Zim Pharma

CHAPTER 1

INTRODUCTION

TO

THE STUDY

Page No.1

1.1 INTRODUCTION

Prevalent from the birth of mankind, man involved himself in one or another business

through sole proprietorship and partnership form of business. But these forms appeared to

be less perpetual, because of unlimited liability and affections by natural factors viz

death, insolvency or lunacy of the owner or partners. Then company form of organization

came into existence which changed the ‘populi’ view of doing business.

An organization is defined as “a consciously coordinated social unit composed of

two or more people that functions on a relatively continuous basis to achieve a common

goal or set of goals”. In other way round it can also be defined as “a form of every human

association for the attainment of a common purpose or goal”. Thus in a way the term

organization emphasizes upon “the human groupings/associations and whose main

objective is to meet certain predefined goals that may vary from profit motive to serving

the society as well as the nation”.

An organizational study is the study of individual and group dynamics in an

organizational setting, as well as the nature of the organizations themselves. Whenever

people interact in organizations, many factors come into play. Organizational studies

attempts to understand and model these factors.

Being a part of the curriculum under 2 years MBA program, we got the

opportunity to carry out one such organizational study in a large cap public company.

The objective of this study was to enjoin the students with the functioning of the

organization, as also of its departments.

The main aim of the organizational study is to acquire the knowledge regarding

the functional as well as the management aspects of an organization, and its sustainability

towards achieving its mission, vision and values set for growth.

1.2 TITLE OF THE STUDY

Organisation study on “ZIM LABORATORIES LIMITED”

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1.3 OBJECTIVES OF THE STUDY

To know about the market structure within which the organization is a player.

To know about the market share and share of competitors.

To understand key issues in strategy deployment like mission, vision, goals,

objectives etc.

To study the organizational administrative structure.

To understand as to how different functional areas of an organization work

together to achieve common objective of the firm.

To study key business levels functions and process like Marketing, Finance,

HR, Operations, etc.

1.4 SCOPE OF ORGANISATIONAL STUDY

The study focuses on the overall structure of the organization. In this study, the

researcher analyzed the overall functioning of the firm and also the financial performance

of the enterprise. The researcher made a moderate attempt to have the SWOT analysis of

the study. The researcher also experienced practical application of the theoretical

knowledge gained

1.5 LIMITATIONS of the Study

As the project is prepared for the academic purpose only, it suffers from the

limitation of time, due to which the detailed report about the operations of the

organization was not possible.

The information given by the persons may not be complete because of their busy

work schedules

The report suffers from the limitation of meeting only the departmental heads

because of lack of permission to interact with other people.

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Certain areas are restricted, so a detailed study is not possible.

1.6 METHODOLOGY used for Organization study

Primary Data1. Personal Interview - There were interview sessions with each of the functional

heads, and there was a questionnaire that was followed as questions which were

asked depending upon situations.

2. Observation - There was a keen sense of observation followed during the study

period to follow the various functions of the company.

Secondary Data1. Internal Data - This includes data provided at the company’s office, like

Organization structures, Balance sheet, Annual reports etc.

2. External Data - It includes organization data derived from internet, and other

information media that gives a wide picture of the Organization with respect to the

external world.

Schedule time frameTime period: 25 days (17-10-09 to 14-11-09)

Data collection: 7 days (22-10-09 to 28-10-09)

Data analysis: days ( -11-09 to -11-09)

Report preparation: days ( -11-09 to -11-09)

Submission of report: 14-11-09

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CHAPTER 2

INTRODUCTION

TO THE

PHARMACEUTICAL INDUSTRY

Page No.5

2.1 INTRODUCTION

The pharmaceutical industry develops, produces, and markets drugs licensed for use

as medications. Pharmaceutical companies can deal in generic and/or brand medications.

They are subject to a variety of laws and regulations regarding the patenting, testing and

marketing of drugs.

The earliest drugstores date back to the Middle Ages. The first known drugstore

was opened by Arabian pharmacists in Baghdad in 754, and many more soon began

operating throughout the medieval Islamic world and eventually medieval Europe. By the

19th century, many of the drug stores in Europe and North America had eventually

developed into larger pharmaceutical companies.

Most of today's major pharmaceutical companies were founded in the late 19th

and early 20th centuries. Key discoveries of the 1920s and 1930s, such

as insulin and penicillin, became mass-manufactured and distributed. Switzerland,

Germany and Italy had particularly strong industries, with the UK, US, Belgium and the

Netherlands following suit.

Legislation was enacted to test and approve drugs and to require appropriate

labeling. Prescription and non-prescription drugs became legally distinguished from one

another as the pharmaceutical industry matured. The industry got underway in earnest

from the 1950s, due to the development of systematic scientific approaches,

understanding of human biology (including DNA) and sophisticated manufacturing

techniques.

Numerous new drugs were developed during the 1950s and mass-produced and

marketed through the 1960s. Cancer drugs were a feature of the 1970s. From 1978, India

took over as the primary center of pharmaceutical production without patent protection.

By the mid-1980s, small biotechnology firms were struggling for survival, which led to

the formation of mutually beneficial partnerships with large pharmaceutical companies

and a host of corporate buyouts of the smaller firms. Pharmaceutical manufacturing

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became concentrated, with a few large companies holding a dominant position

throughout the world and with a few companies producing medicines within each

country.

2.2 GLOBAL SCENARIO

Global Pharmaceuticals Market

1. Size of the global pharmaceutical market was US$ 602 bn. The market has grown

at a CAGR of nearly 11% during 1998-2005.

2. The pharmaceutical markets worldwide can be classified as Regulated, Semi

Regulated and Non Regulated markets.

a. The regulated markets constitute 88% of the global pharmaceutical market.

b. The semi and non regulated markets of Asia, Africa, Australia and Latin

America have been growing at a rapid pace (registering double digit growth in

2005) highlighting the tremendous market potential of these regions.

Global Sales 2005 : US$ 602 billion

The top 10 Pharma companies are facing prospects of slowdown in sales as a large

number of blockbuster drugs that they possess are going off patent.

According to McKinsey & Company report (“India Pharma 2015), the following trends

are expected to influence the growth of the Indian pharmaceuticals market over the next

decade: doubling of disposable incomes and the number of middle-class households,

expansion of medical infrastructure, greater penetration of health insurance, rising

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prevalence of chronic diseases, adoption of product patents, and aggressive market

penetration driven by the relatively smaller companies.

Top 14 Pharmaceuticals Markets, 2005 Top 14 Pharmaceuticals Markets, 2015

US $ billion US $ billion

2.2.1 STRATEGIES ADOPTED BY GLOBAL MARKET PLAYERS

Generic Exports

The global generics market is expected to continue growing rapidly due to the

underlying demand drivers like an aging global population, growing healthcare

expenditure and low generic penetration across large geographical areas.

Currently the Indian industry is estimated to account for 22% of the world generics

market which is expected to reach 30% according to the forecasts of Assocham.

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USA , the largest generics market globally, is also the single largest export market for

Indian generics. The Japanese market is poised to become an important destination

for many global generic players with the introduction of generic substitution in 2006.

Low production costs give India an edge over other generics-producing nations,

especially China and Israel .

CRAMS

Rising pricing pressure on global revenues and falling trend in R&D productivity is

making it imperative for global pharma players to increase outsourcing to sustain

profitability.

Custom manufacturing operations in India or China offer unparalleled cost

advantages and increasing pricing pressures is forcing innovators to minimize

manufacturing costs and shift operations to India and China .

Indian custom manufacturing players have been aggressively acquiring custom

development companies in the EU in order to gain access to a wide gamut of valuable

client relationships, which would have been difficult to obtain otherwise.

India is also an apt destination for outsourcing of research services due to its large

population with relative underexposure to drugs, significant cost advantage and the

availability of well qualified investigators.

2.3 INDIAN SCENARIO

“The Indian pharmaceutical industry is a success story providing employment for

millions and ensuring that essential drugs at affordable prices are available to the vast

population of this sub-continent.”

Richard Gerster

Pharmaceutical Industry in India is one of the largest and most advanced among the

developing countries. It provides employment to millions and ensures that essential drugs

at affordable prices are available to the vast population of India. Indian Pharmaceutical

Industry has attained wide ranging capabilities in the complex field of drug manufacture

and technology. From simple pain killers to sophisticated antibiotics and complex cardiac

compounds, almost every type of drug is now made indigenously.

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Indian Pharma Industry is playing a key role in promoting and sustaining

development in the vital field of medicines. Around 70% of the country's demand for

bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules,

orals and vaccines is met by Indian pharmaceutical industry. A number of Indian

pharmaceutical companies adhere to highest quality standards and are approved by

regulatory authorities in USA and UK. 

