PROJECT REPORT ON

ORDER MANAGEMENT

AT

SMS PHARMACEUTICALS LTD

Submitted by

P.TEJASWI

Roll No. 09136

Batch XVII

A report submitted in partial fulfillment of requirement of PGDM Program of

VIGNANA JYOTHI INSTITUTE OF MANAGEMENT

BACHUPALLY, HYDERRABAD.

DECLARATION

I hereby declare that this Project titled “ORDER MANAGEMENT” submitted by me is a

bonafied work undertaken by me and it is not submitted to any other Institution or University for

the award of any degree/diploma certificate or published any time before.

Place: Hyderabad

Date:

P.TEJASWI

ACKNOWLEDGEMENT

I would like to express my gratitude to everyone who helped out me directly and

indirectly in completing this project work successfully.

I express my gratitude to the Director Dr. Kamal Ghosh Ray for giving me the

opportunity to work on such an interesting project.

I am indebted to my project supervisor Mrs. V.Jayashree for the valuable suggestions

and encouragement right from the conception of the idea to the completion of the project.

I express my sincere gratitude to Mr. G.Ashok, Marketing Executive and all the staff

members of “SMS Pharmaceuticals Ltd” for giving me their valuable time and for supporting

me in completing my project.

ContentsACKNOWLEDGEMENT........................................................................................................................3

1. INTRODUCTION...................................................................................................................................6

2. OBJECTIVE:...........................................................................................................................................6

3. SCOPE:...................................................................................................................................................6

4. LIMITATIONS:......................................................................................................................................6

5. METHODOLOGY..................................................................................................................................7

6. CONCEPTUAL UNDERSTANDING....................................................................................................8

7. LITERATURE REVIEW........................................................................................................................9

8. COMPANY PROFILE..........................................................................................................................10

RESEARCH AND DEVELOPMENT...................................................................................................14

9. INDIAN PHARMACEUTICAL INDUSTRY.......................................................................................16

QUALITATIVE ANALYSIS OF INDIAN PHARMACEUTICAL INDUSTRY.......................................................21

SWOT ANALYSIS OF INDIAN PHARMACEUTICAL INDUSTRY...............................................................22

PORTER’S FIVE FORCES MODEL.............................................................................................................24

(a) INDUSTRY COMPETITION......................................................................................................24

(b)......................................................................................................................................................25

10. MARKETING PROCEDURE:...................................................................................................................27

11. CUSTOMERS:.......................................................................................................................................32

CUSTOMER 1:........................................................................................................................................32

CUSTOMER 2:........................................................................................................................................34

CUSTOMER 3:........................................................................................................................................37

CUSTOMER 4:........................................................................................................................................40

CUSTOMER 5:........................................................................................................................................42

12. CONCLUSION...................................................................................................................................45

13. RECOMMANDATIONS....................................................................................................................46

14. BIBLIOGRAPHY...............................................................................................................................47

EXECUTIVE SUMMARY

SMS Pharmaceutical ltd is a bulk drug manufacturing company. It is a global player in

manufacturing various API (Active Pharma Ingredients) pertaining to different therapeutic areas.

SMS is currently a listed company having ever appreciating international and domestic customer

base.

This report titled “Order Management” aims to study the various ways and channels like

internet, cell phones, direct interaction of dealing with customers like agents, distributors, end

customers. It also analyzes the procedure to be followed while taking the order and also after

taking the order.

Secondary data from the internet and the previous documents of the company helps us to

understand the basic concepts and current market scenario of the products. Primary data has been

collected from the direct interaction with the customers. The data has been analyzed and the

order has been taken. The issues in some cases have been resolved.

Customers can be acquired through internet, phones calls, visits, references, websites,

exhibitions. In bulk drug industry, customers places order with regard to price, payment terms,

product specifications, availability, documents required for that product, past experience, inquiry

from promotional email. The terms differ from country to country.

1. INTRODUCTION

Business Marketing is the practice of individuals, or organizations, including commercial

businesses, governments and institutions, facilitating the sale of their products or services to

other companies or organizations that in turn resell them, use them as components in products or

services they offer, or use them to support their operations. Also known as industrial marketing,

business marketing is also called business-to-business marketing, or B2B marketing, for short.

B2B marketing is not the same as marketing as it involves a lot of components.

This study deals with studying the order management of SMS Pharmaceuticals limited. Order

management deals with taking orders from the existing customers and coordinating with all the

other departments like the purchase department, finance department, logistics department and

marketing departments in order to deliver the order.

2. OBJECTIVE:

To study bulk drug market through various channels

To deal with different customers in B2B marketing

To study the marketing flow in pharmaceutical industry

To understand the relationship among these factors

3. SCOPE:

There are 900 pharmaceutical companies in Hyderabad which shows huge competition in this

industry. The company must understand their strength in the product, their market, different

ways of attaining the customer and the required approval and documentation of the product.

4. LIMITATIONS:

Region covered is only Latin America

Direct interaction with customer is not possible

To understand this industry there must be lot of duration

There is no brief idea about the customers

The reluctance to interact as I am a trainee

Study is limited to few products

5. METHODOLOGY

The report has been divided into two sections

The first section studies about the bulk drug industry, B2B, products and the procedure to be

followed while taking the order.

Data collecting procedure

The data is collected to study different procedures, products, customers and terms needed

in India and Latin America. This secondary data which is main data is primarily collected

from the documents of the company like ISO document, previous order documents,

research papers and internet.

Data available on the sites of different Pharma industries has been used to make a

comparative analysis of study.

The second section will study the different factors which influence a customer’s choice of

placing the order.

Data collecting procedure

The data is collected with direct interaction with customers.

