Ranbaxy’s Future in Sustainable HealthcareTeam B1 – Equilibrium Consulting
Roadmap to Success                                                      Situation Analysis                                ...
Our Understanding                 Your Growth Potential                                        Indian Pharamaceutical     ...
Roadblocks to Success        Threats to Revenue Streams                                        Challenges    Competition  ...
Opportunity Statement              By introducing Daiichi’s patented drugs into India, optimizing quality assurance, and i...
Categorizing Your Challenges                                      2 Key Areas        Current Road                         ...
Categorizing Your Challenges                                        2 Key Areas          Current Road                     ...
Categorizing Your Challenges                                        2 Key Areas          Current Road                     ...
Categorizing Your Challenges                                        2 Key Areas          Current Road                     ...
Categorizing Your Challenges                                        2 Key Areas          Current Road                     ...
Alternatives   What markets? Emerging or Developed                                   Market Mix   What products? Generic o...
The Path Forward                                           Generic in      Generic in         Innovative in               ...
Recommendation                                                                               Target                      Q...
Quality Control Committee        1. Optimize Quality               2. Bringing Innovative                                 ...
Move Into India        1. Optimize Quality                  2. Bringing Innovative                                        ...
Products of Daiichi Sanko        1. Optimize Quality                      2. Bringing Innovative                          ...
Products of Daiichi Sanko        1. Optimize Quality           2. Bringing Innovative                                     ...
Pharmaceutical Marketing        1. Optimize Quality           2. Bringing Innovative                                      ...
Daiichi-Sankyo Medical Representatives        1. Optimize Quality                2. Bringing Innovative                   ...
Daiichi Medical Conference        1. Optimize Quality           2. Bringing Innovative                                    ...
Narrowing Focus of R&D        1. Optimize Quality             2. Bringing Innovative                                      ...
Projected Sales and Costs Sales (2015)                                                                  Pharmaceutical Mar...
Financial Implications                                                                         Net Cash Flows (Sensitivity...
Implementation                          Short Term (present-2012)                         Long Term (2014 onwards)        ...
Risk Mitigation                                     • Ensures that road blocks like import ban do not occur               ...
3 Key Takeaways                              Ranbaxy will:                                                                ...
Slide Index Our Understanding                           Financial Information                        Key Challenges Our Un...
 Financial Information            28
Projected Sales (Pessimistic)Situation Analysis   Alternatives   Recommendation   Financial Impact   Implementation   Wrap...
Projected Sales (Most Likely)Situation Analysis   Alternatives   Recommendation   Financial Impact   Implementation   Wrap...
Projected Sales (Optimistic)                                                 .Situation Analysis   Alternatives   Recommen...
Revenues for Daiichi Sankyo  Transfer pricing model  Ranbaxy purchases   drugs from Daiichi at                          ...
Net Present Value ModelSituation Analysis   Alternatives   Recommendation   Financial Impact   Implementation   Wrap-up   ...
Quality Control Costs                                    Cost                 Amount                      Training Seminar...
 Key Challenges        35
Key Issue: FDA                           How to mitigate import ban issue?                                              Ac...
Key Issue: Synergies       How do we effectively leverage synergies between Daiichi and Ranbaxy?                          ...
Leveraging Synergies                                                                     .                                ...
Key Issue: Sustainability       What alternative provides a long term sustainable strategy for both Daiichi               ...
 Pharmaceutical and India Analysis                  40
The Pharmaceutical Value Chain                                             Drug                                          M...
Generic Drug Consumers - IndiaDemographic                                               Geographic• Lower income          ...
Patented Drug Consumers - IndiaDemographic                                            Geographic• Higher Income           ...
India: Key Health Issues Cardiovascular Disease    Heart diseases: number one killer in both urban and rural areas    Pr...
Competitive Analysis Main Competitor: Cipla  Prominent Indian pharmaceutical compnay; manufacturing low-   cost anti-AIDS...
Growth of Indian Population  1.2 billion people                                 Demographic Shifts in India              ...
 Implementation        47
Detailed Implementation                         Short Term (present-2012)                           Long Term (2014 onward...
