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SUMMARY / BACKGROUND OF THE CASE
IKEA Swedish retailer
Dominates markets in 32 countries.
Corporate Mantra: “Low price with the meaning”
Good quality at a low price.
30-50% below competitors
Last 4 years – Retail prices reduced by 20%
In response to a huge crisis in 2000, the new CEO of Procter & Gamble has to decide whether to continue with an unusual organizational design or to revert to the old matrix organization. Describes all the organizational designs used by Procter & Gamble from the 1920s onward, including geographic, product, and matrix architectures. Market development organizations, global business units, and global business services unit, each of which is heavily interdependent with the others and none of which has a clear decision-making advantage, comprise the unusual organizational design. Examination of the different organizational designs, trade-offs associated with each organizational architecture as well as the accompanying implementation problems
Assignment on Case- IKEA: DESIGN AND PRICINGanonymous
SUMMARY / BACKGROUND OF THE CASE
IKEA Swedish retailer
Dominates markets in 32 countries.
Corporate Mantra: “Low price with the meaning”
Good quality at a low price.
30-50% below competitors
Last 4 years – Retail prices reduced by 20%
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Document content PESTAL and SWOT analysis of NESTLE with examples and detailed analytics. #PESTAL #SWOT #NESTLE
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This presentation briefly will elaborate how IKEA has adopting Porter's Five Forces and Value Chain Analysis in order to maintain its competitive edges over its rivals in furniture market all over the globe by providing good quality furniture at a lower price tag. Hence by bringing in innovative design, improved functionality, low cost operating expenditures and offering excellent quality at lower prices, IKEA's has proved to be a success.
Japan pharmaceutical industry & forecast focus on otc and prescription drugs...AMMindpower
The report offer detailed study of OTC and prescription drugs market, key trends, driving forces and recent Mergers and acquisitions. The report also talks about future outlook of overall Japanese Pharmaceutical industry and demand for prescription and OTC drugs in coming years.
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Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s DholeraAvirahi City Dholera
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Enterprise excellence and inclusive excellence are closely linked, and real-world challenges have shown that both are essential to the success of any organization. To achieve enterprise excellence, organizations must focus on improving their operations and processes while creating an inclusive environment that engages everyone. In this interactive session, the facilitator will highlight commonly established business practices and how they limit our ability to engage everyone every day. More importantly, though, participants will likely gain increased awareness of what we can do differently to maximize enterprise excellence through deliberate inclusion.
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Editable Toolkit to help you reuse our content: 700 Powerpoint slides | 35 Excel sheets | 84 minutes of Video training
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Memorandum Of Association Constitution of Company.pptseri bangash
www.seribangash.com
A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
https://seribangash.com/article-of-association-is-legal-doc-of-company/
Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
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Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
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Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
https://seribangash.com/difference-public-and-private-company-law/
Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
Putting the SPARK into Virtual Training.pptxCynthia Clay
This 60-minute webinar, sponsored by Adobe, was delivered for the Training Mag Network. It explored the five elements of SPARK: Storytelling, Purpose, Action, Relationships, and Kudos. Knowing how to tell a well-structured story is key to building long-term memory. Stating a clear purpose that doesn't take away from the discovery learning process is critical. Ensuring that people move from theory to practical application is imperative. Creating strong social learning is the key to commitment and engagement. Validating and affirming participants' comments is the way to create a positive learning environment.
4. • At the turn of the century, the financial situation in Japan surrounding
health insurance had become strained due to increasing medical costs
shouldered by the government owing to the aging population, advances in
medical technology and the development of new medical equipment.
• The Ministry of Health, Labour and Welfare (MHLW) had to respond with
measures designed to help curb the cost of medicine shouldered by patients,
medical institutions and insurers, which stimulated the market for generic
drugs.
• In fiscal 2003, the sales share of generic drugs in the pharmaceutical
market increased 5.2%, or 0.4 percentage points, in terms of value and 16.4%,
or 4.2 percentage points, in terms of sales volume. This upward trend was to
continue.
5. • These measures by MHLW saw a reorganization of the pharmaceutical
industry particularly in the drug wholesale trade and generic market.
• It resulted in mergers and restructuring of major domestic pharmaceutical
manufacturers which were almost nonexistent in the past but had become
commonplace now.