6. CONCEPTUAL UNDERSTANDING

Before we get into the study the concept of order management has to be understood from a theoretical angle. Meeting customer demand on a timely basis drives customer satisfaction, while ordering excess

inventory hurts your bottom line. Keep supply and demand in profitable balance with Distributed

Order Management. That means having a global view of your inventory—at the supplier, in

transit or at your warehouse—along with real-time aggregated order reporting. You'll always

know what you need and what you have.

Distributed Order Management simplifies your fulfillment process by orchestrating the following

services inside a business process engine:

Aggregating and prioritizing orders: Whether your customers order online, at a store

or through your call center, all orders land in a central repository for visibility and

enterprise-wide order fulfillment. Distributed Order Management also ensures your most

important customers receive the inventory when it's in short supply.

Sourcing: Optimize procurement across an extensive supply network, including stores,

distribution centers and your suppliers, to meet current demand. Automatically generate

purchase orders for additional supplies when needed. Plan for the future with Demand

Forecasting. Receive immediate notice of events that may delay order delivery.

Scheduling and shipping: Ensure your delivery commitments remain realistic by

monitoring available-to-promise (ATP) requirements. Efficiently route your orders to

customers, distribution centers, retailers and partners to minimize delivery time and

storage costs. Reduce transportation costs by linking toTransportation Planning and

Execution.

Managing exceptions and substitutions: Predict inventory shortages, potential

customer service issues and delivery problems, so you have the time and information

necessary to place new orders, reroute, substitute and communicate with customers.

Reduce back-orders and meet customer demand by automating substitutions for similar

products based on your own rules.

Deploying Inventory: Reroute in-transit inventory based on where it's needed most.

Monitor distribution center and store-level inventory positions and distribute inventory as

it clears customs. Fulfill customer orders from anywhere in the inbound network,

including transloading facilities and logistics hubs.

Reporting: Capture key performance metrics and establish benchmarks for on-time

deliveries, cash-to-cash cycle time, inventory turns and forecasting accuracy. Get the

information you need to continuously improve your fulfillment process.

7. LITERATURE REVIEW

Data collected to study the different customers and procedures in India and Latin America is

primarily secondary with documents of the company as the main source. These include:

1. Data like terms and conditions available in the company’s documents

2. Article from Newspapers and magazines available online

3. Data available on the sites of different Pharmaceutical industries

4. Research papers published and available online

5. Articles available on various websites

The Indian pharmaceutical industry is seeing a CAGR of around 13.7% and ranks 14 th

interms of value and 4th in terms of value in the world. The article “the growth of Indian

pharmaceutical industry”, depicts that the growth is due to the combination of skills, technology

and economy which gave path to outsourcing in India. The author also gave some insights on

how the pharmaceutical industry can develop further by investing in R&D and having

innovations.

The Indian Pharmaceutical Industry has shown the strongest performance in post- TRIPS period.

Not only did the industry improve its production performance seen in the previous decades, the

industry turned into a net foreign exchange earner during the decade in question. Under this

backdrop, the present paper “Performance of Indian pharmaceutical industry post TRIPS period-

A Firm level analysis” by Ravi Kiran and Sunitha Mishra examines the impact of new Patent Act

on Pharmaceutical Industry of India especially on R&D. This paper seeks to evaluate the

performance of a few leading Pharmaceutical Firms especially in terms of their ANDA filings

and approvals as well as DMF filings with USFDA in post-TRIPS period.

Another paper “Indian Pharmaceutical industry-surging globally” published by Quest

publications gives insights on the various factors that contributed the growth of Indian

pharmaceutical industry.

8. COMPANY PROFILE

ABOUT SMS PHARMACEUTICALS

SMS Pharmaceuticals Ltd. is a global player in API manufacturing having strong research and

manufacturing team supported by state of art facilities. What started off as a single facility single

product manufacturing company in 1990 grew to be a multi location group having product list

spreading across an array of therapeutic segments. SMS is currently a listed company having

ever appreciating international and domestic customer base. Having six multi product facilities in

operation, one under development, and two research centers, SMS has truly graduated in to big

league with more than 600 employees working for it.

Current Focus:

SMS is focused on API manufacturing and is the single largest producer of anti ulcer products

and is renowned among the clientele for the excellent quality of product and customer service

Emerging Business:

SMS is diversifying into CRAMS by creating research and manufacturing facilities bettering the

requirements of the regulatory markets to appeal to international clientele

Niche Business:

SMS is venturing into highly specialized oncology segment by building first of its kind dedicated

oncology API and formulations manufacturing facility in Andhra Pradesh to target the niche

market segments

Cutting Edge Research:

Recently SMS has established new state of art corporate research center with ultramodern

facilities encompassing the whole gamut of research activity viz. from product conception to

development, scaling up and DMF preparation. This is supported by well equipped analytical

wing and a fully functional pilot plant. This new facility will enhance our existing offerings from

a contract research and custom synthesis point of view

Current Expansions:

SMS is also building an ultra modern API manufacturing facility near Vizag on the eastern coast

of India to cater to in house production needs and also for the emerging contract manufacturing

business

MISSION

The mission of SMS Pharmaceuticals Limited is

To develop new molecules and take them to market

To set bench marks as a leading quality manufacturer

To develop and patent cost effective process for API's, manufacture and market them in

regulatory markets. 

Manufacture & supply intermediates to patent holders in US & EU.

To associate with MNC’s in custom synthesis and contract research

To touch 1000 crore turnover from present Rs.200 crore. 

VISION

Being a quality conscious organization, SMS vision circles around quality and customer

satisfaction. SMS believes in delivering the best value to the customers in a most economic way.

