Description
There are a variety of legal types of organizations, including corporations, governments, non-governmental organizations, international organizations, armed forces, charities, not-for-profit corporations, partnerships, cooperatives, and universities. A hybrid organization is a body that operates in both the public sector and the private sector simultaneously, fulfilling public duties and developing commercial market activities.
PGDM 2010-12 SIMMC
BACKGROUND OF THE STUDY
The project report presented here is required for the partial fulfillment of the PGDM programme recognized by AICTE. This opportunity provides the scholar to practically observe and implement the management theories under corporate environment and guidance. The study was concerned to the study of a leading Indian pharmaceutical organization SAVA Medica Limited. The organization aims at global leadership in pharmaceutical business and therefore tends to harness the potential not only domestically but also globally. India is undisputedly an acknowledged leader in the global pharmaceutical industry (other than drug discovery) measured by any yardstick say number of facilities filing DMFs or facilities inspected by US FDA or number of patent challenges or volume of APIs & formulations exported, etc. In spite of considerable achievements, several untapped business segments and markets exist and the room to enhance the country’s pharmaceutical exports is vast. A number of leading drugs go off patent every year and the generic pharmaceuticals penetration is increasing in all the countries of the world further raising the opportunity for exports in this segment. Approximately US$123 billion worth of generic products are at risk of losing patents by 2012. The ageing population, increased lifestyle diseases and off patenting of drugs pertaining to them provides ample opportunities to the company to expand its generic medicine business across the globe. Analysis of the pharmaceutical sector’s opportunities is a complex task, due to the convergence of often conflicting social and health goals on the one hand and industrial goals on the other. While quality and access are usually welcomed by all stakeholders, high prices and growing expenditure are perceived as bad news from the payer’s perspective (consumers and health insurers) but as good news for suppliers, since for them it translates into higher revenues and profits
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OBJECT OF THE STUDY
The aims of the current study are-
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To study SAVA Medica Limited’s operations and strategies. To gather available information on the pharmaceutical systems in the principal pharmaceutical markets of the world and thus contribute to the understanding of the global pharmaceutical business.
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To identify the relevant players in the global pharmaceutical market To investigate regulatory measures as well as demand side and supply side of the pharmaceutical markets
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To provide information for policy-makers on new business development level, with regard to mechanisms on pricing, reimbursement and dispensing of pharmaceuticals
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THE INDIAN PHARMACETICAL INDUSTRY
Indian pharmaceutical industry is undergoing fast paced changes. The Indian Generics market iswitnessing rapid growth opening up immense opportunities for firms. This is further triggered bythe fact that generics worth over $40 billion are going off patent in the coming few years which isclose to 15% of the total prescription market of the US. The Indian pharmaceutical companies havebeen doing extremely well in developed markets such as US and Europe, notable among thesebeing Ranbaxy, Dr. Reddy’s Labs, Wockhardt, Cipla, Nicholas Piramal and Lupin. The companieshave their strategies in place to leverage opportunities and appropriate values existing informulations, bulk drugs, generics, Novel Drug Delivery Systems, New Chemical
Entities,Biotechnology etc. The industry ranks fourth globally in terms of volume and in terms of value, it isranked thirteenth. The industry has thrived so far on reverse engineering skills exploiting the lackof process patent in the country. This has resulted in the Indian pharmaceutical players offeringtheir products at some of the lowest prices in the world. The quality of the products is reflected inthe fact that India has the highest number of manufacturing plants approved by US FDA, which isnext only to that in the US. Multinational companies have traditionally dominated the industry,which is another trend seeing a reversal. Currently, it is the Indian companies which are dominatingthe marketplace with the local players dominating a number of key therapeutic segments. Themarket is also very fragmented with about 30,000 entities and the organized sector consisting ofabout 300 entities. Consolidation is increasing in the industry with many local players building aglobal outlook and also growing inorganically through mergers and acquisitions. The Key to success in this industry is research & development. R&D is the starting of the industryvalue chain and is also the most important value creator. Companies that involve in R&D do so inspecific areas. They chose specific therapeutic areas to target based on their strengths in themarket, and the commercial potential.
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KINDS OF RESEARCH BASIC R&D This involves discovering new molecules from scratch. It is highly capital intensive in nature as itrelies on a great deal of automation. There are only a handful of Indian players that are able toconduct some form of basic research (Ranbaxy & DRL), and the top five have announced plans. Inthe drug development process in any pharmaceutical company a typical product takes 7-10 years,and $350-500 million internationally but the statistic varies greatly with the disease type. PROCESS RESEARCH OR REVERSE ENGINEERING This entails research on the process by which the drug is made and making modifications to theprocess. Here a company typically copies the molecule of another company and develops a highlycost effective method of producing that molecule. It is much less expensive to conduct since theydo not need to conduct any discovery research or clinical trials. Till now this has been the focus ofmost Indian players. ANALOGUE OR DISCOVERY RESEARCH Companies modify an existing molecule or a new one that has not been commercialized afteraccessing international patent databases, to arrive at a new molecule. BIOTECHNOLOGY RESEARCH It aims at establishing the link between ones genes and the diseases one has and could one daydetermine the best drug for an individual based on ones genetic makeup. Most of these companiesare however doing reverse engineering in the biotech area, and there is very little basic biotechresearch in India. NDDS RESEARCH NDDS (New drug delivery system) entails delivering existing drugs in a novel method. Indiancompanies are looking to research NDDS systems to new drugs being developed. This takes 3years, at a cost of between US $ 10 and 20 Million. An NDDS could fetch you a patent if it is a newconcept, and if it is n improvement it could give you market exclusivity for 3 years in the US.
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R&D IN INDIA
The Indian industry has attained cost advantages in process research used for generic drugs &value added generics production, which accounts for 60-80 percent of total sales. This costadvantage is in the fact that: Most infrastructure facilities are much cheaper in India than in developed countries. Indian scientists can be attracted at much cheaper rates than their US counterparts.
The more value added basic research methodologies are being pursued by very few players likeRanbaxy, Biocon& Dr. Reddys who are willing to take the risk of investing millions in buildingresearch capabilities and developing molecules. In the absence of product patents Indiancompanies ignored basic research and concentrated their R&D efforts toward producing drugsthrough alternative processes. Consequently, total expenditure on R&D was low (multinationalpharmaceutical players spend about 13-16% of total sales on R&D). Investments made in R&D by the Indian pharmaceutical companies would yield 3-4 molecules ayear, which is a very small number. There is very little private initiative to invest in R&D. Thegovernment continues to bear the burden, with industry chipping in with 10% to 12%. This alsoevident in the data of patent granted in the country where the top firms granted patents are mostlyMNCs. Indian industry instead mastered the art of reverse engineering to gain competitiveadvantage, as the industry structure did not provide incentives to invest in basic research.Indian firms have invested very little in R&D in India due to: Lack of Product Patent protection: The delayed adoption of TRIPS in India is cited as the
majorimpediment to the possible investment by international companies in India. Inadequate profit base: The price control has squeezed the profit margins making it difficult
forIndian and international companies to cull out and invest sizable sums in R&D. The profitability ofIndian companies is also much lower than international levels. The pre-tax profit margin ofpharmaceutical companies in India is much less than 6% on sales in sharp contrast to the 18%profit margins common to international companies.
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CHANGING SCENARIO OF INDIAN R&D The acceptance of provisions of the agreement on TRIPS is expected to change the orientation ofIndian companies towards R & D. Indian companies have started investing in complex R & Dactivities like novel drug delivery system and new drug discovery. The advantages of conducting R& D in India are given below. Lower costs: R&D expenditure in India is far lower than in the developed countries. The
costdifferentials are due to lower costs in machinery and human capital. The cost advantages can onlybe exploited if the necessary funds required can be sourced. Following India’s acceptance of theprovision of Trade Related Intellectual Property Rights (TRIPS) under the GATT agreement,investments are expected to start flowing into the area of basic research. Population advantages: A larger population base would facilitate clinical trials for diseases
especially prevalent in developing countries. Indian R&D efforts could be directed towards infectiousdiseases that are especially prevalent in Asian countries. Such R&D activities will be targetedtowards segments such as antibiotics, anti-parasitics and other anti-bacterials.
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PRESENT STATUS OF INDIAM PHARMA INDUSTRY
India currently represents just U.S. $6 billion of the $550 billion global pharmaceuticalindustry but its share is increasing at 10 percent a year, compared to 7 percent annualgrowth for the world market overall.1 Also, while the Indian sector represents just 8 percentof the global industry total by volume, putting it in fourth place worldwide, it accounts for13 percent by value,2 and its drug exports have been growing 30 percent annually. The “organized” sector of India's pharmaceutical industry consists of 250 to 300 companies,which account for 70 percent of products on the market, with the top 10 firms representing30 percent. However, the total sector is estimated at nearly 20,000 businesses, some ofwhich are extremely small. Approximately 75 percent of India's demand for medicines ismet by local manufacturing.