Short Term Implementation (2011-2012) Quality Control Optimization - Addition to core values       -   Approaching Dale At...
Implementation – Immediate Actions                                       Nov   Dec   Jan    Feb    Mar     Apr    May     ...
Quality Assurance Committee     How to Implement – Weekend Training      Session:        2 top level managers from each ...
 Recommendation Details            52
NDDS: Why?       NDDS       - Helps companies build patent fences       - If they develop a new delivery system for an exi...
Why Benicar, WelChol, Effient         1. Quality Control             2. Bringing Innovative                               ...
Value Proposition - Daiichi                                     Sustainable innovative                                    ...
Value Proposition - Ranbaxy                                Sustainable generic drug                          Who I Am   ma...
Synergy Office  Will complement our penetration into the Indian market with   innovative office  Facilitate the logistic...
 Externalities        58
Corruption                                                                                       API Network              ...
What is Sustainability? Pharmaceutical Industry: - Sustainability in terms of business model -   Is the “Hybrid Business M...
Ranbaxy Generic Drug Market Penetration  Ranbaxy already sells generic drugs in all major developing and   developed phar...
Incentive for API  Provide international industry experience  Support API’s objective in organizing, promoting   the sea...
Hedging  Ranbaxy currently hedges against all major currencies in the   markets they operate  Ranbaxy will purchase drug...
Triple Bottom Line Sustainability in a broader context:       Additional focus for pharmaceutical companies in regards t...
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  • Pharmacy Benefits Manager:
  • Ranbaxy singapore

    1. 1. Ranbaxy’s Future in Sustainable HealthcareTeam B1 – Equilibrium Consulting
    2. 2. Roadmap to Success Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-UpSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 2
    3. 3. Our Understanding Your Growth Potential Indian Pharamaceutical Industry Growth  India has highest industry growth in $25 emerging markets (12-14% per year) $20  India, Brazil, Russia, China Billions of USD $15  Strong profitability potential from NDDS research and development $10  New dosage form licensed to Bayer AG for $65 million $5  Dependence on generic drugs leads $- to volatile profitability 2010 2011 2012 2013 2014 2015  2008: $215.5 million loss due to inventory write off 12.3% Compound Annual GrowthSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 3
    4. 4. Roadblocks to Success Threats to Revenue Streams Challenges Competition Supply Chain How to move towards sustainabilityIncreased presence Challenges faced as a of generic players result of in developed acquisition markets How to achieve higher levels of synergy Regulator Authorities Immediate Threat: How to promote quality control FDA import ban in the USSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 4
    5. 5. Opportunity Statement By introducing Daiichi’s patented drugs into India, optimizing quality assurance, and increasing R&D focus on NDDS (Novel Drug Delivery Systems) Ranbaxy will leverage synergies with Daiichi by addressing quality control, in addition to taking advantage of all available opportunities associated with the „Hybrid Business Model‟. The 7-year implementation of this recommendation will generate an NPV of $1.5 to $2.5 billion.Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 5
    6. 6. Categorizing Your Challenges 2 Key Areas Current Road Future Growth Blocks What can be Achieving Better done about Sustainability Synergies import ban?Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 6
    7. 7. Categorizing Your Challenges 2 Key Areas Current Road Future Growth Blocks What can be Achieving Better done about Sustainability Synergies import ban?Acquire new Lobby FDA forproducers / timely resolutionbuild plants - +/- Strengthen quality control processes + Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 7
    8. 8. Categorizing Your Challenges 2 Key Areas Current Road Future Growth Blocks What can be Achieving Better done about Sustainability Synergies import ban?Acquire new Lobby FDA for Supply Qlty Sales/producers / timely resolution Chain Mgmt. Mrktbuild plants - +/- Strengthen quality control processes + Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 8