Indian pharmaceutical industry is undergoing fast paced changes. The Indian

Generics market is witnessing rapid growth opening up immense opportunities for firms.

This is further triggered by the fact that generics worth over $40 billion are going off

patent in the coming few years which is close to 15% of the total prescription market of

the US.

The Indian pharmaceutical companies have been doing extremely well in

developed markets such as US and Europe, notable among these being Ranbaxy, Dr.

Reddy’s Labs, Wockhardt, Cipla, Nicholas Piramal and Lupin. The companies have their

strategies in place to leverage opportunities and appropriate values existing in

formulations, bulk drugs, generics, Novel Drug Delivery Systems, New Chemical

Entities, Biotechnology etc.

The Indian pharmaceutical industry registered strong growth during the Ninth and

Tenth Five Year Plan periods and has emerged as an area of strength especially in

generics. The adoption of world-class patent laws for pharmaceutical products w.e.f. 1

January 2005, pursuant to the obligations under the WTO Agreement, has not dampened

the robust growth but has improved the overall IPR environment. The turnover of the

industry was Rs.72000 crore during 2006-07, having risen more than 12times since 1990.

India has become one of the leading global players, holding fourth position in terms of

volume and thirteenth position in terms of value of production. Exports have also grown

significantly to over Rs.24942 crore in 2006-07 accounting for as much as 34% of the

turnover.

The industry has thrived so far on reverse engineering skills exploiting the lack of

process patent in the country. This has resulted in the Indian pharmaceutical players

offering their products at some of the lowest prices in the world. The quality of the

products is reflected in the fact that India has the highest number of manufacturing plants

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approved by US FDA, which is next only to that in the US. Multinational companies

have traditionally dominated the industry, which is another trend seeing a reversal.

Currently, it is the Indian companies which are dominating the marketplace with

the local players dominating a number of key therapeutic segments. The market is also

very fragmented with about 30,000 entities and the organized sector consisting of about

300 entities. Consolidation is increasing in the industry with many local players building

a global outlook and also growing inorganically through mergers and acquisitions.

The Key to success in this industry is research & development. R&D is the

starting of the industry value chain and is also the most important value creator.

Companies that involve in R&D do so in specific areas. They chose specific therapeutic

areas to target based on their strengths in the market, and the commercial potential.

Kinds of Research :

1. Basic R & D

2. Process Research & Reverse Engineering

3. Analogue or Discovery Research

4. Biotechnology Research

5. NDDS(New Drug Delivery System) Research

2.3.1 Advantage India

(i) Competent workforce: India has a pool of personnel with high managerial and

technical competence as also skilled workforce. It has an educated work force

and English is commonly used. Professional services are easily available.

(ii) Cost-effective chemical synthesis: Its track record of development,

particularly in the area of improved cost-beneficial chemical synthesis for

various drug molecules is excellent. It provides a wide variety of bulk drugs

and exports sophisticated bulk drugs.

(iii) Legal & Financial Framework: India has a 58 year old democracy and

hence has a solid legal framework and strong financial markets. There is

already an established international industry and business community.

(iv) Information & Technology: It has a good network of world-class educational

institutions and established strengths in Information Technology.

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(v) Globalization: The country is committed to a free market economy and

globalization. Above all, it has more than 70 million middle class market,

which is continuously growing.

(vi) Consolidation: For the first time in many years, the international

pharmaceutical industry is finding great opportunities in India. The process of

consolidation, which has become a generalized phenomenon in the world

pharmaceutical industry, has started taking place in India.

2.4 TOP 10 MARKET PLAYERS IN PHARMA INDUSTRY

1. Ranbaxy Laboratories(2007 Turnover – Rs.251.96 bn)

2. Dr.Reddy’s Laboratories (2007 Turnover – Rs.41.622 bn)

3. Cipla (2007 Turnover – Rs.37.637 bn)

4. Sun Pharma Industries (2007 Turnover – Rs.24.635 bn)

5. Lupin Labs (2007 Turnover – Rs.22.155 bn)

6. Aurobindo Pharma (2007 Turnover – Rs.20.801 bn)

7. Glaxo SmithKline Pharma(2007 Turnover – Rs.17.734 bn)

8. Cadilla Healthcare (2007 Turnover – Rs.16.13 bn)

9. Aventis Pharma (2007 Turnover – Rs.9.838 bn)

10. Ipca Laboratories (2007 Turnover – Rs.9.804 bn)

2.4.1 THE STRATEGIES ADOPTED BY MARKET PLAYERS

Business Strategies followed by Indian Pharmaceutical Companies

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Indian Pharmaceutical sector is highly fragmented with more than 20,000 registered units

and is very top heavy. The leading 250 pharmaceutical companies control 70% of the

market with market leader holding nearly 7% of the market share.

There are also 5 Central Public Sector Units that manufacture drugs. These units

produce complete range of pharmaceuticals, which include medicines ready for

consumption by patients and about 350 bulk drugs, i.e., chemicals having therapeutic

value and used for production of pharmaceutical formulations. India is largely self-

sufficient in case of formulations.

More than 85% of the formulations produced in the country are sold in the domestic

market. Some life saving, new generation under-patent formulations are imported, by

MNCs, which they market in India. Over 60% of India's bulk drug production is exported

and the balance is sold locally to other formulators. 

2.4.2 DISCOVERY R & D IN INDIA

The Indian industry has attained cost advantages in process research used for generic

drugs & value added generics production, which accounts for 60-80 percent of total sales.

This cost advantage is in the fact that:

- Most infrastructure facilities are much cheaper in India than in developed countries.

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- Indian scientists can be attracted at much cheaper rates than their US counterparts.

The more value added basic research methodologies are being pursued by very

few players like Ranbaxy, Biocon & Dr. Reddys who are willing to take the risk of

investing millions in building research capabilities and developing molecules. In the

absence of product patents, Indian companies ignored basic research and concentrated

their R&D efforts toward producing drugs through alternative processes. Consequently,

total expenditure on R&D was low (multinational pharmaceutical players spend about

13-16% of total sales on R&D).

Investments made in R&D by the Indian pharmaceutical companies would yield

3-4 molecules a year, which is a very small number. There is very little private initiative

to invest in R&D. The government continues to bear the burden, with industry chipping

in with 10% to 12%. This also evident in the data of patent granted in the country where

the top firms granted patents are mostly MNCs. Indian industry instead mastered the art

of reverse engineering to gain competitive advantage, as the industry structure did not

provide incentives to invest in basic research.

Indian firms have invested very little in R&D in India due to:

- Lack of Product Patent protection: The delayed adoption of TRIPS in India is cited as

the major impediment to the possible investment by international companies in India.

- Inadequate profit base: The price control has squeezed the profit margins making it

difficult for Indian and international companies to cull out and invest sizable sums in

R&D. The profitability of Indian companies is also much lower than international levels.

The pre-tax profit margin of pharmaceutical companies in India is much less than 6% on

sales in sharp contrast to the 18% profit margins common to international companies.

2.4.3 CHANGING SCENARIO OF INDIAN R&D

The acceptance of provisions of the agreement on TRIPS is expected to change the

orientation of Indian companies towards R & D. Indian companies have started investing

in complex R & D activities like novel drug delivery system and new drug discovery. The

advantages of conducting R & D in India are given below:

- Lower costs: R&D expenditure in India is far lower than in the developed countries.

The cost differentials are due to lower costs in machinery and human capital. The cost

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advantages can only be exploited if the necessary funds required can be sourced.

Following India’s acceptance of the provision of Trade Related Intellectual Property

Rights (TRIPS) under the GATT agreement, investments are expected to start flowing

into the area of basic research.

- Population advantages: A larger population base would facilitate clinical trials for

diseases especially prevalent in developing countries. Indian R&D efforts could be

directed towards infectious diseases that are especially prevalent in Asian countries. Such

R&D activities will be targeted towards segments such as antibiotics, anti-parasitics and

other anti-bacterials.

2.5 PEST ANALYSIS

An organisation’s success is influenced by factors operating in it’s internal and external

environment; an organisation can increase it’s success by adopting strategies which

manipulate these factors to it’s advantage. A successful organisation will not only

understand existing factors but also forecast change, so that it can take advantage of

change within the environments in which it operates.

• Pest Factors – These are external forces which the organisation does not have direct

control over these factors. PEST is an acronym and each letter represents a type of factor

(Political, Economical Social and Technological).

• Micro environmental factors – These are internal factors, which the organisation can

control.

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Diagram: PEST analysis and the marketing mix.