According to the German Chemicals Association, in 2005, India's top 10 pharmaceuticalcompanies were Ranbaxy, Cipla, Dr. Reddy's Laboratories, Lupin, Nicolas Piramal,AurobindoPharma, Cadila Pharmaceuticals, Sun Pharma, Wockhardt Ltd. and AventisPharma.5 Indian-owned firms currently account for 70 percent of the domestic market, upfrom less than 20 percent in 1970. In 2005, nine of the top 10 companies in India weredomestically owned, compared with just four in 1994. India's potential to further boost its already-leading role in global generics production, aswell as an offshore location of choice for multinational drug manufacturers seeking to curbthe increasing costs of their manufacturing, R&D and other support services, presents anopportunity worth an estimated $48 billion in 2007. OVER-THE-COUNTER MEDICINES The Indian market for over-the-counter medicines (OTCs) is worth about $940 million andis growing 20 percent a year, or double the rate for prescription medicines.8 The governmentis keen to widen the availability of OTCs to outlets other than pharmacies, and theOrganisation of Pharmaceutical Producers of India (OPPI) has called for them to be sold inpost offices.
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Developing an innovative new drug, from discovery to worldwide marketing, now involvesinvestments of around $1 billion,9 and the global industry's profitability is under constantattack as costs continue to rise and prices come under pressure. Pharmaceutical productioncosts are almost 50 percent lower in India than in Western nations, while overall R&D costsare about one-eighth and clinical trial expenses around one-tenth of Western levels. India'slong-established manufacturing base also offers a large, well-educated, Englishspeakingworkforce, with 700,000 scientists and engineers graduating every year, including122,000 chemists and chemical engineers, with 1,500 PhDs.10 The industry provides thehighest intellectual capital per dollar worldwide, says OPPI India's largest-selling drug products are antibiotics, but the fastest growing arediabetes, cardiovascular and central nervous system treatments.
The industry's exports were worth more than $3.75 billion in 2004-05 and they have beengrowing at a compound annual rate of 22.7 percent over the last few years, according to thegovernment's draft National Pharmaceuticals Policy for 2006, published in January 2006. The Policy estimates that, by the year 2010, the industry has the potential to achieve$22.40 billion in formulations, with bulk drug production going up from $1.79 billion to$5.60 billion: “India's rich human capital is believed to be the strongest asset for thisknowledge-led industry. Various studies show that the scientific talent pool of 4 million OPPORTUNITIES The main opportunities for the Indian pharmaceutical industry are in the areas of: • Generics (including biotechnology generics) • Biotechnology • Outsourcing (including contract manufacturing, information technology (IT)and R&D outsourcing).
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GENERICS Prescription drugs worth $40 billion in the U.S. and $25 billion in Europe are due to losepatent protection by 2007-08. Indian firms will likely take around 30 percent of theincreasing global generics market, the Associated Chambers of Commerce and Industry ofIndia (Assocham) forecast. Currently, the Indian industry is estimated to account for 22percent of the generics world market. Low production costs give India an edge over othergenerics-producing nations, especially China and Israel, says Assocham's presidentMahendraSanghi. He suggests that it will be easier for Indian firms to win larger genericsmarket shares overseas than at home, particularly in the U.S. and Europe. Indian drug manufacturers currently export their products to more than 65 countriesworldwide.14 Their largest customer is the U.S., the world's biggest pharmaceutical market. The use of generic drugs is growing quickly in the U.S. due to cost pressure by payers andthe introduction on January 1 this year of the Medicare Part D prescription benefit, givingseniors and people with disabilities prescription drug coverage for the first time. With 74facilities, India has the largest number of U.S. Food and Drug Administration (FDA)-approved drug manufacturing facilities outside the U.S. Indian firms now account for 35percent of Drug Master File applications and one in four of all U.S. Abbreviated New DrugApplication (ANDA) filings submitted to the FDA.15 Analysts at Credit Lyonnais SecuritiesAsia say they expect the number of generic drug launches by Indian companies in the U.S.to increase from 93 in 2003 to over 250 by 2008. In January 2006, the Indian exporters' representative body, the Pharma Export PromotionCouncil (Pharmexcil) said it planned to raise a number of concerns with the U.S. governmentover what it sees as barriers to trade with them. One is a U.S. regulation that disqualifiesIndian firms from bidding for government contracts, and another is the requirement Indiandrug manufacturers submit separate applications for each U.S. state (there is no U.S.-wideregulatory requirement), even when the firms have FDA-approved products and facilities However, India's traditional lucrative export markets may be becoming a little less secure,for a number of reasons. For example, generic prices have not been rising in the U.S.; theseniors'
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advocacy group AARP (formerly the American Association of Retired Persons) saysthat, of the 75 generic drugs widely used by older people that it monitors on a quarterlybasis, none had had a change in manufacturer list price during third quarter 2005 and onlythree had had increases in list price at any time during January to September 2005.18 Also,new competitive threats have arrived, such as authorized generics produced by major drugproducers, new mid-sized players, Chinese and Eastern Europe manufacturers, and fullyintegrated generics firms, which are less reliant on Indian “back-end” businesses.
CONTRACT MANUFACTURING The global pharmaceutical market is estimated to represent a $48 billion opportunity forIndia by 200730, in terms of: • manufacturing outsourcing-supply of active pharmaceutical ingredients (APIs) andintermediates • development outsourcing-conducting preclinical and clinical trials • customized chemistry services-contract research services for compounds pre-launch.
Worldwide revenues for pharmaceutical industry contract manufacturing and researchservices (CRAMS) totaled $100 billion in 2004 and will grow at an average annual rate of10.8 percent to reach $168 billion by 2009, say analysts at Frost & Sullivan. Within thistotal, the global market for contract manufacturing of prescription drugs is estimated toincrease from a value of $26.2 billion to $43.9 billion, although the over-the-countermedicines and nutritional products sector will show the fastest growth. The Asian region has recently been challenging North America and Europe's traditionaldomination of the global pharmaceutical contract manufacturing market: India and Chinacould potentially account for 35 percent to 40 percent of the outsourced market share foractive pharmaceutical ingredients, finished dosage formulations and intermediates.
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TOP PHARMACEUTICALS COMPANIES IN INDIA
AUROBINDO PHARMA AurobindoPharma manufactures generics and APIs in the antibiotic, antiretroviral,cardiovascular, central nervous system, gastroenterological and anti-allergy fields, andmarkets them in over 100 countries. In the quarter ended December 31, 2005, it reportedsales up 28 percent to $93.1 million over the same quarter of 2004, with sales offormulations rising 125 percent. The firm filed 10 ANDAs and 13 DMFs in the USA in thequarter, with 70 filings in other markets, bringing its total number of formulation filings to364.In January 2006, Aurobindo reported that the U.S. FDA had granted tentativeapproval for its antiretroviral Nevirapine Oral Suspension 50 mg/5 ml, qualifying the productunder President George W Bush's Emergency Plan for AIDS Relief (PEPFAR) program. Alsoin January, the World Health Organization announced the inclusion of Aurobindo'sNevirapine oral suspension 50mg/5ml and Stavudine for oral solution 1mg/ml in itsPre-qualification list - both are used as a part of first-time line treatment in pediatric AIDS. AVENTIS PHARMA 50.1 percent of Aventis Pharma is held by European drug major Sanofi-Aventis and, in earlyApril 2006, it was reported that UB Holdings had sold its 10 percent holding in the firm toVariegate Trading, a UB subsidiary. The firm's major products are in the anti-infective,anti-inflammatory, cancer, diabetes and allergy market segments and, for the year endedDecember 31, 2005, it reported net sales (excluding excise duty) up 9.9 percent to $181.1million, with domestic sales up 9.1 percent at $129.8 million and exports increasing 12percent to $51.2 million. Sales were led by 83 percent annual growth for the diabetestreatment Lantus (insulin glargine), followed by the rabies vaccine Rabipur (+22 percent),the diabetes drug Amaryl (glimepiride) and epilepsy treatment Frisium (clobazam), both up18 percent, the angiotensin-coverting enzyme inhibitor Cardace (ramipril +15 percent),Clexane (enoxaparin), an anticoagulant, growing 14 percent and Targocid (teicoplanin),an antibiotic, whose sales advanced 8 percent. In February 2006, analysts at SSKI India described Aventis India as a “marketingpowerhouse” and forecast 13 percent and 17 percent CAGR in the firm's consolidatedrevenues and earnings,
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respectively, to 2007. The firm is well-placed to leverage on India'spost-patent regime, they said, adding: “with a strong R&D pipeline, the parent's willingnessto launch products in India soon after the global launch and a locally-relevant pricingstrategy, Aventis is an attractive play on the growing domestic market.”
