Description
Describes about Industry Trends pharmaceutical industry, PEST Analysis of pharmaceutical Industry, Competitor Analysis, SWOT analysis, Company Description, General Information about Wockhardt , it's Finance performance, SWOT analysis of Wockhardt and Various Strategies employed.
Company Analysis
Industry Analysis: Industry trends: Indian and Global perspectives, recent happenings Indian pharmaceutical industry is undergoing fast paced changes. The Indian Generics market is witnessing rapid growth opening up immense opportunities for firms. This is further triggered by the fact that generics worth over $40 billion are going off patent in the coming few years which is close to 15% of the total prescription market of the US. The Indian pharmaceutical companies have been doing extremely well in developed markets such as US and Europe, notable among these being Ranbaxy, Dr. Reddy?s Labs, Wockhardt, Cipla, Nicholas Piramal and Lupin. The companies have their strategies in place to leverage opportunities and appropriate values existing in formulations, 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 is ranked thirteenth. The industry has thrived so far on reverse engineering skills exploiting the lack of process patent in the country. This has resulted in the Indian pharmaceutical players offering their products at some of the lowest prices in the world. The quality of the products is reflected in the fact that India has the highest number of manufacturing plants approved by US FDA, which is next 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 dominating the marketplace with the local players dominating a number of key therapeutic segments. The Key to success in this industry is research & development. R&D is the starting of the industry value chain and is also the most important value creator. Companies that involve in R&D do so in specific areas. They chose specific therapeutic areas to target based on their strengths in the market, and the commercial potential. Global Trend The pharmaceutical industry is currently undergoing a period of very significant transformation. The majority of “Big Pharma” companies generate high returns, thus providing them with excess cash for further rapid growth – whether organic, or through mergers and acquisitions. topcompanies in the industry were active participants of mergers and acquisitions. The largest acquisitions in the industry during last years were the acquisition of Pharmacia by Pfizer (purchase price $58 billion), and acquisition of Guidant by Johnson & Johnson (purchase price $25 billion). Another form of structural change in the industry was establishing of new strategic alliances and joint ventures. So far as the research and development process for each drug take many years and requires significant investments, and the outcome of these investments of time and financial resources remains unclear until the final approval of the drug, “Big Pharma” companies are constantly looking for synergies that they can get from cooperation with their competitors. Last
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Company Analysis
years gave multiple examples of such initiatives. For example, cooperation of Sanofi-Aventis and Bristol-Myers Squibb resulted in production of Plavix, which is currently one of the topselling products for each of these companies. 2. PEST Analysis: Political, economic, social and technical aspects related to the industry Political There is now growing political focus and pressure on healthcare authorities across the world. This means that governments will be looking for savings across the board. ? ? ? Growing political focus and pressure on healthcare that cat backs more pressure on pricing. Same selection of drugs be available to everyone Harmonization of the healthcare across Europe.
Economic ? ? ? ? The global economic crisis still exists yet government reports still show that the spend on healthcare per capital continues to grow. The reduction in consumer disposable income will have an impact on those countries using health insurance models particularly where part payment is required. These economic pressures are seeing an increased growth in strategic buying groups who are forcing down prices. Increased pressure from shareholders has caused a consolidation of the industry: more mergers and acquisitions will take place over the coming years.
Social / Culture ? Patients awareness changing expectations increases more pressure on customer services ? Need for education and more price transparency ? Increased age of population because of this market likely to grow with increasing health concerns Technological Technological advancements will create new business prospects both in terms of new therapy systems and service provisions. The online opportunities will see the growth in: ? ? ? ? ?
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New info and Communications technologies. Social Media for Healthcare. Customized Treatments. Direct to Patient Advertising. Direct to patient communications.
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Company Analysis
? More responsive facilities required.