    9. 9. Categorizing Your Challenges 2 Key Areas Current Road Future Growth Blocks What can be Achieving Better done about Sustainability Synergies import ban?Acquire new Market Growth Lobby FDA for Supply Qlty Sales/producers / timely resolution Chain Mgmt. Mrkt Market Sharebuild plants Revenue Streams - +/- Strengthen quality control Are we in the right Is our R&D best suited to processes markets with the right serve our long-term products? needs? + Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 9
    10. 10. Categorizing Your Challenges 2 Key Areas Current Road Future Growth Blocks What can be Achieving Better done about Sustainability Synergies import ban? Non-Negotiable Decision CriteriaAcquire new Market Growth Lobby FDA for Supply Qlty Sales/producers / timely resolution Chain Mgmt. Mrkt Market Sharebuild plants Revenue Streams - +/- Questions our Alternatives need to Address Strengthen quality control Are we in the right Is our R&D best suited to processes markets with the right serve our long-term products? needs? + Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 10
    11. 11. Alternatives What markets? Emerging or Developed Market Mix What products? Generic or Innovative Developed Emerging 2 1 Increase generic Increase generic Alternatives products in products in USA, Europe, Jap India, South Generic Generic drugs, an America, Vietna 1 m, China Emerging markets Type of Generic drugs, Products 2 3 Developed markets Market innovative drugs Innovative drugs, in countries like Innovative 3 India, South Emerging markets America, Vietna m, ChinaSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 11
    12. 12. The Path Forward Generic in Generic in Innovative in Emerging Developed Emerging Sustainability +/- - ++ Profitability +/- +/- + New Synergies - - ++ Actionability + + + Low level of risk +/- + ++Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 12
    13. 13. Recommendation Target Quality Control Committee High Synergies Bringing Innovative Drugs to Streamline India R&D Focus Low Sustainability HighSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 13
    14. 14. Quality Control Committee 1. Optimize Quality 2. Bringing Innovative 3. Streamline focus of R&D Assurance Drugs to India  Quality Control Committee Optimization  Committee currently in place, headed by Mr. Dale Adkisson  What they do: set internal guidelines  Take it to the next level:  Add “honesty and integrity” to corporate culture – Mr. Adkisson should propose this to the executive board (umbrella term for quality assurance)  Includes:  Ethical Research/Data Collection  Ethical behaviour of sales representatives  Verification by External Audit group:  3rd party: make sure that rules/regulations relating to Quality control are being followed  Ensures no conflict of interestSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 14
    15. 15. Move Into India 1. Optimize Quality 2. Bringing Innovative 3. Streamline focus of R&D Assurance Drugs to India Why bring Daiichi brands to India? Market Mix  Innovative Drug Producers only Emerging Developed occupy 5% of the pharmaceutical industry (will increase to 10%) Generic Type of  There is a void in what your group Products of companies supplies to emerging markets in terms of innovative Innovative drugsSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 15
    16. 16. Products of Daiichi Sanko 1. Optimize Quality 2. Bringing Innovative 3. Streamline focus of R&D Assurance Drugs to India What brands should we focus on?  Given the rise in lifestyle disease Rise in Lifestyle across the Indian demographic a Disease market is developing for the following type of innovative drugs  Cardiovascular Disease  Hypertension  Diabetes India in 5-10 yearsSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 16
    17. 17. Products of Daiichi Sanko 1. Optimize Quality 2. Bringing Innovative 3. Streamline focus of R&D Assurance Drugs to India What brands should we focus on?  Benicar (high blood pressure)  WelChol (reduce cholesterol)  Effient (heart disease)  Mevalotin  Loxonin  Hirudoid  Olmetec  Captopril  Panipenem  Cravit  Evoxac  FloxinOtic  GracevitSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 17
    18. 18. Pharmaceutical Marketing 1. Optimize Quality 2. Bringing Innovative 3. Streamline focus of R&D Assurance Drugs to India 3 Key Issues:  Low level of customer knowledge  Number and quality of medical reps  Poor customer acquisition, development and retention strategies Who to target  Health care providers  Medical representatives  Backbone of entire marketing effort  Collaboration of “Associations of Physicians of India” (API)  Trade booth/medical fairs/seminarsSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 18