The efforts are aimed towards achieving our goals as well as providing value to the end user

KEY TO SUCCESS

The key to success has been:

Efficient leadership & dedicated teamwork towards achieving goals

Highly qualified and richly experienced talent pool.

Sophisticated technology meeting USFDA and cGMP Standards.

Strategic marketing wing with qualitative forecasting abilities.

ACCOMPLISHMENTS

SMS was given the export house status in the year 1997-98

Awarded the Prestigious " Pandit Jawaharlal Nehru Silver Rolling Trophy" for the best

productivity effort in the state

Became the single largest producer of Ranitidine Hydrochloride in the World

One of the leading export houses exporting to more than 70 countries worldwide

7 WHO-GMP approved API manufacturing facilities in India

Awarded the prestigious US GCNC Green chemistry award

Successfull FDA audits in 2004 and 2008 at our Bachupally unit

Proven expertise in low cost process routes, commercialization & manufacturing

Over 30 process patents and 72 regulatory filings

Successful execution of contract research and manufacturing assignments

 

MANUFACTURING FACILITIES AT SMS

SMS Pharmaceuticals Ltd is one of the leading pharmaceutical manufacturing companies in

India with world-class facilities with a wide range of process equipment fully compliant with

WHO GMP standards. SMS has over the years developed tremendous manufacturing facilities to

suit its style of operations and to meet the requirements of USFDA and other regulatory markets.

A total of 7 facilities are being presently operated. They have capabilities in wide range of API /

intermediates (cytotoxic solid dose, sterile cytotoxic liquid, and lyophilized products to be added

soon) and have handled varied process reactions and reactor volumes up to 15KL.

One of the facilities had been audited and approved by USFDA in the years 2004 and 2008. The

company's regulatory team is fully trained to design and maintain plants to comply with USFDA

requirements and file Drug Master Files for the products developed in the Research center. The

company has over 72 regulatory filings to its credit and an impressive pipeline.

Their commitment to quality and productivity is reflected in the implementation of total quality

management processes at every stage of the manufacturing life cycle and acknowledged by their

ever expanding list of clientele globally. They desire to be a preferred partner for contract

manufacturing, custom synthesis and development, commercialization, manufacturing of API

and advanced intermediates committed to meeting expectations with high degree of quality and

integrity.

INFRASTRUCTURE AT SMS

Seven world-class manufacturing facilities certified with WHO GMP and ISO

9001:2008 (over 600 KL capacity) in and around Hyderabad

All facilities approvable by USFDA with one inspected twice by FDA and others to be

inspected shortly

DSIR recognized in-process R&D center

A state of the art corporate R&D center to cater to in-house research and CRAMS

A dedicated oncology unit with API and formulation facilities

Phase 1 of 100% export oriented unit complying FDA norms operational in over

400,000 Sq.m

RESEARCH AND DEVELOPMENT

R&D at SMS drives the company’s competitive edge, reflected in the introduction of pioneering

products and processes with a superior price-value proposition. Strong R&D has been at the core

of SMS growth since its inception. SMS started R&D activities with 4 doctorate scientists

supported by 20 senior chemists in a 10000 Sq.ft area.

 SMS recently expanded its R&D facilities by creating a state of art corporate research center

with infrastructure and expertise to carry out all the activities from product conception to the

development, scale up, stability studies culminating in preparation of the DMF.

 SMS research team now comprises of about 100 scientists with expertise in process research,

analytical research and scale up. A dedicated project management team handles costing,

administration, purchase, and project monitoring. R&D capabilities of the company span across

reaction technologies, organic compound categories, and novel catalytic systems. This center is

capable of delivering top notch contract research modules to international clientele.

 The R&D center is focused on lifestyle diseases and has made breakthroughs in anti-cancer,

anti-migraine, anti-diabetic, anti-ulcer, important intermediates, and natural plant extracts.

Development of non-infringing and cost effective alternative routes is the strength of SMS

research center.

The R&D strategy at SMS is four pronged: 

Continuous sustained research on process optimization and cost reduction for

commercialized products: One research group continously works on cost reduction

for commercialized products. Best example being Ranitidine. Similarly success has been

achieved in Sumatriptan Succinate and Gemicitabine.

Development of innovative and cost effective process for existing products: Products

are strategically selected based on market conditions. Successful products are scaled up

and commercialized and enable us to compete in the market with a cost effective process

while maintaining margins

NCE Research and development up to pre-clinical stage: Ongoing NCE research

work in Diuretic and Antidepressant therapeutic segment. SMS will sell promising NCE

to multinationals for further clinical studies and development

Providing contract research services to pharma majors: Successful track record in

executing numerous contract research assignments for top notch companies

PRODUCT PORTFOLIO AT SMS

Over the years the in-house Research and Development has delivered outstanding performance

through its innovative thinking and development of novel and non-infringing processes for the

existing products as well as introducing new products. The portfolio of SMS has spread across

different therapeutic segments in addition to diversifying in to Nutraceuticals, Bio and Inorganic

products and mostly recently in to cytotoxic formulations just to cater to our customer

requirements. The product list of SMS is as shown below:

API and Intermediates

Cytotoxic Solid Dose, Sterile Cytotoxic Liquid, and Lyophilized Products

Bio Products

Inorganic Products and

Nutraceuticals

9. INDIAN PHARMACEUTICAL INDUSTRY

Pharmaceutical Industry in India is one of the largest and most advanced among the developing

countries. It is ranked 4th in volume terms and 11th in value terms globally. Indian

Pharmaceutical Industry has attained wide ranging capabilities in the complex field of drug

manufacture and technology.

Indian Pharmaceutical Industry is playing a key role in promoting and sustaining development in

the vital field of medicines. Around 70% of the country's demand for bulk drugs, drug

intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and vaccines is

met by Indian pharmaceutical industry.