3. Competitor Analysis: Analyze pricing, quality, distribution and partnerships of the nearest competitor of the company Revenue of Share of HQ Total sales, Company pharmaceutical pharmaceutical location mln USD segment, mln USD segment, % Pfizer GlaxoSmithKlin e Johnson Johnson Merck AstraZeneca & NJ, U.S. NJ, U.S. UK Switzerlan d France Switzerlan d 22,190 21,494 21,426 47,348 22,939 21,426 46.87% 93.70% 100.00% UK 31,434 37,324 84.22% NY, U.S. 46,133 52,516 87.85%
Novartis Sanofi-Aventis
18,497 17,861
28,247 18,711
65.48% 95.46%
Roche Bristol-Myers Squibb Wyeth Abbott Eli Lilly Takeda Schering-Plough Bayer
17,460
25,168
69.37%
NY, U.S. NJ, U.S. IL, U.S. IN, U.S. Japan NJ, U.S. Germany
15,482 13,964 13,600 13,059 8,648 6,417 5,458
19,380 17,358 19,680 13,858 10,046 8,272 37,013
79.89% 80.45% 69.11% 94.23% 86.09% 77.57% 14.75%
Source: 2011 Annual Reports of the companies
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4. SWOT Analysis: Strengths, weakness, opportunities and threats faced by the industry E STRENGTHS - Strong and well-developed manufacturing base - Clinical research and trials - Knowledge based, low- cost manpower in science & technology - Proficiency in path-breaking research - High-quality formulations and drugs - High standards of purity
WEAKNESSES - Low Indian share in world pharmaceutical market (about 2%) - Lack of strategic planning - Fragmented capacities - Low R&D investments - Absence of association between institutes and industry
- Non-infringing processes of Active Pharmaceutical Ingredients (APIs)
- Future growth driver - World-class process development labs - Excellent clinical trial centers
- Low healthcare expenditure
- Production of duplicate drugs
SWOT ANALYSIS OF PHARMACEUTICAL INDUSTRY
OPPORTUNITIES
- Incredible export potential
- Increasing health consciousness - New innovative therapeutic products - Globalization - Drug delivery system management - Increased incomes - Production of generic drugs - Contract manufacturing
THREATS - Small number of discoveries - Competition from MNCs - Transformation of process patent to product patent (TRIPS) - Outdated Sales and marketing methods - Non-tariff barriers imposed by developed countries
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Company Analysis: 1. Company description (a brief introduction regarding what businesses the company is into) 2. General information about the company: location of the headquarters, year of founding, shareholding pattern, number of employees, top management, etc. 3. Financial performance of the company: Sales, net profit, segment wise performance of the past 1 year 4. SWOT Analysis: Strengths, weakness, opportunities and threats faced by the company 5. Various strategies employed by the company in the course of conducting business (in the form of alliances, joint ventures, product innovation/ expansion strategies, acquisitions/ divestitures and any such strategies that you think may affect the business of the company) in past 2 years. (Make intelligent use of above points while trying to understand the strategies used by the company) a. Hierarchical: At the corporate level, business unit level and functional or department level of the firm b. Business Division: According to various products, divisions, markets, etc. c. Regional: Strategies devised as per regions, geographies, etc.
WOCKHARDT LTD. Company Description Wockhardt was founded by Habil Khorakiwala in the early 1960s. His father Mr. Fakhruddin T. Khorakiwala had acquired Worli Chemical Works in 1959.This was incorporated as Wockhardt Pvt. Ltd., in 1973.Wockhardt Ltd. was incorporated on July 8.1999. Wockhardt is often confused as a multinational because of its German sounding name Wockhardt is a high-technology intensive global pharmaceutical and biotechnology company with multi-disciplinary and innovative R&D programmes. It has 3 research centres globally and manufacturing facilities across India, USA, UK and Ireland. Wockhardt has a significant presence in USA, Europe and India, with 75% of its global revenues coming from international businesses. With a large pool of Patents and Intellectual Property knowhow, Wockhardt is home to 590 scientists, of whom 80 are doctorates. In all, Wockhardt has 158 Patents granted worldwide. In biotechnology research, it has built a competent„ Concept to Market? capabilities in all facets of development and manufacture of recombinant biopharmaceuticals. Wockhardt boasts of a multi-ethnic workforce of more than 8000 people from 14 different nationalities. Wockhardt?s business philosophy is – „Creating value by understanding and communicating with its customers and business partners?.
