Team Name – Doubting Thomases                Great Lakes Institute of Management                     Member 1 -Puja Khemka...
How Pharmaceutical Sector             works                    MajorMajor Inputs               Products/Services          ...
Snapshot of Pharma industry   Market Size        Global• $ 825 Billion growing @ 4 to 6 %      CAGR            Global• For...
Porter‟s Five Forces                                                           Biotechnology –                            ...
Cipla Limited•   Chemical, Industrial and Pharmaceutical Laboratories, better known as    Cipla, was founded in 1935.•   M...
Cipla Products                               Sales Value (in Cr)   Tablets n Capsules               3981.31        Bulk Dr...
STP – Cipla LtdSegment        HIV/AIDS, cancer, arthritis, respiratory, cardiovascular disease               Flavors and f...
GAP Analysis of CiplaLOCATION: African market is the major market,followed by US. It has also discovered Europe as ahigh p...
Unichem Labs•   Unichem Laboratories Ltd, a mid sized Pharma company, was founded in    1944. It operates in the business ...
Unichem Products                                Sales Value (in Cr)   Formulation Caps/Tabs            624.2517   Bulk dru...
Unichem SWOT Analysis                             SWOT Analysis                 1.   Low cost of production.              ...
Mission and Vision                           CIPLA Ltd• Mission - “To provide excellent quality health care facilities at ...
Synergy Valuation       All Cash Transaction       In Crores       Current Value of Cipla     30,282.17     Current Value ...
EPS                EPS - Combined                                     Entity              1    60.00                      ...
Acquisition OptionsTender      Tender      Share forOffer for   offer for   ShareRs.212.75   Rs.222      Offer        Atte...
Synergy Opportunities• Raw materials – Backward Integration as well as  horizontal Integration• Low Debt/Equity Ratio of U...
Cipla acquisition proposition
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Cipla acquisition proposition

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Proposal of Acquisition of Unichem by Cipla. This was presented by us in a competition hosted by IIT. Won us the 2nd prize.

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  • CRAMS – Contract Research and Manufacturing Services
  • ANDA – Abbreviated New Drug Application
  • Cipla acquisition proposition

