The sun rises with disciplined focus

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The sun rises with disciplined focus

  1. 1. The Sun Rises with Disciplined Focus Tracking and Demystifying Secrets of Industry LeadersFirst DraftNeeds EditingWith this article we start tracking Industry Leaders. Here is from PharmaceuticalIndustry.Key words:Sun Pharmaceuticals, Focused Execution, Business Excellence, Pharmaceuticals, Pharma,Leadership, Dilip Shanghvi, Teva, business growth________________________________________________________________________1st Nov 2011Today, Sun Pharma stood full pager on Economic Times. It is not difficult to understand,why the most valued Indian Pharma company is way ahead of its competitors, althoughits revenues are not the highest.There have been regular full page coverage on industry leaders (including Pharma) invarious business magazines, but this article stands apart, for it depicts exactly why Sun isdifferent and why it is, what it is.Pharma continues to be a high margin business. When gross margins in business is over50%, there is a normal tendency to excessively rely on exploiting clients, productportfolio, geographical expansion and regulatory framework, and build shamelesscomplacency in operational effectiveness. Additionally, given the advantage of coststructure in India, you got to be taking things for granted and become careless.Sun is doing something different that gives it cost advantage also, and not the other way.It is not wasting its effort, diluting its attention or creating self-inflicting uncertainty. Andeven though Sun’s Gross margins has been over 70%, (Gross margins=Sales- materialcost), it has not allowed dilution of its focus and discipline to operate the businesseffectively and efficiently.Sun is an extremely focused company. It knows that the market is big enough. Whilecompetitors have been chasing every opportunity and the obvious directions (antibioticsand easy to make drugs in India), Sun chose to be different (building competencies inchronic diseases). It adopted blue ocean strategy, choosing exactly where it could addsignificant value (instead of risking its money all over world). It did not try to imitatecompetitors.In the words of its Chairman and Managing Director, Shanghvi, “We compete withourselves”. He knows that you do not need to compete with others, when the market is 1Copyrights ©2011, CVMark Consulting, All rights reserved.
  2. 2. big enough. Also, if you try to compete with others, you would only be where they areand, when things change you would be lost. Though, competing with yourself, is not astage that you could build quickly and easily. The ability to come to this enviable level,where you can compete with yourselves, is dependent on consciously buildingcapabilities that are different and far superior to others.Sun in one Pharma company that has developed the ability to crack complex molecules,the area that is often left by others, who took easier route for harvesting patent cliff andgambled their efforts in opaque and risky ventures. And thus it has developed an abilityand a confidence to do business on its own terms. Today it is considered an example in‘business excellence’, that has created a huge organic growth potential within. Evenlook at its acquisitions, it did not go blindly to access full global markets. Nor did it gowith the sole objective of buying companies to gain foreign foothold and transferproducts back to India for low cost manufacturing. Rather, it bought a series of poorlyperforming organizations, and turned them around by placing its own operating system.This is a rare capability that hardly any other competitor in Pharma industry has.Also when Shanghvi says, “We do not want the process of growth to be stressful,” peoplelook at his approach not just as a personal habit but a strong organizational belief that ithas experienced working year after year.Sometimes or may be often, people feel that he is conservative and not so aggressive.Actually, it is not about being conservative or aggressive. It is about being aggressivewhen you need to be and conservative when you need to be. Leaders and organizationsoften put their aggressive bets where they should not and succumb to grave undesirableeffects.Now take the case of Shanghvi. When he says ‘growth without stress’, he is talking aboutthe ‘commitment’ that one makes to the stakeholders (market, clients, employeesincluded). The commitment should not be out of over enthusiasm, nor with a view ofshort term gains, nor to lock customer with aggressive promises, nor promisinghyperbolic story to analyst to spike up valuation. It actually means to being closer toreality and giving certainty to your stakeholders.Of course, he has his eyes firmly on bottom line and cost. He means business and he iscertain what he can deliver. He is not conservative because he does not often follow thecrowd and conventional wisdom. But he certainly follows a rare discipline. He knowsthat the market is big enough, not just for one company like his, but for several. Andtherefore, he does not follow the conventional wisdom to try to grab everything available.He is disciplined enough to identify just a few Blue Ocean opportunities and pursuethem with rigor. His pursuit for Taro and Coraco is an indication of this. He is veryaggressive. Of course, taking sick organizations and turning them around is notconservatism, rather it calls for significant aggression in ‘Execution’. For that matterSun’s unassailable position as a specialty Pharma company is attributed to this focusedapproach and aggressive execution. Of course, specialty comes from expertise and from 2Copyrights ©2011, CVMark Consulting, All rights reserved.
  3. 3. inception, Sun has made focused effort in developing generics in specialty areas, andcreated ability to crack difficult to mimic generics based on complex technologies.Shanghvi has a wide portfolio of products and has a remarkable pipeline of new productfilings in US. But he is not relying on any one of these, when it comes to promise. Justbecause he has a huge war chest, he does not go to war and acquire things blindly. Hedoes not want to add numbers just for the sake of a position in the market place.He is promising on ‘execution’ and ‘operational’ capability of his people. He is relyingon the capability to work with complex molecules and the ability to lead in specializedtherapeutics. He is relying on ability of his team to transform performance of his existingplants and any new acquisition. He is relying on the deep inroads he has made withinIndia and the alliances he is building with distributors in the US. Most importantly, he islooking to unleash significant capacity organically.In today’s time where Pharma industry is at cross roads especially because of growingcomplexity of blockbuster R&D model, onslaught of Innovators into generic space,tightening control of government and regulators, shifting customer base and the fadingSales Centric model; it becomes important for organizations to make execution andoperation excellence central to their business model. Sun’s ability to respond faster tochange comes from the ability to turn things around quickly; whether within existingorganization or in an acquired one. Shanghvi has shown that his team has perhapssignificant edge over others. And aspiring to be the Teva of India, is only for it to aim for.And the reason… his discipline to choose stress free growth… by bringing aggressionwhere required. We call it focused execution and now look forward to trackingremarkable growth path of Sun.Clet:31-11___________________________________________________________________CVMark handholds business leaders in creating organizations that are built to transform.For developing, innovating and executing your business model, call Tel: +91 94480 70081 or Email details to : lolla@cvmark.com .CVMark Consulting, #2304, Nandi Park, Gottegere, Bannergatta Road, Bangalore 560083, INDIA Web: http://www.cvmark.com 3Copyrights ©2011, CVMark Consulting, All rights reserved.

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