RANBAXY LABORATORIES LTD By G. Prashanth kumar 11MBMA59.
Overview India’s largest pharmaceutical company Worldwide Presence • Ground presence in 49 countries, products sold in over 125 countries • Manufacturing locations in 8 countries Amongst the top 10 global generic pharma companies Global consolidated sales: US $ 2.1 Bn (2011) Highest R&D spender amongst Indian Pharmaceutical companies Over 14000 employees globally represented by 50 nationalities
History 1937- Ranbaxy was founded by Ranjit Singh and Dr Gurbax Singh in Amritsar. 1952- Bhai Mohan Singh joined the company as a partner. 1961- First manufacturing plant in Okhla 1969- First real breakthrough came with Calmpose 1973-Ranbaxy goes public 1977-Ranbaxy first joint venture in Lagos (Nigeria) is setup 1983-A modern dosage forms facility at Dewas (MP) in India.
contd… 1990-Ranbaxy got its first US Patent, for doxycycline 1993- Dr Parvinder Singh became CEO of Ranbaxy 1995- Acquisition of Ohm Laboratories of US. 1998- Ranbaxy enters USA, world’s largest pharma market with products under its own name. 1999- Devinder Singh Brar was appointed as CEO and Managing Director . 2000-Ranbaxy forays into Brazil, the largest pharmaceutical market in South America 2008- Daiichi- sankyo acquired over 51% stake in Ranbaxy Laboratories Ltd.
Capitalisation of opportunities-1. Process Patent Act 19702. Price Control Act 1979
Strategic planning In 1993- senior management underwent a strategic planning exercise- vision 2003. Aimed to achieve two milestones by the year 2003 1. $1 bn in revenues 2. Development of one new therapeutic molecule
Strategies Growth Strategy The Globalization Strategy New drug and dosage form development and manufacturing
Changing the product mix Replacing low margin bulk pharmaceuticals with higher margin formulations Value-added/ branded generics Non-branded generics New drug delivery system Proprietary molecules
Mergers and Acquisitions Parvinder Singh has adopted global strategy through joint ventures and acquisition to achieve sustainable growth. He formed a joint venture Ranbaxy Guangzhou China Ltd (RGCL) in China in 1993 Entered into the US market with the acquisition of Ohm Labs- a generic formulation company. Global alliance with Eli Lilly to manufacture and market cefaclor in US in 1994. Acquired Thai Pharmaceutical Company Unicher in 1995 and formed Ranbaxy Unicher Co. Ltd (RUCL). He acquired another company Rima Pharmaceuticals, the semisynthetic pencillins maker to sell generics products in Europe.
His basic strategy was to keep the acquired units as profit centres which helped Ranbaxy to keep acquired firms self sufficient. The acquired centre was given full responsibility of profit and loss of the company. The regional managers were given high degree of autonomy. He had adopted three tier organizational structures. 1) senior managers 2) regional managers 3) country managers.
Upgrading R&D Ranbaxy possessed an applied R&D capability A new basic research capability have to be built from the ground up to support company’s objective In 1997 Ranbaxy spent $12.6 mn and increasingly $67 mn in 2003. In 1994 it opened a world class R&D facility in Gurgaon. Hiring foreign trained scientists In-licensing of molecules developed by Japanese pharmaceuticals Spending $100 mn over ten years.
R&D New Drug Discovery Research Novel Drug Delivery Systems Research focus on Infectious Patented Platform Technologies diseases, Urology, Metabolic diseases Several Products based on these and inflammatory/ respiratory disease technologies introduced in various areas markets Strong NCE Pipeline Several NDDS based ANDAs 10 molecules in different stages of filed drug discovery Helps in developing a differentiated product portfolio
Porter’s Five Forces Model of Competition Industry Competition Bargaining Power of Competitors of Ranbaxy in India Suppliers. are:- Ranbaxy depends on certaino Dr. REDDY‘s organic chemicals .o CIPLA The chemical industry is again veryo NICHOLAS PIRAMAL competitive and fragmented.o AUROBINDO PHARMAo GLAXO SMITH KLINE o The suppliers have very lowo LUPIN bargaining power and the Ranbaxy can easily switch from theiro SUN PHRMACEUTICALS suppliers without incurring a veryo CADILLA HEALTHCARE high cost.o WOCKHARDT
contd…. Bargaining Power of Barriers to Entry Buyers Most easily accessible industries Buyers are scattered and they for an entrepreneur in India. as such does not have power in Capital requirement for an the pricing of the products. industries is low. Government with it’s policies Creating the brand awareness is plays an important role in the key for the long term survival regulating pricing through the NPPA.
contd… Threat of Substitute Products Substitute to allopathic medicine are Ayurvedic and Homeopathic medicine ,but these are not much in practice in India.
Acquisition by Daiichi Ranbaxy was facing many issues such as poor financial position, no major R&D breakthroughs, increasing price wars stiff competition in the generics market. In order to maintain its growth and market position, Ranbaxy needed an influx of fresh funds.
Daiichi Sankyo wanted to manufacture low cost generics because of Japan government’s new policy In June 2008, Daiichi Sankyo acquired over 51% stake in Ranbaxy Laboratories Ltd at Rs. 737 per share. Malvinder Singh sold out his stake of 34.8% to Daiichi Sankyo . The new entity is a significant milestone in the Ranbaxy’s mission of becoming a research-based international pharmaceutical company. Ranbaxy’s competency of low cost manufacturing and Daiichi Sankyo’s competency of innovation will provide the new entity with a sustainable, long- term competitive advantage.