International Marketing Project

INTERNATIONAL MARKETING PROJECT COMPANY: PIRAMAL HEALTH CARE

PRODUCT CATEGORY: INHALATION ANESTHESIA

PRODUCT: HALOTHANE

SKU: 250mlPROJECT BY GROUP A10KARAN CHAWLA (10)ANUBHUTI JAIN (30)RASHMEET KOHLI (36)HORMUZ RAGINA (56)KIRTHI S RAI (57)SHRUTI THAKKER (67)ACKNOWLEDGEMENTWe would like to take this opportunity to thank Dr.Venkatesh Kshirsagar, Manager- International business Global Critical Care, Piramal Health Care Limited who helped us with our project. We would also like to mention Ms. Sanchali Gupta and Gayatri Deshpande, the Country Managers of Iran and Indonesia respectively for being patient with our questions and giving time to make us understand the markets.We would also want to acknowledge our Prof. R.Venkatesh for giving us the opportunity to understand the International Market better through this project. CONTENT

I. Pharmaceutical Industry.05A. Key elements of the sector.05B. Description of the product category and product.05 II. Business history: Piramal Health Care Limited.08III. Market Research..10A. Target countries101. Primary: IRAN..102. Secondary: INDONESIA....18

B. Description of IRAN10 C. Market conditions in IRAN11

1. Existing demand....112. Competition.....123. Strengths and weaknesses of the economy-barriers to entry, etc.12 IV. Marketing decisions..13 A. Distribution strategies.131. Direct exporting132. Documentation.153. Direct investment, strategic alliances..15 B. Pricing strategy.15 C. Promotion strategy15 D. Product strategy..16 V. Legal decisions..16A. Agent/distributor agreements...16B. Patent.16C. Quality...16D. Dispute resolution.16 VI. Manufacturing and operations.16

A. Location of production facilities for exports16 B. Capacity of existing facilities.16 C. Product modification necessary to adapt to local environment.16VII. Personnel strategies: Personnel needed to manage exports.17VIII. Financial decisions..17IX. Secondary Market: INDONESIA17X. Market conditions in INDONESIA.181. Existing demand.192. Competition..193. Challenges..19 XI. Marketing decisions.19 A. Distribution strategies...191. Direct exporting..192. Documentation...21 B. Pricing strategy.21 C. Promotion strategy21 D. Product strategy..21 XII. Legal decisions21A. Agent/distributor agreements...21B. Patent.22C. Quality22D. Dispute resolution.22 XIII. Manufacturing and operations..22A. Location of production facilities for exports..22B. Capacity of existing facilities..22C. Product modification necessary to adapt to local environment.22XIV. Personnel strategies: Personnel needed to manage exports.22XV. Financial decisions..........................................................................................................................23 XVI. Annexure: PO, Distributor Agreement, OFAC License, Sales Promotion Agreement, MIS (FINANCES) - All Iran..24I. PHARMA INDUSTRY A. Key elements of the sector:

Among all the major industries in India, textiles and pharmaceuticals are surely the leaders. The Indian government has listed the pharmaceutical industry as an intellectual industry and investment in research and development has been enhanced.

The pharmaceutical products account for 8 percent of the global pharmaceutical sales and India is the fifth largest producer of bulk medicines in the world. In 2001, the value of India's exports of medicines approached US$1.7 billion. This has gone up to almost US $ 3.3 billion.

Indian Pharmaceutical Industry is estimated to be worth $ 4.5 billion, growing at about 8 to 9 percent annually. It ranks very high in the third world, in terms of technology, quality and range of medicines manufactured. From simple headache pills to sophisticated antibiotics and complex cardiac compounds, almost every type of medicine is now made indigenously.

There are 20,000 laboratories in India's pharmaceutical industry and the scale of the pharmaceutical market amounts to Euro 5.3 billion. The leading 250 pharmaceutical companies control 70% of the market with market leader holding nearly 7% of the market share. It is an extremely fragmented market with severe price competition and government price control.

Around 70% of the country's demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and injections is met by home production. There are about 250 large units and about 8000 Small Scale Units, which form the core of the pharmaceutical industry in India (including 5 Central Public Sector Units).