• The other new business model which emerged for pharmaceutical firms
was to outsource business to bio-venture companies, a move that
attracted much attention.
6. Generic Drugs Market Share
Japanese Market % Value
(Drug price basis)
% Quantity basis
1999 4.70 10.80
2002 4.80 12.20
2003 5.20 16.40
2004 5.47 17.00
Market Shares of Generic Drugs in Main Countries (2002)
U.S. Germany U.K France Japan
Quantity (%) 52 50 52 12 12
Value(%) 9 29 17 3 5
9. • The growth of cardiovascular medicines was supported by
antihypertensive drugs, vasodilators and lipid-lowering agents.
Antihypertensive drugs in fiscal 2003 totaled ¥439.7 billion, an
increase of 8.5%, retaining the top position in terms of drugs
classified by effect.
• The reason for the strong growth was the rapid expansion of the
Angiotensin II receptor inhibitor.
• Cardiovascular medicines that attained steady growth included
Blopress (Candesartan) from Takeda Pharmaceutical, Nu-Lotan
(Losartan) by Banyu Pharmaceutical, and Diovan (Valsartan) from
Novartis Pharma.
• In addition, contributing to this increase was the release of Micardis
(Telmisartan) by Nippon Boehringer Ingelheim in December 2002,
and the release of Olmetec (Olmesartan) by Sankyo–Sanwa Kagaku
Kenkyusho and Kowa–Nikken Chemicals in May 2003.
10. • Lipid-lowering agents in 2002 stagnated at ¥269.5 billion, down
6.4%, but bounced back vigorously in 2003 to ¥302.7 billion, up
12.3%.
• Sales of the HMG-CoA reductase inhibitor increased.
• Mevalotin (Pravastatin) of Sankyo and Lipovas (Lovastatin) of Banyu
which were top ranked drugs were reclassified as generic drugs in
July 2003 which resulted in minus growth in the CVS agents as a
whole in 2004
• Lipitor (Atorvastatin) of Pfizer and Astellas, a second-generation
cardiovascular agent, exhibited strong growth. Livaro (Pitavastatin)
was introduced by Kowa and Sankyo in September 2003.
• Competition in the cardiovascular agent market was expected to
further intensify with the launch of Crestor (Rosuvastatin) by
AstraZeneca and Shionogi in March 2005.
11. • The market for agents affecting the central nervous system
gradually expanded, although the respective market share did not
change much.
Four top-ranking products showed rapid growth :
• Psychoneurotic agent Zyprexa (Olanzapine) from Eli Lilly Japan
• Risperdal (Risperidone) from Janssen Pharmaceutical
• Seroquel (Quetiapine) from Astellas
• Depas (Etizolam) from Mitsubishi Pharma
13. • The number of pharmaceutical companies operating in the
Japanese market had been increasing due to the entry of foreign
pharmaceutical companies and non-pharmaceutical firms
diversifying their product portfolios but around the year 2000 the
number had decreased.
• There were several reasons for this, the first being the slower
growth of the domestic drug market. In addition, some
pharmaceutical companies tried to expand through mergers and
restructuring, while others simply withdrew from the market due to
the time lag between research and commercialization, as well as
the increased costs for development.
• As a result, the number of pharmaceutical companies peaked at
1,646 in 1993, but then decreased to 1,062 in 2003.
14. Broadly classified, there were three groups of
pharmaceutical companies:
• Those that mainly produced and sold prescription drugs
(474 firms)
• Those that mainly produced and sold over-the-counter
drugs (416)
• Those that produced and sold drugs other than
prescription and over-the-counter drugs (172).
• Within the first group, 71 mainly produced and sold
generic drugs. The trend toward oligopoly in the
pharmaceutical market strengthened, with the top 10
firms accounting for 42.5% of sales in fiscal 2003
15. Top 20 Drug Companies by Sales
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000 Sales 2004 (Million Yen)
16. Mergers & Acquisitions
Various types of mergers and reorganizations were seen during the period. These included
• Mergers between Japanese and foreign-affiliated drug companies,
• Japanese-only drug companies which we the most common, or
• Foreign-only companies.
