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AnalyzingAnalyzing outsourcingoutsourcingtrends in Indiantrends in Indian firmsfirms
Industry: PharmaGroup 7Members:
Kartik Mathur2010094
Kedar Muley 2010095Kishan Kumar 2010096Swapnil Joshi 2010257Nidhi Gupta 2010260
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Indian Pharmaceutical EvolutionIndian Pharmaceutical Evolution
Phase II
GovernmentControl
Indian PatentAct 1970
Drug pricescapped
Local companiesbegin to make animpact
Phase IIIDevelopmentPhase
Processdevelopment
Productioninfrastructurecreation
Exportinitiatives
Phase IV
Growth Phase
Rapidexpansion of
domestic market
Internationalmarketdevelopment
Researchorientation
Phase V
Innovation and
Research
New IP law
DiscoveryResearch
Convergence
1970 1980 1990 2000 2010
Phase I
Early Years
Market sharedomination byforeigncompanies
Relativeabsence oforganizedIndiancompanies
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Today's Pharmaceutical IndustryToday's Pharmaceutical IndustryChallengesChallenges
4
Research & Development (RnD)
Sales
Standards & Regulations
Information Technology
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RnDRnD
y Demands to improve clinical trialproductivity and reduce time from Firstin Man studies to final approval,
y Getting complex day by day
y Growing need to share data, insights andconclusions with researchers and studycoordinators who are likely to begeographically dispersed
y Need to share clinical trial data withmultiple geographically dispersedinvestigators, monitors and statisticians
5
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ITIT
y Poor alignment of IT with business strategy
y Greater focus on cost containment bybusiness
y History of poor program management and PMpractices
y Methodologies and architectures not wellarticulated
y Poor track record in meeting projectdeliverables (on time and on budget)
y Slow response to meeting R&D challenges,especially around the deployment of IT toaddress flood of data 6
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The Pharmaceutical MarketplaceThe Pharmaceutical Marketplace
y High and continually escalating R&D costs
7
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Outsourcing ContinuumOutsourcing Continuum
Strategic
Improve businessfocus
Increase flexibilityand speed
Access to world-class capabilities
Accelerated changewith provenapproach
Shared risks
Free resources forother purposes
Bring new solutionsto customers faster
Respond toshortening productlifecycles
Leverage externalsuppliers
Leapfrog competitors
Enter new marketswith reduced risks
Acquire innovativeideas
Transformational
SHORTTERMFOCUS
LONGTERMFOCUS
Tactical
Reduce and controloperating costs
Make capital fundsavailable
Cash infusionResources notavailable internally
Function difficult tomanage or outof control
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Should I Outsource?Should I Outsource?
Is it needed forconsistency,
fiduciary, governanceor control purposes?
Place at
CorporateOffice
Do business unitcustomers
need this service?Eliminate
Embedin
Business
Units
Is the function highlystrategic or a source ofcompetitive advantage?
Is the same servicerequired by several
business units?
ConsiderOutsourcing
START
Embed inBusiness
Units
YES
NO
NO
NO
YES
YES
YES
NO
YES
NO
Can a 3rd party
provide the servicecheaper or better?
Embed inBusiness
units
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Cipla Ltd
Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-06 Mar-05 Mar-04 Mar-03 Mar-02
Net Sales 6,135.16 5,359.52 4,960.60 3,997.90 3,438.24 2,891.36 2,181.26 1,842.24 1,437.28 1,274.51
PBDIT 1,391.12 1,518.54 1,105.33 972.13 922.51 806.09 581.32 448.19 345.34 334.59
COGS 4744.04 3840.98 3855.27 3025.77 2515.73 2085.27 1599.94 1394.05 1091.94 939.92
Distribution
Expenses 52.01 44.31 47.19 31.66 28.3 22.77 12.58 12.78 12.99 11.14
Cost of Sales(CS) 4796.05 3885.29 3902.46 3057.43 2544.03 2108.04 1612.52 1406.83 1104.93 951.06
Opening
Stock of Raw
Materials 646.27 797.2 632.92 532.4 480.07 363.1 253.23 252.91 137.26 101.43
Purchases of
Raw Material 2,559.88 1,945.58 2,037.19 1,725.66 1,348.85 1,303.29 1,000.07 700.41 639.55 450.48
Closing
Stock of Raw
Materials 891.11 646.27 797.2 632.92 532.4 480.07 363.1 253.23 252.91 137.26
Raw Materials
Consumed
(RM) 2315.04 2096.51 1872.91 1625.14 1296.52 1186.32 890.20 700.09 523.90 414.65
OutsourcingRatio
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Till mid 90s the outsourcing by Cipla by traditional way.
With an enhancing of IT and incorporating IT services atcompany they were able to do away from traditional ways.(Click Here)
Outsourcing not only in RnD or just IT, rights to sell the
product is also given. (Click Here)
Outsourced Part:Contract Manufacturing Nitin, Shasun.Clinical Research- SynchronBio-informatics & other IT services HCL, Sai SystemsD
rugD
iscovery/Medicinal Chemistry Glaxo UK,Pfizer,Akorn, Epivir
Quality Check:Vendor Auditing and EvaluationConstruction Quality AssessmentFinancial recordsTrade Practices
Visit to Production HouseSample test
Outsourcing inOutsourcing in CiplaCipla
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Ranbaxy Laboratories Ltd.
Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-06 Mar-05 Mar-04 Mar-03 Mar-02
Net Sales 5,593.45 4,728.09 4,391.91 4,224.22 4,047.15 3,575.44 3,706.30 3,637.60 2,931.13 2,046.78
PBDIT 1,847.78 1,249.59 -1,318.78 970.84 593.29 303.78 699.88 1,019.78 782.53 374.4
COGS 3745.67 3478.50 5710.69 3253.38 3453.86 3271.66 3006.42 2617.82 2148.60 1672.38
Distribution
Expenses 161.85 117.57 170.1 150.44 149.85 134.28 147.82 110.33 79.47 61.81
Cost of Sales(CS) 3907.52 3596.07 5880.79 3403.82 3603.71 3405.94 3154.24 2728.15 2228.07 1734.19
Opening Stock
of Raw Materials 385.38 512.07 404.96 425.93 406.42 443.7 335.6 266.92 210.26 196
Purchases of
Raw Material 1,656.72 1,395.97 1,756.05 1,492.37 1,417.33 1,214.35 1,305.99 1,236.21 1,056.75 686.51
Closing Stock of
Raw Materials 478.88 385.38 512.07 404.96 425.93 406.42 443.7 335.6 266.92 210.26
Raw Materials
Consumed (RM) 1563.22 1522.66 1648.94 1513.34 1397.82 1251.63 1197.89 1167.53 1000.09 672.25
Outsourcing
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R&D
GSK & RanbaxyService outsourcing - Wyeth GVK, Jubilant, Lilly Suven
Albany Molecular & Nektar
Contract Manufacturing Nitin, Jubilant, Divis
Clinical Research Syngene (Biocon), Aurigene (Reddys)
Bio-informatics & other IT services TCS, Satyam, Infosys, GVKBio, Jubilant
Drug Discovery/Medicinal Chemistry Aurigene, Divis, Syngene,
Suven, GVK Bio
Pre-clinicals Vimta, Lambda
Central laboratory services SRL Ranbaxy, Vimta
OutsourcingOutsourcing in Ranbaxyin Ranbaxy
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0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
1 2 3 4 5 6 7 8 9 10
Ranbaxy
Cipla
COMPARISION
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Quality CheckQuality Check atat CiplaCipla
1. Quality Assurance2. Premises3. Personnel4. Validation5. Documentation / Records6. Vendor Qualification7. Change Control Program8. Sample9. Stability Studies10.Drug Recall11.Annual Product Review
12.Audits13.Quality Control
DepartmentsManufacturing AreaEquipment
Equipment
Calibration
14.Raw Material15.Purified and Water for Injection
Systems16.Depack / Preparation
component room17.Sterilizer / Oven Loading Room18.Equipment Airlock19.Washroom / Grown change
room20.Manufacturing (Sterile Product)
Aspectic Batching Area
Filling room Terminal Sterilization Packaging
21.Manufacturing (Oral dosages) Packaging
Reprocessing
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Outsourcing to I.T. ServicesOutsourcing to I.T. Services
Slide presentation will enable Sales,Marketing and IT leaders to effectively
manage their IT Sales & Marketing supportservice systems and will provide keyreference points to inform their insourcing
and outsourcing strategies.
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Result ofOutsourcingResult ofOutsourcing
Solid though not spectacular
Buyers tend to invest more in outsourcing management
and governance (OM/G) efforts
The operating model of many large, globalpharmaceutical firms, however, can complicate theirback-ofce outsourcing management efforts
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How areHow are PharmaPharma CompaniesCompanies
Responding?Responding?
Pharma has had to wake up to slumping stock prices,generic competition, regulatory pressure and shrinkingR&D pipelines that are forcing them to become morecompetitive and cost effective
they are used to working with partners so outsourcingisnt that strange for them.
Outsourcing, not always, does not imply is always theright or viable answer, but that its potential merits, aswell as challenges, are systematically addressed.
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How are Outsourcing ServiceHow are Outsourcing Service
Providers Responding?Providers Responding?Leading outsourcing service providers that target thepharma, life sciences and biotech industries generally arein sync with the demand and trending in outsourcing.
Focusing on how to enable broad, global outsourcingefforts in these industries.
Strong emphasis in moving beyond traditional life and
shift
Also focusing on how to ease the pains and challenges oftransition and accelerate the time to which buyers beingto reap the benets of outsourcing.
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The Advisor PerspectiveThe Advisor Perspective CriticalCritical
Points to ConsiderPoints to ConsiderBefore launching on a journey to improve internal business processes either through outsourcing or internal transformation:
1. How has the outsourcing service provider landscape evolved in
terms of potentially better serving your needs?
2. Are the skills and ambition now in a place that makes outsourcinga viable alternative? How is this determined?
3. What are others in your industry doing to drive processimprovement and change into their organization? How do youmeasure yourself against your peers?
4. Do you have a strategy on outsourcing and globalization? How doyou start the process, and develop a roadmap to an unknown
future state?
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Closing CommentClosing Comment
India is an acquired taste
Give it some time & it will grow
on you
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Merci!