B. Description of the product category and product:

ANESTHESIA

The word 'anesthesia' means 'loss of sensation'. Today, safe and effective methods of anesthesia allow surgery to be performed on millions of patients each year. You should know a few important things about anesthesia:

most importantly, it stops you from feeling pain and other sensations during your operation

it can be given in various ways

not all anesthesia makes you unconscious

it can be directed to different parts of the body

Drugs that cause anesthesia work by blocking the signals that pass along your nerves to your brain. When the drugs wear off, you start to feel normal sensations again, including pain. Some of these medications work on your whole body. While some of the medications work directly on the nerves going to parts of your body.

TYPES OF ANESTHESIA

General anesthesia is a state of controlled unconsciousness during which you feel nothing and may be described as 'anesthetized'. For some operations, general anesthesia may be the only option for safe care during surgery. In other operations, general anesthesia may be an alternative to regional anesthesia. During general anesthesia, anesthetic medications are injected into a vein, or anesthetic gases may be breathed into the lungs. When these medications are carried to the brain by the blood, they effectively "numb" the brain, and produce unconsciousness. Other medications are given to prevent pain and relax the muscles of the body. During general anesthesia, you may need assistance to support adequate breathing. In this case, you may have a breathing tube placed after you have fallen asleep. General anesthesia produces a period of controlled unconsciousness, which is quite different from sleep, and is also different from unconsciousness due to disease or injury. At the end of surgery, as the anesthetic drugs wear off, your consciousness starts to return.

Regional anesthesia is the specialized use of local anesthetic to numb a part of the body. Regional anesthesia can be used for operations on larger or deeper parts of the body. Local anesthetic drugs are injected near to the bundles of nerves which carry signals from that area of the body to the brain. The most common regional anesthetics (also known as regional 'blocks') are spinal and epidural anesthetics. These can be used for operations on the lower body such as Caesarean sections, bladder operations or replacing a hip joint. You stay conscious but free from pain. Nerve blocks in the neck or armpit area are used to numb the arm or shoulder for surgery.

Local anesthesia numbs a small part of your body. It is used when the nerves can easily be reached by injections, drops, sprays, or ointments. You stay conscious but free from pain.

Sedation is the use of small amounts of anesthetic or similar drugs to produce a 'sleepy-like' state. It makes you physically and mentally relaxed during an investigation or procedure which may be unpleasant or painful (such as an endoscopy) but where your co-operation is needed. You may remember a little about what happened but often you will remember nothing. This is frequently called 'conscious sedation', and may be used by other professionals as well as anesthesia professionals. If you are having a regional or local anesthetic, you may want to ask for some sedation as well. Combining types of anesthesia: anesthetic drugs and techniques are often combined. For example: a regional anesthetic may be given as well as a general anesthetic to provide pain relief after the operation. Sedation is frequently used with either regional or local anesthesia. The anesthetic prevents you from feeling pain, while the sedation makes you feel drowsy and mentally relaxed during the operation.

INHALATION ANESTHESIA: HALOTHANE, ISOFLURANE, SEVOFLURANE

Introduced in 1956, our most cost-effective inhalational agent.A colorless, non-flammable oily liquid, CHBrClCF3; b.p. 51C. It smells like trichloromethane and has a sickly burning taste. Halothane is widely used as a general anesthetic, often administered also with oxygen and dinitrogen oxide.

It is apt for asthmatic patients due to bronco-dilatory action.Repeated exposure to halothane in adults was noted in rare cases to result in severe liver injury.

Introduced in 1981, the most commonly administered volatile anesthetic today. Isoflurane is a clear, colorless, volatile, non-flammable liquid for general inhalation anesthesia. It is a general anesthetic for use in patients of all ages.

Uses

ISOFLURANE is a halogenated volatile anesthetic which induces and maintains general anesthesia by depression of the central nervous system and resultant loss of consciousness. It is the most advantageous anesthetic agent for Neurosurgical patients. It is Ideal for maintenance in cardiac surgery. ISOFLURANE should be used with caution in patients with coronary artery disease.