Mergers and reorganizations in the Japanese pharmaceutical industry during the period include:
Period Company 1 Company 2 New Entity
October 2002 Chugai Pharmaceutical Nihon Roche New Chugai
October 2002 Daiichi Pharmaceutical Suntory Pharma Daiichi Suntory Pharma
October 2003 Taisho pharmaceutical Toyama Chemical Taisho Toyama
Pharmaceutical
February 2003 Dynabott Hokuriku Seiyaku Abbott Japan
August 2003 Pfizer Pharmacia Pfizer
17. Other examples of Japanese-foreign mergers included:
• Nippon Boehringer Ingelheim in July 1997,
• Novartis Pharma in April 1997,
• Wyeth Lederle (currently Wyeth) in December 1998,
• AstraZeneca, Aventis Pharma and Sanofi- Synthelabo in January 2000, and Glaxo
Smith Kline in January 2001.
• Japanese-only mergers started appearing around 2004.
• Yamanouchi Pharmaceutical and Fujisawa Pharmaceutical merged on April 1, 2005
to create Astellas Pharma.
• Dainippon Pharmaceutical and Sumitomo Pharmaceuticals were to merge as
Dainippon Sumitomo Pharma,
• Daiichi Pharmaceutical and Sankyo were to jointly form the holding company
Daiichi Sankyo, both in October 2005.
New moves by top-ranking Japanese pharmaceutical companies began to open up a
new stage of mergers and reorganizations, with some observers expecting more
activity among major domestic drug companies, following the example of Takeda
Pharmaceutical.
18. Foreign-Affiliated Companies
• Almost all large pharmaceutical companies in the world had
entered the Japanese market. There were few barriers for
innovators to entering this market, but experience had shown that
it can take a long time for foreign companies to establish
themselves.
The major routes to enter the market:
• Establish a joint venture with a Japanese pharmaceutical company
• Conclude a sales tie-up or also called as co-promotion deals
After doing business in Japan and learning about the market, however,
many foreign companies ended up selling their own products directly.
Furthermore, foreign companies had already realized increased growth
through mergers and reorganizations.
By the end of 2004, 3 foreign-affiliated companies were listed among
the top 10 pharmaceutical companies: Pfizer was second, Chugai fifth
and Novartis Pharma eighth.
19. Mergers and reorganizations of foreign-affiliated pharmaceutical companies
can be broadly divided into two types.
• The merger of Japanese subsidiaries of foreign companies resulting from
mergers and restructuring of parent companies in their home countries.
• This was mostly seen, and examples include AstraZeneca (established by
the merger of Astra Japan and Zeneca Pharma in January 2000), Glaxo
Smith Kline (established by the merger of Glaxo Welcome and Smith Kline
Beecham in January 2001) and Pfizer (established by the merger of Pfizer
and Pharmacia).
• The other was to combine management between a foreign-affiliated
pharmaceutical company and a Japanese pharmaceutical company.
• This includes Abbott Japan (established by the merger of Dynabott and
Hokuriku Seiyaku in February 2002) and Chugai (established by the merger
of Chugai Pharmaceutical and Nippon Roche in October 2002).
20. Spin-off & Consolidation
Company Name Action
Kyorin
Pharmaceutical
Closed Nogi plant in March 2006
Sankyo Yasugawa & Tanashi plants closed
Shinogi & Co. Concentrate on production at Settsu & Kanegasaki plants and shut down the rest
Tanabe Seiyaku Separated Onada Plant as Tanabe Seiyaku. Yamaguchi Co Ltd.
Takeda Chemical
Industries
Closed Shonan plant in March 2006 & concentrated production at Hikari & Osaka
plants
Chugai
Pharmaceutical
Closed down 3 plants and concentrated production at Utsunomiya & Fujieda
plants. Later spun off the production division as a separate entity
Mitsubishi
Pharma
Separated Yoshitimu & Ashikaga plants as MP- Technopharma in April 2005
Meija Seika
Closed Yodogawa drug preparation plant and consolidated production at
Odawara plant
Mochida
Pharmaceutical
Seperated Otawara plant as Mochida Seiyaku Kojo in April 2005.