POLITICAL FACTORS ANALYSIS

It is the first element of the study of PEST Analysis. Pharmaceutical Industry in India has

been de-licensed and industrial licensing for most of the drugs and pharmaceutical

products has been done away with. Manufacturers are now free to produce any drug duly

approved by the Drug Control Authority. Indian pharmaceutical industry got a major

boost with the signing of General Agreement on Tariffs and Trade in January 2005 with

which India began recognizing global patents. Besides the industry is also subjected to

provisions under the TRIPS. The application of provisions relating to Minimum Wages

Act, Factories Act 1948 and allied labour and industrial laws also affect the working in

the industry, since the players have to function within the desired provisions. Non

conformance with these legislative obligations can lead to sanctions such as fines,

adverse publicity and imprisonment in certain cases. Ineffective voluntary codes and

practices will often lead to governments introducing legislation to regulate the activities

covered by the codes and practices.

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The pharmaceutical industry has thrived so far on reverse engineering skills exploiting

the lack of process patent in the country.

ECONOMIC FACTORS ANALYSIS

The second element of a PEST analysis involves a study of economic factors.

All businesses are affected by national and global economic factors. National and global

interest rate and fiscal policy will be set around economic conditions. The climate of the

economy dictates how consumers, suppliers and other organisational stakeholders such as

suppliers and creditors behave within society.

The top 10 Pharma companies are facing prospects of slowdown in sales as a large

number of blockbuster drugs that they possess are going off patent. Besides there have

been a number of regulatory developments since 2005, which includes implementation of

VAT, a shift in excise duty levy to MRP based levy and the enactment of product patent

regime.

The rural markets grew by over 40 percent during the calendar year 2006. The higher

growth in acute therapy segments – pain/ analgesics and Anti-Infectives can be attributed

to the fact that epidemics (dengue & chikungunya) were more prominent in rural areas.

Prevalence rates of key chronic diseases in India    Percent of population

Looking at the recession period and in order to lower labor costs and savings in

manufacturing costs, several Indian pharmaceutical companies have acquired companies

in the US and Europe and many others are raising funds to do so. For example, Ranbaxy

acquired Romania's Terapia, Ethimed NV of Belgium and GSK's generic business Allen

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SpA in Italy. Dr Reddy's acquired German generic drug maker Betapharm. Companies

like Glenmark Pharma, Lupin, Aurobindo and Jubilant Organosys are on the lookout for

lucrative acquisitions.

SOCIAL FACTORS ANALYSIS

The third aspect of PEST focuses its attention on forces within society such as family,

friends, colleagues, neighbours and the media. Organisations must be able to offer

products and services that aim to complement and benefit people’s lifestyle and

behaviour. If organisations do not respond to changes in society they will lose market

share and demand for their product or service.

Indian people, to a great extent, are becoming health conscious. Gone were the days

when medicines and herbs used to be purchased based on monetary factor. The standard

of living of people has increased to a great extent, and they desire to spend more for

maintaining their health and status. A number of pharmaceutical companies have

therefore come out with such drugs and syrups, that will help people to maintain health

and be happy, ex.Revital. Besides the growing population of India, also provides ample

market place for the pharmaceutical companies to diversify their selling area.

The companies have also to a great extent been able to change the philosophy of timid

Indian towards spending on medicines through aggravating marketing advertisements.

Here to, doctors and physicians play an important role in furthering the advantages of

medicines.

TECHNOLOGICAL FACTORS ANALYSIS

The last element in the PEST study is the analysis of technological factors, which

includes the machinery, software and hardware equipments used in information exchange

system and in managing the business.

A distinguishing feature of the pharmaceutical industries in India is the large scale

investment by big pharma companies in the research and development. According to

industry statistics at global level, only about one in ten thousand chemical compounds

discovered by pharmaceutical industry researchers proves to be both medically effective

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and safe enough to become an approved medicine, and about half of all new medicines

fail in the late stages of clinical trials.

Leading Indian companies have started to look beyond generics and are investing in

discovery R&D (NCE/ NDDS research) for sustainable long term growth. The discovery

R&D pipeline of Indian pharma players has been seeing a steady build up over the years.

Technology has created a society which expects instant results. This technological

revolution has increased the rate at which information is exchanged between

stakeholders. A faster exchange of information can benefit businesses as they are able to

react quickly to changes within their operating environment. However an ability to react

quickly also creates extra pressure as businesses are expected to deliver on their promises

within ever decreasing timescales.Company Overview of discovery R&D programme

Dr Reddy's Labs2 NCEs in Phase II and another 4 NCEs in Phase I along with a significant number of pre-clinical candidates. Also partnering with innovative companies on specialty drugs; has a very strong biogenerics programme

Sun Pharma One NCE in Phase II trials in USA ; Also focused on 3 other NCE projects and 4 very promising NDDS platforms

Ranbaxy Has out-licensed a novel statin to PPD ; Has 1 Malaria NCE in Phase II

Biocon Conducting clinical trials on Oral Insulin and Monoclonal Antibody for inflammation Has launched another Monoclonal Antibody for head and neck cancer

NPIL Has 1 oncology NCE in Phase II and plans to have 7-8 NCEs in clinical trials over the next few quarters

Lupin Conducting phase II trials on the anti-psoriasis NCE

Glenmark Has out-licensed 2 of its NCEs to global pharma companies

2.6 PORTER’S FIVE FORCES ANALYSIS

The most influential analytical model for assessing the nature of competition in an

industry is Michael Porter's Five Forces Model, which is described below:

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Figure: Porter’s Five Forces Model for Industry Analysis

Porter explains that there are five forces that determine industry attractiveness and long-run industry profitability. These five "competitive forces" are:

The threat of entry of new competitors (new entrants) The threat of substitutes The bargaining power of buyers The bargaining power of suppliers The degree of rivalry between existing competitors

Threat of New Entrants

New entrants to an industry can raise the level of competition, which may cause in

reducing its attractiveness. The threat of new entrants largely depends on the barriers to

entry. In Pharmaceutical industry it is easy to enter but talking about Products it is tough

because it depend on the reliability of customer. Key barriers to entry include

In industry Economies of scale is very slow because it take time to achieve to

customer loyalty and whole growth is dependant on the loyalty factor only.

For new entrants, it’s a very big challenge to establish business because heavy

amount of capital and investment is required.

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Distribution of drugs and vaccines plays a major role with out which it is not

possible for manufacturer to reach prospective customers. The New entrants find

it difficult to cope up with this problem.

We can also infer here the entry of consolidated/amalgamated corporates or newly

acquired organization, which are generally taken up by already substantiable

organizations. These type of co-existence also affects to a great extent the functioning

of small and medium scale organizations. Recent acquisition of Ranbaxy by Daiichi

Sankyo will not only help Daiichi to strengthen its roots in the Indian Pharmaceutical

industry, but will affect the market share of other pharmaceutical organizations also.

Threat of Substitutes

The presence of substitute products in pharmaceutical industry can lower industry

attractiveness and profitability because they limit price levels. The threat of substitute

products depends on:

● In pharmaceutical industry, once competitor gets customer reliability(loyalty), it’s

difficult thereafter to divert customer mind to other substitutes.

● In pharmaceutical industry, price plays a major role and it’s totally dependant on

market price of the goods i.e. substitutes price. The relative price and performance

of substitutes affects the usage of the organizations drugs.

Bargaining Power of Suppliers

Suppliers are those business houses that supply raw materials & other products to the

industry, which go a long way in manufacturing the product.

The cost of items bought from suppliers (e.g. raw materials, components) can have a

significant impact on a company's profitability. Supplier is said to have high bargaining

power where the product sold by him has no substitute or even very close substitute.

If suppliers have high bargaining power over a company, then in theory the company's

industry is less attractive. The bargaining power of suppliers will be high when:

➢ In an industry there are many buyers and few suppliers. But in pharmaceutical

industry there are many buyers and many suppliers so bargaining power over a

company is not much. This factor may apply to new entrants in industry.

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➢ The industry is not a key customer group to the suppliers. Pharmaceutical

industry is the key customer to the supplier because for suppliers other buyers

are few.

Pharmaceutical companies that offer patented drugs with distinctive medical benefits

have more power over hospitals, health maintenance organizations, and other drug buyers

than those drug companies offering generic (non-patented) products.

Bargaining power of Buyers

Powerful customers – the flip side of powerful suppliers – can capture more value by

forcing down prices, demanding better quality or more service (thereby driving up costs),

and generally playing industry participants off against one another, all at the expense of

industry profitability. But in case of pharmaceutical industry, if we talk of retail buyer,

then he can be said to have low or no bargaining power in case of necessary drugs or

vaccines. In case of Industrial buyers, they can be said to have a moderate bargaining

power, since it is a business to business market and the buyer here are the wholesalers,

who can force the organization to produce only such class of drugs or vaccines which is

more popular among their potential customers. But this situation varies in case of drugs

of extreme necessity viz. cancer drugs, where there can be no expectation of bargaining

by the buyers against the manufacturing industries.