Relatively low solubility and non pungency make sevoflurane an excellent choice for inhalational induction.It is a clear colorless liquid containing no additives. It is an inhalation anesthetic agent administered by vaporization, for use in induction and maintenance of general anesthesia in adult and pediatric patients for inpatient and outpatient surgery. It is a dose related cardiac depressant. II. Business history PIRAMAL HEALTHCARE LTD.Piramal Healthcare Ltd, a Piramal Group company, is a globally integrated healthcare company that fulfills unmet medical needs across the world. It has a growth track record of above 29% CAGR since 1988.Piramal Healthcare had consolidated revenues of US$ 656 million in FY2009. PHL is currently ranked 4th in the Indian market with a diverse product portfolio spanning several therapeutic areas. It is also one of the largest custom manufacturing companies with a global footprint of assets across North America, Europe and Asia.

Divisions:

Acute-Care

Biotech

Cardiac

Cardio-Diabetes

Consumer Products

Critical Cardiology

Derma

Diabetes

General Medicine

Multi-Speciality

Multi-Therapy

Neuro-Psychiatry

Ortho

Pain-Management

Global Critical Care

Lab Diagnostics GLOBAL FOOTPRINT

Production Facilities of Piramal Health Care exist in: Baddi, Himachal Pradesh

Digwal, Andhra Pradesh

Pithampur, Madhya Pradesh

Ahmedabad, Gujarat

Mahad, Thane in Maharashtra

Ennore, Tamil Nadu

Morpeth, UK

Grangemouth UK

Torcan, Canada Piramal Healthcares Global Critical Care (GCC) business markets a range of important hospital and life saving infusion pharmaceuticals. Our key customers include pain management clinics, veterinary hospitals, university research centers and medical industrial users.

With an aim to emerge as a global leader in this segment, we embarked upon a string of Mergers & Acquisitions:

Rhodia, UK in FY2005 PlasmaSelect AG, Germany in FY2008 Minrad Inc. and RxElite Holdings, US in FY2009These strategic alliances have been consistent with the objective of recognizing the compelling potential of our Global Critical Care business and emerging as a leading player in this segment. In addition, our manufacturing JV in China in 2008 has further helped us explore the enormous global opportunity in the critical care segment.

The GCC product portfolio includes some key brands:

Inhalation anaesthetics Halothane

Isoflurane

Polygeline based plasma volume expanders Haemaccel

Highlights 3rd largest player globally in Inhalation Anesthesia (IA) market

Strong product portfolio with all 5 known IA gases

Global sales and marketing networks

Global manufacturing footprint USA, China and India

Haemaccel enjoys more than 70% share of the world market in Polygeline based plasma volume expanders

III. Market Research

A. Target countries: Description about both the countries 1. Primary: IRAN

B. DESCRITION OF IRANIran is a pluralistic society. Persians are the largest predominant ethnic and cultural group in this country, though many are actually of mixed ancestry. The 1979 Islamic revolution and the 1980-88 war with Iraq transformed Iran's class structure politically, socially, and economically. The urban working class has enjoyed somewhat enhanced status and economic mobility, spurred in part by opportunities provided by revolutionary organizations and the government bureaucracy. Most Iranians are Muslims; 89% belong to the Shia branch of Islam, the official state religion, and about 9% belong to the Sunni branch. Non-Muslim minorities include Zoroastrians, Jews, Baha'is, and Christians.

Economic Parameters

Population: 66,429,284 (July 2009 est.)Population Growth Rate: 0.883% (2009 est.)GDP (purchasing power parity): $841.7 billion (2008 est.)

Agriculture products include wheat, rice, other grains, sugar beets, sugar cane, fruits, nuts, cotton; dairy products, wool; caviar

Industries include petroleum, petrochemicals, fertilizers, caustic soda, textiles, cement and other construction materials, food processing (particularly sugar refining and vegetable oil production), ferrous and non-ferrous metal fabrication, armaments

Imports and Exports:

Exports: $95.09 billion (2008 est.)Exports - commodities: petroleum 80%, chemical and petrochemical products, fruits and nuts, carpets

Exports - partners: China 18.5%, Japan 15.4%, Turkey 6.9%, South Korea 6.8%, Italy 4.9% (2008)

Imports: $67.25 billion (2008 est.)Imports - commodities: industrial raw materials and intermediate goods, capital goods, foodstuffs and other consumer goods, technical services, Inhalation anaesthesia (Halothane, Isoflurane)

Imports - partners: China 13.5%, UAE 9.8%, Germany 9.1%, South Korea 6.1%, Russia 5.6%, Italy 5.1%, France 4.2% (2008)

C. Market conditions in IRAN

1. Existing demand: Out of the total demand for the category which was 200,000 bottles, Halothane had the highest share which is 180,000 bottles. The market share is 95% in the same category for the entire world.Current demand of Halothane in Iran is 40,000-45,000 bottles a year.

