1. PORTER’S FORCES IN PHARMACEUTICALINDUSTRY

3. Rise in number of domestic playersNATIONAL-LIST-OF-ESSENTIAL-MEDICINES-(NLEM) lists 354 DRUGS under cost based price control by NATIONAL PHARMACEUTICAL POLICY 2006.

4. The field of discovery and developments of new chemical entity (NCEs), had more misses than hits. Very few discoveries reach the final stages of approvals, and in most of the cases the claim for patent gets stuck in legal battles. INDIAN COMPANIES spend 4% of SALES on R&D, where the GLOBAL practice is of 12-16%.

5. Leading INDIAN Pharma companies have been actively extending the frontiers of scientific knowledge & going global through mergers & acquisitions. The European generics market have emerged as a major attraction for acquisitions by Indian companies as margin erosion in Europe is much less compared to the US when a drug or formulation becomes generic. Consolidation is inevitable and is expected to bring in economies of scale and provide access to newer geographies to regional players.

6. FOREIGN ACQUISITIONS BY INDIAN COMPANIES IN “2006”

7. MAJOR PLAYERS IN INDIA

8. GLOBAL PLAYERS

10. INDIAN PHARMA INDUSTRY DO NO HAVE THIS PROBLEM !!

12. Cardio vascular and

13. Central nervous system drugs.Anti-infective comprise the largest therapeutic segment in India, accounting for about 26 per cent of the market. The INDUSTRY complieswith the Good Manufacturing Practices set by World Health Organisation. These standards improve the quality and also act as potential entry barriers for new firms to enter

15. “MARKET SHARE of MNC & INDIAN Companies” EXPORTS constitutes 40% of TOTAL PRODUCTION. Out of which FORMULATIONS constitutes nearly 55% BULK Drugs rest 45% Almost half of the Export Revenue generated comes from Dr REDDY’S RANBAXY CIPLA

16. Indian Pharma companies are going for compliance with INTERNATIONAL REGULATORY AGENCIES like USFDA & MCC for their manufacturing facilities. INDIA has largest no of USFDA approved plants outside US

18. CONTRACT MANUFACTURING DEALS IN INDIA

22. It’s a well developed INDUSTRY with strong manufacturing base.

23. Access to pool of highly trained scientist from INDIA & ABROAD.

24. Strong marketing & distribution network.

25. Rich BIO DIVERSITY

27. Lack of strong linkages between INDUSTRY and ACADEMICIANS.

28. Low medical expenditure on healthcare in INDIA.

29. Production of spurious & low quality drugs tarnishes the image of INDUSTRY at home & ABROAD.

32. Licensing deals with MNCs for new chemical entity (NCE) & new drug delivery systems (NDDS).

34. Potential in developing INDIA as the centre for INTERNATIONAL CLINICAL TRIALS.

35. NICHE player in global pharma R&D

38. Lowering of TARRIF protection.

40. Labour charges are 40% lower, with favorable labour policies.

42. Chinese Govt. allows 100% income tax holiday for first 2 profit making years & 50% for next 3 years.

44. SPECIALIZED SECTORS

46. The Govt should increase the earmarked Rs 150 Crore for R&D to about Rs 2000 Crore.

48. Income tax exemptions should be given on Clinical trials & Contract research done outside the company & abroad.

51. FOUR STRATEGIES

52. The first is a shift from an opportunistic strategy to one of focus. Market forces are driving Pharmacompanies to concentrate their efforts and to abandon the practice of investing in a broad array of compounds on the premise that nearly every opportunity is worth exploring. Second, companies will shift from a fully integrated pharma company model to one that uses partnerships to manage risk and return. Today, each company handles its own discovery, development, manufacturing, marketing and sales. But trying to do everything internally carried a high risk with increasingly significant investments.

53. Third, companies will shift from science-driven provision of specific drugs to providing customer solutions. Historically, the pharma industry has sold therapeutics that addresses diseases but don't necessarily cure them or meet patients' full needs in managing their conditions. Finally,companies will shift from a functional to an integrated business organisation model. Traditionally, Big Pharma has had separate functional units for each stage of the drug development and marketing process. But the industry should study companies such as Dell and General Electric to assess the advantages of organisation models based on discrete business units. These companies grow profitably by pushing responsibility for profits down to smaller business units.

56. PORTER’S Competitive Forces

57. PORTER’S Competitive Forces Porter's five forces analysis is a framework for the industry analysis and business strategy development developed by Michael E Porter of Harvard Business School in 1979. It uses concepts developed in Industrial Organization (IO) economics to derive five forces which determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one where the combination of forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition". Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace. The overall industry attractiveness does not imply that every firm in the industry will return the same profitability. Firms are able to apply their core competences, business model or network to achieve a profit above the industry average. A clear example of this is the airline industry. As an industry, profitability is low and yet individual companies, by applying unique business models have been able to make a return in excess of the industry average.