    19. 19. Daiichi-Sankyo Medical Representatives 1. Optimize Quality 2. Bringing Innovative 3. Streamline focus of R&D Assurance Drugs to India Addressing Your Medical Sales Representatives Develop Rapport Objective Retrain Ranbaxy Sales Reps Salary with Healthcare Providers Action  Brand and product knowledge  Compensation  Consistent Required -based meetings to  Customer education & retention build  Focus on customer service relationships  5 reps for each region (Delhi,  Drug Samples Trivandrum, Jalpur, Rohtak)  Invitation to Daiichi Medical ConferenceSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 19
    20. 20. Daiichi Medical Conference 1. Optimize Quality 2. Bringing Innovative 3. Streamline focus of R&D Assurance Drugs to India Sample Flyer for Doctor‟s SeminarSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 20
    21. 21. Narrowing Focus of R&D 1. Optimize Quality 2. Bringing Innovative 3. Streamline focus of R&D Assurance Drugs to India Objective: Streamline R&D activities to focus mainly on Novel Drug Delivery Systems (NDDS) What this New NDDS methods accomplishes  Create synergies in R&D between Orally Ranbaxy and Daiichi administered, controlled-  R&D in India is nearly 50% less than release other countries Inhalation  Ranbaxy developments will help create line extension for Daiichi that will serve to extend their product patents with Trans-dermal (patches) Abbreviated New Drug Applications (ANDAs)  Financial incentive: Ranbaxy can profit from licensing R&D to DaiichiSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 21
    22. 22. Projected Sales and Costs Sales (2015) Pharmaceutical Market $60 million $20 billion $2 billion Generics Innovative $20 billion 90% 10% - $2 billion Other Firms Ranbaxy 97% 3% - $60 millionCosts Selling, General & Marketing Transfer Pricing Administrative Expenses 28% of revenues Expenses $8.5 million 10% premium 15% of revenues $3 million / yearSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 22
    23. 23. Financial Implications Net Cash Flows (Sensitivity Analysis) Assumptions $160 $120 Millions of USD Growth $80 12.3% pharmaceutical industry growth per year $40 $- Market Share 2012 2013 2014 2015 2016 2017 2018 5% innovative drug market share by 2018 $(40) Base Case Pessimistic Optimistic Cost of Capital 13% $1.5 billion $2.5 billion NET PRESENT VALUE NET PRESENT VALUE (=6.5 times 2010 Profit) (=11 times 2010 Profit)Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 23
    24. 24. Implementation Short Term (present-2012) Long Term (2014 onwards) Quality Control NDDS - Core Value - Research and develop Technology - Quality Control Seminar Quality Control - External auditing group - Continuation of external auditing and Innovative Products in India bi-annual visits - Acquisition of Daiichi products Innovative Products in India - Establish distribution logistics - Revaluate and extend product offeringsQ4 2011 2012 2013 2014 2015 2016 Medium Term (2012-2014) Quality Control - Continuation of external auditing and bi-annual visits Innovative Products in India - Training of Medical Sales Representatives - Daiichi Medical Conference - Products launch - Reevaluate and extend product offerings Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 24
    25. 25. Risk Mitigation • Ensures that road blocks like import ban do not occur againQuality Assurance • Sets universal standards that can be applied to 11 Optimization plants worldwide • Pre-emptive action • Effectively leveraging synergies in: Supply Chain, Marketing & Daiichi Patented Sales, Quality Control between Daiichi and Ranbaxy drugs to Indian • No additional learning/adaptation costs • Existing Products in New Market; established distribution Market channels • Expanding range of products/servicesIncreased focus on • Able to further penetrate both developed/developing markets (new products) NDDS (R&D) • Less focus on volatility of reverse engineeringSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 25
    26. 26. 3 Key Takeaways Ranbaxy will: High 1. Benefit from increased synergies 2. Ensure the sustainability of the ‘Hybrid Business Model’ Synergies Increase Introduce Ranbaxy’s Quality Daiichi’s R&D focus on Assurance patented Novel Drug Low Sustainability High Optimization drugs to Delivery India Systems (NDDS) 7 year project Profitable Growth generating High Quality Products $1.5 to $2.5 Billion NPVSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 26