The Indian pharmaceutical industry traditionally relied on “reverse engineering” i.e. product

copying, through which vast profits were made. In recent years, however, the larger domestic

companies have realized the need to undertake original research and / or penetrate into the

regulated generics markets in the USA/EU in order to survive in the global market.

Some of the strategies that have been followed by Indian pharmaceutical companies for their

growth in the global markets have been as follows:

Geographic diversification with few companies focusing on increasing presence in the

regulated markets and others exploring the developing/under-developed markets of the

world.

As a part of diversification strategy, some of the companies have acquired brands,

facilities and businesses overseas. Some companies have even started their local

marketing in foreign markets.

Partnerships for supply of bulk drugs and formulations with the generic companies as

well as innovators.

For regulated markets such as the US, there are companies focussing on value added

generics, niche segments or patent challenges in the US.

Focus on offering research and manufacturing services on a contractual basis(CMOs

and CROs)

Apart from these strategies Indian companies have to devise newer strategies continuously to

survive in the highly competitive global market in an industry that is characterised by - high

capital requirement, high technical requirement, high process skills, high value addition

prospects, high export volumes, high market sophistication. Indian companies are following the

route of mergers and acquisitions to make inroads in the foreign markets. They need to

consolidate further in different parts of the world to become trans-national players.

INDUSTRY STRUCTURE

The Pharmaceutical industry in India is fragmented with over 3,000 small/medium sized generic

pharmaceutical manufacturers. It has over 20,000 units out of which 300 units are in the

organized sector; while others exist in the small scale/unorganised sector. The leading 250

pharmaceutical companies control 70% of the market with market leader holding nearly 7% of

the market share. There are also 5 Central Public Sector Units that manufacture drugs. These

companies are:

Indian Drugs & Pharmaceuticals

Hindustan Antibiotics Ltd.

Bengal Chemical and Pharmaceuticals Ltd.

Bengal Immunity Ltd.

Smith Stanistreet Pharmaceuticals Ltd.

The Indian pharmaceutical industry consists of manufacturers of bulk drugs and formulations.

Bulk drugs include the active pharmaceutical ingredients (APIs) which are used for the

manufacture of formulations. According to estimates, the proportion of formulations and bulk

drugs is in the order of 75:25. There are over 60,000 formulations manufactured in India in more

than 60 therapeutic segments. More than 85% of the formulations produced in the country are

sold in the domestic market. Setting up a plant is 40% cheaper in India compared to developed

countries and the cost of bulk drug production is 60-70 percent less. The strength of the industry

is in developing cost effective technologies in the shortest possible time for drug intermediates

and bulk activities without compromising on quality. In accordance with WTO stipulations, India

grants product patent recognition to all New Chemical Entities.

INDUSTRY SEGMENTATION

Indian pharmaceutical industry can be widely classified into bulk drugs, formulations and

contract research. Bulk drugs are the Indian name for Active Pharmaceuticals Ingredients (API).

Fig: Segment-wise sales

BULK DRUGS

Bulk drug is a drug produced, manufactured or distributed in large or undivided quantities.

Active pharmaceutical ingredients (API) are active chemicals used in the manufacturing of

drugs. Another term for active pharmaceutical ingredient is “Bulk Drug Substance”.

Bulk drug industry can be implemented at various levels

- Company level/ owner

- Functional level – Finance, marketing, R & D, Manufacturing, information systems and

human resource managers.

- Operational Level – Plant managers, sales managers, production and department managers.

Bulk drug industry is the backbone of the Indian pharmaceutical industry. Growth of Indian bulk

drug industry in the last five decades has been impressive and highest among developing

countries. From a mere processing industry, Indian bulk drug industry has evolved into

sophisticated industry today, meeting global standards in production, technology and quality

control. Today, India stands among the top five producers of bulk drugs in the world. The market

is fragmented with far too many players. About 300 organised companies are involved in the

production of bulk drugs in India. Over 70 percent of India’s bulk drug production is exported to

more than 50 countries and the balance is sold locally to other formulators. Indian bulk drug

industry is mainly concentrated in the following regional belts - Mumbai to Ankleshwar,

Hyderabad to Madras and Chandigarh. Around, 18000 bulk drug manufacturers exist in India.

Some major producers of bulk drugs in Indian pharmaceutical industry are Ranbaxy

Laboratories, Sun Pharma, Cadila, Wockhardt, Aurobindo Pharma, Cipla, Dr. Reddy’s

Laboratories, Orchid Pharmaceuticals & Chemicals, Nicholas Piramal, Lupin, Aristo

Pharmaceuticals, etc. Most are involved in bulk as well as formulations while a few are solely

into bulk drugs.

Fig: Increasing share of Indian companies in DMF filings (US FDA)

(SOURCE: CRISINFAC, YES BANK/ OPPI)

The growing number of DMF filings signifies the increase in number of contracts that Indian

players have garnered. India has recorded 1671 DMF filings.

The bulk drug segment is a low-margin and volume-driven business. The thrust is on

manufacturing. In manufacturing operation, efficiency through better process skills to reduce

both manufacturing time and cost is critical. Low cost manufacturing is a distinct advantage

gained by Indian companies over a period of time with a steep learning curve. Bulk Drugs

exports have grown significantly in the past on account of growth in generic industry, increasing

share of Indian companies in DMF filings and contract manufacturing opportunity.

Bulk drugs exports grew robustly by 28% CAGR between 2001-02 and 2007-08 to reach an

estimated USD4.2 billion.