CIPLA India's second-largest drug manufacturer was originally established in 1935 as TheChemical, Industrial and Pharmaceutical Laboratories. Until 2000 its business was primarilydomestic, but exports, to more than 150 countries, accounted for 45 percent of its fiscalyear 2005 sales, giving it what is probably the Indian industry's most geographically-diversified export base, say analysts at SKKI, who add that Cipla “has established itself asthe partner of choice for generic companies globally.” At the end of December 2005, Cipla signed the largest product development andmanufacturing agreement in the country, when it agreed a global deal with Germanmanufacturer BoehringerIngelheim for the development and supply of the firm'shypertension drug Micardis (telmisartan). The firm also announced at year-end that it planned to launch the first generic version ofRoche's Tamiflu (oseltamivir), which is recommended for use against the H5N1 strain of avian flu. In 2004, Cipla took over from GlaxoSmithKline as India's leading drug manufacturer interms of retail sales (although, including vaccines and institutional sales, GSK still has theleading share, at just under 6.5 percent).
DR REDDY'S LABORATORIES Dr Reddy's Laboratories is an emerging global pharmaceutical and biotechnology company,which was founded by chairmanAnji Reddy in 1984. It operates in over 60 countries,although India and the USA each accounts for around a third of the firm's total sales. Thecompany is already strongly
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present in most of the world's biggest less-regulated markets,such as Russia, China, Brazil and South Africa. For the nine-month period to December 31, 2005, the firm reported revenues up 14percent to $387.4 million, driven by sales of APIs (up 48 percent in the third quarter and19 percent in the first nine months) and branded formulations (up 34 percent in the thirdquarter, led by growth of 34 percent in India and 35 percent in Russia). Dr Reddy's is alsoan innovator in the use of venture capital to maintain cash-flow for R&D, having received$57 million from ICICI Venture Funds to support ANDA filings for 18 months beyondFY2005 for royalties from sales in the USA. Dr Reddy's made history in February when it entered the German branded generics market,the world's second-largest after the USA, not through building a business organically therebut with the purchase of Betapharm, Germany's fourth-largest generics manufacturer, for$570 million. This is the largest overseas acquisition by an Indian pharmaceutical companyso far. Despite its size, the German generics market is not experiencing the pricing pressurewhich is currently being felt in the USA and shrinking business there. Satish Reddy from DrReddy's is still optimistic about prospects in the USA, pointing to the huge opportunitieswhich will be presented there by patent expiries on major products going forward to 2010.
Before the Betapharm purchase, Dr Reddy's did not have a presence generally in theEuropean branded generics market, although it is active in the UK pure generics market. It is now looking towards expansion in Spain, France and the rest of Europe, and also to rollingout its existing product range in major regulated markets including Australia and New Zealand.
LUPIN Lupin is one of the world's largest manufacturers of APIs and finished formulations for TB,bacterial infections and cardiovascular disease. Its products are sold in more than 50countries. For third13
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quarter 2006 (ended December 31, 2005), the firm reported grosssales up 51 percent to $98.9 million, with exports up 56 percent (boosted by U.S. launches)at $46.3 million and domestic sales rising 47 percent to $51.9 million For the nine monthsto end-December, sales rose 34 percent to $274.7 million, with net profit up 112 percentto $29.5 million.
NICHOLAS PIRAMAL Nicholas Piramal is the flagship company of Piramal Enterprises (PEL), one of India's largestdiversified business houses. It was formed in 1988 when PEL acquired NicholasLaboratories (NPIL) a small formulations company, from Sara Lee. For third-quarter FY2006 (ended December 31, 2005) the firm reported net sales of $78.3 million, up 9.2percent on the second quarter, and consolidated sales were up 17.3 percent at $89.5 million. However, net profit plummeted 69.9 percent to $5.2 million, due to lower sales of thefirm's leading brand, the controversial promethazine/codeine phosphate/ephedrine coughsuppressant Phensedyl, which has been widely abused, and the withdrawal of twovaldecoxib brands - Vah and Valto - plus a foreign exchange loss of £468,000. NPIL's strategy of opting out of early-stage generic exports, which differentiates itfrom most leading Indian firms, enables it to steer clear of IP challenges and focus onpartnering with global firms. Generally, contract manufacturing organizations operate onlyin certain segments (e.g., intermediates, APIs or formulations), but NPIL is seeking to jointhe rank of the few players offering the entire spectrum of services, notes SKKI.
RANBAXY LABORATORIES India's largest pharmaceutical company is ranked among the top 10 generics
manufacturersworldwide and aiming to be in the top five with sales of $5 billion by 2012. However,with the firm's recent moves to increase its size through the inorganic route, it is seen asaiming to establish itself as the world's number three generics producer much sooner. It hasmanufacturing operations in seven countries, a ground presence in 46 nations and sells
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itsproducts in over 100 countries. Ranbaxy has three state-of-the-art research facilities atGurgaon, near New Delhi - R&D Centers I and II focus on the development of generics andnovel drug delivery systems research, while the new R&D Centre III is dedicated to newdrug discovery research. The firm also has the largest R&D budget of any Indian drug manufacturer, standing at 7 percentof sales in 2004, and it plans to progressively increase this to 9 percent-10 percent by 2007.Ranbaxy has set up a global alliance with GlaxoSmithKline in the area of drug discovery anddevelopment. Two research programs, one in the area of anti-infectives and another, in theasthma segment, are now in progress. For the year ended December 31, Ranbaxy reported sales of $1.17 billion, similar to theprevious year, but profits after tax and minority interest slumped 62 percent, largely impactedby continuing price erosion in the key U.S. market, where sales fell 22 percent to $332million. In Europe, sales rose 5 percent to $202 million, while in the BRIC countries (Brazil,Russia, India and China) they rose 11 percent to $340 million. In January, Ranbaxy's newchief executive Malvinder Singh said the firm is looking for M&A to help it reach its $2billion sales target by 2007; the goal for 2006 is an increase of 18 percent. Ranbaxy follows a strategy of aggressively challenging patents of innovator firms to drive itsgenerics business, say analysts at SKKI India, adding: “the robustness of Ranbaxy's globalgeneric model is reflected in its presence in 23 of the top 25 markets in the world includingJapan and Canada. Only Teva and Sandoz can match Ranbaxy's global generics footprint. Also, while Teva and Sandoz have built a global footprint, primarily through inorganicinitiatives, Ranbaxy's growth has so far been largely organic.”
SUN PHARMA Sun Pharma, established in 1983, makes specialty pharmaceuticals and APIs for use inchronic therapy areas such as cardiology, psychiatry, neurology, gastroenterology, diabetesand respiratory conditions, sold in 26 markets worldwide. Its income for the quarter endedDecember 31, 2005 was $103.2 million compared with $73 million in the like, year-earlierperiod, and total nine-month
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income was $295.8 million. In February 2006, the firmannounced the demerger of its innovative R&D programs to a new company which it hasset up for this purpose. Around 25 percent-40 percent of R&D spend, which represents10 percent-11 percent of its sales, is accounted for by innovative R&D, it said.
WOCKHARDT The overseas ambitions of this Mumbai-based pharmaceutical and biotechnology-basedcompany have already been covered elsewhere in this report, but in mid-March 2006Wockhardt announced that it had received approval from its shareholders to raise up to$800 million, in one or more tranches, to fund further foreign purchases. Noting hiscompany's “well -known” ability to create value through acquisitions, chairmanHabilKhorakiwala said the move would “empower us to seize global opportunities quickly.” Thestockholders also authorized an increase in the company's Foreign Institutional Investmentcap to 49 percent.
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SAVA MEDICA LIMITED
Esteemed in 2003, we are committed to make life "SAVA" with our range of healthcare products and services that are benchmark of 'Superlative Quality, Enviable Economy'. Built on the sturdy pillars of financial solidarity, stability, reliability, operational expertise, infrastructure, technology and revolutionary business strategy and execution, the SAVA Group is worth US $50 million and growing with CAGR of 150%, nearly 10 times that of the average pharmaceutical industry. The SAVA Group has attained an iconic stature in pharmaceutical arena making the lives of millions of people feel good. Our well-known generic manufacturing plant located, in Surendranagar near Ahmedabad in India, helps SAVA attain its magnanimous capability of "curative power" by producing over 500 products in what stands as one of the widest range of therapeutic categories in India. The SAVA group of companies constitute independent and well-established entities in manufacturing, marketing, retail and distribution to cover the entire value-chain in pharmaceuticals. This along with strategically prominent marketing nodes the world over, gives SAVA the edge to be self-sustained in effectively delivering our vast range of products across various geographies. It also serves to fulfill our commitment to deliver "beyond the maxim of care".
SAVA VISION
"Be the choice. Be the leader. Because life is too big to play small." At SAVA we perceive the perfect vision (20:20) to be attained by the year 2020 by whence SAVA aims to be 'the choice' as in ? Brand of choice for flagship products at least 20% of product portfolio ? Employer of choice listing in Fortune 500 companies ? Principal of choice for stake holders - Shareholders / Investors / Vendors
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? And by being 'the choice' we hope to be 'the leader' and achieve Position in top 100 global generic life sciences company by profitable new business ventures from both qualitative and quantitative terms by 2020 ? Significant business (60% of business revenues) in prescription products with a strong presence in emerging markets
SAVA MISSION
Innovate. Improve. Inflate. Our mission is our obligation. We have a responsibility to stand in true to 'SAVA''. And we realize that to establish SAVA in every life and make it "feel good" every new rise, means that we need to resolve and pledge ourselves to forever persevere to achieve the three 'I''s that give our mission it's name Mission i3 ? Innovate - to emerge as a key research-based organization ? Improve - the quality of well-being in general of the society ? Inflate - as a major transnational player.
