MANAGEMENT INFORMATION SYSTEMS Batch: 2011-13 Academic Year: 2011-12 Term: Third Program: PGDM/PGDM(FS)/PGDM(R)Last Date for submission of project: Section A & B Section C & D 9th April, 2012 10th April, 2012 Submission of: Research Proposal/Report/Project/AssignmentGroup Number:Group Head Name: RACHIT BHATIA Mobile No.:9026710790Project/Assignment/Case Topic:INDUSTRY- PHARMACEUTICALSCOMPANY- CIPLA & RANBAXYANALYSIS- HR , MARKETING , TECHNOLOGICAL , FINANCIAL. Section: DS. No. Roll No: (in ascending order) Name: (in capital letters) 1. JIML_11_118 PRANJAL SAHAI 2. JIML_11_126 RACHIT BHATIA 3. JIML_11_145 SATYENDRA SINGHSubmitted to: Dr. Ankit Mehrotra
ACKNOWLEDGEMENTWith a sense of gratitude and respect, we would like to extend our heartiest thanks to all those whoprovided help and guidance to make this project. No Project is ever the outcome of single individual’stalent or effort and neither it’s a one day magic. This work is no exception. This project would nothave been possible without the whole hearted encouragement, support and co-operation of ourguide, friends and well-wishers.The successful completion of this project rests on the shoulders of many persons who have helped usdirectly or indirectly. We wish to take this opportunity to express our heartiest thanks to all those,without whose help, completion of this project would have not been possible. We are indebted andthankful to all the individuals who have guided, advised, inspired and supported us in making thisproject a success.Our sincere gratitude to our honorable guide Dr. Ankit Mehrotra for giving us the opportunity fordeveloping the project under his able guidance, motivation and constant encouragement throughoutour project. Without his help this project would have not realized its entity.
INTRODUCTION OF CIPLA Cipla Limited is a prominent Indian pharmaceutical company, best-known outside its homecountry for manufacturing low-cost anti-AIDS drugs for HIV-positive patients in developing countries.Founded by nationalist Indian scientist Khwaja Abdul Hamiedas The Chemical, Industrial &Pharmaceutical Laboratories in 1935, Cipla makes drugs to treat cardiovascular disease, arthritis,diabetes, weight control, depression and many other health conditions, and its products aredistributed in more than 180 countries worldwide.Cipla offers services like consulting, commissioning, engineering, project appraisal, quality control,know-how transfer, support, and plant supply.Apart from its presence in the Indian market, Cipla also has an export market and regularly exports tomore than 185 countries in all corners of the world. INTRODUCTION OF RANBAXY Ranbaxy is one of the leading pharmaceutical Companies in India commanding a market share ofaround 5%. The Company has clocked sales of USD 293 Mn in 2009 in India. Growing ahead of themarket, the Company has enhanced its competitive position in the domestic market through itsfocused approach.The Company’s business has been realigned to its customer groups and investments have beenmade in high growth segments. These efforts have resulted in strengthening its Chronic franchise(Life Style led) as well as has reinforced its leading position in the Acute segment.Ranbaxy is a strong player in the Novel Drug Delivery System (NDDS) segment. Its product portfoliospans across Acute & Chronic Business covering Anti-infectives, Nutritionals, Gastro-intestinals, PainManagement (Acute) Cardiovasculars, Dermatologicals, Central Nervous Systems (Chronic)segments.Company’s India operations are a dominant force in a number of participating therapeutic segments,for example Anti-infectives, Statins, Dermatology and Pain Management. A publicly listed company,Ranbaxy India is also a member of IPA (Indian Pharmaceutical Alliance) & OPPI (Organization ofPharmaceutical Producers of India).
