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PORTER’S FORCES IN PHARMACEUTICALINDUSTRY<br />
KEY CHARECTARISTICS<br />Of INDIAN PHARMA Industry<br />HIGHLY REGULATED<br /><ul><li>  The industry faces PRICE, QUALITY ...
Rise in number of domestic players</li></ul>NATIONAL-LIST-OF-ESSENTIAL-MEDICINES-(NLEM) lists 354 DRUGS  under cost based ...
The field of discovery and developments of new chemical entity (NCEs), had more misses than hits.<br />Very few discoverie...
Leading INDIAN Pharma companies have been actively extending the frontiers of scientific knowledge & going global through ...
FOREIGN  ACQUISITIONS <br />BY<br />INDIAN  COMPANIES <br />IN <br />“2006”<br />
MAJOR  PLAYERS  <br />IN INDIA<br />
GLOBAL  PLAYERS <br />
INDIAN PHARMA INDUSTRY DO NO HAVE THIS PROBLEM !!<br />
A paradigm shift occurred in the Indian pharmaceutical industry with India becoming a signatory to the WTO order,<br />ush...
Cardio vascular and
Central nervous system drugs.</li></ul>Anti-infective comprise the largest therapeutic segment in India, accounting for ab...
“MARKET SHARE of MNC & INDIAN Companies”<br />EXPORTS  constitutes 40% of TOTAL PRODUCTION.<br />Out of which <br />FORMUL...
Indian Pharma companies are going for compliance with<br />INTERNATIONAL REGULATORY AGENCIES like USFDA & MCC for their ma...
CONTRACT MANUFACTURING  DEALS  IN INDIA<br />
 “STRENGHTS”<br />The primary STRENGTHS OF THE INDIAN PHARMA INDUSTRY are:<br /><ul><li>INDIAN pharma industry is COST COM...
 It’s a well developed INDUSTRY with strong manufacturing base.
 Access to pool of highly trained scientist from INDIA & ABROAD.
 Strong marketing & distribution network.
 Rich BIO DIVERSITY
 Competent I chemistry & process development.</li></li></ul><li> “WEAKNESS”<br />The primary WEAKNESS OF THE INDIAN PHARMA...
 Lack of strong linkages between INDUSTRY and ACADEMICIANS.
 Low medical expenditure on healthcare in INDIA.
 Production of spurious & low quality drugs tarnishes the image of INDUSTRY at home & ABROAD.
 Shortage of life saving medicines containing psychotropic substances .</li></li></ul><li>
 “OPPERTUNITIES”<br />The OPPERTUNITIES OF THE INDIAN PHARMA INDUSTRY are:<br /><ul><li>Significant EXPORT POTTENTIAL.
 Licensing deals with MNCs for new chemical entity (NCE) & new drug delivery systems (NDDS).
 Marketing alliances to sell MNC products in domestic markets.</li></li></ul><li> “OPPERTUNITIES”<br />The OPPERTUNITIES O...
 Potential in developing INDIA as the centre for INTERNATIONAL CLINICAL TRIALS.
 NICHE player in global  pharma  R&D
Supply of GENERIC drugs to developed markets.</li></li></ul><li> “THREATS”<br />The Threats OF THE INDIAN PHARMA INDUSTRY ...
 R&D efforts are hampered by lack of enabling regulatory equipment, Ex restrictions on animal testing.</li></li></ul><li> ...
 Lowering of TARRIF protection.
 NEW MRP based excise duty in AP & MAHARASHTRA threatens existence of many small scale units</li></li></ul><li> “THREAT FR...
Labour charges are 40% lower, with favorable labour policies.
 Implemented clear intellectual property laws and data exclusivity rules, a step ahead to attract Foreign players.</li></l...
 Chinese Govt. allows 100% income tax holiday for first 2 profit making years & 50% for next 3 years.
 Companies are allowed duty free import of Capital requirement.</li></li></ul><li>“CHEMICAL EXPERIENCE”<br />
SPECIALIZED  SECTORS<br />
 “STEPS REQUIRED”<br />The steps required for boosting competitiveness are<br /><ul><li>Extension of R&D expenses deductio...