CORE STRENGTHS
At SAVA, our highly competitive nature drives us to diligently focus upon building our strengths. Technical competence and resources for formulation and development of both sterile and nonsterile pharmaceuticals is amongst our core area of interests. By strengthening the above fundamental parameters we have been able to achieve ? Competence in developing science and technology to produce breakthrough formulations ? Excellence in manufacturing superlative quality pharmaceuticals with enviable economy ? Highly competent team across its business functions ? Widest therapeutic portfolio in human life ? Growing therapeutic coverage of animal health ? Global marketing reach to cater to the growing demands of the changing world
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2010 2010 2010
• SAVA INFOTECH PVT. LTD(India) • BIODEAL LABORATORIES PVT. LTD(India) • SAVAPHARM LLC(Russia)
2009
2010 2010
• ANAM PHARMACY.(Malaysia) • SAVA MEDICA PTE. LTD.(Singapore) • GOLD PHARM- AGRIF TASHKENT(Uzbekistan)
2003 2007 2008
• ANAGHA PHARMA PVT LTD(India) • SAVA SHARJAH FZE(U.A.E) • SAVA MEDICARE LIMITED(Mauritius)
2011 2011
• SAVA MEDICA LTD.(Vietnam) • SAVAGLOBAL LLC (Canada)
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GROUP COMPANIES
? SAVA Medica Limited, India ? Biodeal Laboratories Pvt Ltd, India ? AnaghaPharmaPvt Ltd, India ? SAVA Medica (Singapore) Pte Ltd ? SAVAPharm LLC, Russia ? SavestaLifeSciences Ltd. USA
OPERATIONS
Export
In our pursuit to grow as a major transnational player, the company has been continually transcending its horizons and has catapulted its presence in over 30 countries globally. The company operates internationally in five major regions ? By 2010 the company developed liaison offices and Russia and the CIS ? The Americas -Latin America and the Caribbean countries ? Asia including Middle East ? Oceania ? Africa Establishments at strategic marketing nodes of Singapore, Mauritius, Uzbekistan, Dubai and Russia.
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Domestic
The vision of "Life Beyond Care" which has ensured a strong presence across the globe at Sava Medica Limited, is now all set to spread the same radiance in the Domestic Market in the national arena. The unshakeable desire to offer world class services & deliver quality products to the customers, indicates that the products are universally accepted & will definitely receive the same accolades in our own country as well. The future is to launch a host of products in the respiratory segment which will include innovative NDDS, including newer nasal sprays ; anti infectives ; 1st time combinations in various segments, plasma range of products & several other newer drug entities never before launched in India. Thus fulfilling the motto of "A HEALTHY NATION ... A HEALTHY WORLD..." World class manufacturing units at Surendranagar (Wadhvan) near Ahmedabad & another compiling to USFDA to be commissioned mid next year at Panoli in South Gujarat, will enable Sava Medica Limited to reach out to each & every nook & corner across the globe including India. A dynamic, committed & youthful talent pool of over 350 personnel, in sales & marketing will drive the organization in the domestic market scenario with an aim to achieve the top 10 position by year 2025. Global Consumer Care Business Moving up the value chain, Sava Global has identified Consumer Healthcare as its new business undertaking. We plan to cater this consumer healthcare category by launching a range of OTC (Over the counter) Products. Subsequently, SGCH business shall be initiated with the launch of 3 brands; Zerofig- Weight Reduction Capsule, Rankof- Anti-pyretic, Analgesic and Anti-histaminc Tablet &Biomist- Nasal Decongestion Drops. Why enter 'Consumer Health Care'?
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"Creating a Strong Global Consumer Platform", is the key reason why this OTC portfolio is an attractive one in the context of the growing lucrative nature of the global consumer healthcare market. Consumer Healthcare is a growing market primarily because of ? Increasing awareness & growing consciousness about health conditions ? Increasing self-medication trend ? Easy accessibility of medication ? Moving from treatment to proactive monitoring and care OTC medicines will benefit consumers by helping them to treat minor ailments and prevent illness. This is opening new gates of opportunities for the Consumer healthcare market. The global market for over-the-counter (OTC) non-prescription medicines remains buoyant, which reported sales worth US$86.6 billion in 2008, growth in value sales in 2009 estimated at 4.7%, bringing the value of the category to over $95 bn (source: Nicholas Hall Company). Much of this growth has been driven by developing markets, with double-digit growth recorded in Brazil, Russia, India and China (BRIC). Many established mature markets for OTC medicines recorded very modest levels of growth.
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THE PROWESS
Independent LVP formulation unit
? ? ? Infusions Eye / Ear drops Sterile opthalmic liquid solutions ? ? ? ?
Independent Oncology formulation unit
Lyophilized dry powder Oral liquids / Syrup / Suspension Sterile liquid ampoule / Vial Tablets / Capsules
Independent General formulation unit
? ? ? ? ? ? ? ? ? ? Tablets / Capsules / Syrup Soft gelatin capsules Nasal sprays / Dry powder inhalations Aerosols ? ?
Independent Specialty injectable formulation unit
Lyophilized dry powder Sterile liquid ampoule / Vial/ Dry powder
Independent Cephalosporin formulation unit
Sterile liquid ampoule / Vial Tablets / Capsules Oral liquids Oral liquids / Syrup / Suspension ? ?
Independent Biological formulation unit
Dried fraction concentrate Sterile liquid ampoule / Vial
Independent Beta Lactum formulation unit
Sterile liquid ampoule / Vial Oral solids Oral liquids / Syrup / Suspension
The pharmaceutical industry has become increasingly focused on understanding the effects of disease and infection on a molecular and physiological level in order to find better, more specific targets to concentrate their energies on. Sava believes that innovation and development of new products is critical in order to remain competitive. Sava is knowledge based organization. We believe that addition of knowledge to a specific molecule through transformational processes of R & D, clinical, clinical trial,, manufacture, marketing and sales shall generate commercial value & competitive edge to its supply chain activities.
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GLOBAL SOURCING SAVA is ardent in sourcing of various pharmaceutical products and services from global market to utilize global efficiencies as in low cost skilled labour, low cost raw materials and few other economic factors such as tax breaks, low trade tariffs in the delivery of its products and services. Our global sourcing initiatives and programs form an integral part of the strategic sourcing plan and procurement strategy that aims to seek economies of scale through corporate-wide standardization and benchmarking. Our Global sourcing plan includes tapping into skills or resources unavailable domestically, developing alternate supplier/vendor sources to stimulate competition, and increasing total supply capacity, reducing the long lead times, the risk of port shutdowns interrupting supply, and the difficulty of monitoring product quality. Our global sourcing initiatives benefits us from lower acquisition costs , faster times-to-market the products, reduce customer costs and ensure timely initiation and reliability of product supply resulting in substantial value to the bottom line. The network includes manufacturers, scientists,R& D labs, API and Raw material suppliers/vendors who are able to deliver "virtually any product in the world in the healthcare, and to identify the most cost-effective source of supply". It is aim and ambition of SAVA to source and supply products and services worth 300million Usd to global markets in next 5 years. We are looking forward to wide spectrum of business in healthcare including OTC,Phytomedicines, Biopharmaceuticals in finished dosage forms and subsequently API & intermediates. LOGISTICS & DISTRIBUTION
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Logistics and distribution form the most essential element in being a pharmaceutical enterprise with a global module. At SAVA all our products after packaging are stored under secure conditions in an automated, computer-controlled, high-rise warehouse. The warehouse is temperature and humidity monitored. All shipments are individually monitored at departure from the Regional Distribution Center until final proof-of-delivery at the destination with web-based tracking. Our transport solutions are partnered with the most reputable first class logistic carriers who hold the same high-quality standards and provide end-to-end logistics solutions. ? Shipment monitoring ? Controlled ambience < 25°C ? 2 - 8°C
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SAVA BUSINESS
BRANDED GENERICS
GENERICS
CMO
INORGANIC GROWTH
ASPIRATIONS
33 cr. 201112
60 cr. 26 201213
150 cr. 201415
500 cr. 201920
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SWOT ANALYSIS STRENGTHS
? Evolving Organization ? Dedicated People ? Manufacturing. Capability –Respiratory ? Financial Stability ? Clear Management Vision
WEAKNESS
? Operational Efficiency ? Dossiers ? Less no. of registered products in marketing countries ? Less technically experienced personnel ? Dual registration of Sava and Biodeal ? Delay in production ? Less Intl. quality accreditations –ISO, USFDA, TGA, UKMHRA, EU ? Lack of market data-For e.g.., IMS
OPPORTUNITIES
? Disease burden
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? Operations in new markets ? Introduction of new products ? USFDA approved Panoli Project
THREATS
? Less no. of direct operations in marketing countries. ? Absence of novel molecules
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doc_499042761.docx
There are a variety of legal types of organizations, including corporations, governments, non-governmental organizations, international organizations, armed forces, charities, not-for-profit corporations, partnerships, cooperatives, and universities. A hybrid organization is a body that operates in both the public sector and the private sector simultaneously, fulfilling public duties and developing commercial market activities.