    1. 1. Team Name – Doubting Thomases Great Lakes Institute of Management Member 1 -Puja Khemka puja.khemka@greatlakes.edu.in Member 2-Arun Koundinya arun.seshadri@greatlakes.edu.in
    2. 2. How Pharmaceutical Sector works MajorMajor Inputs Products/Services 23% APIs/Bulk Chemicals Government Drugs and Private Healthcare Institutions End Pharmaceutical User Labor Formulations 73% Retailers RnD CRAMS
    3. 3. Snapshot of Pharma industry Market Size Global• $ 825 Billion growing @ 4 to 6 % CAGR Global• Forecasted to be 3-6% through 2013. India‟s Share• India is the 3rd largest producer of Pharmaceuticals having 10% of the global share. CAGR India• Pharmaceutical Industry largest contributor to the Indian economy. Still growing @ 10 to 11%
    4. 4. Porter‟s Five Forces Biotechnology – threat to Synthetic Pharma Products Availability of substitutes - Low Suppliers can doforward integration. Brand Identity Suppliers exists but it is in the availability high hands of influencers Supplier Competitive Buyers Power: Power: Rivalry - High Medium Medium Entry Top five players have taken only Barriers: 20% of market Low/Medium Due to supportive share government policies.
    5. 5. Cipla Limited• Chemical, Industrial and Pharmaceutical Laboratories, better known as Cipla, was founded in 1935.• Manufactures diversified range of pharmaceutical and personal care products.• In addition to its strong presence in the Indian market, the company generates nearly 55% of it‟s turnover from exports to various emerging and regulated markets.• Commands an important position in the Indian pharmaceutical industry by its efforts in manufacturing cost-effective drugs (antiretroviral drugs) for HIV-AIDS.• USP – Inexpensive Generics• Current market share is approximately 5%
    6. 6. Cipla Products Sales Value (in Cr) Tablets n Capsules 3981.31 Bulk Drugs 897.8Injections/Sterile Solutions 680.29 Aerosols 617.48 Liquids 512.5 Creams 134.04 Others 86.78 Export Incentives 80.95 Other services 31.03 Sale of services 27.01 Scrap 25.54
    7. 7. STP – Cipla LtdSegment HIV/AIDS, cancer, arthritis, respiratory, cardiovascular disease Flavors and fragrances, OTC, prescription products, pesticides,Target Group agrochemicalsPositioning Developing life saving drugs SWOT Analysis – Cipla Ltd 1. Has developed good positive image by providing support to cancer patients by issuing drugs at low cost 2. Imminent commencement of the Fixed-Dose combination for treatment of uncomplicated malaria to tackle the 200+ million cases globally 3. Initiation of „No Touch Breast Scan‟ a step forward in the screening technology in India.Strength 4. A foremost player in anti-infective and anti-asthmatic formulations. 1. Strong competition from international and domestic giants means limited market shareWeakness 2. Had faced problems during negative campaign by AHF 1. Can venture into Alzheimer‟s disease medication 2. Increased investment in the budding markets, to push expansion inOpportunity the global economy 1. Constant price rises in India 2. Depreciation of Indian Rupee as compared to US Dollar - FluctuationsThreats in currency exchange rates
    8. 8. GAP Analysis of CiplaLOCATION: African market is the major market,followed by US. It has also discovered Europe as ahigh potential marketPRODUCT: Growth in domestic formulation is 12% - farbelow the industry averageRESEARCH: It‟s APIs are still about to reap benefitsand are expected to grow after a few years
    9. 9. Unichem Labs• Unichem Laboratories Ltd, a mid sized Pharma company, was founded in 1944. It operates in the business of formulations and manufacture of Active Pharmaceutical Ingredients.• Has presence in over 20 countries and good distribution network and marketing alliances in Europe and Latin America.• Has launched more than 27 products in various therapeutic segments and predominately supplies APIs for lifestyle, anti-allergic, anti-asthmatic and anti-ulcerative segments.• The Company is virtually debt free with a small D/E ratio of 0.06 (as on March 2012)
    10. 10. Unichem Products Sales Value (in Cr) Formulation Caps/Tabs 624.2517 Bulk drugs n chemicals 100.5365eyemides, ointment n powders 38.7377Formulation (Syrups - Liquid) 18.9301 Injections 16.6358 Other Fiscal Benefits 5.1832 Sundries 4.095
    11. 11. Unichem SWOT Analysis SWOT Analysis 1. Low cost of production. 2. Five Unichem Brands in Top 300 Indian Pharma brands. 3. Presence across diversified therapeutic classes. 4. Large pool of installed capacities. 5. Efficient technologies for large number of Generics.Strength 6. Increasing liberalization of government policies. 1. Very low key R&D. 2. High dependence on few key products.Weakness 1. New Therapy approaches 2. Growing incomes and growing attention to health.Opportunity 1. High Cost of discovering new products and fewer discoveries. 2. High cost of sales and marketing.Threats 3. Competition, particularly from generic products
    12. 12. Mission and Vision CIPLA Ltd• Mission - “To provide excellent quality health care facilities at reasonable cost”• Vision – To build a healthier and hence, better, world. Unichem Labs• Mission - “To be a caring pharmaceutical company helping to enhance health through quality products”• Vision - "To be a global pharmaceutical company with increasing focus on innovative research and developed markets."
    13. 13. Synergy Valuation All Cash Transaction In Crores Current Value of Cipla 30,282.17 Current Value of UniChem 1,707.09 Purchase Price 2,005.15 Annual Interest Expense 200.51 Total Merger Value 38,480.94 Post Merger EPS 22.04 Share for Share Exchange In Crores Share Exchange Ratio 0.59 New Shares issued by Buyer 5.32 Total Shares Outstanding 85.61 Total Merger Value 38,480.94 Post Merger EPS 21.19Synergy generated due to merger 6,491.69
    14. 14. EPS EPS - Combined Entity 1 60.00 45.00 40.00 40.00 35.005 20.00 2 30.00 25.00 - 20.00 15.00 10.00 5.00 4 3 - Mar 12 Mar 13 Mar 14 Mar 15 Mar 16 Merged Entity All Cash Transaction Share Transaction Cipla
    15. 15. Acquisition OptionsTender Tender Share forOffer for offer for ShareRs.212.75 Rs.222 Offer Attempt• LBO • LBO • Issue Hostile• Debt • Debt 5.32 Takeover crore shares
    16. 16. Synergy Opportunities• Raw materials – Backward Integration as well as horizontal Integration• Low Debt/Equity Ratio of Unichem• Strong Subsidiary in European Market – Niche Generics• Rich US pipeline - Unichem Pharmaceuticals (USA) Inc. – several ANDA in pipeline• Presence across diversified therapeutic classes

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