58. PORTER’S Competitive Forces Strategy consultants occasionally use Porter's five forces framework when making a qualitative evaluation of a firm's strategic position. However, for most consultants, the framework is only a starting point or 'check-list' they might use. Porter's five forces include three forces from 'horizontal' competition: threat of substitute products, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical' competition: the bargaining power of suppliers, bargaining power of customers. According to Porter, the five forces model should be used at the industry level; it is not designed to be used at the industry group or industry sector level. An industry is defined at a lower, more basic level: a market in which similar or closely related products and/or services are sold to buyers. Firms that compete in a single industry should develop, at a minimum, one five forces analysis for its industry. Porter makes clear that for diversified companies, the first fundamental issue in corporate strategy is the selection of industries (lines of business) in which the company should compete; and each line of business should develop its own, industry-specific, five forces analysis. The average Global 1,000 company competes in approximately 52 industries (lines of business).

60. relative price performance of substitutes

61. buyer switching costs

63. economies of product differences

64. brand equity

65. switching costs or sunk costs

66. capital requirements

67. access to distribution

68. absolute cost advantages

69. learning curve advantages

70. expected retaliation by incumbents

72. rate of industry growth

73. intermittent industry overcapacity

74. exit barriers

75. diversity of competitors

76. informational complexity and asymmetry

77. fixed cost allocation per value added

78. level of advertising expense

79. Economies of scale

81. degree of dependency upon existing channels of distribution

82. bargaining leverage, particularly in industries with high fixed costs

83. buyer volume

84. buyer switching costs relative to firm switching costs

85. buyer information availability

86. ability to backward integrate

87. availability of existing substitute products

88. buyer price sensitivity

89. differential advantage (uniqueness) of industry products

91. degree of differentiation of inputs

92. presence of substitute inputs

93. supplier concentration to firm concentration ratio

94. employee solidarity (e.g. labor unions)

95. threat of forward integration by suppliers relative to the threat of backward integration by firms

97. y

98. Company handle its suppliers under section 16 of MSMED acts Company has increased focus on launching new brands. Four new brands were launched in 2008 viz., Champix, Cyclokapron, Acupil and Trulimax. A new indication of Lyrica in Fibromyalgia was also launched. Total capital of campany is 89956 lakhs.Its market share is 2.2% . Its recent growth is 12% Expenditure on R&D is 2835 lakhs.By the increase R &D investment company try to penetrate of patent products. Increase new territorial expansions,new therapeutic areas and building strong sales operations system

99. Torrent

100. The Company has initiated the process of obtaining information from suppliers who have registered themselves under the Micro Small Medium Enterprise Development Act, 2006 (MSMED Act, 2006). Net worth of company is 585.25 crores.Its recent growth is 7%. Total expenditure 11.28 crore.588 patents filed for NDDS technology, drug discovery projects and innovative process of API &formulations for various markets and 163 have been granted so far.` `````````````` The Company introducing new molecules brands and also line extensions of existing brands. During the year, 52 (as compared to 49 in the previous year) new products were launched in the market. Growth of market like organized buyer group, pharmacy chain, corporate hospitals. Increase coverage of new doctors &specialist.

101. THE THREAT OF NEW ENTRANTS Profitable markets that yield high returns draws Firms. This results in many new entrants, and effectively decrease profitability. Unless the entry of new firms can be blocked by incumbents, the profit rate will fall towards a competitive level (perfect competition).

103. Economies of product differences

104. Brand equity

105. Switching costs

106. Capital requirements

107. Access to distribution

108. Absolute cost advantages

109. Learning curve advantages

110. Expected retaliation by incumbents

112. Relative price performance of substitutes

113. Buyer switching costs

116. Rate of industry growth

117. Intermittent industry overcapacity

118. Exit barriers

119. Diversity of competitors

120. Informational complexity and asymmetry

121. Fixed cost allocation per value added

122. Level of advertising expense

123. Economies of scale

125. Degree of dependency upon existing channels of distribution

127. Buyer switching costs relative to firm switching costs

128. Buyer information availability

129. Ability to backward integrate

130. Availability of existing substitute products

131. Buyer price sensitivity

134. Degree of differentiation of inputs

135. Presence of substitute inputs

136. Supplier concentration to firm concentration ratio

137. Employee solidarity (e.g. labor unions)

138. Threat of forward integration by suppliers relative to the threat of backward integration by firms

140. Company not faced temporary problems with thirdparty suppliers to both its German subsidiary, betapharm and its CPS (Custom Pharmaceutical Services)operations in Mexico During the year, the Company invested Rs. 6,293 million on manufacturing, R&D facilities and other capital expenditure 2007–08, Company has increased its revenues at 27 % Company launches new products like simvastatin, finasteride, Merck, Ondansetron, Fexofenadine Company try to increase more penetration in market tie up with hospital and pharmacy chains.

142. Supplier Relationship Management initiatives in key categories helped your Company avail of better service and improvement in on-time supplies. Company invest 42 billion US Dollar in R&D Company has turnover of Rs. 1500 crore and a share of 6.2 per cent* * [Source: IMS Indian Purchase Audit (IIPA), August 2008] The company is the market leader in most of the therapeutic categories .It also offers a range of vaccines, for the prevention of hepatitis A, B, influenzae, chickenpox, diphtheria, pertussis, tetanus and others. Company try to increase new territory and contact with specialist doctors.

144. THANK YOU