INTERNATIONAL

MBA 631

BUSINESS
CIA- PART 1

Submitted By,
Jessica Yvonne Varma
# 1321250
MBA-F1-IJK Finance

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CONTENT
Sl. No.
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TITLE
CHAPTER 1: INTRODUCTION

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4
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Specifications
Quality
Sources of Supply

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10
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CHAPTER 3: PROFILE OF COUNTRIES

Geographical
Regulatory
Economic
Cultural

CHAPTER 4: FDI POLICY FRAMEWORK OF HOST

COUNTRY
CHAPTER 5: BLUE PRINT OF BUSINESS

CHAPTER 2: PRODUCT PROFILE

Indian Pharmaceutical Industry

The Indian Advantage-Resources & Capabilities
Leading Companies in the sector.
Challenges faced by Pharmaceutical Industry

PAGE NO.

Entry Strategies
Marketing Strategies
Strategies for Sustainability
Financial Strategies

REFERENCES

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CHAPTER 1
INTRODUCTION MALPASO PHARMA LTD
INDIAN PHARMACEUTICAL INDUSTRY
Globally, the Indian Pharmaceutical industry is ranked third largest in volume terms and 10th
largest in value terms. The sector is highly knowledge-based and its steady growth is
positively affecting the Indian economy. The organised nature of the Indian Pharmaceutical
industry is attracting several companies that are finding it viable to increase their operations
in the country. The Indian Pharmaceutical industry is highly fragmented with about 24,000
players (330 in the organised sector). The top ten companies make up for more than a third of
the market.

With 72 per cent of market share (in terms of

revenues), generic drugs form the largest segment
of the Indian pharmaceutical sector.
Indian Pharma companies have a large chunk of
their revenues coming from exports. India exports
Pharmaceutical products to more than 200
countries. In terms of value, exports of Indian
Pharmaceutical products increased at a CAGR of
26.1 per cent to touch US$ 10.1 billion during FY06-13.
Pharmaceutical exports are expected to cross
the Rs 1 trillion (US$ 16.17 billion) mark this
year. During 2013-14, Pharma exports stood at
Rs 90,000 crore (US$ 14.55 billion). Out of this,
the share of formulations was 71 per cent. The
Ministry of Commerce targets to export USD25
billion worth of pharmaceuticals in 2016.
India currently exports drug intermediates, Active Pharmaceutical Ingredients (APIs),
Finished Dosage Formulations (FDFs), bio-Pharmaceuticals, and clinical services across the
globe. While some are focusing on the generics market in the US, Europe and semi-regulated

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markets, others are turning their attention to custom manufacturing for innovator companies.
Bio Pharmaceuticals is also increasingly becoming an area of interest given the complexity in
manufacture and limited competition.

India is a significant
manufacturing base for
the Pharmaceutical
industry. Indian
companies live in an
intensely competitive
environment. Most Indian
companies make their
own bulk actives. After
liberalization, Indian companies have built R&D capabilities that have enhanced their
innovative ability.
THE INDIAN ADVANTAGE- RESOURCES & CAPABILITIES

Indian Pharmaceutical industry today is a knowledge intensive industry. Indian companies

have acquired over 15 companies in Europe and the US over the last 10 years. The
organized sector of India's Pharmaceutical industry consists of 250 to 300 companies,

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which account for 70 percent of products on the market, with the top 10 firms representing 30
percent. However, the total sector is estimated at nearly 20,000 businesses, some of which are
extremely small. Approximately 75 percent of India's demand for medicines is met by local
manufacturing Indias Pharmaceutical sector is currently undergoing unprecedented change.
Much of this is due to the introduction of product patents in 2005, before that, only process
patents were permitted to be issued. This has been instrumental to the domestic industrys
huge success as a worldwide exporter of high-quality generic drugs.
LEADING COMPANIES IN THE SECTOR