Fig. India’s Bulk Drug Export (CRISINFAC, YES BANK/ OPPI)

India offers a number of distinctive advantages in the pharmaceutical industry, as illustrated in

the figure below:

Fig: Advantage India-API

(SOURCE: CRISINFAC, YES BANK/ OPPI)

QUALITATIVE ANALYSIS OF INDIAN PHARMACEUTICAL INDUSTRY SWOT ANALYSIS

PORTER’S FIVE FORCES ANALYSIS

SWOT ANALYSIS OF INDIAN PHARMACEUTICAL INDUSTRYThe SWOT analysis of the industry reveals the position of the Indian pharmaceutical industry in

respect to its internal and external environment.

STRENGTHS

1. India with a population of over a billion is a largely untapped market. In fact the penetration of

modern medicine is less than 30% in India. To put things in perspective, per capita expenditure

on health care in India is US$ 93 while the same for countries like Brazil is US$ 453 and

Malaysia US$189.

2. The growth of middle class in the country has resulted in fast changing lifestyles in urban and

to some extent rural centers. This opens a huge market for lifestyle drugs, which has a very low

contribution in the Indian markets.

3. Indian manufacturers are one of the lowest cost producers of drugs in the world. With a

scalable labour force, Indian manufactures can produce drugs at 40% to 50% of the cost to the

rest of the world. In some cases, this cost is as low as 90%.

4. The fact that despite the low level of unit labour costs India boasts a highly skilled workforce

has enabled the country's pharmaceutical industry at a relatively early stage to offer quality

products at competitive prices. Each year, roughly 115,000 chemists graduate from Indian

universities with a master’s degree and roughly 12,000 with a PhD. The corresponding figures

for Germany – just fewer than 3,000 and 1,500, respectively – are considerably lower. After

many chemists from India migrated to foreign countries over the last few years, they now

consider their chances of employment in India to have improved. As a result, a smaller number is

expected to go abroad in the coming years; some may even return.

5. Indian pharmaceutical industry possesses excellent chemistry and process reengineering skills.

This adds to the competitive advantage of the Indian companies. The strength in chemistry skill

helps Indian companies to develop processes, which are cost effective.

WEAKNESS

1. The Indian pharmaceutical companies are marred by the price regulation. Over a period of

time, this regulation has reduced the pricing ability of companies. The NPPA (National

Pharmaceutical Pricing Authority), which is the authority to decide the various pricing

parameters, sets prices of different drugs, which leads to lower profitability for the

companies. The companies, which are lowest cost producers, are at advantage while those

who cannot produce have either to stop production or bear losses.

2. Indian pharmaceutical sector has been marred by lack of product patent, which prevents

global pharmaceutical companies to introduce new drugs in the country and discourages

innovation and drug discovery. But this has provided an upper hand to the Indian pharma

companies.

3. Indian pharma market is one of the least penetrated in the world. However, growth has been

slow to come by. As a result, Indian majors are relying on exports for growth. To put things

in to perspective, India accounts for almost 16% of the world population while the total size

of industry is just 1% of the global pharma industry.

4. Due to very low barriers to entry, Indian pharma industry is highly fragmented with about

300 large manufacturing units and about 18,000 small units spread across the country. This

makes Indian pharma market increasingly competitive. The industry witnesses price

competition, which reduces the growth of the industry in value term. To put things in

perspective, in the year 2003, the industry actually grew by 10.4% but due to price

competition, the growth in value terms was 8.2% (prices actually declined by 2.2%)

OPPORTUNITIES

1. The migration into a product patent based regime is likely to transform industry fortunes

in the long term. The new patent product regime will bring with it new innovative drugs.

This will increase the profitability of MNC Pharma companies and will force domestic

Pharma companies to focus more on R&D. This migration could result in consolidation

as well. Very small players may not be able to cope up with the challenging environment

and may succumb to giants.

2. Large number of drugs going off-patent in Europe and in the US between 2005 to 2009

offers a big opportunity for the Indian companies to capture this market. Since generic

drugs are commodities by nature, Indian producers have the competitive advantage, as

they are the lowest cost producers of drugs in the world.

3. Opening up of health insurance sector and the expected growth in per capita income are

key growth drivers from a long-term perspective. This leads to the expansion of

healthcare industry of which Pharma industry is an integral part.

4. Being the lowest cost producer combined with FDA approved plants; Indian companies

can become a global outsourcing hub for pharmaceutical products.

THREATS

1. There are certain concerns over the patent regime regarding its current structure. It might

be possible that the new government may change certain provisions of the patent act

formulated by the preceding government.

2. Threats from other low cost countries like China and Israel exist. However, on the quality

front, India is better placed relative to China. So, differentiation in the contract

manufacturing side may wane.

3. The short-term threat for the pharma industry is the uncertainty regarding the

implementation of VAT. Though this is likely to have a negative impact in the short-

term, the implications over the long-term are positive for the industry.

PORTER’S FIVE FORCES MODEL

(a) INDUSTRY COMPETITION

Pharmaceutical industry is one of the most competitive industries in the country with as many as

10,000 different players fighting for the same pie. The rivalry in the industry can be gauged from

the fact that the top player in the country has only 6 %(2006) market share, and the top 5 players

together have about 18 %(2006) market share.

Thus, the concentration ratio for this industry is very low. High growth prospects make it

attractive for new players to enter in the industry. Another major factor that adds to the industry

rivalry is the fact that the entry barriers to pharmaceutical industry are very low. The fixed cost

requirement is low but the need for working capital is high.

The fixed asset turnover, which is one of the gauges of fixed cost requirements, tells us that in

bigger companies this ratio is in the range of 3.5-4 times. For smaller companies, it would be

even higher.

Many small players that are focused on a particular region have a better hang of the distribution

channel, making it easier to succeed, albeit in a limited way.