HR ANALYSIS OF CIPLA AND RANBAXY HR POLICY OF CIPLA HR Policy ensures that they have consistent, non discriminatory approach towards the development of personnel career within the organization through meritocracy driven appraisals, consistent efforts in motivation, and a structured approach towards managing human resources. The company is an equal opportunities employer and lends strategic importance towards the recruitment, training and retention of the best of professionals in the industry. Complete disclosure to employees. Incentives for employees to maximize use of cost-effective therapies. o BONUS PROVIDENT o FUND GRATUITY o INSURANCE COVER o LEAVE TRAVEL ALLOWANCE o MEDICAL ALLOWANCE. The company’s wage policy is strictly focused on the POSITION RESPONSIBILITY & PERFORMANCE OF EMPLOYEE
HR POLICY OF RANBAXY Ranbaxy believes in the motto ‘Putting people first’. In order to sustain its success and renew its products, Ranbaxy has focused on the people behind its products and not on the products themselves. Ranbaxy has focused on people, i.e., both employees and customers. The strategy has been to recruit locally in host countries. The company has succeeded in creating multicultural portfolio of human resource skills. The training in the organisation shifted from mixed participant groups to work groups. This has increased focus on people that create and perpetuate such knowledge. The importance of Human Resource Management as a catalytic agent of growth has been increasingly recognised in Ranbaxy Laboratories Limited. The following factors may be considered while examining the recent Human Resource Management efforts in Ranbaxy Laboratories Limited.• A healthy climate, characterized by the values of openness, enthusiasm, trust, mutuality andcollaboration is essential for developing human resources.• Human Resource Management can be planned and managed in ways that are beneficial both to theindividual and organization.• Employees feel committed to their work and organization if the organization prepetuates a feeling ofbelongingness.• Employees are likely to have this feeling of the organisation if it provides for their basic needs andfor their higher needs through appropriate management styles and systems.• Employee commitment is increased with opportunity to discover and use one’s capabilities andpotential in one’s work.
MARKETING ANALYSIS OF CIPLA & RANBAXY MARKETING STRATEGY OF CIPLA Strategic Tie-Ups:Cipla has set up a wholly owned subsidiary, Cipla FZE situated at Jebel Ai Free Zone in Dubai,United Arab Emirates. This is the part of strategy to explore the growing markets in Middle Eastcountries through exports. Cipla entered agreement with Partech Pharma of USA for marketing arange of generic products for American market. Pentech is involved in developing therapies forlifestyle and quality of life conditions. This will further boost its export performance. Low-risk business model: Robust partnership model – CIPLA has entered into global tie-ups with various generic players (likeWatson, Mylan, Barr and Ivax) for supplying its generic products. This strategy enables Cipla toleverage local market knowledge of its partners and utilize its own R&D, product development, andmanufacturing skills. Ciplas offer to sell anti- aids drugs at one-third the price to developing countrieslike South Africa or any other country. The questions were raised against the strategy the companyfollows but Cipla is not committing any illegal or unethical act as it is entitled to sell anti- aids drugs inany country that doesn’t have the requisite patent protection. Cipla is not using pirated technologysince India does not have a product patent regime. Therefore, Cipla has the right to develop andreverse engineer any pharmaceutical product not protected byte countries laws. Therefore, the issueis whether Cipla is selling its products below its costs or is it able to sell cheaply because it has notincurred any research and development (R&D) expenses like multinationals incur in developingdrugs. Cipla is entitled to "make hay while the sun shines, in other words, capitalize on a sympatheticpatent law in India, but keeping in mind that after 2010, the world (and Indian) pharmaceuticalindustry will become a jungle, where only the "fittest will survive.
MARKETING STRATEGY OF RANBAXY Ranbaxy has set itself apart in the marketplace through the rapid expansion of its product line and its willingness to emulate complex drug formulations. RPIs commitment to quickly expanding the breadth and depth of its product line has been key to its success in the marketplace. Ranbaxy has a commercial advantage as many of the high-profit branded drugs with expiring patents over the next few years are in the categories where Ranbaxy has proven expertise - anti- infectives, gastrointestinal, cardiovascular and analgesics. RPI has a turnkey marketing group that works with other pharmaceutical companies to co-market and co-promote a variety of chemicals and products. As a marketing partner, RPI is able to meet the marketing needs of companies while they themselves focus their efforts on a drugs development, manufacturing, distribution and sales. Marketing Strategies is the department focused primarily on developing and executing strategies for the promotion and distribution of branded, generic and OTC products for RPI. One of the key tasks for the department is to identify opportunities in different markets and distribution channels and pursue those to developing and establish new relationships in the marketplace. Managed Care and Internet marketing are a couple of key areas that the department is looking to introduce into its ever-expanding service offerings..