    27. 27. Slide Index Our Understanding Financial Information Key Challenges Our Understanding Projected Sales (Pessimistic) Mitigate Import Ban Roadblocks to Success Synergies Projected Sales (Most Likely) Opportunity Statement Projected Sales (Optimistic) Clarifying Synergies Alternatives Revenue for Daiichi Sankyo What Provides LT Sustainability Categorizing Your Challenges Net Present Value Model Alternatives Pharmaceutical & India Analysis Quality Control Costs Decision Matrix Pharmaceutical Value Chain Recommendation Details Recommendation Generic Drug Consumer Profile The Path Forward NDDS: Why? Patented Drug Consumer Profile Quality Control Committee Benicar, WelChol and Effient CVD & Hypertension Move into India Value Proposition: Daiichi Competitor Analysis Products of Daichii Sankyo Value Proposition: Ranbaxy Why India - Growth of Indian Pharmaceutical Marketing Population Synergy Office Medical Sales Representative Daichii Medical Conference Pamphlet Externalities Implementation Narrowing Focus of R&D Corruption Detailed Overall Implementation What is Sustainability in this Context? Financial Information Detailed Short Term Why Not Generic? – Ranbaxy Market Implementation – Content Projected Sales and Costs Penetration Financial Implications Detailed Short Term Incentive for API Implementation – Visual Implementation Quality Assurance Committee Hedging Risk MitigationSituation Analysis Alternatives Recommendation Financial Impact Implementation Implementation Wrap-up Triple Bottom Line Wrap-Up 27
    28. 28.  Financial Information 28
    29. 29. Projected Sales (Pessimistic)Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 29
    30. 30. Projected Sales (Most Likely)Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 30
    31. 31. Projected Sales (Optimistic) .Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 31
    32. 32. Revenues for Daiichi Sankyo  Transfer pricing model  Ranbaxy purchases drugs from Daiichi at $70 - $130 million cost plus 10% premium NPV for Daichii Sankyo  Ranbaxy is a subsidiary of Daiichi SankyoSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 32
    33. 33. Net Present Value ModelSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 33
    34. 34. Quality Control Costs Cost Amount Training Seminar $1,250,000 Information Materials $200,000 Online Media $150,000 Total $1,600,000 • $1.4 million dollar investment into Quality Control • Funded with cash (currently $550 million in cash and bank balances)Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 34
    35. 35.  Key Challenges 35
    36. 36. Key Issue: FDA How to mitigate import ban issue? Acquire /Build New Implement Production Facilities Internal Quality Control Sustainability - ++ Capability of existing Infrastructure - + Ease of Implementation +/- +Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 36
    37. 37. Key Issue: Synergies How do we effectively leverage synergies between Daiichi and Ranbaxy? Supply Chain Sales & Quality Control Marketing Ease of ++ +/- ++ Implementation Maximizing Efficiency ++ + +/- Cost Savings ++ + + Leverage Industry ++ +/- - OpportunitiesSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 37
    38. 38. Leveraging Synergies . Secondary Consumer AIP R&D Manufacturing Manufacturing Distribution Sales/Market & Packaging ingRanbaxy leveraging Daiichi’s Daiichi leveraging Ranbaxy’s Daiichi leveraginginvestments in R&D: established distribution Ranbaxy’s sales-Established Patented Products channels (Patented Drugs): representatives-Product Mix: -Market Knowledge + Access -Marketing/Sales of -Consumer Knowledge Patented Drugs -Customer LoyaltyDaiichi leveraging Ranbaxy’s Ranbaxy leveragingincreased R&D focus on drug Ranbaxy leveraging Daiichi’s existing brand equity ofdelivery established distribution Daiichi products-Extending Patents on products systems in developed markets -Product Mix:-Outsourcing part of the R&D (drug delivery systems): -Awareness/Brandprocess -Japanese Market LoyaltySituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 38
    39. 39. Key Issue: Sustainability What alternative provides a long term sustainable strategy for both Daiichi and Ranbaxy? Expand into New Product Line Streamlining Geographic Regions Development R&D processes Profitability ++ +/- + Long-term Growth ++ + + Core Values + + + Leverage Industry ++ +/- + OpportunitiesSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 39
    40. 40.  Pharmaceutical and India Analysis 40
    41. 41. The Pharmaceutical Value Chain Drug Manufacturer Pharmacy Drug Pharmacy Benefits Wholesaler Manager Health Insurer / Medical Staff ConsumerSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 41
