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Group 10: Suchit Utekar (59) Mazharkhan Modi (38) Yogesh Kadge (21) Prem Biyani (07) Kedar Nirhali (41) Debanjali Roy (49) Sagar Patil (44) PrathameshWagh (60) Nikhil Sonawane (57) 1 Pharmaceutical Industry in India - Porter's Five Forces Strategy Analysis

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Group 10:

Suchit Utekar (59) Mazharkhan Modi (38)

Yogesh Kadge (21) Prem Biyani (07)

Kedar Nirhali (41) Debanjali Roy (49)

Sagar Patil (44)

PrathameshWagh (60)

Nikhil Sonawane (57)1

Pharmaceutical Industry in India - Porter's

Five Forces Strategy Analysis

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Introduction of the Industry

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y A highly organized sector.

y Estimated to be worth $ 4.5 billion, growing at about 8

to 9 percent annually.

y Highly fragmented with more than 20,000 registeredunits.

y Meets around 70% of the country's demand for bulk 

drugs, drug intermediates, pharmaceutical

formulations, chemicals, tablets, capsules, orals andinjectables.

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Current Scenario

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y third largest in the world in terms of volume and

14th in terms of value

y total turnover of industry between Sept.08 and

Sept.09 was US$ 21.04 billion.y Of this the domestic market was worth US$ 12.26

billion.

y market is expected to reach between US$ 55 to

US$70 billion in 2020 from US$ 12.6 billion in

2009

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INDUSTRY SEGMENTATION

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Over the Counter Drugs(40%)

Ethical (Prescribed) Drugs(60%)

Brand/Trade NameDrug

Generic Drug

With respect to product

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External Analysis of the industry based on

Porter¶s Five Forces Model

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Industry Competition

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y most competitive industries in the country with as many as

20,000 different players.

y top player in the country has only 6% market share and top

five have 18%.

y high growth prospects.

y High entry barriers.

y fixed cost requirement is low and need for working capital

is high.

y entry barriers to pharmaceutical industry are very low.

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Bargaining Power of Customers

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y End user of the product is different from the influencer.

y Consumer has no choice but to buy what doctor says.

y Buyers are scattered and they as such do not hold much

power in the pricing of the products.

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Bargaining Power of Suppliers

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y Pharma industry depends upon several organic

chemicals.

y The chemical industry are very competitive and

fragmented industry.y Chemicals are largely a commodity.

y Suppliers have very low bargaining power.

y Pharma industry can switch from their suppliers

without incurring a very high cost.

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Threats of New Entrants (Barriers to

Entry)

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y Most easily accessible industries for an entrepreneur in

India.

y Capital requirement for the industry is very low, creating a

regional distribution network is easy.

Difficulties in Implementing:

y Creating brand awareness and franchisee amongst doctors

is the key for long-term survival.

y Quality regulations by the government may put some

hindrance for establishing new manufacturing operations.

y Impending new patent regime will raise the barriers to

entry.

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Threat of Substitutes

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y Demand for pharma products continues and the

industry thrives.

y Key reasons for high competitiveness in the industry is

that as an on going concern.y But the advances made in the field of biotechnology,

can prove to be a threat to the synthetic pharmaceutical

industry.

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ea ng n an p ayers y sa es

million)(TO BE deleted)

11

In 2009

1. Cipla

2. Ranbaxy Lab

3. Dr Reddy's Labs4. Sun Pharma

5. Lupin Ltd

6. Aurobindo Pharma

7. Piramal Health8. Cadila Health

9. Matrix Labs

10. Wockhardt

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Leading Indian players by sales (US$ million)

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SWOT Analysis of Pfizer

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STRENGTHS

y R&D innovation with a broad therapeutic coverage

y Marketing strength in major geographical and therapeuticareas

y Existing Patent protection for a number of years on key

products

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Weaknesses

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y Discontinuation of products in the latter stages of 

development

y Co-marketing agreements can limit Pfizer's global presence

yIncreased size and operational complexity makes Pfizer a lessagile company

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Opportunities

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y Decreasing development time through favourable R&D

collaborations and internal efforts

y Emergence of integrated global markets and globalisation for

new productsy Co-marketing agreements with companies wishing to

capitalize on Pfizer's marketing

y strengths, providing Pfizer with strong products and

therefore revenue growth

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Threats

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y Increased competition for core products like Viagra as its high

cost encourages use of cheaper alternative treatments

y An increase in the number of safety issues surrounding Viagra

y

Competition from products similar to Pfizer's in R&D thatreach the market close to before Pfizer's products

y The new economic potential of emergent China, Russia and

competition in diverse regional markets.

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SWOT Matrix - Pfizer

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STRENGHTS WEAKNESS

Opportunities � Leveraging the innovation ability in

R&D in development of new drugs

� Strong marketing skills can help in

tapping the newly emerged global

integrated markets

� Ability to keep patent for longer timefor key products helps in sustained

revenue growth

� Strong R&D base could avoid

in discontinuation of products

in latter stages of development

� Tapping the emerging global

integrated markets can help in

overcoming the Non-agilenature of the company.

Threats � Improvement in development time

backed by strong patent holding ability

can help in tackling the competitorsmenace of entering the market early

with same products.

� Decentralization of 

management can help in

increasing operationalefficiency making the company

more agile.

� Innovative R&D techniques can

help in decreasing the

competition in core products.

E.g. Viagra.

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Industry Competition

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Bargaining Power of Customers

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Bargaining Power of Customers

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Threats of New Entrants (Barriers to

Entry)

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y Government Policies

y Price Controls Infrastructure

y Counterfeiting of drugs

y Counterfeiting Laboury Tax Structure (DTC)