21. Re-organisation of Generic MFG
Company Name Period Action
Towa
Pharmaceutical
Oct-03
Acquired all shares of J-Dolph Pharmaceutical & converted it into a wholly-
owned subsidiary
Nipro Apr-04
Accepted the allocation of new shares to a third party issued by Takeshima
Seiyaku & converted the latter into a subsidiary. Nipro's shareholding ratio rose
to 65.5%
Sawai
Pharmaceuticals
Nov-04
Entered in a business tieup with Zensei Pharmaceutical Industries. Acquired
167,000 shares (19.9%) issued & outstanding
Nichi-iko
Pharmaceutical
Jan-05 Absorbs Nippon Galen
Apr-05
Concluded a comprehensive business tieup agreement & business transfer
agreement covering drugs with Maruko Pharmaceuticals. Acquired Maruko
Pharmaceuticals & converted into its subsidairy
Teikoku Medix Oct-05
Teikoku Medix & Ohta Pharmaceutical merged and the new entity was Teikoku
Medix Co Ltd.
22. Drug Wholesalers
• The introduction of the price quotation system escalated
competition among drug wholesalers and profitability worsened.
• Wholesalers were forced into mergers or business tie-ups with the
purpose of lowering their costs by developing economies of scale,
which helped them to strengthen sales and create more bargaining
power with manufacturers.
• As a result, member companies of the Japan Pharmaceutical
Wholesalers Association (JPWA) decreased from 440 in 1986 to 142
in fiscal 2005, a drop of 298
• Mergers and reorganizations accelerated from around 1999,
resulting in four main groups: Mediceo Holdings, Suzuken group,
Alfresa group and Kyoso Mirai group
24. Wholesaler Turnover & Subsidiaries
Company Name Major Subsidiaries
Mediceo HD
Senshu Yakuhim, Ushioda Sangokudo Yakuhin, Chiyaku, Kuraya Sanseido, Yamahiro Kuraya,
Heiseiyakuhin, Izutsu-Yakuhin, Everlth, Atol
Suzuken Suzuken Okinawa Yakuhin,Suzuken Iwate, Nakano Yakyhin, Astis
Alfresa HD Alfresa Pip Tokyo, Daiwa Yakuhin, Kowa-yakulin, Odashima, Alfresanikkensangyo, Ando
Toho
Pharmaceuticals
Sanus, Honma Toho, Tokai Toho, Yamagachi Toho, Ogawa Toho, Yakushin, Gogo Toho
-
500,000
1,000,000
1,500,000
2,000,000
Mediceo HD Suzuken Alfresa HD Toho Pharmaceuticals
Sales (Million Yen)
25. Drug distribution is roughly divided into four main channels:
• Prescription drugs flow from manufacturers to hospitals via
wholesalers.
• Some over-the-counter drugs flow from manufacturers to
consumers via drugstores and other retailers.
• Other over-the-counter drugs move from manufacturers to
consumers via wholesalers and then drugstores/retailers.
• Medicines sold door-to-door move from manufacturers to
consumers via sales companies specializing in this kind of sales.
About 70% of prescription drugs is sold to medical institutions via
primary wholesalers, and the rest is sold by small/midsized or
secondary wholesalers that have no direct transactions with either
large or second-tier manufacturers.
27. Policy environment for Generic Drugs
Date Major Policy to encourage use of generic drugs
April 2002
Incentives introduced for doctors and pharmacists
Introduction of additional fees for prescriptions with
generic drugs
Introduction of generics information fees and generic
drug dispensing fees
April 2003 Introduction of comprehensive payment system*1 for DPCs
April 2006 Review of prescription forms
October 2007 Government set target in numerical terms for the share of
generics (former indicator*2) of 30% or more by March
2013.
28. Policy Changes
• An incentive to use lower-cost generic drugs was included in the April
2002 revisions to the health insurance system, under the section covering
dispensing fees and medical service fees.
• It was decided that if a generic drug were included in a prescription
obtained from a pharmacy that is not part of a hospital, two points may be
added to the medical service fee and two points to the dispensing fee.
• In addition, 10 points may be added if information about the drug is
furnished to the patient.
• In June of the same year, the Ministry of Health, Labour and Welfare sent
a notice to government-operated hospitals and sanatoriums encouraging
them to use generic drugs more. Three months later, the ministry
introduced a fixed-rate payment for geriatric care.
• In April 2003, salaried workers’ burden of medical fees was raised to 30%,
resulting in higher medical costs for patients at medical institutions.
• Thus, the business climate became more favorable for generic drugs.
29. • Moreover, patent rights expired on such big-market
drugs as Gaster of Yamanouchi, Mevalotin of Sankyo
and Lipovas of Banyu.