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Wockhardt?s vision is – „To be the most admired Indian Health Care Group? And the company is honoured with 2012 DIANA Award for Best Overall Generic Manufacturer. Wockhardt received for the 3rd consecutive year, the Government of India Patents Award for the „Maximum Patents granted Worldwide to an Indian Company? Location of the Headquarters: Wockhardt Towers, Bandra-kurla Complex, Bandra (East) Mumbai-400051, Maharashtra Year of Founding: 1999 Share Holding Pattern: Categories Number of shares Amount in Rs. % to total paid-up capital 73.64 0.05 0.09 0.12 0.00 7.71 1.76 1.87 0.33 0.42 13.85 0.16 0.00 100.00
Promoters Directors/relatives of Directors Financial Institutions Banks Mutual Funds Insurance Companies Foreign Institutional Investors Bodies Corporates Non Resident Indians Shares Representing GDRs Public Clearing Member Trusts TOTAL
80,585,382 55,600 96,403 132,130 1,665 8,434,559 1,930,730 2,049,503 360,964 458,500 15,148,835 178,782 2,850 109,435,903
402,926,910 2,78,000 482,015 660,650 8,325 42,172,795 9,653,650 10,247,515 1,804,820 2,292,500 75,744,175 893,910 14,250 547,179,515
Number of employees: 8600 Top Management: S no Name Designation Chairman Managing Director
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1. Habil Khorakiwala 2. Murtaza Khorakiwala
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3. 4. 5. 6. 7. 8. Huzafia Khorakiwala VR Khetan Shekhar Datta Aman Mehta R A Shah Bharat Patel Executive Director Company Secretary Non Executive Independent Director Non Executive Independent Director Non Executive Independent Director Non Executive Independent Director
3. Financial performance of the company: Sales, net profit, segment wise performance of the past 1 year
Sales: FY12 at Rs. 4,614 crores with growth of 23% Net profit: Rs. 947 crores with growth of 62% Segment wise performance The company is exclusively into pharmaceutical business segment. Sales Month Quantity 03 03 03 03 03 03 03 03 03 03 03 81573.00 5961290.00 943981.00 6881226.00 376388.00 0.00 177029.00 0.00 0.00 0.00 0.00 Sales Value (Rs. Millions) 9380.78 2308.82 2193.63 1657.26 1072.98 337.09 307.08 180.62 135.38 14.45 0.98
Product Name Tablets & Capsules Powder Injections Liquids & Solutions Bulk Drugs Other Goods Ointments Export Incentive Management Fees Distribution Income Processing Charges
Year 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011
% of STO 53.33 13.13 12.47 9.42 6.10 1.92 1.75 1.03 0.77 0.08 0.0
4. SWOT Analysis: Strengths, weakness, opportunities and threats
Strengths ? Strong expertise in the area of Recombinant Biotechnology ? Strong presence in the European market (50%+ revenue comes from Europe)
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? ? ? ? ? Significant ramping up of the US business (22 products marketed) Presence in lifestyle related diseases in India (Diabetes, Nephrology) Excellent products (original and generic) with very high quality. The company has plans to launch 12 to 15 products in US markets during the financial year 2011-12 Pinewood maintained its top position in Ireland?s generic products market
Weaknesses ? Salaries, compared to the market, aren't good at all. ? Nascent presence in the US market (Less than 10% contribution to total revenues) ? Highly leveraged balance sheet with D/E ratio more than 1.5x ? Absence of production plan which is obvious in the shortage of products
Opportunities ? Leverage on synergies present in the European market ? Aggressive growth in the US market (30 products pending approval) ? Introduction of Bio-generics in regulated markets (market size pegged at $10 bn) ? Pharmaceutical and Biotechnology research plans that are currently underway are in line with developmental strategy and will be a key business driver in the coming future in US and other regulated markets Threats ? Non-conversion of FCCBs will lead to huge liabilities in FY09 of $140mn. Also, FCCB conversion will lead to about 9% equity dilution from Rs 547mn to Rs 559mn. ? Integration of European businesses is a major challenge (Negma and Pinewood acquisitions have to be integrated with the UK business) ? Pricing pressure in the US may restrict expected revenue growth (price erosion more than 95%) specially in cephalosporin segment, with growing competition from companies like Orchid Chemicals and Lupin ? Any expensive acquisitions may increase payback period ? Increasing competition in the European generic market with the growing presence of frontline Indian pharma companies including Ranbaxy and Reddys ? There is a risk of domestic currency appreciation as the company derives major revenue from international operations (1 to 3% impact on operating profits for every one rupee appreciation)
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5. Various strategies employed by the company in the course of conducting business (in the form of alliances, joint ventures, product innovation/ expansion strategies, acquisitions/ divestitures and any such strategies that you think may affect the business of the company) in past 2 years. (Make intelligent use of above points while trying to understand the strategies used by the company) a. Hierarchical: At the corporate level, business unit level and functional or department level of the firm One of the key strategies adopted by Wockhardt wasValue Buy-outs: Buy loss-making companies and turn them around. ? In 1998, Wockhardt acquired Wallis Laboratory, a loss-making manufacturer distributor of over-the-counter drugs, for US$ 9 million and made it profitable. ? Wallis Laboratory provided the base for the manufacturing and marketing of medicines and personal care products. ? In 2003, CP Pharmaceuticals were acquired by Wockhardt Limited. ? CP Pharmaceuticals provided a manufacturing base for pharmaceuticals. ? In 2009, Fortis Healthcare Ltd. (Fortis), a hospital chain established by the promoters of Ranbaxy Laboratories Limited (RLL), acquired 10 hospitals of the Wockhardt Hospitals Group (Wockhardt Hospitals), a subsidiary of Wockhardt Ltd. (Wockhardt) for Rs. 9.09 billion. Wockhardt Hospitals was expected to benefit from the acquisition as it would be able to reduce its debt burden of Rs. 5 billion of the total debt of Rs. 34 billion. Besides, it planned to expand its hospitals with the remaining money. ? In Feb 2009, the stock price of Wockhardt made a low of Rs 70 and was down 80% in a year. The price later recovered to Rs 150 when the sale of its nutritional business to Abbott was finalized in July 2009. ? Some companies & FCCB challenged „withdrawal of winding up petition? on Wockhardt. The company finally negotiated the restructuring of FCCB loans with the hedge fund QVT. As QVT held majority of the FCCBs (US$ 42 m) out of the total US$ 74 m remaining, the same terms were enforced on the other lenders too. As part of the settlement, QVT also decided to withdraw the 'winding up' petition filed against the company in the court. ? After the settlement with QVT who holds most of the FCCBs, the stock price recovered further from the Rs 150 mark to around Rs 380 levels. ? The company has been acquiring companies to facilitate its entry into a segment or for tapping a particular geography. This has facilitated the company to penetrate into desired markets. ? Wockhardt Ltd has agreed to sell its nutrition business to French food multinational Danone for about $356 million (Rs 1,576 crore), more than double the amount at which it
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had signed a similar deal with US pharmaceutical giant Abbott a year ago. The Abbott deal was called off after Wockhardt?s lenders opposed the sale of its nutrition business.
