality Control and checked if it is suitable for production.

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Alkem Laboratories Ltd.

Production begins once the raw materials enter the production unit. The entire production
procedure can be divided into five stages. They are:
 Dispensing
 Granulation
 Compression
 Coating
 Inspection
 Packing

 Dispensing
Dispensing is the first step and the most critical in pharmaceutical manufacturing; as
during this step, the weight of each ingredient in the mixture is determined according to
dose. Dispensing may be purely manual by hand scooping from primary containers and
weighing each ingredient by hand on a weigh scale, manual weighing with material lifting
assistance like Vacuum transfer and Bag lifters, manual or assisted transfer with
automated weighing on weigh table, manual or assisted filling of loss-in weight dispensing
system, automated dispensaries with mechanical devices such as vacuum loading system
and screw feed system. Issues like weighing accuracy, dust control (laminar air flow
booths, glove boxes), during manual handling, lot control of each ingredient, material
movement into and out of dispensary should be considered during dispensing.
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Alkem Laboratories Ltd.

 Granulation
Granulation is the process of formation of grains. In simple terms it is the process of
mixing of active ingredient with the excipients so that particles accumulate to reach a
stage where there is uniformity and no voids in the material. Granulation provides
homogeneity of drug distribution in blend which is the next step after particle size
reduction and blending. Drying is important to keep the residual moisture low enough to
prevent product worsening and ensure free flowing properties. The commonly used dryer
includes Fluidized - bed dryer, Vacuum tray dryer, Microwave dryer, Spray dryer, Freeze
dryer, Turbo - tray dryer, Pan dryer, etc.

 Compression
The compression is done on a compression machine. There are two types of compression,
Automatic and Semi-automatic. The automatic machine has 45 stations and is controlled
by PLC, whereas in the semi-automatic machine, there are 27 stations. Also the weight of
tablet (depth of fill) and the thickness are to be adjusted manually. The blend is added
into the hoppers. It then flows into the die bore. The amount of blend is adjusted by the
feed frame (bronze colored) based on our weight setting. The punches (upper and lower)
are fixed onto a turret. When the powder is pressed in between the two dies, it forms a
tablet.
After the preparation of granules (in case of wet granulation) or sized slugs (in case of
dry granulation) or mixing of ingredients (in case of direct compression), they are
compacted to get final product. The compression is done either by single punch
machine (stamping press) or by multi station machine (rotary press).
Each tablet is made by pressing the granules inside a die, made up of hardened steel.
The die is a disc shape with a hole cut through its centre. The powder is compressed in
the centre of the die by two hardened steel punches that fit into the top and bottom of
the die.
The punches and dies are fixed to a turret that spins round. As it spins, the punches are
driven together by two fixed cams - an upper cam and lower cam. The shapes of the two
cams determine the sequence of movements of the two punches. This sequence is
repeated over and over because the turret is spinning round, this process is done to
prevent and protect errors in production.

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Alkem Laboratories Ltd.
Common stages occurring during compression
Stage 1: Top punch is withdrawn from the die by the upper cam
Bottom punch is low in the die so powder falls in through the hole and fills the die
Stage 2: Bottom punch moves up to adjust the powder weight-it raises and expels some
powder

Stage 3: Top punch is driven into the die by upper cam

Bottom punch is raised by lower cam
Both punch heads pass between heavy rollers to compress the powder
Stage 4: Top punch is withdraw by the upper cam
Lower punch is pushed up and expels the tablet
Tablet is removed from the die surface by surface plate
Stage 5: Return to stage 1

 Coating
Many tablets today are coated after being pressed. Although sugar-coating was popular
in the past, the process has many drawbacks. Modern tablet coatings are polymer and
polysaccharide based, with plasticizers and pigments included.

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Alkem Laboratories Ltd.
Coating is performed for the following reasons:

1. Controlling site of drug release

2. Providing controlled, continuous release or reduce frequency of drug dosing
3. Maintaining physical or chemical drug integrity
4. Enhancing product acceptance and appearance

 Inspection and Packing

In Inspection, the tablets are checked for any damages or deviations from the
productions. There is a conveyor belt on which tablets will be flowing. The people
inspecting would check for any dark spots, breakage etc. and would reject them. They are
also passed through metal detectors, which would check if any metals have entered the
tablets from the machine walls. Then the finished dosage is sent again for testing to the
Quality Control Unit. Finally the packing is done.

