Analyzing Outsourcing Trends in Indian Firms

8/3/2019 Analyzing Outsourcing Trends in Indian Firms

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AnalyzingAnalyzing outsourcingoutsourcingtrends in Indiantrends in Indian firmsfirms

Industry: PharmaGroup 7Members:

Kartik Mathur2010094

Kedar Muley 2010095Kishan Kumar 2010096Swapnil Joshi 2010257Nidhi Gupta 2010260


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Indian Pharmaceutical EvolutionIndian Pharmaceutical Evolution

Phase II

GovernmentControl

Indian PatentAct 1970

Drug pricescapped

Local companiesbegin to make animpact

Phase IIIDevelopmentPhase

Processdevelopment

Productioninfrastructurecreation

Exportinitiatives

Phase IV

Growth Phase

Rapidexpansion of

domestic market

Internationalmarketdevelopment

Researchorientation

Phase V

Innovation and

Research

New IP law

DiscoveryResearch

Convergence

1970 1980 1990 2000 2010

Phase I

Early Years

Market sharedomination byforeigncompanies

Relativeabsence oforganizedIndiancompanies


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Today's Pharmaceutical IndustryToday's Pharmaceutical IndustryChallengesChallenges

4

Research & Development (RnD)

Sales

Standards & Regulations

Information Technology


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RnDRnD

y Demands to improve clinical trialproductivity and reduce time from Firstin Man studies to final approval,

y Getting complex day by day

y Growing need to share data, insights andconclusions with researchers and studycoordinators who are likely to begeographically dispersed

y Need to share clinical trial data withmultiple geographically dispersedinvestigators, monitors and statisticians

5


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ITIT

y Poor alignment of IT with business strategy

y Greater focus on cost containment bybusiness

y History of poor program management and PMpractices

y Methodologies and architectures not wellarticulated

y Poor track record in meeting projectdeliverables (on time and on budget)

y Slow response to meeting R&D challenges,especially around the deployment of IT toaddress flood of data 6


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The Pharmaceutical MarketplaceThe Pharmaceutical Marketplace

y High and continually escalating R&D costs

7


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Outsourcing ContinuumOutsourcing Continuum

Strategic

Improve businessfocus

Increase flexibilityand speed

Access to world-class capabilities

Accelerated changewith provenapproach

Shared risks

Free resources forother purposes

Bring new solutionsto customers faster

Respond toshortening productlifecycles

Leverage externalsuppliers

Leapfrog competitors

Enter new marketswith reduced risks

Acquire innovativeideas

Transformational

SHORTTERMFOCUS

LONGTERMFOCUS

Tactical

Reduce and controloperating costs

Make capital fundsavailable

Cash infusionResources notavailable internally

Function difficult tomanage or outof control


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Should I Outsource?Should I Outsource?

Is it needed forconsistency,

fiduciary, governanceor control purposes?

Place at

CorporateOffice

Do business unitcustomers

need this service?Eliminate

Embedin

Business

Units

Is the function highlystrategic or a source ofcompetitive advantage?

Is the same servicerequired by several

business units?

ConsiderOutsourcing

START

Embed inBusiness

Units

YES

NO

NO

NO

YES

YES

YES

NO

YES

NO

Can a 3rd party

provide the servicecheaper or better?

Embed inBusiness

units


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Cipla Ltd

Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-06 Mar-05 Mar-04 Mar-03 Mar-02

Net Sales 6,135.16 5,359.52 4,960.60 3,997.90 3,438.24 2,891.36 2,181.26 1,842.24 1,437.28 1,274.51

PBDIT 1,391.12 1,518.54 1,105.33 972.13 922.51 806.09 581.32 448.19 345.34 334.59

COGS 4744.04 3840.98 3855.27 3025.77 2515.73 2085.27 1599.94 1394.05 1091.94 939.92

Distribution

Expenses 52.01 44.31 47.19 31.66 28.3 22.77 12.58 12.78 12.99 11.14

Cost of Sales(CS) 4796.05 3885.29 3902.46 3057.43 2544.03 2108.04 1612.52 1406.83 1104.93 951.06

Opening

Stock of Raw

Materials 646.27 797.2 632.92 532.4 480.07 363.1 253.23 252.91 137.26 101.43

Purchases of

Raw Material 2,559.88 1,945.58 2,037.19 1,725.66 1,348.85 1,303.29 1,000.07 700.41 639.55 450.48

Closing

Stock of Raw

Materials 891.11 646.27 797.2 632.92 532.4 480.07 363.1 253.23 252.91 137.26

Raw Materials

Consumed

(RM) 2315.04 2096.51 1872.91 1625.14 1296.52 1186.32 890.20 700.09 523.90 414.65

OutsourcingRatio


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Till mid 90s the outsourcing by Cipla by traditional way.

With an enhancing of IT and incorporating IT services atcompany they were able to do away from traditional ways.(Click Here)

Outsourcing not only in RnD or just IT, rights to sell the

product is also given. (Click Here)

Outsourced Part:Contract Manufacturing Nitin, Shasun.Clinical Research- SynchronBio-informatics & other IT services HCL, Sai SystemsD

rugD

iscovery/Medicinal Chemistry Glaxo UK,Pfizer,Akorn, Epivir

Quality Check:Vendor Auditing and EvaluationConstruction Quality AssessmentFinancial recordsTrade Practices

Visit to Production HouseSample test

Outsourcing inOutsourcing in CiplaCipla


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Ranbaxy Laboratories Ltd.