The life of the product is of 5 years

Market type is Tender 70% and Private 30%Number of hospitals- 20,000 More than 90% of the hospitals use HalothaneNumber of Surgeries- 150,000

Number of anesthesiologist- 400

Association- Iran Anesthesia Association

Halothane is included in the Insurance list and is also listed as one of the Dangerous Goods in the Exporting/Importing Items. Its one of the oldest molecules and has been tested, used over 45 years.Since the product has reached the end of Maturity stage in the market and is on a decline on the PLC, 5 hospitals are changing to Isoflurane per year- this is the internal objective of AssociationIsoflurane is in the market for the last 6 years where as Halothane has existed in the market for the last 45 years.

Piramal Healthcare is aiming at 20-25% conversion from Halothane to Isoflurane/ Sevoflurane.

In the market, generally semi closed/ closed type machine are to be found, 3000 anesthetic machine are old, recalibration is hence necessary. Imported machine cost 30k euro with vaporizer whereas local cost 12k euro which are bleez vaporizer.

There are in all 2000 Halothane vaporizer for which services are to be maintained at all times by the distributor. Service cost is $100 which includes material plus $50 service charges. Generally- Hospital service is included with machine.The product that is sold is pure but the artwork is different for all the markets. 2. Competition: There is no direct competition, though there are better quality substitutes that are available. About 6 to 7 years back the Iran market was completely Halothane market. In fact Piramal Healthcare produces a better molecule product for the same use which eats up in Halothanes market share. The competitions areIRAN ANESTHESIA MARKET

ProductMarket PotentialImport Price in $Hospital Price in $CompetitorsMarket Share

Halothane80,00013.1815.75Indirect100%

Isoflurane160000BaxterMinradPHL- 67%Baxter- 22%Minrad- 11%

Sevoflurane2000220300AbbottAbbott-100%

Thio- 1 gr6500001.4Sandoz

Thio- 0.5 g350,000.80Sandoz

Propofol300,000DongkookBaxter

PHL acquired Minrad this year. After this the market share of Piramal has gone up in Iran considerably but in Isoflurane category. 3. Strengths and weaknesses of the economy-barriers to entry, etc.: The following are the setbacks for PHL:

Iran is a very restricted country- Banking being the biggest obstacle. None of the banks in Iran are recognized in any European Country, United States, India, etc. So, inevitably getting money out is very difficult. In Iran everything works on U.S sanctions. Supplying to Iran is not difficult but getting Money out is difficult. The reason being they cannot open an L/C in India as none of the banks in India or U.S or U.K recognize any Iranian Bank like Bank Saderat, Bank Sepah, Bank Mellat, etc. So PHL has a tie up with an agent based out of Dubai which has an office in Iran. Clause in Ministry of Health: One cannot supply one product to two different distributors from the same site of manufacturing. So PHL operates through a distributor called Dareyan Trading Co. Ltd, which is very strong in the private market IV. Marketing decisions

A. Distribution strategies: 1. Direct exporting: Piramal follows an indirect selling method in Iran. They have a tie up with a distributor based from Dubai. So the letter of credit is opened at Dubai. PHL contacts the distributor/agent; an executive visits from PHL and finds out what is the demand in Iran. Once this is done, the order is placed. PHL gives an FOB or CIF shipment, the agent open an L/C in Dubai. The agent opens either a back to back L/C which is a little complicated due to the documents involved as PHL makes the documents according to the L/C given to it by the agent. After which the agent makes the changes in the documents according to the distributor- so there is a lag.Typically the transit of the product from India to Dubai takes 7 days and from Dubai to India takes 14 days (shipment). So the product reaches them in 20-25 days but the documents in back to back L/C take 40-45 days, hence the goods are lying at the port, the demurrages are being paid.