    42. 42. Generic Drug Consumers - IndiaDemographic Geographic• Lower income • Rural Areas• Recent ascension into the middle class • Outer reaches of Urban areas• Tier 2 Consumers .Behavioral Psychographic• Need for OTC products • Lack of access to healthcare services; lack of ability to• Basic solutions to prevent symptoms spend on healthcare • Increased focus: Neuropsychiatry, Oncology, Cardiovascular, Gastro- Intestinal, Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 42
    43. 43. Patented Drug Consumers - IndiaDemographic Geographic• Higher Income • Urban Areas• Middle/High class consumers • Mumbai/Bangalore/Chennai/Delhi• Tier 1 Consumers .Behavioral Psychographic • Access to hospitals/clinics/healthcare• Safety • Western lifestyle diseases• Brand Names • Increased focus:• Quality Assurance Neuropsychiatry, Oncology, Cardiovascular, Gast• Prescription based medicines ro-Intestinal, Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 43
    44. 44. India: Key Health Issues Cardiovascular Disease Heart diseases: number one killer in both urban and rural areas Prevalence rates of CVD in rural populations lower than urban populations  25% in age group of 25-69 years  Predominantly 60–69 years Hypertention Diabetes Causes: Urban lifestyle  Life-long incurable disease  inadequate sleep, cigarette caused by high blood-sugar smoking, stress levels, lack of levels exercise Hypertension is 25-30% in  41M Indians have it urban and 10-15% in rural  Expected 74M will have it in subjects 2025Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 44
    45. 45. Competitive Analysis Main Competitor: Cipla  Prominent Indian pharmaceutical compnay; manufacturing low- cost anti-AIDS drugs for HIV-positive in developing countries  product range comprising cardiovascular drugs Other Competitors: Dr. Reddy’s laboratories, Sun PharmaceuticalSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 45
    46. 46. Growth of Indian Population  1.2 billion people Demographic Shifts in India 1600  1.6% annual growth 1400  Will surpass Chinese 1200 population in 2025 1000 Upper Class Upper-Middle Class 800 Middle Class Lower-Middle Class Emergence of the 600 Below Poverty Line Middle Class 400 530 million people will enter the middle class 200 by 2025 0 1985 1995 2005 2015 2025Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 46
    47. 47.  Implementation 47
    48. 48. Detailed Implementation Short Term (present-2012) Long Term (2014 onwards) Quality Control NDDS - Core Value - Develop Technology - Quality Control Seminar - Research - External auditing group Quality Control - Identification - Continuation of external auditing and - Practices bi-annual visits Innovative Products in India Innovative Products in India - Acquisition of Daiichi products - Revaluate distribution strategies - Establish distribution logistics - Extend product offeringsQ4 2011 2012 2013 2014 2015 2016 Medium Term (2012-2014) Quality Control - Continuation of external auditing and bi-annual visits Innovative Products in India - Training of Medical Sales Representatives - Begin marketing products - Daiichi Medical Conference - Revaluate distribution strategies Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up - Extend product offerings
    49. 49. Short Term Implementation (2011-2012) Quality Control Optimization - Addition to core values - Approaching Dale Atkinson about approaching Executive Committee of Ranbaxy - External Auditing - Searching for/hiring of external “quality auditors” - Establishing of jurisdiction; responsibilities - Investigate processes of Ranbaxy plants, make sure they adhere to CQ rules and regulations - Quality Control Seminar - Planning for Seminar; Location, dates - QC Seminar Follow up - 2 visits per year by Dale Atkinson and his Quality Committee to Ranbaxy plants Patented Drugs into India - Acquiring Products from Daiichi - Re-training of Sales ForceSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 49
    50. 50. Implementation – Immediate Actions Nov Dec Jan Feb Mar Apr May Jun Jul AugCore ValueQuality Control SeminarQuality Control Exec. Team: Bi-annual visitsExternal Auditing Group-Identification- Begin auditAcquisition of Daiichi productsEstablish distribution logistics Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up
    51. 51. Quality Assurance Committee  How to Implement – Weekend Training Session:  2 top level managers from each production facility  Away for one weekend; sessions held by Mr. Adkisson and his group  why is this important? What impact does this have on the company (financially and socially)  Mr. Adkisson and his committee visit plants; (bi-annually for each plant) check on 51
    52. 52.  Recommendation Details 52
