An Overview of Pharma Industry. INTRODUCTION OBJECTIVES IMPORTANCE PROCESS ICAI BHAVAN, BARODA2

Management Planning and Control

SystemsAn Overview of Pharma Industry

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INTRODUCTION OBJECTIVES IMPORTANCE PROCESS

TOPICS COVERED….

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Management Planning and Control System encompass “ A Financial or quantitative statement prepared prior to a defined period of time of a policy to be prepared for that period to attain Short Term(Action Plan) and Long Term(Strategic Plan)of the organization”.

Introduction….

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Management Planning and Control Systems provides a company wide systematic and structured approach, which provides a holistic framework to◦ A) Plan◦ B) Control◦ C) Reduce & Eliminate Cost, throughout the value

chain.

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To concentrate on profitable activities and to eliminate non-profitable activities.

In the highly competitive world, to concentrate on,◦ A) Research and Development◦ B) Innovation◦ C) New Products◦ D) Marketing Strategy◦ E) High tech production

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Which products are innovative and profitable.

Which products should be emphasized more.

Product profitability through cost reduction.

Objectives…

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Steps in Formulating Business Plan

•Sales forecasting

•Production Planning

•Capital Expenditure Planning

•Raw Material Scheduling

•Utility Planning

•Manpower Planning

•Estimates Factory Overhead

•Estimates Administrative Overhead

•Estimates Selling & Distribution Overhead

•Estimates of Finance Charges

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The Pharmaceutical Industry in India is the world’s third largest in terms of volume. According to the department of Pharmaceuticals of the Indian Ministry of Chemicals and Fertilizers, the total turnover of India’s Pharma Industry was 50K Cr in 1995, 153K Cr in 2010 and expected to grow 600K Cr by 2020.

Sales Forecasting…

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Production Planning…

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If capacity is a problem, capacity planning should also be planned in advance to meet the future requirements, which is a Strategic plan.

Criteria for Investment decision:◦ A) Payback Period◦ B) IRR◦ C) NPV

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On the basis on production planning, Raw material scheduling is done. What is produced between 15th March to 15th April is received between 15th February to 15th March. Thus inventory control is also possible.

Raw Material Planning…

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Man-Power Planning… In a highly competitive economy right type

of persons are difficult to get.

Replacement should be done in advance of Top Management.

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Strategic plans of Top Indian companies…

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Sun Pharma has achieved a turnover of 16K Cr and Net Profit of 4500 Cr in 2013-14 of which 70% is international business.

In H1 2014-15 they have achieved a turnover of 9K Cr with NP of 2962 Cr.

Strategic plan of Sun Pharma is to reach turnover of 40K Cr and NP of 10K Cr in next 2 Years.

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They are planning to achieve this strategic plan by following actions:

◦ A) Taking over Ranbaxy.

◦ B) Taking over business in Japan and introducing some new product for Japanese market.

◦ C) Plan to acquire business in Brazil and South Africa.

◦ D) Enhancing R&D activities by spending 8% of the turnover on R&D and introducing new products not only for domestic market but also for international markets.

Cont…

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The turnover of Lupin for the year 2013-14 is 12K Cr with NP of 3000 Cr of which international business id 65%.

They have achieved turnover of 8K Cr in H1 2014-15 with NP of 1800 Cr.

Strategic plan is to reach 20K Cr in next 2 Years with NP of 5500Cr.

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Turnover of Cadila is 8000Cr in 2013-14 with NP of 960Cr.

In next 3 years, Cadila is targeting a turnover of 15K Cr with NP of 1500Cr.

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Management control systems are tools to aid management for steering an organization toward its strategic objectives and competitive advantage.

Management controls are only one of the tools which managers use in implementing desired strategies. However strategies get implemented through management controls, organizational structure, human resources management and culture.

Management Control Systems…

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A) Activity Based CostingB) Balance ScorecardC) BudgetingD) Capital BudgetingE) Just In TimeD) Kaizen(Continuous Improvement)E) Target CostingF) Total Quality Management(TQM)

Techniques…

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A) Projected profitability statement of a company as a whole.

B) Projected profitability of profit centers.C) Projected profitability of products.D) Projected balance sheet.E) Estimates of working capital requirement.F) Targeted contribution v/s Actual

Contribution.G) Variances.

Budgetary Control System…

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CA Parin Kapadia CMA H R KapadiaM:9427302046 M:9426026536

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