PGDM 2010-12 SIMMC
BACKGROUND OF THE STUDY
The project report presented here is required for the partial fulfillment of the PGDM programme recognized by AICTE. This opportunity provides the scholar to practically observe and implement the management theories under corporate environment and guidance. The study was concerned to the study of a leading Indian pharmaceutical organization SAVA Medica Limited. The organization aims at global leadership in pharmaceutical business and therefore tends to harness the potential not only domestically but also globally. India is undisputedly an acknowledged leader in the global pharmaceutical industry (other than drug discovery) measured by any yardstick say number of facilities filing DMFs or facilities inspected by US FDA or number of patent challenges or volume of APIs & formulations exported, etc. In spite of considerable achievements, several untapped business segments and markets exist and the room to enhance the country’s pharmaceutical exports is vast. A number of leading drugs go off patent every year and the generic pharmaceuticals penetration is increasing in all the countries of the world further raising the opportunity for exports in this segment. Approximately US$123 billion worth of generic products are at risk of losing patents by 2012. The ageing population, increased lifestyle diseases and off patenting of drugs pertaining to them provides ample opportunities to the company to expand its generic medicine business across the globe. Analysis of the pharmaceutical sector’s opportunities is a complex task, due to the convergence of often conflicting social and health goals on the one hand and industrial goals on the other. While quality and access are usually welcomed by all stakeholders, high prices and growing expenditure are perceived as bad news from the payer’s perspective (consumers and health insurers) but as good news for suppliers, since for them it translates into higher revenues and profits
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OBJECT OF THE STUDY
The aims of the current study are-
? ?
To study SAVA Medica Limited’s operations and strategies. To gather available information on the pharmaceutical systems in the principal pharmaceutical markets of the world and thus contribute to the understanding of the global pharmaceutical business.
? ?
To identify the relevant players in the global pharmaceutical market To investigate regulatory measures as well as demand side and supply side of the pharmaceutical markets
?
To provide information for policy-makers on new business development level, with regard to mechanisms on pricing, reimbursement and dispensing of pharmaceuticals
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THE INDIAN PHARMACETICAL INDUSTRY
Indian pharmaceutical industry is undergoing fast paced changes. The Indian Generics market iswitnessing rapid growth opening up immense opportunities for firms. This is further triggered bythe fact that generics worth over $40 billion are going off patent in the coming few years which isclose to 15% of the total prescription market of the US. The Indian pharmaceutical companies havebeen doing extremely well in developed markets such as US and Europe, notable among thesebeing Ranbaxy, Dr. Reddy’s Labs, Wockhardt, Cipla, Nicholas Piramal and Lupin. The companieshave their strategies in place to leverage opportunities and appropriate values existing informulations, bulk drugs, generics, Novel Drug Delivery Systems, New Chemical
Entities,Biotechnology etc. The industry ranks fourth globally in terms of volume and in terms of value, it isranked thirteenth. The industry has thrived so far on reverse engineering skills exploiting the lackof process patent in the country. This has resulted in the Indian pharmaceutical players offeringtheir products at some of the lowest prices in the world. The quality of the products is reflected inthe fact that India has the highest number of manufacturing plants approved by US FDA, which isnext only to that in the US. Multinational companies have traditionally dominated the industry,which is another trend seeing a reversal. Currently, it is the Indian companies which are dominatingthe marketplace with the local players dominating a number of key therapeutic segments. Themarket is also very fragmented with about 30,000 entities and the organized sector consisting ofabout 300 entities. Consolidation is increasing in the industry with many local players building aglobal outlook and also growing inorganically through mergers and acquisitions. The Key to success in this industry is research & development. R&D is the starting of the industryvalue chain and is also the most important value creator. Companies that involve in R&D do so inspecific areas. They chose specific therapeutic areas to target based on their strengths in themarket, and the commercial potential.
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KINDS OF RESEARCH BASIC R&D This involves discovering new molecules from scratch. It is highly capital intensive in nature as itrelies on a great deal of automation. There are only a handful of Indian players that are able toconduct some form of basic research (Ranbaxy & DRL), and the top five have announced plans. Inthe drug development process in any pharmaceutical company a typical product takes 7-10 years,and $350-500 million internationally but the statistic varies greatly with the disease type. PROCESS RESEARCH OR REVERSE ENGINEERING This entails research on the process by which the drug is made and making modifications to theprocess. Here a company typically copies the molecule of another company and develops a highlycost effective method of producing that molecule. It is much less expensive to conduct since theydo not need to conduct any discovery research or clinical trials. Till now this has been the focus ofmost Indian players. ANALOGUE OR DISCOVERY RESEARCH Companies modify an existing molecule or a new one that has not been commercialized afteraccessing international patent databases, to arrive at a new molecule. BIOTECHNOLOGY RESEARCH It aims at establishing the link between ones genes and the diseases one has and could one daydetermine the best drug for an individual based on ones genetic makeup. Most of these companiesare however doing reverse engineering in the biotech area, and there is very little basic biotechresearch in India. NDDS RESEARCH NDDS (New drug delivery system) entails delivering existing drugs in a novel method. Indiancompanies are looking to research NDDS systems to new drugs being developed. This takes 3years, at a cost of between US $ 10 and 20 Million. An NDDS could fetch you a patent if it is a newconcept, and if it is n improvement it could give you market exclusivity for 3 years in the US.
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R&D IN INDIA
The Indian industry has attained cost advantages in process research used for generic drugs &value added generics production, which accounts for 60-80 percent of total sales. This costadvantage is in the fact that: Most infrastructure facilities are much cheaper in India than in developed countries. Indian scientists can be attracted at much cheaper rates than their US counterparts.
The more value added basic research methodologies are being pursued by very few players likeRanbaxy, Biocon& Dr. Reddys who are willing to take the risk of investing millions in buildingresearch capabilities and developing molecules. In the absence of product patents Indiancompanies ignored basic research and concentrated their R&D efforts toward producing drugsthrough alternative processes. Consequently, total expenditure on R&D was low (multinationalpharmaceutical players spend about 13-16% of total sales on R&D). Investments made in R&D by the Indian pharmaceutical companies would yield 3-4 molecules ayear, which is a very small number. There is very little private initiative to invest in R&D. Thegovernment continues to bear the burden, with industry chipping in with 10% to 12%. This alsoevident in the data of patent granted in the country where the top firms granted patents are mostlyMNCs. Indian industry instead mastered the art of reverse engineering to gain competitiveadvantage, as the industry structure did not provide incentives to invest in basic research.Indian firms have invested very little in R&D in India due to: Lack of Product Patent protection: The delayed adoption of TRIPS in India is cited as the
majorimpediment to the possible investment by international companies in India. Inadequate profit base: The price control has squeezed the profit margins making it difficult
forIndian and international companies to cull out and invest sizable sums in R&D. The profitability ofIndian companies is also much lower than international levels. The pre-tax profit margin ofpharmaceutical companies in India is much less than 6% on sales in sharp contrast to the 18%profit margins common to international companies.
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CHANGING SCENARIO OF INDIAN R&D The acceptance of provisions of the agreement on TRIPS is expected to change the orientation ofIndian companies towards R & D. Indian companies have started investing in complex R & Dactivities like novel drug delivery system and new drug discovery. The advantages of conducting R& D in India are given below. Lower costs: R&D expenditure in India is far lower than in the developed countries. The
costdifferentials are due to lower costs in machinery and human capital. The cost advantages can onlybe exploited if the necessary funds required can be sourced. Following India’s acceptance of theprovision of Trade Related Intellectual Property Rights (TRIPS) under the GATT agreement,investments are expected to start flowing into the area of basic research. Population advantages: A larger population base would facilitate clinical trials for diseases
especially prevalent in developing countries. Indian R&D efforts could be directed towards infectiousdiseases that are especially prevalent in Asian countries. Such R&D activities will be targetedtowards segments such as antibiotics, anti-parasitics and other anti-bacterials.
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PRESENT STATUS OF INDIAM PHARMA INDUSTRY
India currently represents just U.S. $6 billion of the $550 billion global pharmaceuticalindustry but its share is increasing at 10 percent a year, compared to 7 percent annualgrowth for the world market overall.1 Also, while the Indian sector represents just 8 percentof the global industry total by volume, putting it in fourth place worldwide, it accounts for13 percent by value,2 and its drug exports have been growing 30 percent annually. The “organized” sector of India's pharmaceutical industry consists of 250 to 300 companies,which account for 70 percent of products on the market, with the top 10 firms representing30 percent. However, the total sector is estimated at nearly 20,000 businesses, some ofwhich are extremely small. Approximately 75 percent of India's demand for medicines ismet by local manufacturing.