 The Govt should increase the earmarked Rs 150 Crore for R&D to about Rs 2000 Crore.
 Rationalization of Drug price control order (DPCO).</li></li></ul><li> “STEPS REQUIRED”<br />The steps required for boost...
 Income tax exemptions should be given on Clinical trials & Contract research done outside the company & abroad.
 Spurious drug problem should be tackled </li></li></ul><li><ul><li> India should exploit its age old know how on traditio...
 Govt. should provide TAX holidays for some specific periods, so that Indian companies  can exploit the  opportunity arisi...
FOUR STRATEGIES<br />
The first is a shift from an opportunistic strategy to one of focus. Market forces are driving Pharmacompanies to concentr...
Third, companies will shift from science-driven provision of specific drugs to providing customer solutions. Historically,...
PORTER’S Competitive Forces<br />
PORTER’S Competitive Forces<br />Porter&apos;s five forces analysis is a framework for the industry analysis and business ...
PORTER’S Competitive Forces<br />Strategy consultants occasionally use Porter&apos;s five forces framework when making a q...
PORTER’S Competitive Forces<br />THE THREAT OF SUBSTITUTE PRODUCTS<br />The existence of close substitute products increas...
relative price performance of substitutes
buyer switching costs
perceived level of product differentiation</li></li></ul><li>PORTER’S Competitive Forces<br />THE THREAT OF THE ENTRY OF N...
economies of product differences
brand equity
switching costs or sunk costs
capital requirements
access to distribution
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Porter’S Forces In Pharmaceutical ind

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Porter’S Forces In Pharmaceutical ind

  1. 1. PORTER’S FORCES IN PHARMACEUTICALINDUSTRY<br />
  2. 2. KEY CHARECTARISTICS<br />Of INDIAN PHARMA Industry<br />HIGHLY REGULATED<br /><ul><li> The industry faces PRICE, QUALITY & PATENT regulation.</li></ul>RESEARCH ORIENTED<br /><ul><li> Highly research driven, regularly invents NDDS along with new molecules & innovative production process.</li></li></ul><li>KEY CHARECTARISTICS<br />Of INDIAN PHARMA Industry<br />LOW PRICE ELASTICITY<br /><ul><li> Consumers less sensitive to price movements for most drugs</li></ul>LIMITED CUSTOMER CHOICE<br /><ul><li> CONSUMERS are not decision makers, DOCTORS & medical representatives play major role.</li></ul>HIGHLY DEPENDENT ON THE DEVELOPMENT OF HEALTH INFRASTUCTURE<br /><ul><li> Hospitals, health facilities, medical practitioners plays a key role in driving consumption.</li></li></ul><li>KEY ISSUES<br />Of The Industry<br />The Indian pharmaceutical industry is estimated to have over 10,000 manufacturing units, as given by the Organisation of Pharmaceutical Producers of India.<br />PRICE EROSION IN INDIAN GENERICS due to:<br /><ul><li>Price control imposed by government
  3. 3. Rise in number of domestic players</li></ul>NATIONAL-LIST-OF-ESSENTIAL-MEDICINES-(NLEM) lists 354 DRUGS under cost based price control by NATIONAL PHARMACEUTICAL POLICY 2006.<br />
  4. 4. The field of discovery and developments of new chemical entity (NCEs), had more misses than hits.<br />Very few discoveries reach the final stages of approvals, and in most of the cases the claim for patent gets stuck in legal battles.<br />INDIAN COMPANIES spend 4% of SALES on R&D, where the GLOBAL practice is of 12-16%.<br />
  5. 5. Leading INDIAN Pharma companies have been actively extending the frontiers of scientific knowledge & going global through mergers & acquisitions.<br />The European generics market have emerged as a major attraction for acquisitions by Indian companies as margin erosion in Europe is much less compared to the US when a drug or formulation becomes generic.<br />Consolidation is inevitable and is expected to bring in economies of scale and provide access to newer geographies to regional players.<br />
  6. 6. FOREIGN ACQUISITIONS <br />BY<br />INDIAN COMPANIES <br />IN <br />“2006”<br />
  7. 7. MAJOR PLAYERS <br />IN INDIA<br />
  8. 8. GLOBAL PLAYERS <br />
  9. 9.