Rivalry among existing competitors

Rivalry among existing competitors takes many familiar forms, including price

discounting, new product introductions, advertising campaigns, and service

improvements. High rivalry limits the profitability of an industry. The degree to which

rivalry drives down an industry’s profit potential depends, first, on the intensity with

which companies compete and, secondly, on the basis on which they compete.

In pharmaceutical industry, the intensity of rivalry is very high because there are

more than 20000 registered units, more or less on an equal size and out of which

about 250 are big pharma companies controlling 70% of the market share.

Despite the exit barriers, small pharma companies find it profitable to remain on

track, and progress through R & D.

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Big pharma companies in India are competing on the basis of R & D facility and

through scheme of new drugs and vaccines.

Such degree is very much required between the players in the pharmaceutical

industry, because they are also the provider of great employment opportunities in

urban as well as rural sectors.

Overall, the pharmaceutical industry shows an upward trend in its core markets. The

industry remains highly valued, has a favourable market position with strong financial

make-up and strong earnings growth. Its future potential demand trend is positive and

despite increased competition the industry still shows a continuing upward growth

momentum. The forecast of the leading 16 pharmaceutical companies for 2001 to 2007

suggests that combined sales will grow at a minimum rate of 5.2 percent based on the

potential of their product pipeline.

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CHAPTER 3

COMPANY PROFILE

3.1 BACKGROUND AND HISTORY

The Pharmaceutical sector is one where trends and technologies are in a state of flux.

New breakthroughs in the world & Healthcare occur at a hectic pace. This demands for

expertise & skill to stay ahead. Zim Laboratories Limited exemplifies an organization

displaying these very traits.

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The organization has been established under the shelter and support of Universal Group

of Pharmaceutical Companies, one of the leading pharmaceutical group in central India.

ZIM has made a significant mark as a maverick pharma innovator, constantly penetrating

newer areas of pharmaceutical business & technology, and successfully demonstrating its

commitment to its Missions & Goals.

Headquartered & set-up in the industrial belt of Nagpur City of Central India,

ZIM has established itself as one of the preferred  healthcare solution providers in the

field of  New Drug Delivery Systems (NDDS). ZIM & Associates are supported by

excellent technical team & sufficient capacity to produce large requirements for different

market segments.

ADDRESS Of Corporate Office and Works Place

Corporate Office Works

545, Shantinagar, B-21/22, MIDC Area,

Nagpur – 440002. Kalmeshwar – 441501.

E-mail : [email protected] E-mail – [email protected]

[email protected] Website – www.zimlab.in

3.1.1 Accomplishments

Felicitation of Mr. Zakir S.Vali, Chairman, by Award of Udyog Patra, but the

Deputy Chairman, Planning Commission of India, for being an Eminent

Industrialist.

Felicitation for contributing to Industrialization and other important, areas to

Mr.Anwar S.Daud, Managing Director by Central Institute of Business

Management Research & Development, India.

Award of the Best Managed Industry by D.I.C.(Govt.of Maharashtra, India).

The facilities provided by the organization are WHO CMP, certified by Food and

Drugs Administration, India.

Registration as vendor by Ministry of Defence (Director General Quality

Assurance), Govt.of India.

Page No.25

The organization’s systems and documents are in conformance with the ISO

9001:2000 Standards accredited by AQA of USA.

ZIM & its Associate Companies are engaged in the activities of manufacturing,

distribution & marketing of pharmaceuticals in Allopathic & Herbal categories

encompassing almost every dosage form, including Tablets, Capsules, Dry Syrups,

Liquid Orals, External Preparations, SVPs (Injectables), Ointments, Powders, etc.

ZIM has pioneered several innovative technologies & products particularly in the

spheres of Pellets, Multiplets, Resinates, Herbals & Diagnostics. Multiparticulates &

Modified Release Oral Solid Dosage Forms have been identified as a thrust area & key

formulations developed. The wide appreciation for its quality and prompt services to

clients, have ensured a strong presence in the domestic markets, as well as in

the international markets.

The Independent and well - organized Business

Development Department at this organization is in a

position to offer customer support from conception to

product delivery in a strict schedule and provides

services ranging from product development, packaging

development and design, material sourcing assistance

and developments of products based on client's specifications.

3.1.2 The Core Principles of ZIM

The organization articulates its understanding of market, customers, its products

and services through following six core principles :

Page No.26

• UNDERSTANDING markets & Customers

• DESIGN Products & • MARKET & SELL Services. Products & Services

• PRODUCE Products & • DELIVER Products & Services. Services.

• PROVIDE Customer Service.

3.2 MISSION AND VISION

3.2.1 MISSION STATEMENT

“We will exploit our Zeal for Excellence and Spirit of Innovation in the field of Medicine

to ensure our position as a premier pharmaceutical manufacturing

organization specialized in......

• Niche Products and Markets.

• Original Research based Herbals for Chronic aliments.

• Biotechnology based Products & Processes.

....... thereby contribution to make available of High Quality Affordable Healthcare for

the common man and meeting our Obligations to our Employees, Investors and the

Shareholders.”

3.2.2 VISION STATEMENT

"Making Quality Healthcare Affordable"

Page No.27

“We believe that the pharmaceutical business is today poised for a great leap forward.

tryly innovative technologies with the potential to change the nature of human health &

longevity have already appeared and each day brings better & better innovations. There

is a desperate need for solutions that emerge out of these innovative technologies to

reach the common man at an affordable cost so that these benefits do not remain

accessible only to the rich and affluent sections of society.

Ever changing regulatory guidelines, advances in drug therapy & delivery systems, drug

industry Mergers Acquisitions, globalization & evolving market such as those for

nutritional supplements, old-age & alternative therapy medicines pose challenge to every

pharmaceutical organisation to manage and accelerate the drug development process.

We at ZIM, aspire to play a significant role in making the fruits of such technologies

available as affordable healthcare solutions, teaming with like-minded associates in the

pharmaceutical technology business, aiming for Customer Satisfaction, while respecting

the rights of others.

Uniquely positioned to provide expertised drug delivery systems, we support our own &

customer's objectives with specialized formulations to reach the market faster & easier

than ever.

We are committed towards providing our national & international clients an easy &

timely access to sophisticated process technologies & products, give value for money, &

to offer our customers innovative & exclusive quality products that differentiate them

from their competitors & significantly impacts their bottom-line.

That's why, every day we continue to put our Zeal for Excellence and Spirit of Innovation

into all our actions.”

3.2.3 GOALS AND THE VALUE DRIVEN CULTURE

The following best explains the corporate philosophy which ZIM percolates through the

entire organization and hence forms the core :-

Page No.28

Pursuing Excellence through Continuous Innovations.

Striving for Customer’s Satisfaction through all their actions.

Transacting business with Integrity & Transparency.

Respecting the Rights of all Stake-holders & Associates.

Aspiring for a Responsible Corporate Citizenship through our regard for

Environment, promotion of Education, and contribution towards Disease-free

Humanity in constant harmony and Peace.

3.3 SWOT ANALYSIS

Strengths

1. Making Innovative Products

ZIM is very much involved in the production of novel allopathic drugs. For this

purpose and to serve an industry that is rapidly changing, ZIM has assembled a

team of researchers, scientists and technical personnel with competence and

experience to provide the following varied range of services :

(i) Development and validation of formulations

(ii) Analytical development i.e. customizing testing to meet client

specifications through time-valued and cost effective tests at their

facility.

(iii) Performing and monitoring stability testings based on ICH guidelines.

The management very well believes in producing new drugs and vaccines that

will help in the control of diseases.

2. Less through-put time

ZIM has mastered the strategy of involving less time in meeting up with the order

of the clients. This is because of the sophisticated machinery and the great

endeavor taken by the Business Development Department towards fulfilling the

orders of the clients. Less through–put time ensures the organization to cope up

with the future orders and also ensures to maintain quality of the medicines and

the drug processes.

Page No.29

3. Quality drugs and processes

There is production of drugs and vaccines that meet more than upto the

expectations of the clients. Moreover, facilitating the International Quality

Standards with innovative services tailored to users need, special care is taken at

every stage of the manufacturing process. A well equipped Quality Control

laboratory comprising sophisticated instruments manned by highly experienced

technocrats ensure that the laid down quality policy aspects are strictly adhered to.

ZIM believes that Quality is a continuous process an not an isolated stage.

4. Highly Sophisticated Customer Care department

To be very well proficient with meeting the requirements of the customers and to

stand up in the competitive era, ZIM has a highly developed and sophisticated

customer care department, which is nominated as Business Development

Department. The independent and well-organized BDD is in a better position to

offer customer support from development to delivery of product. This is done in a

strict time schedule. A unique feature of this department is that it provides

services ranging from product development, packaging development and design,

material sourcing assistance and developments of products based on the

specifications or requirements of the clients.