• In April 2003, the comprehensive evaluation system
known as diagnosis-procedure combination (DPC) was
introduced, stimulating the proliferation and increased
consumption of generic drugs at medical institutions.
• The new environment had become a boon to major
generic drug firms, such as Towa Pharmaceutical, Sawai
Pharmaceuticals, Taiyo Yakuhin and Nichi-iko, while
other generic drug companies began to actively seek
mergers and restructuring to expand their shares.
30. • The revised Pharmaceutical Law enacted in April 2005
replaced the old “approval for manufacture” regulation
with “approval for manufacture and wholesale.”
• Previously, only partial outsourcing of a manufacturing
process was permitted, but the revised law allows
complete outsourcing.
• As a result, the market for drug manufacturing services
expanded. In Addition, some major pharmaceutical
companies spinned off manufacturing operations into
separate companies.
31. Generic Drugs Registration
• The total time from new generic drug application to approval was generally 12 months
• New generic drugs were approved in February and August, because the National Health
Insurance drug price list was updated twice a year, in June and December.
• The application review time was 9 months, and MHLW approval procedures and Good
Manufacturing Practice (GMP) inspections were conducted during the remaining 3 months.
Application
12 months
First Inquiry
Answer
Preparing
Inquiry
Answer
GMP
inspection
5 months 1.5 months 2.5 months 2 months
Approval
Approval judgment
period of MHLW
Applicant
time
32. Process of Screening
Applicant Pharmaceuticals & Medical Devices Agency
Interview
Inquiry by PMDA & confirmation
Presentation by Applicant
Applicant Screening Specialist
Investigation Specialist
Factory
GMP
Inspection
Screening &
investigation
of reliability
Report about
screening
Report about screening
Result of screening (notification
of results)
External Specialist
Consultation
(Screening
Experts) Discussion of main problems
Document review
External Specialists
Screening
Experts
Result of
GMP
investigation
(notification
of Result)
Interview
by
screening
committe
e
Applicant
Applicant
Side expert
Screening
expert
External expert
• Explanation (presentation) by Applicant
• Study of main problem
• Proceedings entrusted to department
manager in charge of screening
• Two interviews possible
Screening
expert
External expert
Consultation among
screening experts
(ongoing, following
interview)
Ministry of Health, Labour & Welfare Pharmaceutical Affairs Council
Approval Request for Advice
Designation &
consultation
Advice
Summing up main problem
34. POLITICAL
• Early 2000’s was a time of turmoil in the Political system of Japan
• Prime Minister Obuchi suffered a stroke in April 2000 and was replaced by Yoishiro
Mori.
• After the Liberal Party left the coalition in April 2000, Prime Minister Mori
welcomed a Liberal Party splinter group, the New Conservative Party, into the
ruling coalition which lasted for 1 year.
• On 24 April 2001, riding a wave of grassroots desire for change, maverick politician
Junichiro Koizumi defeated former Prime Minister and other party stalwarts on a
platform of economic and political reform.
• on 8 August 2005, Prime Minister called for a snap election to the lower house, as
threatened, after LDP stalwarts and opposition DPJ parliamentarians defeated his
proposal for a large-scale reform and privatization of Japan Post, which besides
being Japan's state-owned postal monopoly was the world's largest financial
institution, with nearly 331 trillion yen of assets.
• The ruling LDP started losing hold since 2006. No prime minister except Koizumi
had good public support.
• On 26 September 2006, new LDP President Shinzo Abe was elected by a special
session of the Diet to succeed Junichiro Koizumi as Prime Minister.
35. Economy
• Average duration of the Japanese business cycles was around
50 months, which was relatively short in comparison with
other developed countries where an average cycle lasted for 6
years.
• Average duration of the recessions in Japan was around 17
months, which was longer than in other developed countries
whose recessions lasted only 12 months on average.
• The total amount of trade between Japan and India had been
rising since 2002, reaching approximately US$6.8 billion in
2005.
• However, this figure was not commensurate with the two
countries economic power and potential.
36. The trade share and its relative importance between
Japan and India were diminishing:
• Japan ranked 10th among India’s export destinations
(share of 2.5%) and 10th among import sources (2.8%),
• India ranked 26th among Japan’s export destinations
(0.6%) and 28th among import sources (0.6%).