THE ALKEM SUPPLY CHAIN

Although very intricate and developed, the information on the supply chain of Alkem Labs was
intentionally not explored in detail by the guide. The following is the information provided by
the professional guide during the trip:

 Suppliers:
Alkem has very good relations with different suppliers and has good bargaining power
on the price at which they source their raw material. Most of the raw material is
sourced on credit and since the plant is located at a comparatively remote location, a
good amount of material is ordered in advance.

 Distribution and Logistics:

Since the inception of Alkem, it has put in a lot of effort and planning in building up a
robust distribution network system. Today, they have one of the largest logistic network
distribution set up in India covering the entire length and breadth of the country.
Distribution Channel starts from manufacturing units. In this the products are
manufactured in factories and various plants across India and packaging is done in the
plant itself. Various lots of packed material are then sent to the central warehouse where
the further distribution is carried forward. Here there is a carrying and forwarding agent
which takes the material from warehouse to various stock agents. Their work is to give
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Alkem Laboratories Ltd.
clearances and send to the concerned agents. Consignee agent takes order for
consignments and delivers it to the stockist. There are around 5500 stockists for Alkem
which cater to over more than 1.6 lakh retail outlets. These outlets then help in further
distribution of Alkem products to consumers and customers. They cover almost 250,000
retail pharmacies in India.

PROMOTIONAL STRATEGIES:
Alkem Laboratories Ltd is mainly a generic drug maker. Now, the scope of promotion and
advertising is limited for such a firm, who is producing medicines whose substitutes are
available in the market. The main focus of Alkem is cost reduction to be competitive in the
market, a strategy it has successfully followed through the years by following highly efficient
production techniques.
So, even though the Television and radio promotions of Alkem are practically nonexistent,
there are various other ways through which Alkem promotes its products.
 Relations – The founder of Alkem Shri Samprada Singh has always been a highly
respected figure in the Indian pharmaceutical industry. The main values that he
instilled in the firm were of building long term relations through commitment and
values. Alkem makes it a point in maintaining long lasting relationships with all those
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Alkem Laboratories Ltd.
that are associated with the firm. That includes its distributors, suppliers, hospitals and
doctors. Alkem has made it a point to have solid relations with hospitals and doctors
across the nation who then prescribes their medicines to the patients. Doctors majorly
influence the buying decision of medicines. This way Alkem not only secures a regular
demand for its products but also builds a solid name for its product which is crucial in
the long run.
 Articles and interviews – The top executives and health experts associated with Alkem
regularly write articles in health magazines and dailies relating to latest health and
pharma-industry trends. They also give interviews in various business news channels
thereby strengthening the company name and brand.
 Online promotions – Various websites like medindia.net, poulvet.com etc., shows the
list of Alkem products that the general public can refer to while purchasing the
products.
 Website – Through its own user friendly website, Alkem promotes its products and
services by providing detailed information.
 Charts – Alkem provides charts of its medicines, products and disease information to
various chemists and doctors.
 Agreements - Alkem Laboratories enters into various sorts of licensing arrangements
and agreements in order to explore market opportunities and draw maximum value
out of it. For instance, Alkem Laboratories entered into a licensing agreement with
Cooper Surgicals a business unit of The Cooper Companies, Inc. for the Medscanc
cytobrushes for women's healthcare markets.
 Marketing Alliances- Alkem encourages marketing partnerships and product
acquisition and hence they enter into different marketing alliances to enhance their
presence
Some of these are:
 Karo Bio - Sweden
 Gnosis - Switzerland
 Oculus - The Netherlands
 Reyon - South Korea
 Cargen - South Korea
 Hor Phag - Switzerland
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Alkem Laboratories Ltd.
OBSERVATIONS AND LEARNING OUTCOMES:
When we visited the manufacturing unit, we made the following observations:
 In the vial filling process no. of defective pieces is only 1 in 15 minutes.
 Outsourcing of material takes around 30 days.
 In a shift of 8 hours there are 65000 – 70000 pieces of production.
 Auditing is done by government and WHO.
 Checking of material is done 3-4 times before final sending – 2 times manually and 2 times
by machines.
 This Alkem plant has revenue of 3000 crores from which 2500 crores are from domestic
market and 500 crores from imports.
 There is a different dress code for different teams like blue for manufacturing team,
yellow for quality assurance teams and white for visitors.
The main observation was focused on the adherence to Alkem’s quality standards which is the
responsibility of its dedicated Corporate Quality Assurance (CQA) team. The team(s) charter
includes enforcing a standardized common quality system across the organization to ensure
consistency, effectiveness and efficiency during the manufacture of its products.
CQA focuses on:
 Establishing quality standards
 Ensuring Quality by Design
 Developing processes to achieve those standards
 Monitoring to ensure compliance (internal audits)
 Upgrading technology standards
 Training personnel on quality aspects
 Packaging control
While observing the manufacturing process, we were also shown some of the key management
measures that Alkem maintains at all its locations such as:
 Providing a positive working environment for employees.
 Protecting the consumer’s interest at every step of the process by maintaining quality.
 Clean and lean manufacturing processes adopted.
 Promoting a growth culture in the organization by a good policy framework.
 Enhancing growth and profitability of the organization by adopting new methods and
technology.
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Alkem Laboratories Ltd.