The BDD acts as the connecting link between the prospective clients of the

organization and the company, and provides a standing in-house representation of

the inside company.

Weaknesses

Capacity constraint

The organization faces the problem of meeting to the excess order requirements of the

clients, and that too because of the quality drugs manufactured by it. Many a times, the

order quantity poses a risk to production pattern and hence results in capacity constraint.

Opportunities

Export Potential

Page No.30

ZIM has great potentiality in the foreign markets because of its innovation driving

mechanism which is very well required in this sector. Presently, the company is exporting

its products to more than 25 countries, some of which are Bangladesh, Libya, UAE,

Egypt, Algeria, Morocco, Latin America, Sri Lanka, Nigeria, Vietnam, Iraq and Yemen.

Besides it has also covered several Central and South states in the domestic sector, some

of which are Maharashtra, Chattisgarh and Madhya Pradesh.

The company sees a bright market prospect in the continents of Africa and America. The

reason why it places high dependence on export sales is because of its superior quality

drugs and processes, which makes it one of the better manufacturers among its sector.

Threats

Competition from Indian organizations operating outside India

Operating in the foreign markets requires huge investment besides facing a tough

competition from the operation of domestic organizations in the foreign markets.. The

organization is comprehended to the threat of operations of major domestic players like

Ranbaxy Laboratories, Glaxo SmithKline, and others.

3.4 PRODUCTS AND MARKETS

PRODUCTS

The following specific formulations are offered:-

• Taste and Odour Masked Formulations. 

• Immediate Release Stabilised Multi- component Formulations.

• Sustained Release Formulations. 

• Enteric Release Formulations.

• Dual Release Formulations (Delayed Release With Enteric Coating Attributes).

• Stability Enhancement----- Premixes & Granulates.

• Bio-availability Enhancement---- Formulations & Powders .

• Dispersible / Mouth Dissolving Tablets and their R C Granules.

• Herbal single & multi-components pre-mixes, granules, and multiparticulates.

• Non-Pareil Seeds & other pre- processed excipients.

Page No.31

Additionally, the company has the experience & ability

to manufacture and supply large volumes of standard

and customized finished formulations under different

labels & brand names. This large volume capacity

allows us to offer our customers products of consistent

quality with reduced lead-times.

Some of the products in the above category manufactured by ZIM are :

PELLETSAnti-inflammatory

Hyperacidity,Ulcers Anti-Hypertensive

Anti-Allergics

Aspirin Esomeprazole Atenolol Chlorpheniramine Maleate

Ibuprofen Lansoprazole Nicardipine Cetirizine/Levocetirizine

Indomethacin Omeprazole Nifedipine Loratadine

Ketoprofen Pantoprazole Nitroglycerin

Tramadol Verapamil

TABLETSAnti-

AsthamaticsAnti-Hypertensive Anti-Depressant Anti-Diabetic

Aminophylline Hydrate

Candesartan Cilexetil

Clomipramine HCl

Glimepiride

Montelukast Sodium Chewable

Carvdilol  Citalopram Metformin

Diltiazem SR Metformin

Losartan potassium & Ramipril

Repaglinide

CAPSULESAnti-Bacterial Anti-Viral Anti-Fungal Anti-Asthamatic

Cefixime & Cefdinir

Didanosine Delayed Release

Fluconazole Theophylline SR

TASKS MASKSAlbendazole Azithromycin Cefixime Cefpodoxime proxetil

Page No.32

Cefuroxime axetil Ciprofloxacin Clarithromycin Erythromycin ethyl succinate

Fluconazole Gatifloxacin Levofloxacin Nystatin

Ofloxacin Roxithromycin

3.5 BALANCED SCORE-CARD

Analysis of the Organization using Balanced Score Card Approach:The success of any organization is reflected upon by its performance which is in turn

highly dependent upon its strategies. In this era of cut-throat competition, what an

organisation requires is not just framing the right strategies, but also managing the same.

The impact of the right strategies will automatically be reflected in the results. Moreover,

any organisation has to understand that it needs to give impetus not only towards the

financial results but also towards satisfaction of the customers, development of state-of-

the-art technologies and creation of an environment of learning and growth. The

Balanced Scorecard is such an innovative tool which has considered not just the financial

indices but also the non-financial indicators as equally critical in determining

organizational performance. This tool brings a link between strategy and action. Due to

these, the framework is gaining increasing importance among different business houses.

The balanced scorecard is a strategic performance management tool for measuring

whether the smaller-scale operational activities of a company are aligned with its larger-

scale objectives in terms of vision and strategy.

By focusing not only on financial outcomes but also on the operational, marketing and developmental inputs to these, the Balanced Scorecard helps provide a more comprehensive view of a business, which in turn helps organizations act in their best long-term interests.

Page No.33

Balance Scorecard Phases

Page No.34

The long-term success of any organization is determined by the capabilities and the

competencies it has developed. One of the tools for organizational appraisal that is

gaining immense popularity is the Balanced Scorecard, developed by Robert S Kaplan

and David P Norton in 1992. This innovative tool is unique in two ways compared to the

traditional performance measurement tools. They are–

(i) It considers the financial indices as well the non-financial ones in determining the

corporate performance level; and

(ii) It is not just a performance measurement tool but is also a performance management

system.

The tool has given stress on the other areas which are required to ‘balance’ the financial

perspective in order to get a total view about the organizational performance and improve

the same. The framework tries to bring a balance and linkage between the –

(a) Financial and the Non-Financial indicators,

(b) Tangible and the Intangible measures,

(c) Internal and the External aspects and

(d) Leading and the Lagging indicators.

Advantages of using Balanced Scorecard approach :

1. It translates vision and strategy into action.

2. It defines the strategic linkages to integrate performance across organizations.

3. It communicates the objectives and measures to a business unit.

4. It aligns the strategic initiatives in order to attain the long-term goals.

5. It aligns everyone within an organization so that all employees understand how

they support the strategy.

6. It provides a basis for compensation for performance.

7. The scorecard provides a feedback to the senior management if the strategy is

working.

Example of Balanced Scorecard

A typical scorecard of an organization can be prepared as under:

Page No.35

Observational Analysis of ZIM Laboratories

The Financial Perspective: The company follows effective financial strategies to maintain stability in

finance and allocation of funds. Since the company is an unlisted one, there arises no

questions of return to the shareholders. Besides, company has negligible funding from

outside sources.

The Customer Perspective: The company satisfies its customers in an effective way and caters to the

customer requirements very efficiently. They set goals according to national and

international standards and accordingly they take effective measures to achieve them.

This has been carried out to a large extent by the highly efficient Business Development

Department of the company, which looks out for overall satisfaction of its customers.

The Process Perspective:

Page No.36

In process perspective also the company have a very specific goals regarding like

production, logistics or sales and then set goals related to such things as quality,

time/efficiency, and cost reduction. Company generally follows production on the basis

of orders generated from the customers, in order to avoid wastage and spoilage.

The Innovation and Learning Perspective: In this area, the company is examining measures relating to employee development,

retention, and skills improvement. It also look at measures for research and development.

It focus here is on continuous improvement and value creation, by using the people

resources most effectively.

Note:

Company doesn’t follow balanced score-card approach. The above analysis

has been carried on the basis of observations brought out during the organizational

study.

Page No.37

CHAPTER 4

ORGANISATION STRUCTURE

AND

CRITICAL REVIEW

Page No.38

4.1.1 Why Organizational Design ?

Organizations have become the primary form of social institution in contemporary

society. The way in which an organization is structured creates/restrains opportunities for

interactions with other organizational members, influencing the attitudes and social

relations that emerge over time and the ways in which work related tasks are completed.

4.1.2 Organizational structure

The formal system of task and authority relationship that control how people coordinate

their actions and use resources to achieve goals

Structure facilitates effective response to problems of coordination and motivation

4.1.3 What is Organizational design ?

It is the process by which managers select and manage aspects of structure and culture so

that an organization can control the activities necessary to achieve its goals.

Organization structures may take different forms. Following are the broad types of

structural forms :

1. Functional and Divisional structures

2. Vertical and Horizontal structures

3. Mechanistic and Organic structures

4. The Matrix Structure.

5. Federations

A brief introduction to the above forms of organization structures is given below :

Functional and Divisional structures

The oldest and commonly used organization structure is functional structure. In

functional structure, the organization is departmentalized on the basis of various

functions performed by it viz. production, operations, R & D, Maintenance, Human

Resources, etc. In case of divisional structure, organization is departmentalized on the

basis of products, customer, or region.

Page No.39

Vertical and Horizontal structures

In an organization, both absolute centralization and decentralization are neither desirable

nor possible. Hence, the writers and organizations began to explore ways to modify the

two structures. The essence of modified structure lies in the modifications to the classical

principles of delegation of authority and standard of control. Accordingly, organizations

having a series of narrow span of control were termed as vertical structures.

