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INDIAN PHARMACEUTICAL INDUSTRY:

Indias traditions in the science of health and heating go back to the halcyon days of

Susruta, Vaghatta and Charska. Our systems of medicine like Ayurveda were well established

and schools and hospitals with treatises and instructions manual were in wide use.

The Indian Pharmaceutical Industry today is in the front rank of Indias science-based

industries with wide ranging capabilities in the complex field of drug manufacture and

technology. A highly organized sector, the Indian Parma Industry is estimated to be worth $ 4.5

billion, growing at about 8 to 9 percent annually. It ranks very high in the third world, in terms of

technology, quality and range of medicines manufactured. From simple headache pills to

sophisticated antibiotics and complex cardiac, almost every type of medicine is now madeindigenously.

The pharmaceutical industry in India meets around 70% of the country's demand for

bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals

and injectibles. There are about 250 large units and about 8000 Small Scale Units, which form

the core of the pharmaceutical industry in India.

India's pharmaceutical sector is currently undergoing unprecedented change. Much ofthis is due to the country's introduction, on January 1, 2005, of a system of product patents;

before that, only patents for processes were permitted to be issued, a fact that has been

instrumental in the domestic industry's huge success as a worldwide exporter of high quality

generic drugs.

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MAJOR PLAYERS

India has a strong pharmaceutical market, which results in the existence of a number of top

bracket pharmacy companies. Despite the great recession, the sales in the Indian pharmacy

industry went up by 18.4% in March 2009. According to the recent McKinsey report (November

30, 2009), the industry will touch $40 billion mark by 2015. Following are the top pharmacy

companies in India:

y Ranbaxy

y Dr Reddy's Laboratories

y Cipla

y Sun Parma Industries

y Lupin Labs

y Aurobindo Parma

y GlaxoSmithKline Parma

y Cadila Healthcare

y Aventis Pharma

y Ipca Labor6atories

RATE OF MARKET GROWTH

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The Role of Pharmaceutical Industry in India GDP is immense. For the

past few years the Indian Pharmaceutical Industry is performing very well.

The varied functions such as contract research and manufacturing, clinical

research, research and development pertaining to vaccines are the strengths

of the Pharma Industry in India. Multinational pharmaceutical corporations

outsource these activities and help the growth of the sector. The Indian

Pharmaceutical Industry has a bright future.

y The Pharmaceutical Industry in India is one of the largest in the world

y It ranks 4th in the world, pertaining to the volume of sales

y The estimated worth of the Indian Pharmaceutical Industry is US$ 6

billion

y The growth rate of the industry is 13% per year

y Almost most 70% of the domestic demand for bulk drugs is catered by

the Indian Pharma Industry

y The Pharma Industry in India produces around 20% to 24% of the

global generic drugs

y The Indian Pharmaceutical Industry is one of the biggest producers of

the active pharmaceutical ingredients (API) in the international arena

y The Indian Pharma sector leads the science-based industries in the

country

y The pharmaceutical sector has the capacity and technology pertaining

to complex drug manufacturing

y Around 40% of the total pharmaceutical produce is exported

y 55% of the total exports constitute of formulations and the other 45%

comprises of bulk drugs

y The Indian Pharma Industry includes small scaled, medium scaled,

large scaled players, which totals nearly 300 different companies

y There are several other small units operating in the domestic sector

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COMPANY DETAILS:

CIPLA:

Khwaja Abdul Hamied, the founder of Cipla, was born on October 31, 1898. The fire

of nationalism was kindled in him when he was 15 as he witnessed a wanton act of colonial

highhandedness. The fire was to blaze within him right through his life.

In college, he found Chemistry fascinating. He set sail for Europe in 1924 and

got admission in Berlin University as a research student of "The Technology of Barium

Compounds". He earned his doctorate three years later.

In October 1927, during the long voyage from Europe to India, he drew up great plans

for the future. He wrote: "No modern industry could have been possible without the help of such

centres of research work where men are engaged in compelling nature to yield her secrets to the

ruthless search of an investigating chemist." His plan found many supporters but no financiers.

However, Dr Hamied was determined to being "a small wheel, no matter how small, than be a

cog in a big wheel."

In 1935, he set up The Chemical, Industrial & Pharmaceutical

Laboratories, which came to be popularly known as Cipla. He gave the company all his

patent and proprietary formulas for several drugs and medicines, without charging any

royalty. On August 17, 1935, Cipla was registered as a public limited company with an

authorised capital of Rs 6 lakhs.

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PRODUCT PROFILE:

Cipla has the largest product basket among all the pharmaceutical players in India rangingfrom

prescription to OTC to animal health, besides a big kitty for active pharmaceutical ingredients

(APIs) or bulk drugs.

Prescription

Amoebicides/Antiprotozoals, Anabolic steroids, Anaesthetics, Analgesics/Antipyretics, Antacids,

Anthelmintics, Anti-inflammatory drugs, Anti-TB drugs, Antiacne drugs,Antiallergic drugs,

Antialzheimer drugs, Antiasthma drugs, Antibiotics and AntibacterialsAnticancer drugs etc.

OTC

Ciplas over-the-counter drugs portfolio comprises the following segments Analgesics Oral,

Artificial Sweetener, Calcium Preparations, Child Care, Cold & Flu, Constipation, Cosmetics &

Skin Care, Dental Care & Oral Hygiene, Diarrhea, Food Supplements, Indigestion, Infant Food,

Medicated Plasters, Medicated Shampoos, and Veterinaryetc.