Mar-11 Mar-10 Mar-09 Mar-08 Mar-07 Mar-06 Mar-05 Mar-04 Mar-03 Mar-02

Net Sales 5,593.45 4,728.09 4,391.91 4,224.22 4,047.15 3,575.44 3,706.30 3,637.60 2,931.13 2,046.78

PBDIT 1,847.78 1,249.59 -1,318.78 970.84 593.29 303.78 699.88 1,019.78 782.53 374.4

COGS 3745.67 3478.50 5710.69 3253.38 3453.86 3271.66 3006.42 2617.82 2148.60 1672.38

Distribution

Expenses 161.85 117.57 170.1 150.44 149.85 134.28 147.82 110.33 79.47 61.81

Cost of Sales(CS) 3907.52 3596.07 5880.79 3403.82 3603.71 3405.94 3154.24 2728.15 2228.07 1734.19

Opening Stock

of Raw Materials 385.38 512.07 404.96 425.93 406.42 443.7 335.6 266.92 210.26 196

Purchases of

Raw Material 1,656.72 1,395.97 1,756.05 1,492.37 1,417.33 1,214.35 1,305.99 1,236.21 1,056.75 686.51

Closing Stock of

Raw Materials 478.88 385.38 512.07 404.96 425.93 406.42 443.7 335.6 266.92 210.26

Raw Materials

Consumed (RM) 1563.22 1522.66 1648.94 1513.34 1397.82 1251.63 1197.89 1167.53 1000.09 672.25

Outsourcing


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R&D

GSK & RanbaxyService outsourcing - Wyeth GVK, Jubilant, Lilly Suven

Albany Molecular & Nektar

Contract Manufacturing Nitin, Jubilant, Divis

Clinical Research Syngene (Biocon), Aurigene (Reddys)

Bio-informatics & other IT services TCS, Satyam, Infosys, GVKBio, Jubilant

Drug Discovery/Medicinal Chemistry Aurigene, Divis, Syngene,

Suven, GVK Bio

Pre-clinicals Vimta, Lambda

Central laboratory services SRL Ranbaxy, Vimta

OutsourcingOutsourcing in Ranbaxyin Ranbaxy


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0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

1 2 3 4 5 6 7 8 9 10

Ranbaxy

Cipla

COMPARISION


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Quality CheckQuality Check atat CiplaCipla

1. Quality Assurance2. Premises3. Personnel4. Validation5. Documentation / Records6. Vendor Qualification7. Change Control Program8. Sample9. Stability Studies10.Drug Recall11.Annual Product Review

12.Audits13.Quality Control

DepartmentsManufacturing AreaEquipment

Equipment

Calibration

14.Raw Material15.Purified and Water for Injection

Systems16.Depack / Preparation

component room17.Sterilizer / Oven Loading Room18.Equipment Airlock19.Washroom / Grown change

room20.Manufacturing (Sterile Product)

Aspectic Batching Area

Filling room Terminal Sterilization Packaging

21.Manufacturing (Oral dosages) Packaging

Reprocessing


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Outsourcing to I.T. ServicesOutsourcing to I.T. Services

Slide presentation will enable Sales,Marketing and IT leaders to effectively

manage their IT Sales & Marketing supportservice systems and will provide keyreference points to inform their insourcing

and outsourcing strategies.


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Result ofOutsourcingResult ofOutsourcing

Solid though not spectacular

Buyers tend to invest more in outsourcing management

and governance (OM/G) efforts

The operating model of many large, globalpharmaceutical firms, however, can complicate theirback-ofce outsourcing management efforts


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How areHow are PharmaPharma CompaniesCompanies

Responding?Responding?

Pharma has had to wake up to slumping stock prices,generic competition, regulatory pressure and shrinkingR&D pipelines that are forcing them to become morecompetitive and cost effective

they are used to working with partners so outsourcingisnt that strange for them.

Outsourcing, not always, does not imply is always theright or viable answer, but that its potential merits, aswell as challenges, are systematically addressed.


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How are Outsourcing ServiceHow are Outsourcing Service

Providers Responding?Providers Responding?Leading outsourcing service providers that target thepharma, life sciences and biotech industries generally arein sync with the demand and trending in outsourcing.

Focusing on how to enable broad, global outsourcingefforts in these industries.

Strong emphasis in moving beyond traditional life and

shift

Also focusing on how to ease the pains and challenges oftransition and accelerate the time to which buyers beingto reap the benets of outsourcing.


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The Advisor PerspectiveThe Advisor Perspective CriticalCritical

Points to ConsiderPoints to ConsiderBefore launching on a journey to improve internal business processes either through outsourcing or internal transformation:

1. How has the outsourcing service provider landscape evolved in

terms of potentially better serving your needs?

2. Are the skills and ambition now in a place that makes outsourcinga viable alternative? How is this determined?

3. What are others in your industry doing to drive processimprovement and change into their organization? How do youmeasure yourself against your peers?

4. Do you have a strategy on outsourcing and globalization? How doyou start the process, and develop a roadmap to an unknown

future state?


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Closing CommentClosing Comment

India is an acquired taste

Give it some time & it will grow

on you


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Merci!

Documents

Analyzing Outsourcing Trends in Indian Firms