On the contrary, structures incorporating wide spans and limited layers of control at

horizontal levels were called horizontal structures. However, both these structure have

their own advantages and disadvantages.

Mechanistic and Organic structures

Two contrasting types of organizational structure were recommended by Bruns and

Stalker in their study of twenty industrial firms in England. Accordingly, the

organizational structure suitable to stable conditions was termed as mechanistic structure,

while the organizational structure which was considered appropriate to changing

conditions was called organic structure.

Matrix Structure

The matrix organization structure was proposed by Dairs and Lawrence for Aero space

programme of the United States. In this structure, attempts were made to combine the

advantage of product and functional departmentalization to achieve the organizational

goals. In other words, this dual structure simultaneously organizes part of organization

along product lines and part of the organization along functional lines to gain the

advantages of both.

In a matrix organization, each department reports simultaneously to both product

managers and functional managers. The product managers and functional managers have

equal authority within the organization, and employees report to both of them.

Matrix forms of management can be regarded as an early form of 'network' structure.

They focus on project teams, bringing skilled individuals together from different parts of

Page No.40

the organization. Individuals were made responsible both to their line manager and the

project manager involved.

Federations

This form is a variant of the divisional organizational structure which has great

importance because of its human resource factor. The federations is a loosely connected

arrangement of businesses with a single holding company or separate firms in alliance.

But this form of organization has attracted criticism from stock market analysts who find

difficulty in comprehending its subtle informality.

4.2 ORGANISATION STRUCTURE OF ZIM LABORATIES

Zim Laboratories follows Horizontal form of organizational structure, since the power of

management control is divided between the Financial Director and Executive Director

from the Managing Director.

Page No.41

Page No.42

CHAIRMAN

MANAGING DIRECTOR

FINANCIAL DIRECTOR EXECUTIVE DIRECTOR

PURCHASE OFFICER

A/C OFFICER

EDP ERP ADMIN. OFFICER

HR MANAGER

INWARD /OUTWARDINCHARGE

SECURITY

ASST.PURCHASE

ACCOUNTANT

ALL ASST. ALL ASST.

ADMIN.ASST.

VPBDD

QC

INTERNAL AUDIT INCHARGE

QA MANAGER

MANAGERR & D

V.P. OPERATION

PROJECTINCHARGE

OSD

ALL ASST.

ALL ASST.

ALL ASST.

ALL ASST.

R&DSR.EXEC

PRODUCTION OFFICER ALL

ASST.

MAINTENANCE ENGG.

PRODUCTIONMANAGER

STOREINCHARGE(FG)

STOREINCHARGE(RM)

STOREINCHARGE(PM)

PERSONNELOFFICER

4.3 CRITICAL REVIEW of the Organizational Structure

1. The Chairman is concerned with policy making matters.

2. The Managing Director is entrusted with the functions of routine management.

3. During the Board Meetings there has to be reporting of policies framed and

exceptional functions performed during the routine management.

4. The Finance and the Executive Directors are under the supervision of the MD.

5. The Finance Director controls not only the accounts department, but also the

purchase department, EDP and ERP functions also.

6. The MD also supervises the working of the following departments / functions :

a. Business Development Department

b. Quality Control and Quality Assurance

c. Internal Audit

d. Research and Development

e. Operations

f. Projects

7. Like a just organization, the production, stores and personnel departments are

under the control and supervision of Operations department.

8. The organization operates in a B2B market, wherein it is desirable to have a

horizontal organization design. The only misconception about this form of design

is that the MD has to operate and hear from all the departments functioning within

it. Therefore he is burdened with the task of responding to each of them, which

requires technical as well as functional expertise on his part.

9. Since MD is to concern himself with the making of policies in an organization,

this form of organization design poses a great challenge for him, which can have,

to some extent, a demeaning effect on the working of the MD.

Page No.43

ALL ASST.

ALL ASST.

ALL ASST.

ALL ASST.

ALL ASST.

CHAPTER 5

BUSINESS LEVEL FUNCTIONS

AND

PROCESSES

Page No.44

5.1 FUNCTIONAL DEPARTMENTS OF ZIM LABORATORIES

1. Business Development Department

2. Administrative Department

3. Purchase Department

4. Accounts Department

5. Research & Development

6. EDP & ERP

7. Quality Assurance

8. Quality Control

9. Production Department

10. Materials Department

a. Raw Materials

b. Packing Materials

c. Finished Goods & Dispatch

11. Maintenance Department

12. Personnel Department

13. Human Resources Department

14. Marketing Department

5.2 HUMAN RESOURCES DEPARTMENT

5.2.1 Recruitment / Training and Development Process

Page No.45

Vacancies Arise in the Respective department

Job advertisement is given in the newspaper & Applications are collected

The Resumes received are then scrutinized

5.2.2 Promotion Policy, Performance, Incentives and Leaves

It was informed that there were no extra incentives to the employees apart from the

monetary allowances. Extra incentives are pointed out here in the sense of overtime

work. There is no payment for overtime work. Instead, these credit hours are adjusted the

emergency hours i.e. whenever employee wants to work less on any particular day of the

week, then if he/she has done some overtime work before, then that overtime work hour

is adjusted towards in such emergency situation. This generally happens in case of family

or social functions at the employees residence or in case of accident or other uncertainity

of any of his/her family members.

Page No.46

The Respective Head of Department further scrutinizes the application

A Committee Panel is established and a date & time is decided from the Panel

Selected candidates are called for Preliminary Interview

Candidates selected from Preliminary Interview are called for Final Interview

Selection and Disbursal of Offer letters

Appointment and Joining Formalities

Induction Process

Internal Training and Development

Performance Appraisal (Self-Appraisal by employees)

Appraisal by the Head of Department whose employees are evaluated

Review with Committee Panel

5.2.3 Number of Employees

Administrative

Category of Employee Total Number

Trainee 52

On Probation 22

Confirmed Posts 82

Total 156

Non-Administrative (Workers)

Permanent workers 54

Casual (on contract basis) 300-400

5.2.4 Matters dealt with by the department

1. Salary & Wages

2. Incentives and Bonus Payment

3. Provident Fund

4. Activities concerning welfare of employees

5. Canteen facility

6. Bus facility

7. Scrap. Spoilage and Wastage

8. Sale of Scrap.

5.3 MARKETING DEPARTMENT

ZIM Laboratories has its registered office in Mumbai, for the reason of it being the

financial capital of India.

5.3.1 Role of the Marketing Department

The Mumbai Office takes care of the Marketing function of the organization. Marketing

is generally done of Finished goods and Semi-finished goods.

Page No.47

In case of exports, only Semi-finished goods are marketed, while in case of finished

goods, they are marketed for the government and institutions, and also for export

purposes in some cases.

5.3.2 Method of Marketing deployed

The organization has not employed any of the direct marketing strategies i.e. no

questionnaires nor behavioral method. Instead customers visit the factory outlets and

place direct orders with the organization. In case of exports, there are also frequent visits

by the Health Ministers and other top officials of the health department of the foreign

country.

In case of transaction with governments and institutions, the usual process adopted is :

8. Tender participation

9. Tender awarded

10. Finally, supply of goods.

However, export marketing usually involves following steps :

A. Where organization visits foreign country :-

1. Country visit

2. Appointment of local agents in foreign country

3. Meeting customers through local agents appointed in that country.

B. Buyers directly approach the organization through informed visits to factory, and

thereafter places the order accordingly.

5.3.3 The Market Strategies or the Business Models

1. Export

The organization has export in more than 25 countries. Presently, the company is

exporting its products to more than 25 countries, some of which are Bangladesh,

Libya, UAE, Egypt, Algeria, Morocco, Latin America, Sri Lanka, Nigeria,

Vietnam, Iraq and Yemen. Besides it has also covered several Central and South

states in the domestic sector, some of which are Maharashtra, Chattisgarh and

Madhya Pradesh. ZIM holds –

i. ISO 9001:2000

Page No.48

ii. WHO Certification (for Export and Registration)

iii. NAFDAC (National Agency for Food & Drugs Administration and

Control) which is helpful mostly for export of products in the country

of Nigeria.

2. 3 rd Party Export

It is selling goods locally in more than 15 countries.

3. Contract Manufacturing

The organization is involved in selling of allopathic drugs according the

requirements of the customer i.e. custom manufacturing. The greatest advantage

of this type of strategy is that there is following of JIT system to the tune of 80-

90%, since production is carried out only after receiving the specification or

requirements of the order.