b. Business Division: According to various products, divisions, markets, etc. Wockhardt Limited UK operates through various business divisions – ? Retail and Hospital Medicines, ? Private Label Medicines, ? Oral Healthcare, ? Contract Manufacturing and ? Export. In the case of the oral healthcare division, products are sold under Wockhardt's own brand (ConfiDent brand) as well as under private labels. Wockhardt also undertakes contract manufacturing in the UK, which helps the company to increase its revenue from its UK operations. CP Pharmaceuticals, acquired in 2003, strengthened the contract-manufacturing capabilities of the company. It has a contract-manufacturing relationship with Amylin Inc. for Exenatide, which is a medication for diabetes. From 2005, Wockhardt Limited UK has begun undertaking the production of Esparma GmbHa subsidiary of Wockhardt Limited in Germany, which had been outsourced earlier. Esparma GmbH outsources about 40 per cent of its production to Wockhardt Limited UK. Therefore, the current in-house production facilitates Wockhardt to reduce costs and provide a better control on its complete value chain. Innovation Wockhardt?s core business is innovation. It uses science and technology to develop medicines and other products that improve the quality of millions people?s lives through better health. Wockhardt has proved its technical excellence by developing patented modified release formulations and recombinant biotechnology products. It has a multi-disciplinary R&D programme with more than 550 scientists, including over 100 doctorates, in the areas of: ? ? ? ? Pharmaceutical Research Biotechnology & Genomics Research Novel Drug Delivery Systems New Drug Discovery Programme. API Research
Wockhardt is in the forefront of Intellectual Property creation with 1,411 patents filed till date, of which 145 patents have been granted. And the capability and commitment of Wockhardt in
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pursuing Intellectual Property has been recognized by the Government of India for three years in a row, with an award for the maximum number of „Patent filings and Grants from India?. Wockhardt is determined to create benchmarks for a promising future. c. Regional: Strategies devised as per regions, geographies, etc. Wockhardt is eyeing markets in Europe, particularly the UK, as part of its growth strategy. The company has as a strong brand presence through various tie-ups with leading healthcare insurance providers in the UK. The next few years will witness the expiry of many patents in Europe, thereby creating a large potential for generics. Wockhardt is aiming to tap a larger pie of this potential market. The company is planning to increase its focus on specialty nutrition products as their demand is increasing in Europe. With an enhanced understanding of customer needs, Wockhardt is focusing on tapping the market requirement for nutritional products. It has placed great emphasis on the research to be conducted in producing improved nutritional products. Collaborations Wockhardt works with partners to in-license products in India and out-license products into other regions by capitalizing on these collaborative strengths to capture and penetrate new markets. According to Wockhardt?s MD, Dr. Murtaza Khorakiwala, strategic partnerships are a less capital-intensive way of moving into new territories or acquiring new capabilities. By finding partners with complementary skills, Wockhardt endeavours to find smarter ways to grow and in turn create significant value for all it stakeholders. The company has successfully created an integrated multi-technology capability to manufacture all types of dosage forms including sterile injectables and lyophilized products. Highly skilled technicians operate 14 manufacturing facilities that are US FDA, UK MHRA and EMEA compliant sites in India, the US and Europe. Key business highlights: Region wise Sales 1. The US business achieved revenues of Rs. 10,736 million 2. The European operations achieved revenues of Rs. 14,212 million 3. The Indian business achieved revenues of Rs. 10,413 million 4. The RoW business achieved revenues of Rs. 2,151 million The state-of-the-art biotech plant in Aurangabad has six dedicated manufacturing facilities for biopharmaceutical bulk as well as recombinant formulations. The Wockhardt Biotech Park has created its own benchmark in manufacturing recombinant products with world-class technology
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doc_739036978.docx
Describes about Industry Trends pharmaceutical industry, PEST Analysis of pharmaceutical Industry, Competitor Analysis, SWOT analysis, Company Description, General Information about Wockhardt , it's Finance performance, SWOT analysis of Wockhardt and Various Strategies employed.