So what is done is the purchaser opens an L/C with the agent in Dubai and PHL works on it. The agent and PHL works on D/A terms, it is largely trust based.The following are the registered Agent and Distributor for Piramal Health Care Ltd. in Iran.

HalothaneAgent/ DistributorRegistrationSite of Manufacture

IPIYesEnnore

DareyanYESDigwal (Hyderabad)

Let us look at their functioning after the goods reach IRANIPI- Pasteur Institute ofIran(IPI) in cooperation withHealth Ministry

In IPIs case money comes after 8 months of delivery and the supply is from different site which is Chennai (keeping in mind the clause of MOH)In Iran, the influence of Key Opinion Leaders (KOL) makes a huge difference. If one can tap the top 10 influencers, the business will definitely do well. So convincing them is important.There is Corruption as its indirect form of selling.Dareyan Trading Co. Ltd

The sales force is also in charge of maintaining vaporizers which is the augmented product to have the core product in place. If this fails the competition comes in and acquires that customer.

Dareyan has a further network of local distributors who has the logistics in place to transit the goods further and identify the inventory stock in Hospitals and thereby supply where ever there is shortage.So the distribution flow looks like:

2. Documentation: The product explicitly says that Manufactured by Piramal Health care but distributed by Dareyan.

There is a sales promotion agreement, purchase order, artwork for Iran, draft of Agreement for the distribution and a copy of the license (Iranian Transactions Regulation from the department of the Treasury) as annexure to this report. Note: That some data was not shared with us by PHL which they have cut in those documents.

3. Direct investment, strategic alliances: Recently PHL acquired Minrad. B. Pricing strategy: It is Market Based. The import duties + clearance+ customs+ salaries and other expenses account for 21% for the agent, so PHC has to price it accordingly seeing the above mentioned factors for getting the product in Iran. After this the mark up comes in picture for the agent, distributor, sales force, hospital and then the end consumer. The Cost to Company was not disclosed to us, but in Iran market the 250ml bottle is charged at 11 euro to the agent. C. Promotion strategy: The Distributor takes part in Conferences, Seminars and Workshops. An Endorsement from Iran Anesthesia Association works all the way. Other promotion includes printed pamphlets, brouchers, gifts, service of the vaporizer and sometimes even the vaporizers are donated to Hospitals.Even the executives from PHL go to Iran for a more direct promotion, which is more like relationship manger.

Out of the 400 anesthesiologists in Iran- 10 are the President, Secretary, Vice President in the Iran Anesthesia Association who if convinced leads to great business.

D. Product strategy: Banks on the proposition of Fits all pockets V. Legal decisions

A. Agent/distributor agreements:

There is an agreement document with agents and distributors which has the following very important factors: Termination clause (in Piramals favor) Minimum Order Quantity (MOQ) has to be met always. Its on a 3 year basis, if the distributor does not meet the requirement for the two consecutive years, the distributor is terminated Ministry of Health states that one cannot supply to 2 distributors from the same plant site

A copy is attached in the annexure. B. Patent: Halothane is a generic product and is sold in the pure form. It is off patent for the last 45 years. It is not sold over the counter. C. Quality: The product is of good quality. It is certified by US FDA (United States) UK MHRA (United Kingdom) TGA (Australia) MCC (South Africa) D. Dispute resolution: The entire operation happens through a trust based relationship. But there have been certain disputes. For e.g. a year back there was a problem in the L/C opening. After the Purchase order was sent to PHL which then gets stamped, goes to the bank, notifies PHL of the inspection agency in India (Branch of Iranian inspection). At this point the Documents went missing, and during this time the L/C lapsed. But the sale was already made in PHLs books of accounts. This led to extending L/C for another 6 months.Till date there have been no big disputes and litigations. Resolving of issues happen amicably as it is a trust based process. VI. Manufacturing and operations

A. Location of production facilities for exports: Digwal, Hyderabad

B. Capacity of existing facilities: 500 tons of Halothane C. Certification: Audit by:

US FDA (United States) UK MHRA (United Kingdom) TGA (Australia)

MCC (South Africa)VII. Personnel strategies: Personnel needed to manage exports: PHL has dedicated Commercial teams working on different countries. The country managers visit Iran once in 6 months to discuss issues if any.VIII. Financial decisions: A document on the MIS (finances) which was shared with us has been attached as an annexure.The product Halothane is seeing a negative growth though it is still very high. The degenerating growth is about 15% as the product is in the decline phase now. The sale of Halothane