An important fact is that, pharmaceutical is a stable market and its growth rate generally tracks

the economic growth of the country with some multiple (1.2 times average in India). Though

volume growth has been consistent over a period of time value growth has not followed in

tandem.

The product differentiation is one key factor which gives competitive advantage to the firms in

any industry. However, in pharmaceutical industry product differentiation is not possible since

India has followed process patents till date, with loss favoring imitators. Consequently product

differentiation is not a driver, cost competitiveness is. However, companies like Pfizer and Glaxo

have created big brands over the years which act as product differentiation tools.

Earlier it was easy for Indian pharmaceutical companies to imitate pharmaceutical products

discovered by MNCs at a lower cost and make good profit. But today the scene is different with

the arrival of the patent regime which has forced Indian companies to rethink its strategies and to

invest more on R&D. Also contract research has assumed more importance now.

(b) BARGAINING POWER OF BUYERS

The unique feature of pharmaceutical industry is that the end user of the product is different from

the influencer (read doctor). The consumer has no choice but to buy what doctor says. However,

when we look at the buyer’s power, we look at the influence they have on the prices of the

product. In pharmaceutical industry, the buyers are scattered and they as such do not wield much

power in the pricing of the products. However, government with its policies, plays an important

role in regulating pricing through the NPPA (national pharmaceutical pricing authority).

(c) BARGAINING POWER OF SUPPLIERS

The pharmaceutical industry depends upon several organic chemicals. The chemical industry is

again very competitive and fragmented. The chemicals used in the pharmaceutical industry are

largely a commodity. The suppliers have very low bargaining power and the companies in the

pharmaceutical industry can switch from their suppliers without incurring a very high cost.

However, what can happen is that the supplier can go for forward integration to become a

pharmaceutical company. Companies like Orchid Chemicals and Sashun Chemicals were

basically chemical companies who turned themselves into pharmaceutical companies.

(d) BARRIERS TO ENTRY

Pharmaceutical industry is one of the most easily accessible industries for an entrepreneur in

India. The capital requirement for the industry is very low; creating a regional distribution

network is easy, since the point of sales is restricted in this industry in India. However, creating

brand awareness and franchisee among doctors is the key for long term survival. Also, quality

regulations by the government may put some hindrance for establishing new manufacturing

operations. The new patent regime has raised the barriers to entry. But it is unlikely to discourage

new entrants, as market for generics will be as huge.

(e)THREAT OF SUBSTITUTES

This is one of the great advantages of the pharmaceutical industry. Whatever happens, demand

for pharmaceutical products continues and the industry thrives. One of the key reasons for high

competitiveness in the industry is that as an ongoing concern, pharmaceutical industry seems to

have an infinite future. However, in recent times the advances made in thee field of

biotechnology, can prove to be a threat to the synthetic pharmaceutical industry

10. MARKETING PROCEDURE:

1. INQUIRY: We get inquiries from different channels like customers, agents and

distributors. In an inquiry they will be asking for the availability of the product, Quantity

they are looking for, price per kg, shipment terms, payment terms, commission if they are

agents etc. Likewise it also includes details like packing details of the product which

varies from market to market. If the customer is new to company he may ask for different

documents like DMF, WHO GMP, Sample COA, MOA, MSDS etc to analyze the

product.

GMP: "Good manufacturing practice" or "GMP" is part of a quality system

covering the manufacture and testing of active pharmaceutical ingredients,

diagnostics, foods, pharmaceutical products, and medical devices

COA: Authenticated document, issued by an accredited firm or individual, that

certifies the quality and purity of pharmaceuticals, and animal and plant products

being exported

Inquiry can be of different types. Few of them are illustrated below

Inquiry from existing agents: Here inquiry comes from the existing customers. Here these

customers are the ones who had done business with us and would like to continue with us

for their further requirements.

Inquiry from promotional Emails : Here promotional Emails will be sent to the

customers/agents/distributors. In that we update them with the latest products along with

the existing products, up gradations in the facilities, documentations added etc etc.

Inquiries will float as a response to our emails.

Inquiry from New customer/agents/distributors: They know about the company by

reference, by b2b sites, Pharma exhibits and send inquiries.

2. QUOTATION: After receiving the inquiry, in reply to that we shall send them the

quotation. Knowing the requirements from the inquiry we shall offer them our price.

Each and every factor should be considered in order to claim the business

Important factors that are mentioned are given below

Inco Terms

Payments Terms

Shipment Date

Packing Details

Commission (If it is from an agent)

Incoterms (International Commercial Terms) are a series of international sales terms widely used

throughout the world. They define monetary transaction and role responsibilities for both sides of

the international trading buyer and seller transaction. The purpose of standardized incoterms is to

determine export and import clearance responsibilities, who is owning the risk for the condition

of the products at each stage in the transport process, and who is responsible for paying for what.

Inco terms like CPT, CFR, CIF, CIP, FOB etc will be given and cost incurred will be changed

depending on the inco terms. For example, if we take CIF there you need to bear the freight,

insurance and it is your responsibility until it reaches destination port. But for CFR you will bear

only the freight and the responsibility is upto destination port. Depending on the requirement we

have to take the cost from the inco terms.

Payment terms are the Conditions under which a seller will make a sale. Typically, these terms

specify the period allowed to a buyer to pay off the amount due, and may demand cash in

advance, cash on delivery, deferred payment period of 30 days or more, etc.

Payment Terms will be like D/A 30 days, D/A 90 days, D/A 120 days especially in Latin

American market. Depending on the credit period you give we have to calculate the interest.

Commission will be given on the company norms and generally it will be from 2% till 10%.