• As for other comparable major economies in 2005, the
trade value between Japan and China was US$189.4
billion and between India and the US, US$20 billion
indicated a substantial potential for further expansion
of trade between Japan and India.
37. • India’s exports of software to Japan had grown dramatically in years, marking a
60% increase in the year 2004 alone.
• At the same time, there had been no changes in the traditional structure in which
major exports were comprised of commodities such as gems, marine products and
iron ore, making diversification of the trade structure a challenge.
• Manufactured goods such as automobile components still constituted a large
proportion of India’s imports from Japan.
• Japan and India were studying the sectors in which India had expanded its trade
volume with other countries, and considerations were drawn for increasing the
trade value in IT, textiles and fiber products and pharmaceutical products.
• A study conducted by Japan Bank for International Cooperation (JBIC) revealed
that India ranked third after China and Thailand, as a promising country in which to
expand business in the medium term, and second after China in the long term.
• Thus the expectations were high for the future.
38. Social
– Japan is ranked as the 10th most populated country in the world (the U.S.
Census Bureau, 2005). However, according to some other sources, it is not
10th, rather 11th in the world.
– Total population in Japan is 126.4 million. Shintoism and Buddhism are two
major religions while the major language is Japanese which is spoken by
around 99% of the country’s population.
– Japan faces a number of social challenges. Ageing population and sinking birth
rate are two of the biggest challenges Japan faces today.
– The life expectancy for men is 81 years, while 87 years for women. Many
sources forecast that the Japanese population is likely to fall below 100 million
in 2048 and about 87 million by 2060.
– This will severely impact on Japan and it will lose out to regional powers,
particularly China.
– Therefore, many Japanese politicians are now highlighting an ‘integrated’
immigration policy to draw vital foreign workers to Japan to reduce the skill-
gaps created by shrinking birth rate and ageing population.
39. • Many people in Japan prefer Japanese companies to
foreign ones. This makes trading difficult for foreign
companies. Indeed, this is one of the main reasons as to
why many foreign companies failed in Japan.
• For instance, after operating 9 years, Tesco (British retail
giant) had to close its operations in Japan in 2012 (BBC,
2012). Likewise, Wendy’s, Pret A Manger’s, and many
other global companies failed in Japan.
• However, it is also true that some foreign companies did
very well in Japan as well. Therefore, it is extremely
important for foreign companies to carry out a detailed
environmental scanning before entering into Japan.
40. Technology
• Japan is one of the most technologically advanced countries in world. The
Japanese are well-known as extremely creative in searching out and
learning to use modern technologies. Japan has been pushing
technological innovation and creativity in such a way that many countries
will struggle to emulate.
• Japan’s innovation can be found in a variety of fields. For example,
automation systems are widely used in Japan, particularly in hospitals,
airports, and restaurants. Likewise, Japan is well ahead of many other
advanced countries in robotic development. Indeed, it has more than half
of the industrial robots in the world.
• The contactless payment system has been in Japan for a long time; indeed,
long before many countries even thought about it. Japan has also done
tremendously well in areas such as space research and development,
chemicals, optics, rail transport, and semi-conductors. These
developments offer great opportunities for both Japanese and foreign
individuals and companies.
41. – Lupin began making incremental changes in its Japanese
facilities tweaking the system for greater efficiency,
ensuring better economies of scale, and renegotiating
prices with large independent wholesalers (oroshi) and
regional (hansha) players.
– For instance, at Kyowa’s factories, instead of producing the
full quota of drugs for a month (200-odd), it decided to
produce less per month but for three months continuously.
– This brought down operational costs significantly because
it reduced the time taken for cleaning between
changeover for drugs.
– “Without creating any dissonance in the company, we
were able to raise margins from 33% to 42% in the first
year,” says Kamal K. Sharma, managing director, Lupin.
42. Legal
• Legal environment is the last element to discuss in the PESTEL
analysis of Japan.
• People can work in Japan as employees, dispatched workers,
independent contractors, and directors.
• All employees enjoy employment rights and benefits such as
maximum work hours, work breaks, holidays, and maternity
leave.
• Companies need to register employees for mandatory
pension insurance, health insurance, unemployment
insurance, and workers’ accident compensation insurance.