According to the German Chemicals Association, in 2005, India's top 10 pharmaceuticalcompanies were Ranbaxy, Cipla, Dr. Reddy's Laboratories, Lupin, Nicolas Piramal,AurobindoPharma, Cadila Pharmaceuticals, Sun Pharma, Wockhardt Ltd. and AventisPharma.5 Indian-owned firms currently account for 70 percent of the domestic market, upfrom less than 20 percent in 1970. In 2005, nine of the top 10 companies in India weredomestically owned, compared with just four in 1994. India's potential to further boost its already-leading role in global generics production, aswell as an offshore location of choice for multinational drug manufacturers seeking to curbthe increasing costs of their manufacturing, R&D and other support services, presents anopportunity worth an estimated $48 billion in 2007. OVER-THE-COUNTER MEDICINES The Indian market for over-the-counter medicines (OTCs) is worth about $940 million andis growing 20 percent a year, or double the rate for prescription medicines.8 The governmentis keen to widen the availability of OTCs to outlets other than pharmacies, and theOrganisation of Pharmaceutical Producers of India (OPPI) has called for them to be sold inpost offices.
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Developing an innovative new drug, from discovery to worldwide marketing, now involvesinvestments of around $1 billion,9 and the global industry's profitability is under constantattack as costs continue to rise and prices come under pressure. Pharmaceutical productioncosts are almost 50 percent lower in India than in Western nations, while overall R&D costsare about one-eighth and clinical trial expenses around one-tenth of Western levels. India'slong-established manufacturing base also offers a large, well-educated, Englishspeakingworkforce, with 700,000 scientists and engineers graduating every year, including122,000 chemists and chemical engineers, with 1,500 PhDs.10 The industry provides thehighest intellectual capital per dollar worldwide, says OPPI India's largest-selling drug products are antibiotics, but the fastest growing arediabetes, cardiovascular and central nervous system treatments.
The industry's exports were worth more than $3.75 billion in 2004-05 and they have beengrowing at a compound annual rate of 22.7 percent over the last few years, according to thegovernment's draft National Pharmaceuticals Policy for 2006, published in January 2006. The Policy estimates that, by the year 2010, the industry has the potential to achieve$22.40 billion in formulations, with bulk drug production going up from $1.79 billion to$5.60 billion: “India's rich human capital is believed to be the strongest asset for thisknowledge-led industry. Various studies show that the scientific talent pool of 4 million OPPORTUNITIES The main opportunities for the Indian pharmaceutical industry are in the areas of: • Generics (including biotechnology generics) • Biotechnology • Outsourcing (including contract manufacturing, information technology (IT)and R&D outsourcing).
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GENERICS Prescription drugs worth $40 billion in the U.S. and $25 billion in Europe are due to losepatent protection by 2007-08. Indian firms will likely take around 30 percent of theincreasing global generics market, the Associated Chambers of Commerce and Industry ofIndia (Assocham) forecast. Currently, the Indian industry is estimated to account for 22percent of the generics world market. Low production costs give India an edge over othergenerics-producing nations, especially China and Israel, says Assocham's presidentMahendraSanghi. He suggests that it will be easier for Indian firms to win larger genericsmarket shares overseas than at home, particularly in the U.S. and Europe. Indian drug manufacturers currently export their products to more than 65 countriesworldwide.14 Their largest customer is the U.S., the world's biggest pharmaceutical market. The use of generic drugs is growing quickly in the U.S. due to cost pressure by payers andthe introduction on January 1 this year of the Medicare Part D prescription benefit, givingseniors and people with disabilities prescription drug coverage for the first time. With 74facilities, India has the largest number of U.S. Food and Drug Administration (FDA)-approved drug manufacturing facilities outside the U.S. Indian firms now account for 35percent of Drug Master File applications and one in four of all U.S. Abbreviated New DrugApplication (ANDA) filings submitted to the FDA.15 Analysts at Credit Lyonnais SecuritiesAsia say they expect the number of generic drug launches by Indian companies in the U.S.to increase from 93 in 2003 to over 250 by 2008. In January 2006, the Indian exporters' representative body, the Pharma Export PromotionCouncil (Pharmexcil) said it planned to raise a number of concerns with the U.S. governmentover what it sees as barriers to trade with them. One is a U.S. regulation that disqualifiesIndian firms from bidding for government contracts, and another is the requirement Indiandrug manufacturers submit separate applications for each U.S. state (there is no U.S.-wideregulatory requirement), even when the firms have FDA-approved products and facilities However, India's traditional lucrative export markets may be becoming a little less secure,for a number of reasons. For example, generic prices have not been rising in the U.S.; theseniors'
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advocacy group AARP (formerly the American Association of Retired Persons) saysthat, of the 75 generic drugs widely used by older people that it monitors on a quarterlybasis, none had had a change in manufacturer list price during third quarter 2005 and onlythree had had increases in list price at any time during January to September 2005.18 Also,new competitive threats have arrived, such as authorized generics produced by major drugproducers, new mid-sized players, Chinese and Eastern Europe manufacturers, and fullyintegrated generics firms, which are less reliant on Indian “back-end” businesses.
CONTRACT MANUFACTURING The global pharmaceutical market is estimated to represent a $48 billion opportunity forIndia by 200730, in terms of: • manufacturing outsourcing-supply of active pharmaceutical ingredients (APIs) andintermediates • development outsourcing-conducting preclinical and clinical trials • customized chemistry services-contract research services for compounds pre-launch.
Worldwide revenues for pharmaceutical industry contract manufacturing and researchservices (CRAMS) totaled $100 billion in 2004 and will grow at an average annual rate of10.8 percent to reach $168 billion by 2009, say analysts at Frost & Sullivan. Within thistotal, the global market for contract manufacturing of prescription drugs is estimated toincrease from a value of $26.2 billion to $43.9 billion, although the over-the-countermedicines and nutritional products sector will show the fastest growth. The Asian region has recently been challenging North America and Europe's traditionaldomination of the global pharmaceutical contract manufacturing market: India and Chinacould potentially account for 35 percent to 40 percent of the outsourced market share foractive pharmaceutical ingredients, finished dosage formulations and intermediates.
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TOP PHARMACEUTICALS COMPANIES IN INDIA
AUROBINDO PHARMA AurobindoPharma manufactures generics and APIs in the antibiotic, antiretroviral,cardiovascular, central nervous system, gastroenterological and anti-allergy fields, andmarkets them in over 100 countries. In the quarter ended December 31, 2005, it reportedsales up 28 percent to $93.1 million over the same quarter of 2004, with sales offormulations rising 125 percent. The firm filed 10 ANDAs and 13 DMFs in the USA in thequarter, with 70 filings in other markets, bringing its total number of formulation filings to364.In January 2006, Aurobindo reported that the U.S. FDA had granted tentativeapproval for its antiretroviral Nevirapine Oral Suspension 50 mg/5 ml, qualifying the productunder President George W Bush's Emergency Plan for AIDS Relief (PEPFAR) program. Alsoin January, the World Health Organization announced the inclusion of Aurobindo'sNevirapine oral suspension 50mg/5ml and Stavudine for oral solution 1mg/ml in itsPre-qualification list - both are used as a part of first-time line treatment in pediatric AIDS. AVENTIS PHARMA 50.1 percent of Aventis Pharma is held by European drug major Sanofi-Aventis and, in earlyApril 2006, it was reported that UB Holdings had sold its 10 percent holding in the firm toVariegate Trading, a UB subsidiary. The firm's major products are in the anti-infective,anti-inflammatory, cancer, diabetes and allergy market segments and, for the year endedDecember 31, 2005, it reported net sales (excluding excise duty) up 9.9 percent to $181.1million, with domestic sales up 9.1 percent at $129.8 million and exports increasing 12percent to $51.2 million. Sales were led by 83 percent annual growth for the diabetestreatment Lantus (insulin glargine), followed by the rabies vaccine Rabipur (+22 percent),the diabetes drug Amaryl (glimepiride) and epilepsy treatment Frisium (clobazam), both up18 percent, the angiotensin-coverting enzyme inhibitor Cardace (ramipril +15 percent),Clexane (enoxaparin), an anticoagulant, growing 14 percent and Targocid (teicoplanin),an antibiotic, whose sales advanced 8 percent. In February 2006, analysts at SSKI India described Aventis India as a “marketingpowerhouse” and forecast 13 percent and 17 percent CAGR in the firm's consolidatedrevenues and earnings,
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respectively, to 2007. The firm is well-placed to leverage on India'spost-patent regime, they said, adding: “with a strong R&D pipeline, the parent's willingnessto launch products in India soon after the global launch and a locally-relevant pricingstrategy, Aventis is an attractive play on the growing domestic market.”