In the past ten years, Indian companies have moved beyond their traditional export products
like tea, coffee, leather, iron ore, etc. to software and Pharmaceutical products participating in
what is called as the new age industries that are technology-knowledge-service-intensive.
The success achieved by the new genre of companies is also due to their careful selection of
market segments to participate in. For example, the Pharmaceutical majors essentially
participate in the generic segment of the Pharmaceutical industry and not in the researchintensive new-to-the-world products segment. Foreign companies who came to tap the
middle-class market discovered these advantages which the Indian companies leveraged
aggressively to take position in overseas markets
Pharmaceutical industry in India accounts for less than two per cent of the world market in
value terms, despite the fact that we are the third largest in volume terms

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Going global and Going
international are entirely
different. For going global,
one requires a global mindset and global aspirations.
Becoming international
historically meant supplying
out of India. You do not
have to be globally
competitive in the true sense
to export out of India. In
some areas, you may not be globally competitive. Going international only means leveraging
some country and company advantages to tap overseas markets.
Looking at some of the success stories of companies like Sun Pharma, using their generic
market capabilities having 26 manufacturing units across four continents. It has more than 72
percent of its sales coming from international markets. Cipla has presence in more than 160
countries and it outperformed other global pharma majors by offering patented anti-AIDS
drugs at affordable prices.
Indian Pharmaceutical industry has one of the richest resources in manufacturing, research
capabilities, and entrepreneurship. Our industry has capabilities and capabilities across the
value chain and, we are cost competitive across the value chain.
CHALLENGES FACED BY INDIAN PHARMECEUTICAL INDUSTRY:

Price Controls:
Price controls are broadly cited as the most critical challenge that companies face in the
Indian market. India is one of the most price-controlled markets in the world, as under the
DPCO, prices and margins are monitored carefully. The DPCO is being supervised by the
NPPA. Price controlled drugs are essential medicines, such as antibiotics and painkillers, and
drugs used for the treatment of diseases such as cancer and asthma.

Infrastructure:
Infrastructure has always been mentioned as a barrier to growth of the Pharma industry in
India. Poor energy and transport infrastructure has traditionally posed a problem for

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companies. Some areas lack basic hotel facilities, preventing reach and penetration. With the
government gradually increasing investment in infrastructure, the situation is improving, but
it is still seen as an investment opportunity in India.

Counterfeiting:Counterfeiting of drugs has been a major issue in the Indian Pharma space. The inherent
nature of the Indian market makes it difficult for a systematic study that quantifies the extent
of counterfeiting, to be carried out. Organisation of Pharmaceutical Producers of India (OPPI)
has also carried out various initiatives to combat the situation like organising seminars and
working with the Ministry of Health towards the development of policies against spurious
drugs.

Intellectual Property:India has accepted and made a commitment to the Trade-Related Aspects of Intellectual
Property Rights (TRIPS) in 1995, and keeping with this commitment, implemented the Patent
(Amendment) Act in 2005. Although this act does not apply for drugs patented before 1995, it
is a major step forward on the earlier patent scenario. Since then, recommendations have been
made to the government regarding improvement and expansion of the Patent (Amendment)
Act, by the Satwant Reddy committee and the Mashelkar report. These reports highlighted
the need for data exclusivity and the prevention of evergreening.
Overcoming the challenges that exist in the market is a key imperative for future growth.

CHAPTER TWO:
PRODUCT PROFILE
SPECIFICATIONS:Two segment of products are exported. Bulk drug segments and formulations. Bulk drugs are
active pharmaceutical ingredients (APIs) with medicinal properties, which are used to
manufacture formulations. Of the total number of pharmaceutical manufacturers, about 77%
produce formulations, while the remaining 23% manufacture bulk drugs.
Bulk Drugs
The Indian pharmaceutical industry manufactures about 400 bulk drugs belonging to various
therapeutic segments.
Formulations
Formulations are the end-products of the medicine manufacturing process, and can take the
form of tablets, capsules, injectable or syrups, and can be administered directly to patients.

Based on the pharmaceutical customer base, the Indian API manufacturing segment can be
divided into four parts branded, generic, Over-the-counter, and patented products.

Branded Generics:The top brands in this category are Corex, Phensedyl Cough and Voveran. These drugs also
have a brand premium which differs between therapeutic areas. For example:

The number 1 ranked brand for the

molecule Amoxicillin lavulanate,
Augmentin, commands a premium
as high as 260% over the next-inline brand Moxikind-CV, and 101%
over the third ranked brand Clavam.
Innovator brands can command
high premiums over branded generics. For example, Risperdal, an innovator brand,
commands a 1048% premium over Risdone (generic brand).
Brand premium is dependent upon several factors such as:

First mover advantage.