TECHNOLOGICAL ANALYSIS OF CIPLA & RANBAXY TECHNOLOGICAL ANALYSIS OF CIPLA Research and Development has always been and will continue to be the focal area for Cipla. As in the past, we will continue to earmark a significant portion of our funds for R&D. Our R&D successes have certainly been directly responsible for our better performance each year for the past several decades. The R&D work being undertaken focuses on new chemical entities, new drug delivery systems, development of patent-free processes for known molecules, etc. Today, Cipla ranks among the worlds leading companies in the manufacture of metered dose products for inhalation. We have over 40 years experience in inhalation therapy and the international market for inhaled drugs is expected to be a major growth area for your Company in the immediate future. In order to meet this and other additional business requirements and opportunities, last year your Company, set up a state-of-the-art centre for manufacturing a wide range of pharmaceutical formulations in Goa. Cipla has been instrumental in setting up a Chest Research Foundation in Pune. This centre will undertake clinical research in the field of respiratory diseases particularly Asthma and Chronic Obstructive Pulmonary Disease (COPD). The Cipla Foundations Palliative Care Centre in Pune continues to provide care to terminally ill cancer patients. As of date, this institution has provided comfort and solace to over 2000 patients. New technologies will change the way we live, work and maintain our health. However radical these changes may be, Cipla will always remain synonymous with care, compassion and a humane approach to all problems involving medicines and healthcare.
TECHNOLOGICAL ANALYSIS OF RANBAXY Ranbaxy views its R&D capabilities as a vital component of its business strategy that will provide a sustainable, long-term competitive advantage. The company has a pool of over 1,200 R&D personnel engaged in path-breaking research. Ranbaxy is among the few Indian pharmaceutical companies in India to have started its research program in the late 70s, in support of its global ambitions. A first-of-its-kind world class R&D centre was commissioned in 1994. Today, the company has multi-disciplinary R&D centers at Gurgaon, in India, with dedicated facilities for generics research and innovative research. The R&D environment reflects its commitment to be a leader in the generics space offering value added formulations and development of NDA/ANDAs, based on its Novel Drug Delivery System (NDDS) research capability. The NDDS research at Ranbaxy focuses on maximizing the overall therapeutic and commercial value of commonly prescribed pharmaceutical formulations by enhancing their performance and reducing their adverse event profile. Such innovation also helps to improve the overall patient convenience and compliance The Company’s NDDS focus is mainly on the development of New Drug Applications (NDA) / Abbreviated New Drug Applications (ANDAs) of oral controlled- release products for the regulated markets. The Companys first significant international success using the NDDS technology platform came in September 1999, when Ranbaxy licensed its once-a-day Ciprofloxacin formulation on a worldwide basis to a multinational Company. Ranbaxys in-house NDDS programs are primarily focused on the oral segment. Inhalation (patented devices) and trans-dermal (patented adhesive polymers) programs are also being pursued through collaborations. Within Ranbaxy, R&D of Generics will now get a sharper focus, as the company is increasingly working on more complex and specialist areas.