CIPLA India's second-largest drug manufacturer was originally established in 1935 as TheChemical, Industrial and Pharmaceutical Laboratories. Until 2000 its business was primarilydomestic, but exports, to more than 150 countries, accounted for 45 percent of its fiscalyear 2005 sales, giving it what is probably the Indian industry's most geographically-diversified export base, say analysts at SKKI, who add that Cipla “has established itself asthe partner of choice for generic companies globally.” At the end of December 2005, Cipla signed the largest product development andmanufacturing agreement in the country, when it agreed a global deal with Germanmanufacturer BoehringerIngelheim for the development and supply of the firm'shypertension drug Micardis (telmisartan). The firm also announced at year-end that it planned to launch the first generic version ofRoche's Tamiflu (oseltamivir), which is recommended for use against the H5N1 strain of avian flu. In 2004, Cipla took over from GlaxoSmithKline as India's leading drug manufacturer interms of retail sales (although, including vaccines and institutional sales, GSK still has theleading share, at just under 6.5 percent).
DR REDDY'S LABORATORIES Dr Reddy's Laboratories is an emerging global pharmaceutical and biotechnology company,which was founded by chairmanAnji Reddy in 1984. It operates in over 60 countries,although India and the USA each accounts for around a third of the firm's total sales. Thecompany is already strongly
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present in most of the world's biggest less-regulated markets,such as Russia, China, Brazil and South Africa. For the nine-month period to December 31, 2005, the firm reported revenues up 14percent to $387.4 million, driven by sales of APIs (up 48 percent in the third quarter and19 percent in the first nine months) and branded formulations (up 34 percent in the thirdquarter, led by growth of 34 percent in India and 35 percent in Russia). Dr Reddy's is alsoan innovator in the use of venture capital to maintain cash-flow for R&D, having received$57 million from ICICI Venture Funds to support ANDA filings for 18 months beyondFY2005 for royalties from sales in the USA. Dr Reddy's made history in February when it entered the German branded generics market,the world's second-largest after the USA, not through building a business organically therebut with the purchase of Betapharm, Germany's fourth-largest generics manufacturer, for$570 million. This is the largest overseas acquisition by an Indian pharmaceutical companyso far. Despite its size, the German generics market is not experiencing the pricing pressurewhich is currently being felt in the USA and shrinking business there. Satish Reddy from DrReddy's is still optimistic about prospects in the USA, pointing to the huge opportunitieswhich will be presented there by patent expiries on major products going forward to 2010.
Before the Betapharm purchase, Dr Reddy's did not have a presence generally in theEuropean branded generics market, although it is active in the UK pure generics market. It is now looking towards expansion in Spain, France and the rest of Europe, and also to rollingout its existing product range in major regulated markets including Australia and New Zealand.
LUPIN Lupin is one of the world's largest manufacturers of APIs and finished formulations for TB,bacterial infections and cardiovascular disease. Its products are sold in more than 50countries. For third13
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quarter 2006 (ended December 31, 2005), the firm reported grosssales up 51 percent to $98.9 million, with exports up 56 percent (boosted by U.S. launches)at $46.3 million and domestic sales rising 47 percent to $51.9 million For the nine monthsto end-December, sales rose 34 percent to $274.7 million, with net profit up 112 percentto $29.5 million.
NICHOLAS PIRAMAL Nicholas Piramal is the flagship company of Piramal Enterprises (PEL), one of India's largestdiversified business houses. It was formed in 1988 when PEL acquired NicholasLaboratories (NPIL) a small formulations company, from Sara Lee. For third-quarter FY2006 (ended December 31, 2005) the firm reported net sales of $78.3 million, up 9.2percent on the second quarter, and consolidated sales were up 17.3 percent at $89.5 million. However, net profit plummeted 69.9 percent to $5.2 million, due to lower sales of thefirm's leading brand, the controversial promethazine/codeine phosphate/ephedrine coughsuppressant Phensedyl, which has been widely abused, and the withdrawal of twovaldecoxib brands - Vah and Valto - plus a foreign exchange loss of £468,000. NPIL's strategy of opting out of early-stage generic exports, which differentiates itfrom most leading Indian firms, enables it to steer clear of IP challenges and focus onpartnering with global firms. Generally, contract manufacturing organizations operate onlyin certain segments (e.g., intermediates, APIs or formulations), but NPIL is seeking to jointhe rank of the few players offering the entire spectrum of services, notes SKKI.
RANBAXY LABORATORIES India's largest pharmaceutical company is ranked among the top 10 generics
manufacturersworldwide and aiming to be in the top five with sales of $5 billion by 2012. However,with the firm's recent moves to increase its size through the inorganic route, it is seen asaiming to establish itself as the world's number three generics producer much sooner. It hasmanufacturing operations in seven countries, a ground presence in 46 nations and sells
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itsproducts in over 100 countries. Ranbaxy has three state-of-the-art research facilities atGurgaon, near New Delhi - R&D Centers I and II focus on the development of generics andnovel drug delivery systems research, while the new R&D Centre III is dedicated to newdrug discovery research. The firm also has the largest R&D budget of any Indian drug manufacturer, standing at 7 percentof sales in 2004, and it plans to progressively increase this to 9 percent-10 percent by 2007.Ranbaxy has set up a global alliance with GlaxoSmithKline in the area of drug discovery anddevelopment. Two research programs, one in the area of anti-infectives and another, in theasthma segment, are now in progress. For the year ended December 31, Ranbaxy reported sales of $1.17 billion, similar to theprevious year, but profits after tax and minority interest slumped 62 percent, largely impactedby continuing price erosion in the key U.S. market, where sales fell 22 percent to $332million. In Europe, sales rose 5 percent to $202 million, while in the BRIC countries (Brazil,Russia, India and China) they rose 11 percent to $340 million. In January, Ranbaxy's newchief executive Malvinder Singh said the firm is looking for M&A to help it reach its $2billion sales target by 2007; the goal for 2006 is an increase of 18 percent. Ranbaxy follows a strategy of aggressively challenging patents of innovator firms to drive itsgenerics business, say analysts at SKKI India, adding: “the robustness of Ranbaxy's globalgeneric model is reflected in its presence in 23 of the top 25 markets in the world includingJapan and Canada. Only Teva and Sandoz can match Ranbaxy's global generics footprint. Also, while Teva and Sandoz have built a global footprint, primarily through inorganicinitiatives, Ranbaxy's growth has so far been largely organic.”
SUN PHARMA Sun Pharma, established in 1983, makes specialty pharmaceuticals and APIs for use inchronic therapy areas such as cardiology, psychiatry, neurology, gastroenterology, diabetesand respiratory conditions, sold in 26 markets worldwide. Its income for the quarter endedDecember 31, 2005 was $103.2 million compared with $73 million in the like, year-earlierperiod, and total nine-month
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income was $295.8 million. In February 2006, the firmannounced the demerger of its innovative R&D programs to a new company which it hasset up for this purpose. Around 25 percent-40 percent of R&D spend, which represents10 percent-11 percent of its sales, is accounted for by innovative R&D, it said.
WOCKHARDT The overseas ambitions of this Mumbai-based pharmaceutical and biotechnology-basedcompany have already been covered elsewhere in this report, but in mid-March 2006Wockhardt announced that it had received approval from its shareholders to raise up to$800 million, in one or more tranches, to fund further foreign purchases. Noting hiscompany's “well -known” ability to create value through acquisitions, chairmanHabilKhorakiwala said the move would “empower us to seize global opportunities quickly.” Thestockholders also authorized an increase in the company's Foreign Institutional Investmentcap to 49 percent.
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SAVA MEDICA LIMITED
Esteemed in 2003, we are committed to make life "SAVA" with our range of healthcare products and services that are benchmark of 'Superlative Quality, Enviable Economy'. Built on the sturdy pillars of financial solidarity, stability, reliability, operational expertise, infrastructure, technology and revolutionary business strategy and execution, the SAVA Group is worth US $50 million and growing with CAGR of 150%, nearly 10 times that of the average pharmaceutical industry. The SAVA Group has attained an iconic stature in pharmaceutical arena making the lives of millions of people feel good. Our well-known generic manufacturing plant located, in Surendranagar near Ahmedabad in India, helps SAVA attain its magnanimous capability of "curative power" by producing over 500 products in what stands as one of the widest range of therapeutic categories in India. The SAVA group of companies constitute independent and well-established entities in manufacturing, marketing, retail and distribution to cover the entire value-chain in pharmaceuticals. This along with strategically prominent marketing nodes the world over, gives SAVA the edge to be self-sustained in effectively delivering our vast range of products across various geographies. It also serves to fulfill our commitment to deliver "beyond the maxim of care".
SAVA VISION
"Be the choice. Be the leader. Because life is too big to play small." At SAVA we perceive the perfect vision (20:20) to be attained by the year 2020 by whence SAVA aims to be 'the choice' as in ? Brand of choice for flagship products at least 20% of product portfolio ? Employer of choice listing in Fortune 500 companies ? Principal of choice for stake holders - Shareholders / Investors / Vendors
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? And by being 'the choice' we hope to be 'the leader' and achieve Position in top 100 global generic life sciences company by profitable new business ventures from both qualitative and quantitative terms by 2020 ? Significant business (60% of business revenues) in prescription products with a strong presence in emerging markets
SAVA MISSION
Innovate. Improve. Inflate. Our mission is our obligation. We have a responsibility to stand in true to 'SAVA''. And we realize that to establish SAVA in every life and make it "feel good" every new rise, means that we need to resolve and pledge ourselves to forever persevere to achieve the three 'I''s that give our mission it's name Mission i3 ? Innovate - to emerge as a key research-based organization ? Improve - the quality of well-being in general of the society ? Inflate - as a major transnational player.