Year05-0606-0707-0808-09

Halothane110000-8900050000

IX. Secondary Market: Indonesia

With a population of almost 200 million people on 13,667 islands, Indonesia is the world's largest archipelago located between the continents of Asia and Australia, and between the Pacific and the Indian Oceans. Only 35% of the population live in urban areas, but there are more than 30 cities with 100,000+ populations. Plus, five cities have a population of over one million. They are Jakarta, Surabaya, Bandung, and Semarang, and are all located on Java.Although the population has a significant Malay heritage, it is also diverse with over 300 distinct cultures residing within its borders. With each culture comes a unique language or dialect; however Bahasa Indonesia, the common language of the country, unites everyone. In tourist areas and population centers English is the most commonly spoken second language. Though the large majority of Indonesians follow the Islamic faith (85%), the intensity of their observance for their faith varies due to the large diversity within this nation, Christianity a distant second (10%).

Economic Parameters:

Population growth rate- 1.136% (2009 est.)GDP (purchasing power parity)- $914.6 billion (2008 est.)

GDP - real growth rate: 6.1% (2008 est.) GDP - composition by sector: agriculture: 14.4%, industry: 48.1%, services: 37.5% (2008 est.)

Agriculture products include rice, cassava (tapioca), peanuts, rubber, cocoa, coffee, palm oil, copra; poultry, beef, pork, eggs

Industries include: petroleum and natural gas, textiles, apparel, footwear, mining, cement, chemical fertilizers, plywood, rubber, food, tourism

Imports and Exports:

Exports: 139.3 billion (2008 est.)

Commodities Exported: oil and gas, electrical appliances, plywood, textiles, rubber

Exports - Partners: Japan 20.2%, US 9.5%, Singapore 9.4%, China 8.5%, South Korea 6.7%, India 5.2%, Malaysia 4.7% (2008)

Imports: $116 billion (2008 est.)

Commodities Imported: machinery and equipment, chemicals, fuels, foodstuffs, Inhalation anaesthesia (Halothane, Isoflurane)

Imports - partners: Singapore 16.9%, China 11.8%, Japan 11.7%, Malaysia 6.9%, US 6.1%, South Korea 5.4%, Thailand 4.9% (2008)X. Market conditions in INDONESIA 1. Existing demand: 20,000 bottles in 2008-09HOSPITALS:

Approximately 1,274 hospitals (Indonesian Hospitals Association, an umbrella organization)

Government owned = 40.92%

Military organizations owned = 9.08%

Private companies = 50%

The extremely popular Indonesian Red Cross or commonly known as Palang Merah Indonesia is a non-profit organization that owns a general hospital in Bogor located in West Java

Indonesian Hospitals Association:

Works in collaboration with the government of Indonesia to promote national health care programs

Provides technical consultations in order to help the local hospitals to improve its management skills

Islamic Hospitals Foundation is the organization for Islamic hospitals of Indonesia.

IHA STRUCTURE:

Total Market value: $8.35 Million

2. Competition: Aventis had halothane last yr old stock which they were disposing off now Piramal is the only one in the market and hence a market leader in the molecule. There is no other company manufacturing this molecule. Hence no direct competition.But Isoflurane Baxter, Abbott, Minrad is eating up halothane market as they are better substitutes. PLC is towards a decline.3. Challenges include the lack of awareness among the Anesthetists about the availability of 3 molecules in the segment. XI. Marketing decisions

A. Distribution strategies1. Direct exporting: The Importer for Piramal Healthcare in Indonesia is Dexa Medica It is an established business. The appointed distributor (DEXA) is the market authorization (MA) holders. Nicolas team discusses the budget and stock situation with the Dexa purchase team -what is the order situation after discussing with domestic team as per the forecasts in Indonesia and send a PI- Dexa raises a purchase order in Nicolass name -Nicolas teams checks if the shipment terms ,payment terms are in place signs & sends after approval scanned copy for their records -Export team checks the time of arrival and volume of order- the export team sends the order at the factory as the art work is specific to the Indonesia market-Raises Sales order in SAP-Plant people label and send it to the port.DA mode of payment .Payment is made after 90 days of the shipment.