FINANCIAL ANALYSIS OF CIPLA & RANBAXY BSE Particulars CIPLA RANBAXY Sensex INDUSTRYAverageExpected Return (annual) % 10.698 20.448 18.7296 3.67 Standard deviation 97.57 195.97 105.52 13.03 Average Current Ratios 2.238 1.106 1.96 1.46 Average Debt-Equity Ratios 0.12 1.092 0.724 0.62 Average Interest coverage 99.102 10.29 2.92 5.812 Average ROCE (%) 20.46 7.67 19.854 12.15 Average RONW (%) 18.032 9.576 12.118 16.402 Average EPS 10.606 8.562 B B Intercept @ 0.319064611 -0.2471315 B 0.275307219 company vs BSE Sensex P-value 0.747770158 0.87760925 B 0.056998731 Beta 0.366749849 1.25005755 B 0.020091477 P-value 0.001706576 3.8255E-09 B 0.214343333 R Square 0.15728081 0.45303811 0.026456886
RATIO’S OF CIPLA & RANBAXYRANBAXY 2011 2010 2009 2008 2007 AVGNet Profit Margin(%)/return on sales 19.74 11.72 -22.02 14.33 9.07 6.568Return On Capital Employed(%) 12.82 8.03 2.52 4.93 10.05 7.67Return on Assets 121.74 94.16 84.24 68.01 5.41 74.712Current Ratio 1.4 1.18 1.16 0.83 0.96 1.106Quick Ratio 1.6 0.89 0.86 0.97 1.03 1.07Debt Equity Ratio 0.83 0.85 1.05 1.38 1.35 1.092Long Term Debt Equity Ratio 0.57 0.68 0.8 0.9 0.93 0.776Interest Covererage 22.22 15.24 1.29 3.19 9.51 10.29Investments Turnover Ratio 3.95 4.05 4.07 4.67 4.66 4.28Asset Turnover Ratio 2.13 2 2.14 2.08 2.12 2.094Earnings Per Share 27.28 13.61 -24.85 16.56 10.21 8.562Return on Net Worth 22.41 14.44 -29.5 24.34 16.19 9.576 CIPLA 2011 2010 2009 2008 2007 AVG 1 Net Profit Margin(%) 14.98 18.97 14.58 16.43 18.41 16.674 2 Return On Capital Employed(%) 16.22 22.16 22.39 18.17 23.4 20.468 3 Return on Assets Including Revaluations 82.36 73.66 55.97 48.32 41.64 60.39 4 Current Ratio 1.94 2.17 1.81 2.62 2.65 2.238 5 Quick Ratio 1.56 1.57 1.93 1.88 1.76 1.74 6 Debt Equity Ratio 0.07 -- 0.22 0.15 0.04 0.12 7 Long Term Debt Equity Ratio -- -- 0.02 0.15 0.04 0.07 8 Interest Cover 222.4 57.08 35.92 67.27 112.84 99.102 9 Investments Turnover Ratio 3.73 4.18 3.79 3.83 3.74 3.854 10 Asset Turnover Ratio 1.61 1.94 1.94 1.91 1.98 1.876 11 Earnings Per Share 11.96 13.47 9.99 9.02 8.59 10.606 12 Return on Net Worth 14.54 18.31 17.89 18.72 20.7 18.032
INTERCOMPANY ANALYSIS AVERAGE EXPECTED RETURN- The average annual return of CIPLA Ltd. is 10.69 which is more on the lower side as compared to Ranbaxy which is 20.448 respectively which means that more investors will get attracted towards Ranbaxy as its expected return is more than that of Cipla. RETURN ON ASSETS- Return on assets/return on investment is 60.39 which is lower than Ranbaxy which is 74.71 which indicates that Cipla’s overall profitability is lower comparative to Ranbaxy. NET PROFIT MARGIN- Net Profit Margin/Return on sale of Cipla is 16.67% which is more than that of Ranbaxy which is 6.56% , which shows good returns. ASSET TURNOVER RATIO- The asset turnover ratio is 1.87 which is lower than that of Ranbaxy which is 2.09 through which we can infer that Cipla is managing its assets efficiently which contribute to better returns. EARNING PER SHARE- The earning per share of Cipla is 10.606 which is more than that of Ranbaxy which is 8.562 which shows higher returns of Cipla’s as compared to Ranbaxy. RISK OF RETURN- The Risk of Return/Standard Deviation on Cipla is 97.57 which is lower as compared to that of Ranbaxy which is 195.97 which indicates there is less risk on return in Cipla as compared to Ranbaxy. CURRENT RATIO- The risk is low as current ratio is 2.23 which is more than the ideal i.e. 2:1.Current ratio indicates company’s ability to pay its debts in short term which is better than that of Ranbaxy which is 1.106. Higher current ratio indicates lower risk.