Ciplas animal health care products division has four sections dedicated for equine, poultry,

companion animals, livestock animals products, apart from Herbal Specialties.

Active Pharmaceutical Ingredients (API)

Cipla is one of the biggest exporters of low-cost, high quality APIs across the world. Major bulk

drugs and intermediates manufactured by Cipla are:

Adefovir Dipivoxyl, Albendazole USP, Albuterol Sulfate, Alendronate Sodium.3H2O,Alprazolam,

Amlodipine Besylate, Anastrazole, Atorvastatin, Aripiprazole, Azelastine HCl

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Comprehensive Product Offering

y With approximately 150 APIs and more than 1,600 formulation products in its portfolio,

Cipla offers a wide range of products across several major therapeutic categories.

y Not dependent on any particular product with no single product accounting for more

than 2% of the total income in FY09

y Therapeutic categories served include anti-asthma, anti-inflammatory, cardiac, anti-

retroviral, anti-cancer, eye/ear preparations, dermatology, anti-ulcerant , anti-malaria

and critical care

y Product range covers most dosage forms including solids, liquids, injectibles ,

ophthalmic preparations, topical preparations, nasal preparations, inhaler sand devices,

y rectal preparations and buccal preparations

PRESENT BUSINESS:

1. CIPLA had a research alliance with a Bangalore-based biotech company Avesthagen,

to develop biotherapeutic products. CIPLA has terminated its marketing agreement with

Avesthagen and is looking at selling its 5.8% stake in the Bangalore-based company.

Cipla terminated the agreement due to Avesthagens alleged failure to meet targets.

Under the agreement, Avesthagen was supposed to develop the biosimilar products and

Cipla would have used its strong marketing force to commercialize and market it. Cipla

was, however, not happy with the progress of Avesthagens research. The Mumbai-

based generics major is, however, clear that it wants a presence in the biosimilar space

and is close to finalizing a deal with a Chinese partner. Cipla is keen on partnering with a

Chinese player for its biosimilar venture since the Chinese are strong in this space. The

products will be developed in China and manufactured in India. Ciplas termination of its

agreement with Avesthagen has resulted in the biotech company going it alone in the

Indian market.

2. CIPLA plans to raise Rs 1,500 cr. either by issuing foreign currency convertible bonds

or through global depository receipts (GDRs) to clear its debt as well as finance its

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capital expenditure. Addressing the shareholders at the companys annual general

meeting, chairman and MD YK Hamied said the pharma company has debt of Rs 800 cr.

and plans to invest Rs 500-600 cr. in the next two years. Cipla is so far the only company

to manufacture generic versions of both Tamiflu and Relenza. Reports say that if the

virus mutates, it could wipe out half the worlds population The Companys version of

Tamiflu, Antiflu, is the only generic anti-viral drug approved by the WHO. After taking a

hit of Rs 228 cr. in forex losses last year, Cipla has changed its hedging policy. The

company is now hedging all its loans and covering all net exports on a monthly basis.

This is due to the fluctuation in the currency market

MARKETING STRATEGIES:

Cipla follows an excellent marketing strategy.

Strategic Tie-Ups

Cipla has set up a wholly owned subsidiary, Cipla FZE situated at Jebel Ai Free

Zone in Dubai, United Arab Emirates. This is the part of strategy to explore the

growing markets in Middle East countries through exports. Cipla entered

agreement with Pentech Pharma of USA for marketing a range of generic

products for American market. Pentech is involved in developing therapies for

lifestyle and quality of life conditions. This will further boost its export

performance.

Low-risk business model:

Robust partnership model CIPLA has entered into global tie-ups with various

generic players (like Watson, Mylan, Barr and Ivax) for supplying its generic

products. This strategy enables Cipla to leverage local market knowledge of its

partners and utilize its own R&D, product development, and manufacturing skills.

Cipla's offer to sell anti- aids drugs at one-third the price to developing countries

like South Africa or any other country. The questions were raised against the

strategy the company follows but Cipla is not committing any illegal or unethical

act as it is entitled to sell anti- aids drugs in any country that does not have the

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requisite patent protection. Cipla is not using pirated technology since India does

not have product patent regime. Therefore, Cipla has the right to develop and

reverse engineer any pharmaceutical product not protected by the country's laws.

Therefore, the issue is whether Cipla is selling its products below its costs or is it

able to sell cheaply because it has not incurred any research and development

(R&D) expenses like multinationals incur in developing drugs. Cipla is entitled to

"make hay while the sun shines', in other words, capitalize on a sympathetic

patent law in India, but keeping in mind that after 2010, the world (and Indian)

pharmaceutical industry will become a "jungle', where only the "fittest' will

survive.

DISTRIBUTION STRATEGY:

Ciplas channel of distribution for the generic medicine is as below:

When the order placed by the super stockiest for one or more F.T.L i.e

full truck load then the goods are sent from the main depot Jaipur it

flows in such manner from Company Depot Super Stockiest

Stockiest /Wholesalers Retailers/ Institutions Consumer.

When the order is placed for different products the goods are sent to

Bangalore where there is all India C.F. the goods are checked there and

then they are sent to Super Stockiest of particular state and follows the

same procedure. The transportation cost is borne by the company and

is selected on contract basis only.

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