Company Analysis
Industry Analysis: Industry trends: Indian and Global perspectives, recent happenings Indian pharmaceutical industry is undergoing fast paced changes. The Indian Generics market is witnessing rapid growth opening up immense opportunities for firms. This is further triggered by the fact that generics worth over $40 billion are going off patent in the coming few years which is close to 15% of the total prescription market of the US. The Indian pharmaceutical companies have been doing extremely well in developed markets such as US and Europe, notable among these being Ranbaxy, Dr. Reddy?s Labs, Wockhardt, Cipla, Nicholas Piramal and Lupin. The companies have their strategies in place to leverage opportunities and appropriate values existing in formulations, 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 is ranked thirteenth. The industry has thrived so far on reverse engineering skills exploiting the lack of process patent in the country. This has resulted in the Indian pharmaceutical players offering their products at some of the lowest prices in the world. The quality of the products is reflected in the fact that India has the highest number of manufacturing plants approved by US FDA, which is next 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 dominating the marketplace with the local players dominating a number of key therapeutic segments. The Key to success in this industry is research & development. R&D is the starting of the industry value chain and is also the most important value creator. Companies that involve in R&D do so in specific areas. They chose specific therapeutic areas to target based on their strengths in the market, and the commercial potential. Global Trend The pharmaceutical industry is currently undergoing a period of very significant transformation. The majority of “Big Pharma” companies generate high returns, thus providing them with excess cash for further rapid growth – whether organic, or through mergers and acquisitions. topcompanies in the industry were active participants of mergers and acquisitions. The largest acquisitions in the industry during last years were the acquisition of Pharmacia by Pfizer (purchase price $58 billion), and acquisition of Guidant by Johnson & Johnson (purchase price $25 billion). Another form of structural change in the industry was establishing of new strategic alliances and joint ventures. So far as the research and development process for each drug take many years and requires significant investments, and the outcome of these investments of time and financial resources remains unclear until the final approval of the drug, “Big Pharma” companies are constantly looking for synergies that they can get from cooperation with their competitors. Last
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years gave multiple examples of such initiatives. For example, cooperation of Sanofi-Aventis and Bristol-Myers Squibb resulted in production of Plavix, which is currently one of the topselling products for each of these companies. 2. PEST Analysis: Political, economic, social and technical aspects related to the industry Political There is now growing political focus and pressure on healthcare authorities across the world. This means that governments will be looking for savings across the board. ? ? ? Growing political focus and pressure on healthcare that cat backs more pressure on pricing. Same selection of drugs be available to everyone Harmonization of the healthcare across Europe.
Economic ? ? ? ? The global economic crisis still exists yet government reports still show that the spend on healthcare per capital continues to grow. The reduction in consumer disposable income will have an impact on those countries using health insurance models particularly where part payment is required. These economic pressures are seeing an increased growth in strategic buying groups who are forcing down prices. Increased pressure from shareholders has caused a consolidation of the industry: more mergers and acquisitions will take place over the coming years.
Social / Culture ? Patients awareness changing expectations increases more pressure on customer services ? Need for education and more price transparency ? Increased age of population because of this market likely to grow with increasing health concerns Technological Technological advancements will create new business prospects both in terms of new therapy systems and service provisions. The online opportunities will see the growth in: ? ? ? ? ?
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New info and Communications technologies. Social Media for Healthcare. Customized Treatments. Direct to Patient Advertising. Direct to patient communications.
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Company Analysis
? More responsive facilities required.