Creating a value proposition.
Being an innovative drug.
Appropriate pricing strategy.

Generic Generics:-

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Currently, the market share of generic generics is very low. We see two main hurdles to pure
genericisation of the Indian market:
1. Lack of generic generics regulations and guidelines for the establishment of bioequivalence, for example the Abbreviated New Drug Application (ANDA) guidelines that
exist in the U.S.
2. Doctor comfort derived from prescribing medications on the basis of brand name.
A good example for this is the government run- Jan Aushadi programme. They provide noname generic drugs at their subsidized prices in 24-hour pharmacies all over the country.
Over-the-counter Products:
The OTC market was worth about US$1.8 billion in 2012, and PwC estimates that by 2020, it
will grow to US$11 billion - a CAGR of 18%, with the potential to reach US$13 billion at
an aggressive CAGR of 20%.
OTC Drugs means drugs legally allowed to be sold Over the Counter by pharmacists, i.e.
without the prescription of a Registered Medical Practitioner.
The OTC segment growth drivers are:-

Novartis, Pfizer and Johnson & Johnson are examples of MNCs that have a strong presence
in the Indian OTC segment.
Patented Products:The market size for patented drugs as of today is very small. With growing affordability,
deepening of health insurance and steady improvement in Intellectual Property Rights (IPR),
patented product launches should increase giving great opportunity for India.

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These are the major products we have chosen for our International Business abroad:

Corticosteroids
Anti-Asthmatic
Anaesthetics
Anti-Diabetics
Anti-Tuberculosis
Intermediates
Anti-Hypertensive
Anti-Depressants
Antibiotics

QUALITY:Indian Regulatory Bodies for Quality Control in Pharmaceutical industry:-

The Central Drug Standards and Control Organization (CDSCO)

The CDSCO is located under the Ministry of Health and Family Welfare. It prescribes
standards and measures for ensuring the safety, efficacy and quality of drugs, cosmetics,
diagnostics and devices in the country; Regulates the market authorization of new drugs and
clinical trials standards; supervises drug imports and approves licenses to manufacture.

The National Pharmaceutical Pricing Authority (NPPA)

The NPPA instituted in 1997 under the Department of Chemicals and Petrochemicals. It
maintains data on production, exports and imports and market share of pharmaceutical firms
and imparting inputs to Parliament in issues pertaining to drug pricing.
Various Acts governing the regulation of quality standards:

Drugs and Cosmetics Act of 1940 and Rules 1945 regulates drug manufacturing,

quality and marketing.

Pharmacy Act of 1948
The Drugs and Magic Remedies Act of 1954, etc.

International standard of pharmaceutical machinery:

Standardization
Pharmaceutical Quality System ISO-9001
Every pharmaceutical company needs to meet the latest GMP compliance
GMP would want the machinery manufacturers to follow a set of procedures and rules
with proper documentation in the manufacturing.

SOURCES OF SUPPPLY

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The domestic bulk drug industry is poised to benefit from the impending patent expiries in
the regulated markets leading to increase in generic penetration; thereby providing a
significant opportunity for supply of APIs to manufacturers of such generic drugs coupled
with increased outsourcing of bulk drugs by multinational pharmaceutical companies.
To gain more control over bulk drug supplies, we have increased our backward integration in
key API segments. In addition to the apparent benefits of greater cost efficiencies and quality
control, in-house API manufacturing facilities offer greater manufacturing flexibility and
minimises the reliance on third party suppliers.
As many of the major Multinational pharmaceutical companies have adopted, we are
following a partnership arrangement with suppliers either through outsourcing contracts or
long term alliances. This will help maximise cost efficiencies.
For example, some of the major tie-ups between pharmaceutical companies and domestic
API suppliers are:

A key challenge however would be to win the confidence of generic manufacturers as a

reliable and cost competitive supplier.