  10. 10. INDIAN PHARMA INDUSTRY DO NO HAVE THIS PROBLEM !!<br />
  11. 11. A paradigm shift occurred in the Indian pharmaceutical industry with India becoming a signatory to the WTO order,<br />ushering in the Product Patent Regime.<br />Earlier, with the enactment of The Patent Act, 1970, only process patent was applicable.<br />In India, 97 per cent of drugs are off patent and are manufactured by a vast number of companies.<br />The key therapeutic segments include <br /><ul><li>Anti-infective s
  12. 12. Cardio vascular and
  13. 13. Central nervous system drugs.</li></ul>Anti-infective comprise the largest therapeutic segment in India, accounting for about 26 per cent of the market.<br />The INDUSTRY complieswith the Good Manufacturing Practices set by World Health Organisation. These standards improve the quality and also act as potential entry barriers for new firms to enter<br />
  14. 14.
  15. 15. “MARKET SHARE of MNC & INDIAN Companies”<br />EXPORTS constitutes 40% of TOTAL PRODUCTION.<br />Out of which <br />FORMULATIONS constitutes nearly 55%<br />BULK Drugs rest 45%<br />Almost half of the Export Revenue generated comes from Dr REDDY’S<br /> RANBAXY<br /> CIPLA<br />
  16. 16. Indian Pharma companies are going for compliance with<br />INTERNATIONAL REGULATORY AGENCIES like USFDA & MCC for their manufacturing facilities. INDIA has largest no of USFDA approved plants outside US<br />
  17. 17.
  18. 18. CONTRACT MANUFACTURING DEALS IN INDIA<br />
  19. 19.
  20. 20.
  21. 21. “STRENGHTS”<br />The primary STRENGTHS OF THE INDIAN PHARMA INDUSTRY are:<br /><ul><li>INDIAN pharma industry is COST COMPETITIVE.
  22. 22. It’s a well developed INDUSTRY with strong manufacturing base.
  23. 23. Access to pool of highly trained scientist from INDIA & ABROAD.
  24. 24. Strong marketing & distribution network.
  25. 25. Rich BIO DIVERSITY
  26. 26. Competent I chemistry & process development.</li></li></ul><li> “WEAKNESS”<br />The primary WEAKNESS OF THE INDIAN PHARMA INDUSTRY are:<br /><ul><li>Low investments in innovative R&D and lack of resources to compete with MNCs for new drug discovery research.
  27. 27. Lack of strong linkages between INDUSTRY and ACADEMICIANS.
  28. 28. Low medical expenditure on healthcare in INDIA.
  29. 29. Production of spurious & low quality drugs tarnishes the image of INDUSTRY at home & ABROAD.
  30. 30. Shortage of life saving medicines containing psychotropic substances .</li></li></ul><li>
  31. 31. “OPPERTUNITIES”<br />The OPPERTUNITIES OF THE INDIAN PHARMA INDUSTRY are:<br /><ul><li>Significant EXPORT POTTENTIAL.
  32. 32. Licensing deals with MNCs for new chemical entity (NCE) & new drug delivery systems (NDDS).
  33. 33. Marketing alliances to sell MNC products in domestic markets.</li></li></ul><li> “OPPERTUNITIES”<br />The OPPERTUNITIES OF THE INDIAN PHARMA INDUSTRY are:<br /><ul><li>Contract manufacturing arrangements with MNC s.
  34. 34. Potential in developing INDIA as the centre for INTERNATIONAL CLINICAL TRIALS.
  35. 35. NICHE player in global pharma R&D
  36. 36. Supply of GENERIC drugs to developed markets.</li></li></ul><li> “THREATS”<br />The Threats OF THE INDIAN PHARMA INDUSTRY are:<br /><ul><li>Product patent regime poses serious challenge to DOMESTIC industry unless investment happens in R&D.