CORE STRENGTHS
At SAVA, our highly competitive nature drives us to diligently focus upon building our strengths. Technical competence and resources for formulation and development of both sterile and nonsterile pharmaceuticals is amongst our core area of interests. By strengthening the above fundamental parameters we have been able to achieve ? Competence in developing science and technology to produce breakthrough formulations ? Excellence in manufacturing superlative quality pharmaceuticals with enviable economy ? Highly competent team across its business functions ? Widest therapeutic portfolio in human life ? Growing therapeutic coverage of animal health ? Global marketing reach to cater to the growing demands of the changing world
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2010 2010 2010
• SAVA INFOTECH PVT. LTD(India) • BIODEAL LABORATORIES PVT. LTD(India) • SAVAPHARM LLC(Russia)
2009
2010 2010
• ANAM PHARMACY.(Malaysia) • SAVA MEDICA PTE. LTD.(Singapore) • GOLD PHARM- AGRIF TASHKENT(Uzbekistan)
2003 2007 2008
• ANAGHA PHARMA PVT LTD(India) • SAVA SHARJAH FZE(U.A.E) • SAVA MEDICARE LIMITED(Mauritius)
2011 2011
• SAVA MEDICA LTD.(Vietnam) • SAVAGLOBAL LLC (Canada)
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GROUP COMPANIES
? SAVA Medica Limited, India ? Biodeal Laboratories Pvt Ltd, India ? AnaghaPharmaPvt Ltd, India ? SAVA Medica (Singapore) Pte Ltd ? SAVAPharm LLC, Russia ? SavestaLifeSciences Ltd. USA
OPERATIONS
Export
In our pursuit to grow as a major transnational player, the company has been continually transcending its horizons and has catapulted its presence in over 30 countries globally. The company operates internationally in five major regions ? By 2010 the company developed liaison offices and Russia and the CIS ? The Americas -Latin America and the Caribbean countries ? Asia including Middle East ? Oceania ? Africa Establishments at strategic marketing nodes of Singapore, Mauritius, Uzbekistan, Dubai and Russia.
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Domestic
The vision of "Life Beyond Care" which has ensured a strong presence across the globe at Sava Medica Limited, is now all set to spread the same radiance in the Domestic Market in the national arena. The unshakeable desire to offer world class services & deliver quality products to the customers, indicates that the products are universally accepted & will definitely receive the same accolades in our own country as well. The future is to launch a host of products in the respiratory segment which will include innovative NDDS, including newer nasal sprays ; anti infectives ; 1st time combinations in various segments, plasma range of products & several other newer drug entities never before launched in India. Thus fulfilling the motto of "A HEALTHY NATION ... A HEALTHY WORLD..." World class manufacturing units at Surendranagar (Wadhvan) near Ahmedabad & another compiling to USFDA to be commissioned mid next year at Panoli in South Gujarat, will enable Sava Medica Limited to reach out to each & every nook & corner across the globe including India. A dynamic, committed & youthful talent pool of over 350 personnel, in sales & marketing will drive the organization in the domestic market scenario with an aim to achieve the top 10 position by year 2025. Global Consumer Care Business Moving up the value chain, Sava Global has identified Consumer Healthcare as its new business undertaking. We plan to cater this consumer healthcare category by launching a range of OTC (Over the counter) Products. Subsequently, SGCH business shall be initiated with the launch of 3 brands; Zerofig- Weight Reduction Capsule, Rankof- Anti-pyretic, Analgesic and Anti-histaminc Tablet &Biomist- Nasal Decongestion Drops. Why enter 'Consumer Health Care'?
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"Creating a Strong Global Consumer Platform", is the key reason why this OTC portfolio is an attractive one in the context of the growing lucrative nature of the global consumer healthcare market. Consumer Healthcare is a growing market primarily because of ? Increasing awareness & growing consciousness about health conditions ? Increasing self-medication trend ? Easy accessibility of medication ? Moving from treatment to proactive monitoring and care OTC medicines will benefit consumers by helping them to treat minor ailments and prevent illness. This is opening new gates of opportunities for the Consumer healthcare market. The global market for over-the-counter (OTC) non-prescription medicines remains buoyant, which reported sales worth US$86.6 billion in 2008, growth in value sales in 2009 estimated at 4.7%, bringing the value of the category to over $95 bn (source: Nicholas Hall Company). Much of this growth has been driven by developing markets, with double-digit growth recorded in Brazil, Russia, India and China (BRIC). Many established mature markets for OTC medicines recorded very modest levels of growth.
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THE PROWESS
Independent LVP formulation unit
? ? ? Infusions Eye / Ear drops Sterile opthalmic liquid solutions ? ? ? ?
Independent Oncology formulation unit
Lyophilized dry powder Oral liquids / Syrup / Suspension Sterile liquid ampoule / Vial Tablets / Capsules
Independent General formulation unit
? ? ? ? ? ? ? ? ? ? Tablets / Capsules / Syrup Soft gelatin capsules Nasal sprays / Dry powder inhalations Aerosols ? ?
Independent Specialty injectable formulation unit
Lyophilized dry powder Sterile liquid ampoule / Vial/ Dry powder
Independent Cephalosporin formulation unit
Sterile liquid ampoule / Vial Tablets / Capsules Oral liquids Oral liquids / Syrup / Suspension ? ?
Independent Biological formulation unit
Dried fraction concentrate Sterile liquid ampoule / Vial
Independent Beta Lactum formulation unit
Sterile liquid ampoule / Vial Oral solids Oral liquids / Syrup / Suspension
The pharmaceutical industry has become increasingly focused on understanding the effects of disease and infection on a molecular and physiological level in order to find better, more specific targets to concentrate their energies on. Sava believes that innovation and development of new products is critical in order to remain competitive. Sava is knowledge based organization. We believe that addition of knowledge to a specific molecule through transformational processes of R & D, clinical, clinical trial,, manufacture, marketing and sales shall generate commercial value & competitive edge to its supply chain activities.
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GLOBAL SOURCING SAVA is ardent in sourcing of various pharmaceutical products and services from global market to utilize global efficiencies as in low cost skilled labour, low cost raw materials and few other economic factors such as tax breaks, low trade tariffs in the delivery of its products and services. Our global sourcing initiatives and programs form an integral part of the strategic sourcing plan and procurement strategy that aims to seek economies of scale through corporate-wide standardization and benchmarking. Our Global sourcing plan includes tapping into skills or resources unavailable domestically, developing alternate supplier/vendor sources to stimulate competition, and increasing total supply capacity, reducing the long lead times, the risk of port shutdowns interrupting supply, and the difficulty of monitoring product quality. Our global sourcing initiatives benefits us from lower acquisition costs , faster times-to-market the products, reduce customer costs and ensure timely initiation and reliability of product supply resulting in substantial value to the bottom line. The network includes manufacturers, scientists,R& D labs, API and Raw material suppliers/vendors who are able to deliver "virtually any product in the world in the healthcare, and to identify the most cost-effective source of supply". It is aim and ambition of SAVA to source and supply products and services worth 300million Usd to global markets in next 5 years. We are looking forward to wide spectrum of business in healthcare including OTC,Phytomedicines, Biopharmaceuticals in finished dosage forms and subsequently API & intermediates. LOGISTICS & DISTRIBUTION
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Logistics and distribution form the most essential element in being a pharmaceutical enterprise with a global module. At SAVA all our products after packaging are stored under secure conditions in an automated, computer-controlled, high-rise warehouse. The warehouse is temperature and humidity monitored. All shipments are individually monitored at departure from the Regional Distribution Center until final proof-of-delivery at the destination with web-based tracking. Our transport solutions are partnered with the most reputable first class logistic carriers who hold the same high-quality standards and provide end-to-end logistics solutions. ? Shipment monitoring ? Controlled ambience < 25°C ? 2 - 8°C
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SAVA BUSINESS
BRANDED GENERICS
GENERICS
CMO
INORGANIC GROWTH
ASPIRATIONS
33 cr. 201112
60 cr. 26 201213
150 cr. 201415
500 cr. 201920
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SWOT ANALYSIS STRENGTHS
? Evolving Organization ? Dedicated People ? Manufacturing. Capability –Respiratory ? Financial Stability ? Clear Management Vision
WEAKNESS
? Operational Efficiency ? Dossiers ? Less no. of registered products in marketing countries ? Less technically experienced personnel ? Dual registration of Sava and Biodeal ? Delay in production ? Less Intl. quality accreditations –ISO, USFDA, TGA, UKMHRA, EU ? Lack of market data-For e.g.., IMS
OPPORTUNITIES
? Disease burden
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? Operations in new markets ? Introduction of new products ? USFDA approved Panoli Project
THREATS
? Less no. of direct operations in marketing countries. ? Absence of novel molecules
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