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CHAPTER 3:
COUNTRY PROFILE
The main importers of Indian Pharmaceutical products are:-

(Value in Million USD)

More than just cheap generic drugs, with exports growing at nearly 30% per year, India's
pharmaceutical industry is well positioned for greater research spends. Over the last three
years exports of pharmaceuticals (largely generics) have grown at over 21.5% and now
accounts for over US $ 13 billion in annual sales. Highlighting Indias dominance, nearly
40% of Abbreviated New Drug Applications (ANDA) received by the FDA in 2012 were
from India, with a further 87 confirmed and another 25 already received between January and
June 2013.
Looking at the top 10 Global markets for generic drugs:-

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Changes in the global landscape brought about by the increasing costs of healthcare and
drying R&D pipelines have been able to create a number of opportunities for Indian players.
The US and EU markets have been the largest importers of Indian products, but increasing
scrutiny in these geographies is threatening export revenues and Indian companies would
have to look at risk mitigation strategies. Understanding market dynamics will be imperative
in determining the extent of growth and reach that Indian companies will be able to achieve.
With Indian products competing with their global counterparts in terms of quality, India has
been able to establish a global footprint. Indian companies operating in the west have been
able to do so successfully, but, markets such as Japan, parts of South America, Gulf
Cooperation Council (GCC) and Commonwealth of Independent States (CIS) still remain
untapped and can be explored.
Markets that we have selected to enter:1. Gulf Cooperation Council which includes Bahrain, Kuwait, Oman, Qatar, Saudi
Arabia, and the United Arab Emirates.
2. Latin American Countries that incluse, Argentina, Chile, Brazil, Mexico, etc.
GEOGRAPHY:1. GCC
The GCC is home to 30,785 Indian partnership and ownership companies. With 2,592
companies coming on board in 2013 alone their annual growth has been quite substantial over
the past years. Meanwhile, 2,104 companies came on board in 2010 as were 2,374 in 2011
and 2,640 in 2012 averaging 2,000 new companies setting up businesses in Dubai annually.
This trend clearly shows the attractiveness of GCCs competitive business environment to
Indian businesses. Other factors are geographical proximity of India to some of the GCC
countries like Dubai as this makes the cost of shipping lower as the country can quickly
supply fresh products to the UAE. Also, the presence of large population of Indians leads to
demand for their countrys products here.
The relation between GCC and India has further strengthened over the last decade, with the
increasing import of oil and gas, growing trade, investment opportunities and presence of a
large Indian diaspora. Also the global economic slowdown and its impact on the developed
economies have prompted a Look East policy from the GCC nations, which has enhanced
the significance of India as a potential investor. Though there has been significant growth in
bilateral trade between the two regions, the growth in investment flows has been limited so

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far. However, Indias growing significance as one of the fastest growing global economic
powerhouses, driven by the momentous surge in domestic consumption and growing per
capita income has propelled many Indian corporates into the league of global multinationals.
As a part of their growth initiatives, these corporates scouts for attractive overseas investment
opportunities. GCCs investor friendly economic environment, geographical proximity and
inherent advantages in energy-intensive manufacturing hold tremendous potential for
attracting further investments from Indian industries. According to the overseas investment
data released by the Reserve Bank of India, investments by Indian firms in GCC have been
on the rise in the recent years. Indian firms have been investing in GCC countries across
sectors like manufacturing, financial services, real estate & construction, trade & hospitality,
agriculture & mining.
2. Latin American Countries:The India-Latin America economic relationship has evolved significantly over the past
decade, with new investments and value-added businesses that supplement the large trade in
commodities. Indias total trade with Latin America for 2012-13 is $41 billion but just
$13.5 billion are exports, the larger chunk being imports largely comprising oil, minerals and
agricultural products (Ministry of Commerce & Industry, 2013).
The pharmaceutical market in Brazil, at an estimated $26 billion a year, is the regions
largest. The generics market is growing rapidly but is untapped still. Generics account for
only one-fourth of pharmaceutical drugs sold in Brazil much lower than the roughly 50 %
sold in the U.S. but sales of generic drugs in Brazil are strong, increasing by 53 % in 2012
(Latinvex, 2013). The IMS Consulting Group has included five Latin American
countries Brazil, Argentina, Mexico, Colombia and Venezuela as part of the
Pharmerging markets that remain the global growth engine for the pharmaceutical sector.
REGULATORY ENVIRONMENT:1. GCC:The Gulf cooperation council (GCC) region is considered as Emerging market for
pharmaceutical export and bilateral trade. The understanding of the regulatory requirements
of this region can be beneficial for pharmaceutical export. Some incidents of the year 200809, like recession or economic slowdown in highly well-off and regulated market of the EU
and US, raised the demand for alternate destinations for business. The regulations of Gulf