Knowing the above requirements we calculate the final price. Also the offered price will be

varied depending on the destination market. For example regulatory courtiers like USA, Korea,

Australia etc will require documentation and approvals and they pay good price.

3. NEGOTIATION: Knowing the customer requirement and our best price we will negotiate

with the customer. Mode of contact will be generally on phone or by emails. This is a crucial

phase where our marketing skills help us on how you we convince customer.

If we are strong with the product then we have better bargaining power and can have better profit

margins. In every negotiation we have to take our strengths to the customer and have to convince

to confirm the Order.

4. PURCHASE ORDER: If we are succeeding with the above steps, we get the confirmed

Purchase Order. In this you will have all the terms that we have confirmed with the customer like

product name, price, quantity, shipment date, shipment mode, etc etc. We confirm the receipt of

Purchase Order and let them know.

5. ORDER ENTRY: After receipt of the confirmed order, based on that we raise a sales order

which is an internal document. In this document we will give the details that are needed for the

dispatch from factory. This document should be flowed through a hierarchy for approval and

once it is approved it will be sent to the factory.

6. This is reference document for the stores to dispatch the material. Before doing the dispatch

QA/ QC personals will do the quality check on the material and has to approve for dispatch the

material. Stores will cut the excise challan and send the tear weights and gross weights to prepare

the documents like commercial invoice and Packing list.

7. From here logistics follow with the material until it is sailed. When the logistics receive

instructions from stores to move the material, they will ask forwarding agent to pick the material.

Forwarding agents do the custom clearance and book the space for shipment. Meanwhile

logistics arrange for the following documents

Commercial Invoice

Packing List

Certificate of Origin

Insurance Certificate

Material Safety Data Sheet

Commercial invoice is the Document required by customs to determine true value of the

imported goods, for assessment of duties and taxes. A commercial invoice (in addition to other

information), must identify the buyer and seller, and clearly indicate the (1) date and terms of

sale, (2) quantity, weight and/or volume of the shipment, (3) type of packaging, (4) complete

description of goods, (5) unit value and total value, and (6) insurance, shipping and other charges

(as applicable).

Insurance of certificate is a document issued by an insurance company/broker that is used to

verify the existence of insurance coverage under specific conditions granted to listed individuals.

More specifically, the document lists the effective date of the policy, the type of insurance

coverage purchased, and the types and dollar amount of applicable liability.

The Certificate of Origin is an instrument to establish evidence on the origin of goods imported

into any country. The certificates are issued under the ambit of the Rules of Origin of any

importing country that grants such concessions to tariffs or merely stipulates a non preferential

certificate without granting any tariff concession.

A material safety data sheet (MSDS) is a form containing data regarding the properties of a

particular substance.

Also send sailing/Flight details pertaining to the shipment

8. We will forward the documents and the sailing details to the customer for their reference.

Customer will check and confirm the documents.

9. Once the material is sailed or flied we will get the Bill of Lading/ Air way Bill.

Bill Of Ladding: A bill of lading is a type of document that is used to acknowledge the receipt of

a shipment of goods. A transportation company or carrier issues this document to a shipper. In

addition to acknowledging the receipt of goods, a bill of lading indicates the particular vessel on

which the goods have been placed, their intended destination, and the terms for transporting the

shipment to its final destination

A document signed by a carrier (a transporter of goods) or the carrier's representative and issued

to a consignor (the shipper of goods) that evidences the receipt of goods for shipment to a

specified designation and person.

Carriers using all modes of transportation issue bills of lading when they undertake the

transportation of cargo. A bill of lading is, in addition to a receipt for the delivery of goods, a

contract for their carriage and a document of title to them. Its terms describe the freight for

identification purposes; state the name of the consignor and the provisions of the contract for

shipment; and direct the cargo to be delivered to the order or assigns of a particular person, the

consignee, at a designated location.

There are two basic types of bills of lading. A straight bill of lading is one in which the goods are

consigned to a designated party. An order bill is one in which the goods are consigned to the

order of a named party. This distinction is important in determining whether a bill of lading is

negotiable (capable of transferring title to the goods covered under it by its delivery or

endorsement). If its terms provide that the freight is to be delivered to the bearer (or possessor) of

the bill, to the order of a named party, or, as recognized in overseas trade, to a named

person or assigns, a bill, as a document of title, is negotiable. In contrast, a straight bill is not

negotiable.

Air WayBill (AWB) or air consignment note refers to a receipt issued by an international courier

company for goods and an evidence of the contract of carriage, but it is not a document of title to

the goods. Hence, the AWB is non-negotiable. The AWB has a tracking number which can be

used to check the status of delivery, and current position of the shipment.

When goods are sent by airways, the sender of the goods prepares airway bill in triplicate. The

three copies of airway bill are made as follows:

The first copy is signed by the sender and is handed over to the carrier.

The second copy is signed by both the carrier and the sender of the goods and it is handed over to

the consignee.

The third copy is signed by the carrier and is handed over to the consignor after the receipt of

goods.

The airway bill contains place and date of carriage contract, the place of departure, the name and

addresses of the sender, name and addresses of the carrier, name and addresses of consignee,

description of goods, nature of goods and the details of freight.

10. Once all the documents mentioned above are ready, logistics will forward a copy to us for the

customer reference and a set of originals will be handed over to the finance department.

11. Finance department hand over the documents to the bank as the payment is of D/A terms.

Bank will send the documents to the customer bank basing on the details furnished in the

purchase order. After sending the documents, bank will give us the courier tracking number to

track the originals to the finance department. The same will be forwarded to us for the customer

reference and we give it to the customer.