3. Competitor Analysis: Analyze pricing, quality, distribution and partnerships of the nearest competitor of the company Revenue of Share of HQ Total sales, Company pharmaceutical pharmaceutical location mln USD segment, mln USD segment, % Pfizer GlaxoSmithKlin e Johnson Johnson Merck AstraZeneca & NJ, U.S. NJ, U.S. UK Switzerlan d France Switzerlan d 22,190 21,494 21,426 47,348 22,939 21,426 46.87% 93.70% 100.00% UK 31,434 37,324 84.22% NY, U.S. 46,133 52,516 87.85%
Novartis Sanofi-Aventis
18,497 17,861
28,247 18,711
65.48% 95.46%
Roche Bristol-Myers Squibb Wyeth Abbott Eli Lilly Takeda Schering-Plough Bayer
17,460
25,168
69.37%
NY, U.S. NJ, U.S. IL, U.S. IN, U.S. Japan NJ, U.S. Germany
15,482 13,964 13,600 13,059 8,648 6,417 5,458
19,380 17,358 19,680 13,858 10,046 8,272 37,013
79.89% 80.45% 69.11% 94.23% 86.09% 77.57% 14.75%
Source: 2011 Annual Reports of the companies
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4. SWOT Analysis: Strengths, weakness, opportunities and threats faced by the industry E STRENGTHS - Strong and well-developed manufacturing base - Clinical research and trials - Knowledge based, low- cost manpower in science & technology - Proficiency in path-breaking research - High-quality formulations and drugs - High standards of purity
WEAKNESSES - Low Indian share in world pharmaceutical market (about 2%) - Lack of strategic planning - Fragmented capacities - Low R&D investments - Absence of association between institutes and industry
- Non-infringing processes of Active Pharmaceutical Ingredients (APIs)
- Future growth driver - World-class process development labs - Excellent clinical trial centers
- Low healthcare expenditure
- Production of duplicate drugs
SWOT ANALYSIS OF PHARMACEUTICAL INDUSTRY
OPPORTUNITIES
- Incredible export potential
- Increasing health consciousness - New innovative therapeutic products - Globalization - Drug delivery system management - Increased incomes - Production of generic drugs - Contract manufacturing
THREATS - Small number of discoveries - Competition from MNCs - Transformation of process patent to product patent (TRIPS) - Outdated Sales and marketing methods - Non-tariff barriers imposed by developed countries
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Company Analysis: 1. Company description (a brief introduction regarding what businesses the company is into) 2. General information about the company: location of the headquarters, year of founding, shareholding pattern, number of employees, top management, etc. 3. Financial performance of the company: Sales, net profit, segment wise performance of the past 1 year 4. SWOT Analysis: Strengths, weakness, opportunities and threats faced by the company 5. Various strategies employed by the company in the course of conducting business (in the form of alliances, joint ventures, product innovation/ expansion strategies, acquisitions/ divestitures and any such strategies that you think may affect the business of the company) in past 2 years. (Make intelligent use of above points while trying to understand the strategies used by the company) a. Hierarchical: At the corporate level, business unit level and functional or department level of the firm b. Business Division: According to various products, divisions, markets, etc. c. Regional: Strategies devised as per regions, geographies, etc.
WOCKHARDT LTD. Company Description Wockhardt was founded by Habil Khorakiwala in the early 1960s. His father Mr. Fakhruddin T. Khorakiwala had acquired Worli Chemical Works in 1959.This was incorporated as Wockhardt Pvt. Ltd., in 1973.Wockhardt Ltd. was incorporated on July 8.1999. Wockhardt is often confused as a multinational because of its German sounding name Wockhardt is a high-technology intensive global pharmaceutical and biotechnology company with multi-disciplinary and innovative R&D programmes. It has 3 research centres globally and manufacturing facilities across India, USA, UK and Ireland. Wockhardt has a significant presence in USA, Europe and India, with 75% of its global revenues coming from international businesses. With a large pool of Patents and Intellectual Property knowhow, Wockhardt is home to 590 scientists, of whom 80 are doctorates. In all, Wockhardt has 158 Patents granted worldwide. In biotechnology research, it has built a competent„ Concept to Market? capabilities in all facets of development and manufacture of recombinant biopharmaceuticals. Wockhardt boasts of a multi-ethnic workforce of more than 8000 people from 14 different nationalities. Wockhardt?s business philosophy is – „Creating value by understanding and communicating with its customers and business partners?.