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countries are encouraging the import of quality generic products, which can be good news to
the Indian drug manufacturers.
Based on responses from 215 representatives of leading pharmaceutical manufacturers in
India and those registered in the six GCC countries, the FICCI study found an overwhelming
keenness to tap the GCC market.
According to a FICCI survey report There is a considerable scope for increasing our exports
of drugs and pharmaceutical products to GCC countries, namely Saudi Arabia, Kuwait,
Bahrain, Qatar, United Arab Emirates and Sultanate of Oman
Opportunities in the Gulf Cooperation Council market

GCC countries- 80% demand of pharmaceuticals through import

Indian export to GCC countries- 119.25 USD billion

Largest trading partner after US - 6.8 USD billion business annually[7]

Annual increase of population is more than one million - Great potential for
healthcare sector

Economic development boards (EDB), joint ventures and economic liberalization

by GCC countries- Opportunities for Indian investors

Less custom duty on pharmaceuticals- duty-free (Saudi Arabia & UAE) and 4-5%
by all the remaining GCC members.

ECONOMIC RELATIONSHIP WITH INDIA:1. GCC:The phenomenal economic rise of the GCC bloc and growing prominence of India in the
global economy has been hallmarks of this century. Deepening of economic engagements
was facilitated by high economic growth rate in India and GCCs substantial financial
liquidity over the last decade. The Look East policy of the Gulf States and the ever growing
desire of India to secure energy supplies further strengthened economic and business ties for
mutual benefit.
There is a two-way link between GCC and India through trade and investments. GCC is of
vital importance for India, given the increasing import of oil and gas, growing trade,
investment opportunities and presence of approximately 7.0 million Indian expatriates
working in the region.

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GCC-India bilateral trade increased at a CAGR of 10.4% to US$ 150.0 billion over 200914.
During the period, trade flows from GCC to India expanded at a CAGR of 11.3% to US$
101.8 billion, while trade from India to GCC rose at a CAGR of 8.5% to US$ 48.2 billion.
Growth in bilateral trade was driven by numerous agreements and Indias increasing oil
imports.
GCC- India Bilateral Trade:

2. Latin American Countries:

The pharmaceutical sector represents about 15 per cent of Indias exports to the LAC region.
Indicating the beginning of strategic engagement in pharmaceuticals, India and Brazil have
cooperated in fighting the European Unions illegal clampdown on generics trade. Key nondefence sectors in India-LAC trade are - energy, minerals, pharmaceuticals & chemicals,
agribusiness, IT/ITES, etc.
CULTURAL TIES WITH INDIA:a. GCC:GCC and India have traded with each other since long. Every year, thousands of Indian
pilgrims perform Haj rituals in Saudi Arabia, further strengthening the cultural bond. Decades
of commercial engagements between the two have fostered and nourished mutual ties.
Growing bilateral trade and the Indian expatriate population have further strengthened these
ties.
Indian expatriates in GCC countries:-

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b. Latin American Countries:

Unlike the regular model of trade where India exports finished products and imports raw
materials, here India exports raw materials that Latin America can add value to and sell
within its own markets. This is a healthy bilateral arrangement that builds confidence.