    53. 53. NDDS: Why? NDDS - Helps companies build patent fences - If they develop a new delivery system for an existing drug, and if they are First-to-File to produce as the original patent runs out, they can receive marketing exclusivity for up to 180 days Benefits for Ranbaxy - Transfer Pricing - Following a market trend - Increased number of Indian Generic Pharmaceutical companies going in this direction - Mitigates Risk - Reduces focus on US market; allows Ranbaxy to further penetrate Indian pharmaceutical generic market - Sustainability - Increased variety of products/services offered - Further penetration of both developed/developing markets - More to offer both new/existing consumersSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 53
    54. 54. Why Benicar, WelChol, Effient 1. Quality Control 2. Bringing Innovative 3. Streamline focus of R&D Committee Drugs to India What brands should we focus on? Drug Addresses Patent Successful Expiry In Other Markets Addresses the Benicar High Blood 2016 trend of Pressure increasing occurrence of WelChol Lowers 2014 lifestyle disease Cholesterol among Indians Effient Heart 2012 DiseaseSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 54
    55. 55. Value Proposition - Daiichi Sustainable innovative drug manufacturer Who I Am Sustainable; financially and in terms of How I Feel business model + effectively leveraging demographic trends – part of a mutually beneficial partnership HIGH END/NICHE PENETRATIONWhat I Get Established Distribution Network, In depth consumer knowledge, Market/Consumer AccessSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 55
    56. 56. Value Proposition - Ranbaxy Sustainable generic drug Who I Am manufacturer How I Feel Further penetration of the Indian drug market, taking advantage of demographic and industry trends – part of an effective partnership What I Get Financial incentives + Increased sales and market share in the Indian drug market; Leveraging of R&D synergiesSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 56
    57. 57. Synergy Office  Will complement our penetration into the Indian market with innovative office  Facilitate the logistics behind our recommendation  Sales and Marketing: Medical sales representatives  Supply Chain: Use of our distribution channels for Daiichi office  Quality Control: Coordinating quality control in for RanbaxySituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 57
    58. 58.  Externalities 58
    59. 59. Corruption API Network Commission-based Established, Medical Association trusted representatives of network Physicians of India (API)Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 59
    60. 60. What is Sustainability? Pharmaceutical Industry: - Sustainability in terms of business model - Is the “Hybrid Business Model” sustainable in the long term? - Ensure growth, profitability, and constant innovation Market Mix Emerging Developing Generic Type of Products InnovativeA truly sustainable Pharmaceutical company is present in all four segmentsSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 60
    61. 61. Ranbaxy Generic Drug Market Penetration  Ranbaxy already sells generic drugs in all major developing and developed pharmaceutical markets  Entered Japan through the Daiichi Sankyo Espha subsidiary in early 2010Situation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 61
    62. 62. Incentive for API  Provide international industry experience  Support API’s objective in organizing, promoting the search in problems relating to the science of medicine  Meetings, exhibitions, conferencesSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 62
    63. 63. Hedging  Ranbaxy currently hedges against all major currencies in the markets they operate  Ranbaxy will purchase drugs from Daiichi Sankyo in Japanese Yen  Ranbaxy should continue to hedge against currency fluctuations in the Indian Rupee and Japanese Yen using future contractsSituation Analysis Alternatives Recommendation Financial Impact Implementation Wrap-up 63
    64. 64. Triple Bottom Line Sustainability in a broader context:  Additional focus for pharmaceutical companies in regards to sustainability  “Health & Safety” of customers and individuals Triple Bottom Line:  PROFIT  Economic impact  Is our recommendation profitable for the company?  PEOPLE  All the stakeholders, including society at large  Focus on “honesty & integrity” – improves overall quality for stakeholders  Positive impact on community by introducing medicine that was previously unavailable  PLANET  Impact on the planet and natural systems 64

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