DEBT – EQUITY RATIO- Company’s debt equity ratio is 0.12 which is is lower than that of Ranbaxy which is 1.092 which shows that company is neither too risky nor too conservative. INTEREST COVERAGE RATIO- Company’s interest coverage ratio is 99.102 times which is higher than that of Ranbaxy which is 10.29. Higher interest coverage ratio indicates adequate safety for payment of interest even if there were to be drop in company’s earning. BETA- Beta of Cipla is 0.3667 which is less than 1. This indicates that company is defensive whereas Beta of Ranbaxy is 1.25 which is more than 1 , which indicates that company is offensive. P – VALUE- The P-value indicates statistical accuracy of data. It should always be less than 0.05. Since P-value of Cipla is 0.001706576 which is less than 0.05 whereas the P-value of Ranbaxy is 3. 8255509 which is more than 0.05 which shows that data of Cipla is much accurate than that of Ranbaxy. R – SQUARE- The R square shows the relation between market return and company’s return. R square of Cipla is 0.1572 whereas the R square of Ranbaxy is 0.4530 which is higher than that of Cipla which shows that performance of Ranbaxy is 29.58% more dependent upon market than that of Cipla.
ANALYSIS OF CIPLA & RANBAXY WITH INDUSTRY ANALYSIS OF CIPLA WITH INDUSTRYIndustry’s average expected return is 3.67 per annum which is lower than Cipla’s expected returnwhich is 10.69 with industry’s risk of 0.020 which is lower than risk of Cipla which is 0.366, whichmeans Cipla gives higher return with high risk as compared to industry. ANALYSIS OF RANBAXY WITH INDUSTRYIndustry’s average expected return is 3.67 per annum which is lower than Ranbaxy’s expected returnwhich is 20.44 with industry’s risk of 0.020 which is lower than risk of Ranbaxy which is 1.25, whichmeans Rabaxy gives higher return with high risk as compared to industry
ANALYSIS OF CIPLA & RANBAXY WITH MARKET ANALYSIS OF CIPLA WITH MARKETMarket (BSE Sensex) average expected return is 18.73% per annum whereas Cipla’s expectedreturn is 10.69% which is lower than that of market which means Cipla gives low return as comparedto market. ANALYSIS OF RANBAXY WITH MARKETMarket (BSE Sensex) average expected return is 18.73% per annum whereas Ranbaxy’s expectedreturn is 20.44% which is higher than that of market which means Ranbaxy gives higher return ascompared to market.
CONCLUSIONAccording to the values of Net Profit Margin, Earning Per Share, BETA (β) and Standard Derivation,Cipla has the best performance as compared to Ranbaxy. The net profit margin of Cipla is 16.67%which is higher as compared to that of Ranbaxy. The EPS of Cipla is 16.67% which is higher ascompared to that of Ranbaxy. The standard derivation (which is a measure of total risk) of Cipla is97.57 which is lower as compared to that of Ranbaxy , which shows lower risk in Cipla. The Beta (β)value of Cipla is 0.3667 which is also less than 1 which also tells that it is less risky in nature. So, atlast we conclude that Cipla has a better performance as compared to Ranbaxy.
BIBLIOGARPHY www.moneycontrol.com › PHARMACEUTICALS www.equitymaster.com http://en.wikipedia.org/wiki/Cipla www.televisionpoint.com/news2007/newsfullstory.php?id. www.business-standard.com › Home › Companies & Industry www.ranbaxyusa.com/businessopp.aspx www.ranbaxy.com/annualreports/rworld_aug05.pdf articles.economictimes.indiatimes.com Some of the matter is taken from economic times & business standard newspaper.