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Wockhardt?s vision is – „To be the most admired Indian Health Care Group? And the company is honoured with 2012 DIANA Award for Best Overall Generic Manufacturer. Wockhardt received for the 3rd consecutive year, the Government of India Patents Award for the „Maximum Patents granted Worldwide to an Indian Company? Location of the Headquarters: Wockhardt Towers, Bandra-kurla Complex, Bandra (East) Mumbai-400051, Maharashtra Year of Founding: 1999 Share Holding Pattern: Categories Number of shares Amount in Rs. % to total paid-up capital 73.64 0.05 0.09 0.12 0.00 7.71 1.76 1.87 0.33 0.42 13.85 0.16 0.00 100.00
Promoters Directors/relatives of Directors Financial Institutions Banks Mutual Funds Insurance Companies Foreign Institutional Investors Bodies Corporates Non Resident Indians Shares Representing GDRs Public Clearing Member Trusts TOTAL
80,585,382 55,600 96,403 132,130 1,665 8,434,559 1,930,730 2,049,503 360,964 458,500 15,148,835 178,782 2,850 109,435,903
402,926,910 2,78,000 482,015 660,650 8,325 42,172,795 9,653,650 10,247,515 1,804,820 2,292,500 75,744,175 893,910 14,250 547,179,515
Number of employees: 8600 Top Management: S no Name Designation Chairman Managing Director
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1. Habil Khorakiwala 2. Murtaza Khorakiwala
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3. 4. 5. 6. 7. 8. Huzafia Khorakiwala VR Khetan Shekhar Datta Aman Mehta R A Shah Bharat Patel Executive Director Company Secretary Non Executive Independent Director Non Executive Independent Director Non Executive Independent Director Non Executive Independent Director
3. Financial performance of the company: Sales, net profit, segment wise performance of the past 1 year
Sales: FY12 at Rs. 4,614 crores with growth of 23% Net profit: Rs. 947 crores with growth of 62% Segment wise performance The company is exclusively into pharmaceutical business segment. Sales Month Quantity 03 03 03 03 03 03 03 03 03 03 03 81573.00 5961290.00 943981.00 6881226.00 376388.00 0.00 177029.00 0.00 0.00 0.00 0.00 Sales Value (Rs. Millions) 9380.78 2308.82 2193.63 1657.26 1072.98 337.09 307.08 180.62 135.38 14.45 0.98
Product Name Tablets & Capsules Powder Injections Liquids & Solutions Bulk Drugs Other Goods Ointments Export Incentive Management Fees Distribution Income Processing Charges
Year 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011
% of STO 53.33 13.13 12.47 9.42 6.10 1.92 1.75 1.03 0.77 0.08 0.0
4. SWOT Analysis: Strengths, weakness, opportunities and threats
Strengths ? Strong expertise in the area of Recombinant Biotechnology ? Strong presence in the European market (50%+ revenue comes from Europe)
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? ? ? ? ? Significant ramping up of the US business (22 products marketed) Presence in lifestyle related diseases in India (Diabetes, Nephrology) Excellent products (original and generic) with very high quality. The company has plans to launch 12 to 15 products in US markets during the financial year 2011-12 Pinewood maintained its top position in Ireland?s generic products market
Weaknesses ? Salaries, compared to the market, aren't good at all. ? Nascent presence in the US market (Less than 10% contribution to total revenues) ? Highly leveraged balance sheet with D/E ratio more than 1.5x ? Absence of production plan which is obvious in the shortage of products
Opportunities ? Leverage on synergies present in the European market ? Aggressive growth in the US market (30 products pending approval) ? Introduction of Bio-generics in regulated markets (market size pegged at $10 bn) ? Pharmaceutical and Biotechnology research plans that are currently underway are in line with developmental strategy and will be a key business driver in the coming future in US and other regulated markets Threats ? Non-conversion of FCCBs will lead to huge liabilities in FY09 of $140mn. Also, FCCB conversion will lead to about 9% equity dilution from Rs 547mn to Rs 559mn. ? Integration of European businesses is a major challenge (Negma and Pinewood acquisitions have to be integrated with the UK business) ? Pricing pressure in the US may restrict expected revenue growth (price erosion more than 95%) specially in cephalosporin segment, with growing competition from companies like Orchid Chemicals and Lupin ? Any expensive acquisitions may increase payback period ? Increasing competition in the European generic market with the growing presence of frontline Indian pharma companies including Ranbaxy and Reddys ? There is a risk of domestic currency appreciation as the company derives major revenue from international operations (1 to 3% impact on operating profits for every one rupee appreciation)
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5. Various strategies employed by the company in the course of conducting business (in the form of alliances, joint ventures, product innovation/ expansion strategies, acquisitions/ divestitures and any such strategies that you think may affect the business of the company) in past 2 years. (Make intelligent use of above points while trying to understand the strategies used by the company) a. Hierarchical: At the corporate level, business unit level and functional or department level of the firm One of the key strategies adopted by Wockhardt wasValue Buy-outs: Buy loss-making companies and turn them around. ? In 1998, Wockhardt acquired Wallis Laboratory, a loss-making manufacturer distributor of over-the-counter drugs, for US$ 9 million and made it profitable. ? Wallis Laboratory provided the base for the manufacturing and marketing of medicines and personal care products. ? In 2003, CP Pharmaceuticals were acquired by Wockhardt Limited. ? CP Pharmaceuticals provided a manufacturing base for pharmaceuticals. ? In 2009, Fortis Healthcare Ltd. (Fortis), a hospital chain established by the promoters of Ranbaxy Laboratories Limited (RLL), acquired 10 hospitals of the Wockhardt Hospitals Group (Wockhardt Hospitals), a subsidiary of Wockhardt Ltd. (Wockhardt) for Rs. 9.09 billion. Wockhardt Hospitals was expected to benefit from the acquisition as it would be able to reduce its debt burden of Rs. 5 billion of the total debt of Rs. 34 billion. Besides, it planned to expand its hospitals with the remaining money. ? In Feb 2009, the stock price of Wockhardt made a low of Rs 70 and was down 80% in a year. The price later recovered to Rs 150 when the sale of its nutritional business to Abbott was finalized in July 2009. ? Some companies & FCCB challenged „withdrawal of winding up petition? on Wockhardt. The company finally negotiated the restructuring of FCCB loans with the hedge fund QVT. As QVT held majority of the FCCBs (US$ 42 m) out of the total US$ 74 m remaining, the same terms were enforced on the other lenders too. As part of the settlement, QVT also decided to withdraw the 'winding up' petition filed against the company in the court. ? After the settlement with QVT who holds most of the FCCBs, the stock price recovered further from the Rs 150 mark to around Rs 380 levels. ? The company has been acquiring companies to facilitate its entry into a segment or for tapping a particular geography. This has facilitated the company to penetrate into desired markets. ? Wockhardt Ltd has agreed to sell its nutrition business to French food multinational Danone for about $356 million (Rs 1,576 crore), more than double the amount at which it
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had signed a similar deal with US pharmaceutical giant Abbott a year ago. The Abbott deal was called off after Wockhardt?s lenders opposed the sale of its nutrition business.