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CHAPTER 4:
FDI POLICY OF HOST COUNTRIES
INVESTMENTS:
In 2013, total foreign direct investment (FDI) to GCC from India stood at US$ 2.1 billion.
The cumulative FDI outflows from India to the GCC region during 200813 stood at US$ 9.7
billion, registering a CAGR of 7.0%. Meanwhile, cumulative FDI outflows from GCC to
India during 200814 stood at US$ 2.9 billion, registering a CAGR of 2.3%. The sectors that
attracted most investments include power, construction, services, and metallurgical industries.
According to the overseas investment data released by the Reserve Bank of India,
investments by Indian firms in GCC have been on the rise. The UAE is the most favoured
investment destination, accounting for around 83.7% of total FDI flows from India to the
region in 2013. Despite being the largest recipient of FDI from global investors (56.0% of
cumulative inflows over 200012) among GCC countries, Saudi Arabia attracted just 12.3%
of Indias outward FDI to GCC in 2013.
FDI flow to GCC from India (US $ Million):-

Key Factors Driving FDI Growth in GCC:

Economic Drivers:

GCC nations and India have registered strong GDP growth over the past decade, helping
them gain significant economic strength. GCCs main growth drivers were high energy
prices, liberalization initiatives to attract more FDI and economic diversification to reduce
dependence on its mainstay, the oil and gas sector. India, on the other hand, witnessed a surge

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in economic activities post the 1991 economic liberalization that opened the domestic
markets to foreign investments.

GCC countries growing economic stability:

Continued investments on the governments part to expand and modernize basic

infrastructure has helped the region to attract global investors. Signing of an impending free
trade agreement between GCC and India would further open up the market for India-based
companies.

Investment Barriers:

GCC countries also follow divergent standards regarding FDI regulations. In addition,
absence of a competent investment authority in the region remains a drawback. Although
measures have been taken to improve the investment environment, underdeveloped capital
markets are still an impediment to investments. Though the recent volatility episode with
Indian rupee has receded, lack of currency stability serves as a barrier to the cross-border
investments. The RBIs imposition of increased restrictions on overseas investments by
Indian firms, given the volatility faced by the Indian Rupee (which depreciated more than
20.0% in 2013 to an all-time low of 68.8 against US$, before stabilizing ~60-62 range) was
lifted in September 2013. The RBI eased the recent curbs by allowing firms that have raised
funds via the external commercial borrowing (ECB) route to invest up to 400% of their net
worth against a month ago limit of 100%.
Because of the overall ease and strength in the India-GCC economic and cultural relations, it
is imperative to use Joint-Ventures, Mergers as a mode of entry or they can use the traditional
export mode of business which currently represents majority of their business in GCC
countries.

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CHAPTER 5:
BLUE PRINT OF BUSINESS
ENTRY STRATEGIES FOR INDIAN MNC:Entry barriers differ immensely from market to market & region to region in the national
markets. Classic issues needed to overcome include dearth of infrastructure, challenges in
areas like product distribution & supply chain management.
Some of the ways the company can enter the market are:Through Partnering:-

Partnering, with a local player would probably craft a win-win situation, empowering the
market entrant to benefit from the partners existing presence and home country market
understanding to establish operations, build market share and swiftly overcome local
hindrances.
Acquisition:-

Buying an already reputed player in an embryonic market enables a foreign company with an
already constructed local position that it can fully assimilate into its global operations with
time.

Manufacturing in Home country and tapping the overseas markets through direct or
indirect exports:-

The main benefits of this are that there are no cultural or language barriers, higher and
quicker turnaround, higher protection on intellectual property rights, etc.
Export Houses:-

The export/merchant houses play a dynamic role in endorsing exports to foreign locations. In
this scenario the manufacturers delegates the job of selling the products abroad to specialist
agencies - The Export Houses. The main disadvantage with this is that, the manufacturer has
minimal control over the market.
Licensing:-

Licensing is the lowest-cost option to expand market access, but bearing a high brand threat
and restrictive potential to exploit the local market opportunities. The current trend though is

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more on out-licensing, yet there is increasing in-licensing activities, with large
pharmaceutical brands licensing out their very vital R&D activities, predominantly clinical
trials. Licensing pacts are increasingly being used to magnify the product portfolio,
supplement research effort & strategically enter new markets.
Joint Ventures:-

Joint Ventures almost imitate the licensing arrangements, but normally differ in the, equity
participation and management in the local firm. In case of a Joint Venture, the participating
firms generally bear an equal share in the equity participation and management in the local
firm.
Acquisition:-