  37. 37. R&D efforts are hampered by lack of enabling regulatory equipment, Ex restrictions on animal testing.</li></li></ul><li> “THREATS”<br />The Threats OF THE INDIAN PHARMA INDUSTRY are:<br /><ul><li>Drug Price Control Order put unrealistic ceilings on product prices, profitability & prevents generating investible surplus.
  38. 38. Lowering of TARRIF protection.
  39. 39. NEW MRP based excise duty in AP & MAHARASHTRA threatens existence of many small scale units</li></li></ul><li> “THREAT FROM CHINA”<br />Competitor in the exports of Active Pharmaceutical Ingredients , with an export growth of 20% per year.<br />COMPETITIVE ADVANTAGE OF CHINA<br /><ul><li>Lower Electricity costs (Rs 1.5 to 2.5 per KWH) than (Rs 4.5 to 6 per KWH) of INDIA.
  40. 40. Labour charges are 40% lower, with favorable labour policies.
  41. 41. Implemented clear intellectual property laws and data exclusivity rules, a step ahead to attract Foreign players.</li></li></ul><li> “THREAT FROM CHINA”<br />Competitor in the exports of Active Pharmaceutical Ingredients , with an export growth of 20% per year.<br />COMPETITIVE ADVANTAGE OF CHINA<br /><ul><li>Established profit oriented R&D organizations independent of Govt. funding.
  42. 42. Chinese Govt. allows 100% income tax holiday for first 2 profit making years & 50% for next 3 years.
  43. 43. Companies are allowed duty free import of Capital requirement.</li></li></ul><li>“CHEMICAL EXPERIENCE”<br />
  44. 44. SPECIALIZED SECTORS<br />
  45. 45. “STEPS REQUIRED”<br />The steps required for boosting competitiveness are<br /><ul><li>Extension of R&D expenses deduction by 150%
  46. 46. The Govt should increase the earmarked Rs 150 Crore for R&D to about Rs 2000 Crore.
  47. 47. Rationalization of Drug price control order (DPCO).</li></li></ul><li> “STEPS REQUIRED”<br />The steps required for boosting competitiveness are<br /><ul><li>Industry-academic relationship can be further explored.
  48. 48. Income tax exemptions should be given on Clinical trials & Contract research done outside the company & abroad.
  49. 49. Spurious drug problem should be tackled </li></li></ul><li><ul><li> India should exploit its age old know how on traditional & herbal medicines.
  50. 50. Govt. should provide TAX holidays for some specific periods, so that Indian companies can exploit the opportunity arising from patented Drugs & take up marketing of GENERICS to US.</li></li></ul><li>Four strategies<br />Big Indian pharma or big global pharma needs to reorient themselves to newer strategic models.<br />There have been four shifts. As a result, big pharma companies will have to develop their own models.<br />
  51. 51. FOUR STRATEGIES<br />
  52. 52. The first is a shift from an opportunistic strategy to one of focus. Market forces are driving Pharmacompanies to concentrate their efforts and to abandon the practice of investing in a broad array of compounds on the premise that nearly every opportunity is worth exploring.<br />Second, companies will shift from a fully integrated pharma company model to one that uses partnerships to manage risk and return. Today, each company handles its own discovery, development, manufacturing, marketing and sales. But trying to do everything internally carried a high risk with increasingly significant investments.<br />
  53. 53. Third, companies will shift from science-driven provision of specific drugs to providing customer solutions. Historically, the pharma industry has sold therapeutics that addresses diseases but don&apos;t necessarily cure them or meet patients&apos; full needs in managing their conditions.<br />Finally,companies will shift from a functional to an integrated business organisation model.<br />Traditionally, Big Pharma has had separate functional units for each stage of the drug development and marketing process. But the industry should study companies such as Dell and General Electric to assess the advantages of organisation models based on discrete business units. These companies grow profitably by pushing responsibility for profits down to smaller business units.<br />
  54. 54.
  55. 55.
