Cipla final

Combined By:Ashwin (14048)Sjcba,Bangalore

Company Profile CIPLA Limited is an India-based global

pharmaceutical company, Whose goal is ensuring No patient shall be denied access to high quality, Affordable medicine and support.

Mission Statement Cipla’s mission is to be a leading global

healthcare company which uses technology and innovation to meet everyday needs of all patients.

Industry analysis- Pharmaceuticals Third largest in terms of volume and thirteen largest in terms of value.

Branded generics constitute 70-80% of market

Highly fragmented

Estimated to grow at 20% CAGR over next five years.

 FDI up to 100 per cent under the automatic route for manufacturing of medical devices subject to specified conditions.

The country's pharmaceutical industry expanded at a compound annual growth rate (CAGR) of 9.4 per cent in 2013 to reach US$ 12 billion and is expected to expand at a CAGR of 23.9 per cent to US$ 55 billion by 2020

The Government of India plans to set up a US$ 640 million venture capital fund to boost drug discovery and strengthen pharma infrastructure..

Industry analysis

Industry analysis

8

Competitor analysisName Last Price Market Cap.

(Rs. cr.)Sales

TurnoverNet Profit Total Assets

Sun Pharma 841.75 202,566.81 8,017.20 -1,472.76 9,816.89

Lupin 1,698.15 76,404.86 9,752.47 2,397.35 9,067.83

Dr Reddys Labs 4,223.85 72,041.11 10,010.94 1,679.35 13,758.80

Cipla 719.20 57,759.30 10,131.78 1,181.09 12,470.76

Aurobindo Pharm 761.45 44,465.98 8,095.10 1,516.34 8,256.07

Cadila Health 1,913.55 39,179.65 5,284.43 1,271.12 5,788.60

Ranbaxy Labs 859.80 36,598.55 6,864.94 -879.00 7,088.06

GlaxoSmithKline 3,612.40 30,598.12 3,287.58 471.65 1,854.30

Glenmark 1,059.85 29,904.32 5,085.60 1,007.53 3,259.35

Divis Labs 2,141.30 28,422.39 3,084.01 847.06 3,588.09

Torrent Pharma 1,493.60 25,275.11 3,476.00 623.00 4,990.81

Wockhardt 1,652.35 18,257.54 1,886.55 331.82 1,417.00

Piramal Enter 914.40 15,779.17 2,401.41 372.74 15,250.15

competition Source : moneycontrol.com

Opportunities and Threats

Global demand for generic rising

Increased penetration in non-metro markets

Significant investment from MNCs

New partnerships to develop Bio similar business

Wage Inflation Competition from

emerging economies Preliminary investment

for drug discovery is very high

Long gestational period

Competitive Advantage Low cost Reverse engineering of new processes for the mass production

High quality drugs At low cost due to the absence of product patent.

New pharmaceutical products to the market - costs $1.2billion Cipla simply reverse engineered the process

low cost business model.

Relative cheap labor and high skilled manpower in India Produce drugs much cheaper than those produced by the patent

owners

Organic growth Engaged In Acquiring New Capabilities

Cipla Pioneered Bulk Drug Manufacturing In India And Has Emerged As A Major Player In The Domestic Market

The Process Patent Regime, Leveraging On Its Significant Process Skills And Reverse Engineering Capabilities

Building On Its Reverse Engineering Capabilities

It Developed New Generic Products For Other Developing Economies It Became One Of The Largest Exporters Of Drugs From India, Foreign Sales Reaching Up To 50% Of Total Sales

Business scope - expanding to other countries

Cipla has forayed into developed markets

such as the US and Europe using specifically developed generic drugs

marketing them through tie-ups with generic MNC majors

such as Andrx (Cipla 2009)

In 2005 Cipla's R&D was primarily aimed at developing new processes generic drugs

Remained At About 4% Of Sales.

Drugs Are Sold In Over 100 Countries

It Had Not Made Any Overseas Acquisitions until 2013

Negligible exports a few decades ago are now in excess of 50% of turnover (Cipla 2010).

Current scenario Patents expiring

Until the mid-1990s when India signed the WTO agreement, many leading Indian pharmaceutical companies relied on the domestic market alone.

Since 2002, over

-$80 billion worth of block busters have lost their patents.

-Another $74 billion worth is expected to be exposed to generic competition as a result of loss of patent between 2009 and 2012.

As a result,

-Indian generics are taking advantage of the global generics market

-expanding to developed countries.

Cipla is well positioned as it has a

-competitive edge of low cost manufacturing

-advance chemistry capabilities.

More R & D spending Cipla is rising up the value chain.

Pure reverse engineering firm focused on the domestic market, moving towards basic research driven, export oriented global presence, and enlarging its market reach.

Invested Rs. 250 crores in a new R & D facility in Mumbai .

The total expenditure on R & D as a percentage of total revenue increased to about 5.4%in 2014.

Cipla's R & D now includes

-development of new drug formulations

-patenting of newer processes and products of the domestic and international markets

-development of new products specifically for exports.

Strength and WeaknessStrength 1. Cipla has developed good positive image by providing support to cancer patients by issuing

drugs at low cost2. Imminent commencement of the Fixed-Dose combination for treatment of uncomplicated

falciparum malaria to tackle the 200+ million cases of malaria globally

3. Initiation of ‘No Touch Breast Scan’ a step forward in the screening technology in India. 4. A foremost player in anti-infective and anti-asthmatic formulations. 5. Has a strong employee force of over 16,000

Weakness1. Strong competition from international and domestic giants means limited market share

2. Cipla had faced problems during negative campaign by AHF

Value creation Take full control of cold-chain management

Full supply chain visibility

Own-controlled air freight service guaranteeing sufficient capacity and flexibility

Controlled product temperature ruling out temperature excursions and damages

Reduced logistics costs

Reduced total lead time and a shorter order-to-cash cycle

Big data- Using data to supplement decisions by adopting big data strategy

Strategies in action Invested big on talent for future growth:

-There was a significant increase in its employee cost, up 56% over a year during the March quarter and 49% for the year ended March 2014.

Hired senior executives in key functions of finance and international business & strategy from competitors such as Lupin and Dr Reddy’s Laboratories.

Acquired the entire stake in Medpro South Africa and increased its stake in Quality Chemical Industries of Uganda. A significant part of the increased personnel is due to these acquisitions.

Subhanu Saxena, its global chief executive officer since February 2013, also joined from Novartis, where he had led the global product strategy and commercialization functions at Novartis.

The company had identified three strategic priorities to sustain its growth.

-building the right organizational and governance models

-developing a robust portfolio and pipeline

-executing the growth strategies. Each of these has elements of talent enhancement. Consolidated financial results show the company incurred employee benefit

expense of Rs 428 crore during the quarter ended March, up from Rs 275 crore in the same period a year before.

For the full year ended March, employee cost was Rs 1,543 crore, against Rs 1,036 core the previous year.

Future