• All of these apply to employment relationships regardless of
the citizenship of employees (Ohta, 2015).
43. Environment
• Japan is a relatively clean and environmentally responsible
nation. However, it faces some environmental challenges today. For
example, waste management is one of the biggest environmental
issues in Japan. Trash produced by the modern society, industrial
activities, and agriculture contribute to the production of a great
deal of waste. Japan is indeed under pressure to minimise waste
and control environmental pollution.
• Japan is one of the countries, most affected by calamities and
natural disasters. Tsunamis, floods, earthquakes, mudslides,
cyclones, and volcanic eruptions hit Japan from time-to-time. These
disasters cost Japan billions of dollars for reforms and rebuilding. In
fact, Japan is a less popular tourist destination because of natural
disasters, high-cost, and language barriers.
45. 1.Competition/
Industry Rivalry
is high
1.Threat of
new
entrants
1.Bargainin
g power of
the buyers
1.Threat of
substitutes
1.Bargainin
g power of
the
suppliers
1. BP high - API Cos - Difficult to manufacture
products.
2. BP low – API suppliers – Simple to
manufacture or commoditized.
3. Hence, BPOS is medium.
1. TOS medium: because one generic can be
substituted by another.
2. However, there are limited number of generic
players in Japan.
1. Entry barriers for Japan are high considering
the regulatory approval timelines for generic
entry in their market along with consumer’s
preference for branded innovator products.
2. TONE is low for the short term. Registrations
can go on for a 2 year period by which new
strategies can be developed to counter comp
1. Generics – Cost Effectiveness
2. Significant savings for buyers
3. Therefore BPOB is low since the government is
pushing for generics.
46. Competitive Rivalry
• Ranbaxy (now wholly owned by Daiichi Sankyo) was one of the first to enter the
country in 2002 by acquiring a 50% stake in Nihon Pharmaceutical Industry (a
subsidiary of Nippon Chemifar). But it was unable to make much headway, and
after its acquisition by Daiichi, it ended the tieup in 2009.
• Ahmedabad-based Torrent Pharmaceuticals opened a fully-owned subsidiary in
Yokohama in April 2006, only to exit two years later.
• Dr. Reddy’s too announced its entry into Japan in 2011 by signing a joint venture
with Tokyo-based Fujifilm to deliver APIs and formulations.
• Similarly, Ahmedabad-based Zydus Cadila has been in Japan since 2007 after it
acquired Nippon Universal Pharma. But Japan barely accounts for 1% of the total
business of Zydus Cadila and Dr. Reddy’s.
• Those who track international pharma describe Japan as a fortress, where the top
10 firms, including Takeda, Astellas, Daiichi Sankyo, Eisai (all Japanese), Pfizer,
Roche, Merck, and Novartis (foreign), account for 44.7% of the total market.
• Most foreign firms partner a local player because the Japanese prefer buying drugs
made by Japanese companies; the big Japanese firms also control the trade.
48. LUPIN LTD.
44%
21%
15%
20%
Therapeutic Mix
Cephalosporins
Anti-TB
Cardiovasculars
Others
53%
22%
25%
Gross Sales (Geography Break-
down)
Domestic
Exports - Advanced
Markets
Exports - Emerging
Markets
23 22
77 78
0
50
100
2005-06 2006-07
SalesContribution%
Global Sales (Market Break-
down)
Advanced Markets Emerging Markets
Lupin was one of the top-
5 Indian Pharmaceutical
Companies operating in
50 countries
It earned revenues of
around Rs. 20 Bn and
profit of Rs. 3 Bn
Lupin had six
manufacturing facilities
all located in India
It had a debt equity ratio
of 0.61
Lupin’s promoters held
slightly more than 50% of
its share capital
1827.2
3020.6
0
1000
2000
3000
2005-06 2006-07
InRs.Million
Net Profit
Net Profit
49. Strength
1. World leader in Anti-TB drugs &
Cephalosporin.
2. Considerable presence in market of
Asthma, Pediatric Diabetes and CNS
3. Presence in US & European market
4. Manufacturer of API & vertical
integration in most areas
5. R&D focus and strong pipeline
Weakness
1. High dependence on the US market.
2. Operates in low growth segments
such as CNS and Respiratory.
Opportunity
1. Increased generic awareness in
Japanese pharma market.