4. Loan License Manufacturing

Under this strategy, the organization used to sell/manufacture drugs with specific

names of clients on the products as per its requirements. This is just indirect

manufacture, wherein ZIM used to manufacture the drugs and medicines and

dispatched them under the name and seal of the client, as if to appear that the

product has been marketed by that client. In fact the manufacturing rights

remained with ZIM and were displayed as ‘Marketed By : ZIM Laboratories’ on

the tablet / capsule strips or syrups or related products.

5. Government and Institutes

ZIM also supplies drugs and syrups to government and allied institutions, some of

which are ESIC, WCL, RDPL,etc. The organization holds a Certificate of

registration from DGQA i.e.Director General of Quality and Assurance for supply

in Defence sector.

6. Trade Marketing

This comprises of own marketing of products, which excludes direct marketing

techniques. It is the customer who directly approaches the organization either

through

7. Trading

Page No.49

ZIM also aids those organizations which find it difficult to import instrument

parts and other quality control equipments for manufacturing purposes. Many a

times, it is the foreign entities who approach ZIM in order to purchase these

machinery and equipments, since these organizations face the problem of finding

the right supplier.

5.3.4 Sales Promotional Techniques

ZIM follows basic promotional techniques and does not goes for mere technical tools.

1. In case of Trade Marketing, tools adopted are :

Conferences, Gifts, Coupons and Prizes.

2. In case of Export Sales, tools and techniques adopted are :

Bonus goods or free goods, Commission or Discount on further purchases.

3. In case of Marketing of products, ZIM provides only promotional materials to its

customers, simply because the superior quality of products provided by it to them.

5.3.5 Marketing Information Systems

Marketing Information Systems is generally brought in application of Age analysis of

Debtors and Creditors of the organization. Age analysis means how old or for how much

time the party is appearing as Debtor or Creditor in the Ledger of the organization. For

this purpose, a provision is made to exclude a specific amount of debtors from the total

amount.

5.4 FINANCE DEPARTMENT

The recording of transactions with respect to purchase of raw materials, payment of

revenue expenditure and receipts is regulated and functioned by the finance department in

any organization. In fact, finance is considered to be the backbone of any organization,

since it brings forth the true and correct position of the organization.

Page No.50

The recording of transactions relating to raw material starts with the security check and

entry in the Register Inward kept for the purpose at the entry gate of ZIM Laboratories.

Materials in this case usually consists of :

i. Inputs (Raw Materials or Packing Materials)

ii. Capital Goods (generally Machinery)

iii. Spares & Consumables (Factory Expenses)

Thereafter, they are transferred to respective departments after making an entry in the

Outgoing Register. Input goods are transferred to Raw Materials/Packing Materials

Department, Capital Goods are transferred to Production Department, and Spares &

consumables are transferred to Stores Department.

A Goods Receipt Note(G.R.N) is issued by the respective departments on receipt of raw

materials/capital goods.

5.4.1 Posting of Transactions

After issue of GRN, there is made an entry of receipts in registers kept for the purpose :

i. Receipt Register (Raw/Packing Materials)

ii. Inward/Fixed Assets Register (Production Department)

iii. Receipt Register (Stores Department)

5.4.2 Dispensing / Basis of Issue of Raw Materials

On the receipt of requisition from respective user department, a slip is issued in favor of

the respective department and finally an entry in made in outward register. Accordingly,

i. Issue Slip (by Raw/Packing Department) and entry made in Outward /Issue

Register.

ii. Delivery Memo to Stores (by Production Department). It also acts as register

entry.

iii. Issue Slip ( by Stores Department) and entry made in Issue Register.

5.4.3 Posting of Issues

After issue of raw materials or spares and entry in department outgoing register, the issue

is posted in Ledger(financial effect) and Invoice/Sale-Book(Inventory effect).

Page No.51

5.4.4 Financial and Inventory effects of transactions

Only payment related details are entered in the financial books viz. date, cheque no.,

amount, etc. and in case of inventory books the unit price per material is entered along

with issue slip issued by the raw materials or stores department. In case of deviation from

the required quantity, a Debit Note is issued by the department in favor of the party for

verification and variation. After the entire cross verification, entry is made in the

financial accounts.

5.4.5 Payment method

Generally, payment for raw material purchases is done on cash or cheque basis. In case of

cash payment, payment entry is posted in Party account by cash register. Similarly, on

payment through cheque, entry is posted in respective Party account by Bank Register.

5.4.6 Recording of Raw Material/Packing Material Purchases

At Security check point, entry is made in Entry Register and GRN issued.

Material passes to Quality Control department for sample checking.

If the material is approved by the QC department, an entry to that effect is made

in the Materials Receipt Register and posted in Party’s Ledger account.

Requisition slips are filled by the departments in need of the raw material and

issued in favor of materials and stores department.

In return, the materials and stores department issues ‘Issue Slips’ and enters the

transaction into Issue Register.

Finally, the entry is posted in Ledger and Stock Register is updated.

5.4.7 Books of Accounts maintained

1. Cash Book

2. Bank Book

3. Journal

4. Purchase Registers

Page No.52

i. Raw Materials PR

ii. Packing Materials PR

iii. Finished Goods PR

5. Sale Registers

i. Commercial SR

ii. Excisable SR

iii. Other SR

6. Credit Note Register

7. Debit Note Register

Credit note and Debit note Registers are maintained by the organization for

entering Rate Difference and Short quantity.

8. Ledger Accounts

5.4.8 Budgets

In consonance with the general practices and like other organizations, ZIM also concerns

itself with the preparation of various budgets viz.

1. Cash Budget

2. Sales Budget

3. Purchase Budget

4. Financial Budget

5. Overheads Budget / Cost Budget

5.4.9 Voucher Entries

ZIM follows the practice of entering transactions of normal or regular expenditure only

through supporting vouchers. In fact, no entry is made in the books of accounts or no

payment is made, unless there is some voucher to support its nature of transaction.

5.5 BUSINESS DEVELOPMENT DEPARTMENT

ZIM believes that the pharmaceutical business today is poised for a great leap forward.

The BDD is just like the Customer Care department which functions to face the

competitors and focus to customer requirements. The department is a one window

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concept which means a one stop place for outsiders, more specifically customers, for

transacting with the organization.

5.5.1 Functions of BDD

a. To develop the organization business

b. To represent and deal on behalf of customers with the organization.

5.5.2 Activities of BDD

1. Fulfilling customer requirements.

2. Ensuring shipment of products in time.

3. Follow-up of customer and agent payment.

4. Timely intimation to customers about introduction of new drugs and processes.

5. Monitoring performance of the agents appointed in foreign countries as also the

performance of the customers with regard to the use of the products.

6. Payment of Commission to agents appointed in foreign countries on time.

The BDD acts as a connecting link between the organization departments on one hand

and the agents and customers on the other hand. The position can be better explained with

the help of following diagram :-

5.5.3 THE BDD CUSTOMER RELATIONSHIP MODELS

BDD Relationship Domestic Customer Model

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BDD

Prodn.

HR

QC

Mkg

A/c

Customer 1

Customer 2

Customer 3

Customer 4

BDD Relationship Export Model

The independent and well-organized BDD is in a better position to offer efficient

customer support, right from conception to product delivery, keeping in view a strict time

schedule. The BDD provides services in the form of product development, packaging

development and design, material sourcing assistance and developments of products

(drugs) based on specifications provided by the clients.

5.5.4 Composition of BDD

The BDD is constituted of four interrelated cells with well-defined activities

encompassing:

b. Procurement Teams

c. Regulation and Commercial Documentation Team.

d. Packaging Development Team, and

e. Logistics Management Team.

All the activities of BDD are geared towards providing a standing in-house representation

the company to its valued customers.

5.6 PRODUCTION DEPARTMENT\

5.6.1 The Production Plant

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BDD

Prodn.

HR

QC

Mkg

A/c

Agents

Customer 1

Customer 2

Customer 3

Customer 4

The production facilities are located at Kalmeshwar Industrial Area near Nagpur in

Central India. Advantages of having the production plant in such area are numerous,

some of which are :

Easy access by all means of transportation to all parts of the country.

Plentiful electricity and water.

Easy availability of technically qualified work force.

A cosmopolitan, secular atmosphere and work culture.

A dry dock facility and further development of the nearby Industrial area

(Butibori), such that both facilitate direct export/import.

Easy and economical availability of raw and packing materials.

Moreover, Central India is surrounded by vast tribal forest areas having their own

wealth of plants of medicinal value giving it easy, local availability of the

required plant raw materials.