  56. 56. PORTER’S Competitive Forces<br />
  57. 57. PORTER’S Competitive Forces<br />Porter&apos;s five forces analysis is a framework for the industry analysis and business strategy development developed by Michael E Porter of Harvard Business School in 1979. It uses concepts developed in Industrial Organization (IO) economics to derive five forces which determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An &quot;unattractive&quot; industry is one where the combination of forces acts to drive down overall profitability. A very unattractive industry would be one approaching &quot;pure competition&quot;.<br />Porter referred to these forces as the micro environment, to contrast it with the more general term macro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace. The overall industry attractiveness does not imply that every firm in the industry will return the same profitability. Firms are able to apply their core competences, business model or network to achieve a profit above the industry average. A clear example of this is the airline industry. As an industry, profitability is low and yet individual companies, by applying unique business models have been able to make a return in excess of the industry average.<br />
  58. 58. PORTER’S Competitive Forces<br />Strategy consultants occasionally use Porter&apos;s five forces framework when making a qualitative evaluation of a firm&apos;s strategic position. However, for most consultants, the framework is only a starting point or &apos;check-list&apos; they might use.<br />Porter&apos;s five forces include three forces from &apos;horizontal&apos; competition: threat of substitute products, the threat of established rivals, and the threat of new entrants; and two forces from &apos;vertical&apos; competition: the bargaining power of suppliers, bargaining power of customers.<br />According to Porter, the five forces model should be used at the industry level; it is not designed to be used at the industry group or industry sector level. An industry is defined at a lower, more basic level: a market in which similar or closely related products and/or services are sold to buyers. Firms that compete in a single industry should develop, at a minimum, one five forces analysis for its industry. Porter makes clear that for diversified companies, the first fundamental issue in corporate strategy is the selection of industries (lines of business) in which the company should compete; and each line of business should develop its own, industry-specific, five forces analysis. The average Global 1,000 company competes in approximately 52 industries (lines of business).<br />
  59. 59. PORTER’S Competitive Forces<br />THE THREAT OF SUBSTITUTE PRODUCTS<br />The existence of close substitute products increases the propensity of customers to switch to alternatives in response to price increases (high elasticity of demand).<br /><ul><li>buyer propensity to substitute
  60. 60. relative price performance of substitutes
  61. 61. buyer switching costs
  62. 62. perceived level of product differentiation</li></li></ul><li>PORTER’S Competitive Forces<br />THE THREAT OF THE ENTRY OF NEW COMPETITORS <br />Profitable markets that yield high returns will draw firms. This results in many new entrants, which will effectively decrease profitability. Unless the entry of new firms can be blocked by incumbents, the profit rate will fall towards a competitive level (perfect competition).<br /><ul><li>the existence of barriers to entry (patents, rights, etc.)
  63. 63. economies of product differences
  64. 64. brand equity
  65. 65. switching costs or sunk costs
  66. 66. capital requirements
  67. 67. access to distribution
  68. 68. absolute cost advantages
  69. 69. learning curve advantages
  70. 70. expected retaliation by incumbents
  71. 71. government policies</li></li></ul><li>PORTER’S Competitive Forces<br />THE INTENSITY OF COMPETITIVE RIVALRY <br />For most industries, this is the major determinant of the competitiveness of the industry. Sometimes rivals compete aggressively and sometimes rivals compete in non-price dimensions such as innovation, marketing, etc.<br /><ul><li>number of competitors
  72. 72. rate of industry growth
  73. 73. intermittent industry overcapacity
  74. 74. exit barriers
  75. 75. diversity of competitors
  76. 76. informational complexity and asymmetry
  77. 77. fixed cost allocation per value added
  78. 78. level of advertising expense
  79. 79. Economies of scale