Visits to manufacturing firms are useful for us to understand the nuances and realities of the
shop floor, which in itself is a rare exposure. By visiting the shop floor we got to understand the
risky conditions in which workers work, the people management challenges involved in
managing workers apart from getting hands-on technical knowledge. Such an experience helped
students who visited Alkem to figure out management from core from time to people, from
environment to social and hence growth holistically.
Though an industrial visit is an integral part of learning to most of the graduate students, on a
post graduate level it is very essential for us to learn how we need to act as a manager when we
are employed in the industry. An industrial visit provides us with a tool which will eventually
help us realize challenges and opportunities in several sectors of management such as Human
resources, finance, marketing, operation etc.

SIKKIM-A LAND OF OPPORTUNITY:

In India, units setting up shop in the north-east and in specified backward states do not
have to pay any direct taxes for the first five years. They also enjoy a 25 percent deduction on
direct taxes from the fifth to the 10th year of operation, according to government information.
The deduction allowed is 25 percent of profits for 10 years. For units located in the
north-eastern region and in specified backward states, the deduction allowed is 100 percent
for first five years and 25 percent for the next five years.
The objectives of these exemptions can be explained as:

1. Generation of additional economic activity;

2. Promotion of exports of goods and services;
3. Promotion of investment from domestic and foreign sources;
4. Creation of employment opportunities;
5. Development of infrastructure facilities.

Sikkim which is the least populous state in the country has attracted pharma investment
upwards of many crores. There is minimal interference by the state government. Also there is
low cost in labour, power and overall cost of manufacturing. The main attractiveness lies in the
multitude of tax benefits it offers. The inclusion of Sikkim under the Centre's 'North East
Industrial and Investment Promotion Policy, 2007' in April 2007 did the trick. As part of this, all
new units as well as existing units which go in for substantial expansion in Sikkim will be eligible
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Alkem Laboratories Ltd.
for incentives for a period of ten years from the date of commencement of commercial
production. There's 100% excise duty exemption on finished products manufactured there,
100% exemption on income tax, capital investment subsidy of 30% on the investment in plant
and machinery, interest subsidy at 3% on working capital loan and even reimbursement of
100% insurance premium. On the top of it all, Sikkim also offers attractive freight subsidy. So
this Tax Holiday Zone provides a lot of incentives and profit to Alkem Laboratories.

CONCLUSION
Industry visits sensitize students to the practical challenges that organizations face in the
business world. Industrial visits also give greater clarity about various management concepts for
students as they can practically see how these concepts are put into action.
We are grateful to the college for providing us with the opportunity to experience the working
of a manufacturing industry and we would like to affirm that we have had a good learning
experience about the challenges and opportunities in several sectors of management such as
Human resources, finance, marketing, operation etc.

REFERENCES

 https://www.mckinsey.com/~/media/mckinsey/dotcom/client_service/Pharma%20and%20Medical%20Product
s/PMP%20NEW/PDFs/778886_India_Pharma_2020_Propelling_Access_and_Acceptance_Realising_True_Potent
ial.ashx
 http://www.alkemlabs.com/about-us
 http://en.wikipedia.org/wiki/Mixing_(process_engineering)#Solid-solid_mixing
 http://starpharm.listedcompany.com/processes.html

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