b. Business Division: According to various products, divisions, markets, etc. Wockhardt Limited UK operates through various business divisions – ? Retail and Hospital Medicines, ? Private Label Medicines, ? Oral Healthcare, ? Contract Manufacturing and ? Export. In the case of the oral healthcare division, products are sold under Wockhardt's own brand (ConfiDent brand) as well as under private labels. Wockhardt also undertakes contract manufacturing in the UK, which helps the company to increase its revenue from its UK operations. CP Pharmaceuticals, acquired in 2003, strengthened the contract-manufacturing capabilities of the company. It has a contract-manufacturing relationship with Amylin Inc. for Exenatide, which is a medication for diabetes. From 2005, Wockhardt Limited UK has begun undertaking the production of Esparma GmbHa subsidiary of Wockhardt Limited in Germany, which had been outsourced earlier. Esparma GmbH outsources about 40 per cent of its production to Wockhardt Limited UK. Therefore, the current in-house production facilitates Wockhardt to reduce costs and provide a better control on its complete value chain. Innovation Wockhardt?s core business is innovation. It uses science and technology to develop medicines and other products that improve the quality of millions people?s lives through better health. Wockhardt has proved its technical excellence by developing patented modified release formulations and recombinant biotechnology products. It has a multi-disciplinary R&D programme with more than 550 scientists, including over 100 doctorates, in the areas of: ? ? ? ? Pharmaceutical Research Biotechnology & Genomics Research Novel Drug Delivery Systems New Drug Discovery Programme. API Research
Wockhardt is in the forefront of Intellectual Property creation with 1,411 patents filed till date, of which 145 patents have been granted. And the capability and commitment of Wockhardt in
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pursuing Intellectual Property has been recognized by the Government of India for three years in a row, with an award for the maximum number of „Patent filings and Grants from India?. Wockhardt is determined to create benchmarks for a promising future. c. Regional: Strategies devised as per regions, geographies, etc. Wockhardt is eyeing markets in Europe, particularly the UK, as part of its growth strategy. The company has as a strong brand presence through various tie-ups with leading healthcare insurance providers in the UK. The next few years will witness the expiry of many patents in Europe, thereby creating a large potential for generics. Wockhardt is aiming to tap a larger pie of this potential market. The company is planning to increase its focus on specialty nutrition products as their demand is increasing in Europe. With an enhanced understanding of customer needs, Wockhardt is focusing on tapping the market requirement for nutritional products. It has placed great emphasis on the research to be conducted in producing improved nutritional products. Collaborations Wockhardt works with partners to in-license products in India and out-license products into other regions by capitalizing on these collaborative strengths to capture and penetrate new markets. According to Wockhardt?s MD, Dr. Murtaza Khorakiwala, strategic partnerships are a less capital-intensive way of moving into new territories or acquiring new capabilities. By finding partners with complementary skills, Wockhardt endeavours to find smarter ways to grow and in turn create significant value for all it stakeholders. The company has successfully created an integrated multi-technology capability to manufacture all types of dosage forms including sterile injectables and lyophilized products. Highly skilled technicians operate 14 manufacturing facilities that are US FDA, UK MHRA and EMEA compliant sites in India, the US and Europe. Key business highlights: Region wise Sales 1. The US business achieved revenues of Rs. 10,736 million 2. The European operations achieved revenues of Rs. 14,212 million 3. The Indian business achieved revenues of Rs. 10,413 million 4. The RoW business achieved revenues of Rs. 2,151 million The state-of-the-art biotech plant in Aurangabad has six dedicated manufacturing facilities for biopharmaceutical bulk as well as recombinant formulations. The Wockhardt Biotech Park has created its own benchmark in manufacturing recombinant products with world-class technology
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