  80. 80. Sustainable competitive advantage through improvisation</li></li></ul><li>PORTER’S Competitive Forces<br />THE BARGAINING POWER OF CUSTOMERS <br /><ul><li>buyer concentration to firm concentration ratio
  81. 81. degree of dependency upon existing channels of distribution
  82. 82. bargaining leverage, particularly in industries with high fixed costs
  83. 83. buyer volume
  84. 84. buyer switching costs relative to firm switching costs
  85. 85. buyer information availability
  86. 86. ability to backward integrate
  87. 87. availability of existing substitute products
  88. 88. buyer price sensitivity
  89. 89. differential advantage (uniqueness) of industry products
  90. 90. RFM Analysis</li></li></ul><li>PORTER’S Competitive Forces<br />THE BARGAINING POWER OF SUPPLIERS <br />Also described as market of inputs. Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm. Suppliers may refuse to work with the firm, or e.g. charge excessively high prices for unique resources.<br /><ul><li>supplier switching costs relative to firm switching costs
  91. 91. degree of differentiation of inputs
  92. 92. presence of substitute inputs
  93. 93. supplier concentration to firm concentration ratio
  94. 94. employee solidarity (e.g. labor unions)
  95. 95. threat of forward integration by suppliers relative to the threat of backward integration by firms
  96. 96. cost of inputs relative to selling price of the product.</li></li></ul><li>CRITICISM of 5 Forces<br />That buyers, competitors, and suppliers are unrelated and do not interact and collude.<br />That the source of value is structural advantage (creating barriers to entry).<br />That uncertainty is low, allowing participants in a market to plan for and respond to competitive behavior.<br />An important extension to Porter was found in the work of Brandenburger and Nalebuff in the mid-1990s. Using game theory, they added the concept of complementors (also called &quot;the 6th force&quot;), helping to explain the reasoning behind strategic alliances. The idea that complementors are the sixth force has often been credited to Andrew Grove, former CEO of Intel Corporation. According to most references, the sixth force is government or the public. Martyn Richard Jones, whilst consulting at Groupe Bull, developed an augmented 5 forces model in Scotland in 1993, it is based on Porter&apos;s model, and includes Government (national and regional) as well as Pressure Groups as the notional 6th force. This model was the result of work carried out as part of Group Bull&apos;s Knowledge Asset Management Organisation initiative.<br />It is also perhaps not feasible to evaluate the attractiveness of an industry independent of the resources a firm brings to that industry. It is thus argued that this theory be coupled with the Resource-Based View (RBV) in order for the firm to develop a much more sound strategy.<br />
  97. 97. y<br />
  98. 98. Company handle its suppliers under section 16 of MSMED acts<br />Company has increased focus on launching<br />new brands. Four new brands were launched in 2008 viz.,<br />Champix, Cyclokapron, Acupil and Trulimax. A new indication of<br />Lyrica in Fibromyalgia was also launched. <br />Total capital of campany is 89956 lakhs.Its market share is 2.2% . Its recent growth is 12%<br />Expenditure on R&D is 2835 lakhs.By the increase R &D investment company try to penetrate of patent products.<br />Increase new territorial expansions,new therapeutic areas and building strong sales operations system<br />
  99. 99. Torrent<br />
  100. 100. The Company has initiated the process of obtaining information from suppliers who have registered themselves<br />under the Micro Small Medium Enterprise Development Act, 2006 (MSMED Act, 2006).<br />Net worth of company is 585.25 crores.Its recent growth is 7%. <br />Total expenditure 11.28 crore.588 patents filed for NDDS technology, drug discovery projects and innovative process of API &formulations for various markets and 163 have been granted so far.` ``````````````<br />The Company introducing new molecules brands and also line extensions of existing brands. During the year, 52 (as compared to 49 in the previous year) new products were launched in the market.<br />Growth of market like organized buyer group, pharmacy chain, corporate hospitals. Increase coverage of new doctors &specialist.<br />
  101. 101. THE THREAT OF NEW ENTRANTS<br />Profitable markets that yield high returns draws Firms. This results in many new entrants, and effectively decrease profitability. <br />Unless the entry of new firms can be blocked by incumbents, the profit rate will fall towards a competitive level (perfect competition).<br />
