Strategic Management: Presented by

Strategic
Management
Presented by: Sun
Group:8
Section-D
Pharm
a
1. Rise in nosocomial infections 1. Unforeseen political policies may hamper the market growth
2. Increased rate of lifestyle diseases due to 2. Govt. initiatives push health education and insurance
pollution 3. Govt. Subsidies and tax wavers for health care companies
3. Growing environmental agenda 4. High govt. intervention and bureaucracy affect market growth
4. Awareness amongst the communities 5. Insufficient budget allocation to health care
1. Globalisation making way for joint

1. Regulations on Pharmaceutical drugs ventures in FDI
2. Import export Custom duties on the 2. Inflation and rising interest rates
drugs affect growth market
3. Consumer protection laws 3. Drug prices are also affected by the
4. Increased litigation health of the economy
5. Health insurance regulation 4. Health care is considered a necessary
expense, economic slowdown has
1. Internet Penetration is making little impact
consumer aware of treatment with 5. Generic drugs are more affordable
innovative pharmaceutical drugs
2. Customised treatments 1. Ageing Global Population
3. Direct advertising 2. Busy and Sedentary lifestyles increase
4. New information and communication incidences of lifestyle diseases
technology growth 3. Difference in social classes results in
varied access to drugs and treatments
Key Drivers
• Growing orientation towards Research and Development (R&D) – The introduction of product patent in India has brought some
fundamental changes in strategies of Indian pharmaceutical companies, with focus shifting more towards R&D.
• Leveraging CRAMs opportunities – India is emerging as the global hub for contract research and manufacturing services
(CRAMs) due to its low cost advantage and world class quality standards.
• Growing exports - Exports have been the major growth enabler of the Indian pharmaceutical industry in recent years. India
exports pharmaceutical products, APIs and intermediates to more than 200 countries across the world .
• Expanding presence in regulated market – Over the years, India has shown better regulatory awareness and superior technical
skills, which has enabled Indian companies to penetrate the high-value markets like the US and EU. Exports of pharmaceutical
products to the US grew by an impressive 33% to Rs 23 bn and by a whopping 62% to Rs 35 bn to the EU during FY04-FY06.
• Rise in new product launches – New products launched since 2005 accounted for around 12% of the overall market growth.
These launches have been done by both domestic and international players and some of them are first time launch of new
chemical entity (NCE).
1. An Indian multinational pharmaceutical company headquartered in Mumbai.
2. Started as partnership firm by Mr. Dilip Shanghavi in 1983 in Vapi with just five products to
treat psychiatry ailments.
3. Cardiology products were introduced in 1987 followed by gastroenterology products in
1989.
4. Today it is the largest chronic prescription company in India and a market leader in
psychiatry, neurology, cardiology, orthopedics, ophthalmology, gastroenterology and
nephrology.
Sun Pharma’s Inorganic Growth Strategy
Sun Pharma, promoted and led by the astute billionaire, Dilip Shanghvi, has always followed an
inorganic growth strategy both in India and abroad.
After the acquisition of Ranbaxy in 2014, Sun Pharmaceutical Industries Limited (Sun Pharma) became
the largest pharmaceutical company in India and ranked 4 th among the global generic and specialty
pharmaceutical company.
Sun Pharma’s other major buys included the 1999 takeover of troubled US drug maker Caraco
Pharmaceutical Laboratories, followed by a merger deal with Israel’s Taro Pharmaceutical
Industries.
For Sun Pharma, the Ranbaxy acquisition and merger was a shot in the arm to expand by integrating a
much larger product portfolio and market network of the acquired entity. It also helped Sun more
than double its sales network as well as production base in the country.
Sun Pharma acquired Ranbaxy
Sun Pharmaceutical Industries Ltd became the world’s fifth largest generics drugs maker on 6th
April, 2014 after buying Ranbaxy Laboratories Ltd from Japan’s Daiichi Sankyo Co. Ltd in an all-stock
deal worth $3.2 billion (around Rs.19,200 crore) with addition to 800 million USD of debt after
regulatory approval.
Post deal, the entity had Rs.30,000 crore (US $411million) as combined annual revenue and 2.5
trillion USD in market value. It had become the India’s largest drug maker with local market share of
10%.
Daiichi had a stake of 9% in the company after the deal. The public shareholders of Ranbaxy and
Sun Pharma had 14% and 22% stake respectively after the deal.
With profitable operations, expanded R&D capabilities and the global presence, the new entity was
expected to create synergistic value creation of USD 250 million over three years; thereby creating
USD 4.5 billion entity, as projected by Sun Pharma’s founder and managing director Dilip Shanghvi.
The Post Merger Blues
Ranbaxy plants faced quality issues in its dedicated manufacturing units in Mohali, Dewas and Paonta Sahib.
The quality concern prompted US Food & drug Administration (FDA) which imposed a ban on drugs
produced at these sites affecting the sales in US Market. The ban complicated the smooth functioning of the
company.
Ranbaxy’s problems were deepened with issues like wrong handling of data and inferior facilities of
production, which led to $ 500 million payments in return for settlement with federal legislation. Adding to
this, FDA further banned few generic drugs of Ranbaxy due to the manufacturing problems.
Challenge here was to regain and restore the trust and confidence of the regulators. With the four of
Ranbaxy plants being banned by USFDA, compliance with the regulatory authorities posed the biggest
challenge for Sun Pharma post merger.
The CCI approved the acquisition on December 5, 2014 on the condition that the brands which were
expected to contribute with less than 1% to the revenues of the new entity should be divested in order to
prevent the negative impact on the competition existing in the domestic market.
The Expected Synergy
Synergy benefits worth US$ 250 million were expected by third year since the deal closure. Increased
revenue, and cost management with supply chain efficiencies were the expected benefits.
The formed entity was the world’s fifth largest specialty-generic pharma company with sales of US $
4.2 billion .
With US FDA approval, the entity to have potential for developing complex drugs.
Sun Pharma, through this deal, had to improve its global footprint in emerging pharma markets like
Russia, Romania, Brazil, Malaysia and South Africa, for cross-selling and for building better brand.
Integration
Post-merger challenges stood at a diverse range aiming from integration to regulatory compliance
with the authorities. Sun Pharma had the challenge to align its finance, technology and human
resources to achieve the synergies projected.
One of the key integration was that of product portfolio, manufacturing and supply chain.
Sun Pharma prepared a wholesome approach to integrate supply chain and field force to boost
efficient productivity.
Sun Pharma’s Annual Sales Revenue

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1. Globalisation making way for joint

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