Laws are that the importer cannot directly be the distributor .There has to be another country distributor to supply to the Hospitals.

Exception:

But if a company registers itself and sets up office then it can carry on marketing activities.

E.g.

Abbott can market their product in the country as they have set up an office.

Dexa Medica has evolved from a small company established in 1969 to one of Indonesias largest ethical pharmaceutical companies at the beginning of the 21st century and has become a prominent, well-respected player in the domestic pharmaceutical market.

Providing better health care by applying expertise was the foundation on which its founders built this Company. Honesty, trust, dedication and commitment to providing patients with the highest quality of ethical pharmaceutical products are preserved as the guiding principles, based upon which the highly professional management team and the motivated, competent staff of Dexa have developed the Company in the spirit of mutual respect, teamwork and innovation over more than three decades.

Serving as a good corporate citizen is one of our responsibilities and being a strategic asset of Indonesia is one of our foremost desires. For along time Dexa has worked together with governing institutions and the Indonesian Pharmaceutical Association championing compliance and improving the industry standards.

Dexa had a contract with Rodia which was acquired by Piramal in 1995 hence the contract with Nicolas.A Typical Order Process in Indonesia:

Nicolas team discusses the budget and stock situation with the Dexa purchase team -what is the order situation after discussing with domestic team as per the forecasts in Indonesia and send a PI- Dexa raises a purchase order in Nicolass name -Nicolas teams checks if the shipment terms ,payment terms are in place signs & sends after approval scanned copy for their records -Export team checks the time of arrival and volume of order- the export team sends the order at the factory as the art work is specific to the Indonesia market-Raises Sales order in SAP-Plant people label and send it to the port.

2. Documentation: Its on the D/A system. Largely trust based.B. Pricing strategy: $80-$100 per bottleC. Promotion strategy: The distributor is also a sister concern of Dexa which markets the product by participating in symposiums and conferences. Networking with Key Opinion Leaders and Focused Anesthetists., New Vaporizer Installations in Key Hospitals, CME at all levels & build relationship with Paramedics.

D. Product strategy: Positioned as Fits all pocketsXII. Legal decisions

A. Agent/distributor agreements: There is an agreement document with agents and distributors which has the following very important factors:Termination clause (in Piramals favor) Minimum Order Quantity (MOQ) has to be met always. Its on a 3 year basis, if the distributor does not meet the requirement for the two consecutive years, the distributor is terminated.B. Patent: Halothane is off patentC. Quality: The product is of good quality. It is certified by US FDA (United States)

UK MHRA (United Kingdom)

TGA (Australia)

MCC (South Africa)D. Dispute resolution: The framework is trust based, so any dispute which occurs is resolved amicably. XIII. Manufacturing and operations

A. Location of production facilities for exports: Digwal, Hyderabad

B. Capacity of existing facilities: 500 tons of Halothane

C. Product modification necessary to adapt to local environment: Only the artwork is changed.XIV. Personnel strategies: Personnel needed to manage exports: Piramal has a dedicated Commercial team who focus on each country.The country managers, an executive from Piramal visit Indonesia once in 6 months to discuss issues and survey the market.XV. Financial decisions: Drug Price Components (Assumption based)Mark up CostAssumptionsAssumptions

The manufacturers

selling price (bases) $ 100$ 100

Distributor

(In this case, it includes sub-distributor margin. This may go as high as 40%)Profit Margin

5% 20 %5%5

----------

10520%20

--------

120

VAT 10%10% 10.50

--------

115.50 12

---------

132

Retail pharmacies

and hospitals VAT 10%10% 11.55

---------

127.05 13.20

------------

145.20

Profit Margin 20% 35 %20%25.41

----------

152.4635%50.82

-----------

196.02

Dispensing fee Small fixed amount

The prices that customer have to pay$ (152.46 196.02) + dispensing fee

There has been 20% de-growth in the Halothane sales due to maturity- decline phase. XVI. Annexure (All Iran)1) Purchase Order

2) Distribution Agreement

3) Office of Foreign Assets Control (OFEC)- Iranian Transactions Regulations

4) Sales Promotion Agreement

5) MIS Finances1 | Page