  102. 102. THE THREAT OF NEW ENTRANTS<br /><ul><li> Existence of barriers to entry (patents, rights)
  103. 103. Economies of product differences
  104. 104. Brand equity
  105. 105. Switching costs
  106. 106. Capital requirements
  107. 107. Access to distribution
  108. 108. Absolute cost advantages
  109. 109. Learning curve advantages
  110. 110. Expected retaliation by incumbents
  111. 111. Government policies </li></li></ul><li>THE THREAT OF SUBSTITUTES<br />The existence of close substitute products increases the propensity of customers to switch to alternatives in response to price increases (high elasticity of demand).<br /><ul><li>Buyer propensity to substitute
  112. 112. Relative price performance of substitutes
  113. 113. Buyer switching costs
  114. 114. Perceived level of product differentiation</li></li></ul><li>THE INTENSITY OF<br />COMPETITIVE RIVALRY<br />For most industries, this is the major determinant of the competitiveness of the industry. <br />Sometimes rivals compete aggressively and sometimes rivals compete in non-price dimensions such as innovation, marketing, etc.<br />
  115. 115. THE INTENSITY OF<br />COMPETITIVE RIVALRY<br /><ul><li>Number of competitors
  116. 116. Rate of industry growth
  117. 117. Intermittent industry overcapacity
  118. 118. Exit barriers
  119. 119. Diversity of competitors
  120. 120. Informational complexity and asymmetry
  121. 121. Fixed cost allocation per value added
  122. 122. Level of advertising expense
  123. 123. Economies of scale
  124. 124. Sustainable competitive advantage through improvisation </li></li></ul><li>BARGAINING POWER<br />OF CUSTOMERS<br /><ul><li> Buyer concentration to firm concentration ratio
  125. 125. Degree of dependency upon existing channels of distribution
  126. 126. Bargaining leverage, particularly in industries with high fixed costs </li></li></ul><li>BARGAINING POWER<br />OF CUSTOMERS<br />Also described as the market of outputs. The ability of customers to put the firm under pressure and it also affects the customer&apos;s sensitivity to price changes.<br /><ul><li>Buyer volume
  127. 127. Buyer switching costs relative to firm switching costs
  128. 128. Buyer information availability
  129. 129. Ability to backward integrate
  130. 130. Availability of existing substitute products
  131. 131. Buyer price sensitivity
  132. 132. Differential advantage (uniqueness) of industry products </li></li></ul><li>BARGAINING POWER<br />OF SUPPLIERS<br />Also described as market of inputs. Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm. <br />Suppliers may refuse to work with the firm, or e.g. charge excessively high prices for unique resources.<br />
  133. 133. BARGAINING POWER<br />OF SUPPLIERS<br /><ul><li> Supplier switching costs relative to firm switching costs
  134. 134. Degree of differentiation of inputs
  135. 135. Presence of substitute inputs
  136. 136. Supplier concentration to firm concentration ratio
  137. 137. Employee solidarity (e.g. labor unions)
  138. 138. Threat of forward integration by suppliers relative to the threat of backward integration by firms
  139. 139. Cost of inputs relative to selling price of the product</li></li></ul><li>
  140. 140. Company not faced temporary problems with thirdparty suppliers to both its German subsidiary,<br />betapharm and its CPS (Custom Pharmaceutical<br />Services)operations in Mexico <br />During the year, the Company invested Rs. 6,293 million on manufacturing, R&D facilities and other<br />capital expenditure <br />2007–08, Company has increased its revenues at 27 %<br />Company launches new products like simvastatin, finasteride, Merck, Ondansetron, Fexofenadine<br />Company try to increase more penetration in market tie up with hospital and pharmacy chains.<br />
  141. 141.
  142. 142. Supplier Relationship Management initiatives in key categories<br />helped your Company avail of better service and improvement in on-time supplies.<br />Company invest 42 billion US Dollar in R&D<br />Company has turnover of Rs. 1500 crore and a share of 6.2 per cent* * [Source: IMS Indian Purchase Audit (IIPA), August 2008]<br /> The company is the market leader in most of the therapeutic categories .It also offers a range of vaccines, for the prevention of hepatitis A, B, influenzae, chickenpox, diphtheria, pertussis, tetanus and others.<br />Company try to increase new territory and contact with specialist doctors.<br />
  143. 143.
  144. 144. THANK<br />YOU<br />

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