5.6.2 Production Processes

The normal production process followed by ZIM is given below :

1. Receipt of order from the customer.

2. Raw Material and Packing Material planning

3. Material requirement planning

4. Receipt of Inputs

5. Testing of Inputs received.

6. Actual manufacturing of products (drugs or processes)

7. Testing of the manufactured product.

8. Packing of products.

9. Sampling and re-testing of products packed.

10. Transfer of packaged products to Finished Goods store for dispatch.

Steps involved in CAPSULE PROCESSING

1. Bringing in Raw Material(Active/Inactive)

2. Checking ; Sifting; Blending & Weighing

3. Analysis & Release

4. Passing to Quarantine area

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5. Empty capsule loading

6. Capsule filling

7. Inspection and Polishing of the Capsule

8. In Process Quality Control Check and Release

9. Unit Packing and re-IPQC Check and Release

10. Final Packing of the Capsules

11. Quality Assurance Analysis and release

12. Passing to Quarantine section

13. Passing to Finished Goods and Packing Material Stores

Finally, the capsules are ready for packing and distribution. Capsule section is divided

into following :

1. Mixing / Blending

2. Polishing Section.

Steps involved in the process of PELLETS and TABLETS Manufacturing

1. First, Powder is prepared

2. The defective tablets are purified using the Bulk Tablet Machine.

3. Thereafter using PVC Sheets, the tablets are covered in the Blister Cell.

The Double track machine.

4. Then there is weighing of the powder and tablets using the electronic

balance.

5. After weighing, preparation of Binder and there is drug layering through

coating the pan.

6. Then the tablets/pellets are dried using an Oven and passed through

vibratory sifter.

7. It is then proceeded by an IPQC checking with regards to Moisture

content, bulk density and total assay & drug release.

8. The products are then coated and dried using a coating pan/fluid bed

coater.

9. There is re-IPQC checking.

10. Finally, the tablets and pellets are packed after electronic balance

checking.

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The above steps lays down the general process for the production of tablets and pellets.

However there are certain additional steps in the preparation and processing of tablets.

5.7 R & D DEPARTMENT

5.7.1 Research and Development wing at ZIM

The requirement of a sophisticated research and development wing is very essential from

the point of view of pharma industries. R & D requires not only a good technical team but

also following of Quality check and Quality policy.

ZIM possesses an exceptional technical team, an independent Research & Development

department and a full fledged quality Assurance department. The R & D and Technical

Services departments are key focus areas. A good number of talented professionals are

engaged in the unending endeavor to break new grounds and bring forth fresh solutions.

These talented team members ensure that the company’s customers, to a great extent and

even perpetually, derive the advantage of Innovative, cost-effective and Quality products

being produced after much research & development. This ensures the company an

unbeatable edge in the competitive market place.

5.7.2 The Technology path

ZIM provides its customers a wide spectrum of value-added & cost-effective services

whether pertaining to manufacturing, product development, pharmaceutical & analytical

method development, technical assistance or regulatory affairs. Customers at ZIM obtain

high-tech product advantage, new therapeutic classes besides renewing the interest for the

older drug molecules by their continual improvisation through elimination of their

negative attributes which otherwise would have rendered those molecules obsolescent.

Products in several categories are available with diverse attributes that include conversion

of Hygroscopic molecules to Non-Hygroscopic forms, Solubility and Stability

enhancement, Site specific/Target release characterization, Enteric Release specifically

for Acid-labile drugs, Taste-masking and flavouring technology for masking bitterness

and obnoxious odour of active drug ingredients, and Ready for Compression Granules for

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unstable, or, corrosive and hazardous, and otherwise conventionally unworkable

materials rendering them Environmental friendly or processable.

5.7.3 Activities undertaken at R & D Department

1. Formulation Development

Whenever an order is placed by a customer regarding manufacturing of a new

drug or process, the company’s R & D department comes into play and develops

the product through its sophisticated technical department and panel of technical

team members. ZIM has a team of researchers, scientists and technical personnel

who have great competence and experience to provide a range of services,

including development and validation of formulations. The formula is developed

after great research and experimentation required specifically in the field of

medicines and drugs.

2. Formulation Redesigning

ZIM also undertakes the redesigning of formulations pertaining to products

already in the market. Formulation redesigning is done only after receiving the

requisition from the client regarding redesigning of product subject to change in

the processes previously involved in the manufacture of the product. The

company generally carries out this activity with regard to the products already

manufactured by it.

5.8 ERP & EDP

The company has installed the Enterprise Resource Planning Software 2 months before,

and informed with respect to the functional softwares, that there will be a single software

which will control all the functional departments. Where a purchase order has been

placed by the purchase department, the information will be updated for reference and

approval by other departments.

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CHAPTER 6

OBSERVATIONS

LEARNINGS

AND

CONCLUSIONS

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It was an interesting and practical experience that was gained at ZIM Laboratories during

the study .The company Heads and Managers have been highly cooperative and had

made good arrangements for the interactions despite their tight schedule.

6.1 OBSERVATIONS

1. For efficient functioning of its departments, ZIM has divided them into 15

different departments. This ensures timely implementation of functions

concerned.

2. The company has excellent research and development wing, which ensures

quality products and processes.

3. The company has ensured following of the quality policy through quality control

and assurance department.

4. The company in consonance with point 2 facilitates international quality standards

with innovative services tailored to users need.

5. The company’s market strategies which comprises of seven different models are

unique and distinguishing.

6. The machinery used in the production of powders, pellets, tablets and capsules

have all been imported from China, which can be operated using the touch-screen

system.

7. Despite the general performance appraisal procedures, ZIM goes for self-

appraisal, which ensures evaluation of the true and correct productivity of the

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employees. The self-appraisal forms are then re-evaluated by a separate team of

members appointed from each department, specially the department heads.

8. The company has not involved itself in the providing of extra incentives to its

workers and employees, but follows the simple and lucid system of crediting of

excess worked hours towards emergency hours required by the workers.

9. Because of the quick functioning of the BDD, it ensures, besides, timely delivery

of products to its customers, proper co-ordination between the different

departments functioning within the organization.

6.2 KEY LEARNINGS

The study has facilitated me in learning the following things :

1. Understanding the functioning of the various departments in the organization.

2. Requirement of better co-ordination between the departments for their effective

functioning.

3. Placing Customer care and Customer Service at the apex of objectives list.

4. Necessity of great division of labour and technical skills in such an industry is of

vital importance, and that no organization can succeed without taking into

consideration this fact.

5. Learned how to carry on the SWOT, PEST and Porter’s Five Forces analysis.

6. Understanding the organization structure and the decision making process, as also

the reporting procedure between the departments.

6.3 CONCLUSIONS

An organization is a unified group of individuals who work laterally to achieve the

desired goals and objectives. But what comes of more importance is the functions of the

organization, or to be more specific, the departments comprised in the organization. The

working of an organization is very well reflected by the working of its departments. The

better the co-ordination between the departments, more will be the growth of the

organization. Through this organizational study, we get to know the working of

organization and have an overview of its functional departments.

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Thus the overall study in ZIM Laboratories was a learning experience. ZIM is a

pharmaceutical manufacturing company having diversified market strategies, and fame &

reputation in the central industrial belt comprising Maharashtra and adjoining states. The

company believes in providing “Affordable Quality Healthcare through Zeal and

Innovation in Medicine”.

The main focus on the study in ZIM was on coverage of all the departments in average.

The unique feature observed was that the Business Development Department was the

intermediary between the customer and the organization. All the departments are linked

with each other. They maintain good relation within the employees as well as with the

customers.

There is healthy competition in the industry with entry of global giants. The Indian firms

should put in good efforts to overcome the competition. By having joint venture and

collaboration with the foreign companies the industry can overcome the competition and

at the same time it can upgrade its production technology. The company has good

marketing strategy for export and domestic market.

Thus the company has enabled me to learn the various aspects of management,

production, marketing, finance which will be useful for my further studies.

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ABBREVIATIONS AND MEANING OF TERMS

NDDS - New / Novel Drug Delivery System.

Drug discovery is the process by which potential drugs are discovered or designed.

Drug development refers to activities undertaken after a compound is identified as a potential drug in order to establish its suitability as a medication. Objectives of drug development are to determine appropriate Formulation and Dosing, as well as to establish safety.

Insulin is a polypeptide pancreatic hormone which lowers the glucose levels in the blood,

a lack of which causes diabetes.

Penicillin is an antibiotic produced naturally by certain blue moulds, and which is now

prepared synthetically.

Generic Drug is a drug which is produced and distributed without patent protection.

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BIBLIOGRAPHY

Books and Magazines

1. CHRONICLE Magazine– March 2009

2. Harvard Business Review- January 2008 (Porters 5 forces)

Websites

1. www.zimlab.in

2. www.special.rediff.com

3. www.marksonspharma.com

4. www.learnmarketing.net

5. www.wikipedia.org

6. www.hrmguide.net (orgnaisation structure)

7. www.marketingteacher.com (balance scorecard)

8. www.balancedscorecard.org

9. www.managementhelp.org

10. www.themanager.org

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