Acquisition: Acquiring a foreign company with all its assets and liabilities is the fastest way
to enter a market than developing own facilities.
MARKETING STRATEGIES TO BE EMPLOYED:The ability to create strong brand equity by engaging in portfolio marketing is a key factor for
success in emerging markets. The strength of the sales and marketing organization and its
capabilities in terms of field sales, promotions, market research can play a critical role.
Physician engagement and the creation of brand equity can be even more important for the
success of the branded generic when the original drug has been off-patent for some time and
other generics have already been launched in the market.
Promotional activities can help MNCs maintain the relevance of branded generic offerings in
a market, and doing upfront portfolio lifecycle planning and taking steps to understand target
segment needs can place the MNC in a strong commercial position with its branded generic
offerings. A multi-channel marketing strategy leveraging newly adopted channels (such as
digital access) has the potential to reach a broader audience to deliver core branded generics
messaging. One key goal of this strategy is instilling trust and recognition among health care
providers and consumers for the pharmaceutical parent company.
STRATEGIES FOR SUSTAINABILITY:Today, businesses are beginning to understand that sustainability is not only about being
environmentally friendly. It is about business, which ultimately means it is about money. If
implemented well, sustainability can contribute positively to a companys financial results.

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Establishing local capabilities in emerging

markets can be a challenge for global
pharma players, but the benefits can be
significant. Local production can help
organizations shorten supply chains, avoid
currency fluctuations and better understand a
markets unique aspects, including
distribution oddities. Furthermore, setting up
local R&D capabilities can help company
attune their product portfolios to meet the
urgent needs in the country, and hiring and retaining local talent can enable firms to benefit
from emerging markets resources.

FINANCIAL STRATEGIES:Achieving year-on-year cost reduction in their overall spending by rigorously identifying and
eliminating wastes in their manufacturing and business processes.

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Elements of cost reduction:

Like any other industry, pharmaceutical cost has several direct and indirect costs:

Material cost: Around, 60 to 70% of pharma manufacturing cost is influenced by raw

materials. Therefore, controlling material costs is one of the most important areas that

companies need to focus on.

Manpower cost: Like others, the pharma industry also faces challenges such as an
average 15% growth in salaries and an approximate 20% attrition rate at operative and
executive level. Therefore, controlling manpower cost is becoming an important

agenda item for the top management.

Energy: The pharma industry uses a variety of utility equipment, including boilers, air
compressors, chillers, brine units, air handling units (AHU), vacuum pumps, DG sets,
etc. Savings in operating these units primarily result from ensuring efficiency of these
machines and preventing wastage. Companies typically look at generation,

consumption and distribution efficiencies.

Packing costs: Packing costs are typically higher for formulations as compared to
API. Packing costs can be reduced by at least 10% by reducing packing rejections and

by value-engineering the packing design.

Analysing costs: Quality costs (QC) in most organisations were not tracked and it is
only recently that organisations have started looking into this.

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Another important financial strategy to be followed is to manage the transfer pricing.
GCC Market:Saudi Arabia is the largest market for pharmaceutical sales in GCC. 80% of their sales is
contributed by imports. Domestic Manufacturers Have a Limited Share of the GCC Market
Compared to Imported Products. India and Japan are setting up JVs with local firms;
Ranbaxy was the first Indian company to penetrate the Saudi market. The GCC main players
in this sector are Abbott, Novartis, GlaxoSmithKline, Astra Zeneca, Johnson & Johnson, and
Pfizer.
Expected Pharmaceutical Sales in GCC nations:-

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REFERENCES:

http://www.slideshare.net/bipindapin/pharmaceutical-industry-33589145
http://www.business-standard.com/content/b2b-pharma/indian-pharma-companies-

need-to-tap-unexplored-markets-to-boost-revenues-114090300435_1.html
http://www.business-standard.com/content/b2b-chemicals/success-strategies-for-

indian-pharma-industry-in-an-uncertain-world-114021701557_1.html
http://www.process-worldwide.com/management/markets_industries/articles/415275/
http://www.jgtps.com/admin/uploads/9rYHbt.pdf
http://www.indus.org/healthcare/Secientific%20Sessions/Dr.%20P.V.Appaji%20-

%20Indian%20Pharma's%20Contribution%20to%20Global%20Market.pdf
http://www.exim-pharm.com/