2. Strong leadership with cultural know
how in the Japanese market
3. 3 year relationship with Kyowa for API
supply.
Threat
1. Indian generic players who are trying
to enter Japan.
2. Regulatory hurdles
3. Japanese obsession with the quality
of medicines.
50. Kyowa Pharmaceutical
Established in 1954 and involved in the development, manufacture,
sale and import of generic drugs
Business strategy- to become the market leader in generic psychiatry
drugs
Out of 1379 psychiatric hospitals in japan, 1258 prescribed Kyowa’s
products
Kyowa spent around 8% of its FY 2006-07 sales on R&D
63% of sales were achieved through small distributors and the rest
through wholesalers
83% of revenue was from own-product sales and the remaining were
from merchandize sales, where Kyowa acted merely as a trader for
both domestic and overseas manufacturers
2% 1.90% 1.90% 2%
0%
1%
2%
FY2005 FY2006 FY2007 FY2008E
Market Share in Japan (% of total)
Market Share (% of total)
33.60%
15.10%13.60%
37.70%
Segments by Sales
Psychia
tric
Cardiov
ascular
Respira
tory
Others
0
2000
4000
6000
8000
InJPYMillions
Sales
50
51. Strength
1. Market leader in generic psychiatry drugs
2. Presence in cardiovascular, Respiratory and
other category.
3. Good hospital coverage (1258/1379)
4. Good products demand
5. 8% R&D spend
6. Good distribution network
7. 83% of revenue was from domestic sale
Weakness
1. Low cash reserves and negative balance
sheet
2. Complete dependence Domestic market.
3. Formulators (dependency for API)
4. High Operational costs
5. Less focus on Respiratory
Opportunity
1. Increased generic awareness and policy
changes in Japanese pharma market.
2. Increased cash flow and streamlining
operations can lead to a turn around.
Threat
1. Highly regulated market.
2. Lagging incase of no cash infusion.
3. Maintaining Market leadership
55. 4P of
marketing
Product
Price
Place
Promotion
• Diverse price
range
• Regulatory
controlled
• Competitive
• Co promotions
• Skilled Field force
• Doctor promotion
• Pharmacy stores
• Website, Press
release
• Distributor
• Semi
distributor
• Institutions
• Psychotropics (Risperidone,
carbamazepine )
• Sedatives & Hypnotics
(Alprazolam)
• Hyper tensives (Amlodipine,
Nicardipine) & Vasodialators
• Peptic Ulcer agents (Lansoprazole,
Domperidone) .
• Addressing the need gap.
56. Current Scenario
• Even as the company faces another price cut in Japan, Lupin looks
to rationalize costs, shift manufacturing units and looks at non-
Japanese markets to continue growth.
• The company bought a portfolio of 21 generic brands from the
Osaka-based company paying $150 million two years ago. It is also
looking at in-licensing deals to distribute specialty and complex
drugs in central nervous system and neurology segments.
• Lupin in-licensed and launched Bipresso, a speciality brand from
Astellas for the treatment of bipolar depression last year. The drug
is a top-selling one for Lupin in Japan.
• 2 years after Kyowa takeover, Lupin acquired I’rom Pharmaceuticals
to complement their portfolio and include injections and a wider
hospital base.
• Lupin’s 1st biosimiliar Etanercept was developed with Nichi-iko and
was commercialized in Japan.
57. Way Forward
• The company is focusing on non-Japanese Asia-Pacific markets such as
Australia and South East Asia to compensate for the dip in Japanese
growth.
• In 2017-2018, Asia Pacific (APAC) as a block, excluding Japan, contributed
7 percent to Lupin sales whereas Japan along contributed 11%
• In Australia, Lupin turned around its loss-making business, which is now
growing by 28 percent, outperforming the market. The company expects
its Australian business to maintain the growth trajectory. Australian
pharmaceutical market was valued at $13 billion in 2017 with generics
accounting for over 30 percent of the sales volume.
• Lupin now plans to strengthen its presence in the Philippines and expand
in Malaysia, Thailand and Myanmar through more launches. It is also
exploring ways to enter China.
• The plan is to generate $100 million sales from non-Japanese APAC
markets.
Editor's Notes
Source: Japan Generic Pharmaceutical Manufacturers Association
In Billion yen
%
Source: Yano Research Institute from data released by each company