12. With this Order entry transaction will be completed.

11. CUSTOMERS:

CUSTOMER 1:

Customer Name : HELM DE MEXICO

Customer Type : Distributor

Country : Mexico

ABOUT:

Helm de Mexico, S.A., established in Mexico City in 1966, is a subsidiary of  Helm AG, a

public company registered in Germany.  It’s a part of an international organization with over 60

branch offices around the world, active in marketing and distribution of chemicals for more than

100 years.

RELATION WITH SMS PHARMACEUTICALS:

They have business relation with SMS from almost 15 years and are working with different

products. To point big they are exclusive agents for the product “Ranitidine Hcl” in the Mexican

market. To monitor the transactions they have a branch office in India with the name “Helm-

India” and they will be coordinating on every aspect. To name the persons they are Mr. Athul

Sharada and Ms. Mavis.

Having exclusivity, both the parties are having their own benefits. SMS can plan a precise

production plan and can know the cash flow that comes in for the year. Helm can have a better

price than any other agent and the priority in dispatching the shipments.

BUSINESS PROPOSALS:

Business Projections will be discussed at the starting of the year i.e. from Jan till Dec as per their

financial year. In these projections they will let us know about the tentative requirement in

quantity and the price indicatives in the market. With the projections they provide, SMS will do

production planning and also work on reducing the cost to increase the profit margin.

ORDER PROCESS:

They send an inquiry based on the requirement for the every quarter and they negotiate mainly

on price and all other terms like payment terms, Inco Terms, packing remains same as in the

past. In this quarter they have a requirement of 54MT and they would like to have the indicative

price @$12.00/Kg. Before negotiating on price we have to consider our last transaction prices

and net realization from the indicative price taking all overheads and costs incurred in shipments.

While calculating the realization we have to consider Dollar Rate, Freight, Bank Charges,

Interest, Commission, DEPB (Export Benefits). General formal is given below

Net Realization = [Price(USD) * dollar Rate(INR)] – (Freight+ Bank Charges+

Interest+ Comm) + DEPB

After calculating for net realization the indicative price is not workable and we have to at least

quote $13.25/Kg to get the margin.

MY PROPOSAL:

To claim this order we have to cut down the price but we should not go into loss. Considering the

factors in the calculation of net realization, only place where we can cut the cost is Freight. In my

study I have understood that the sea shipments will be booked in two types

o LCL cargo (Less than Container Load Cargo)

o FCL cargo (Full container Load Cargo)

LCL Cargo will be booked by many customers and it has to be waited until it is filled. Liners

charge more Freight on this type of shipment. But for FCL, we have only our material and it will

be shipped immediately and we have control on the shipment. This kind of cargo will be

advantageous when we can use complete vessel space. Finally Freight is less compared to LCL.

As we have 54MT of requirement, I have divided the total requirement into 3 shipments i.e.

18MT in each partial shipment which can be exactly fitted into 40’ Container. So I have asked

logistics to have the freight accordingly and recalculated the net realization which came to

$12.90/Kg. With this price I have negotiated with the customer explaining them the last

transaction price of $13.25/Kg and how much we have discounted for this transaction. Actually

the price was not decreased but the cost optimization is done.

With this finding we could able to cut down the price by 3% which is benefit to all the parties

involved in this transaction.

CUSTOMER 2:

Customer Name : DORMEX

Customer Type : Trader

Country : Argentina

ABOUT:

Dromex is a company founded on the basis of a commitment to fair trade between the customer

and supplier within the Brazilian, Argentina, Mexican markets. They have over 10 years of

experience in delivering active ingredients for the pharmaceutical industry and a team of

working professional, highly trained, proactive and efficient to offer them the best support

service.

RELATION WITH SMS PHARMACEUTICALS:

Dromex is working with SMS Pharma from the last 5 year, especially for the Argentinean

Market. Now that they have recently started their operations in Mexico they have started

promoting SMS Pharma products in that region. Basically Dromex work as a trader and they will

be like a bridge between the customer and the manufacturer. For every consignment through

them they will take commission of 3%. Most importantly we need to protect the customer with

an agreement termed as CPA (Customer Protection Agreement).

BUSINESS INQUIRY:

As a trader Dromex will get different inquiries from different customers. Depending on the

products SMS Pharma is manufacturing, they will send the inquiries. Also, if the customer is

new, then we need to protect the customer to them with a Customer Protection Agreement before

going further with the transactions.

Customer Protection Agreement: This is an agreement between the trader and the supplier

mainly agreeing that manufacturer will not contact the customer directly and they will not hold

any business relation independently. This agreement will have a time frame and will be expired

once it crosses the time frame agreed in the agreement. This is a document which is very

frequently issued while working with traders.

ORDER PROCESS:

In this transaction they have a requirement for Lansoprazole to their Paraguay customer. For that

we have a sent the quotation and they have approved the order with less efforts on Price

negotiation. Mode of contact is generally by phone and by emails. Here Luciana from Paraguay

contacted us as a representative on behalf of the Dromex Company. For this consignment they

are more concerned on below terms rather than price

Controlled Product

o As the products used for Human Consumption, all the pharmaceutical

products will be regulated by Central Drug Control Department. They

have a list of products that are approved and those can be transacted in the

market. If the product is not approved that we need to take NOC (No

Objection Certificate) from Drug Control Department and this document

is mandatory for Export.

WHO GMP

o Certificate issued by World Health Organization that product

manufactured under “Good Manufacturing Practices”

Need Pre-shipment COA for Approval

o Pre – Shipment COA is a specification sheet of the product that we are

going to ship to the customer. Only after approval of the same product will

be dispatched from the factory.

We have confirmed them with a letter on our letter head that this product is not controlled and

we can market the material. We have cGMP certificate for this product and we have sent the

same to them for their reference.

For most of the countries in Latin America they need Import License to procure the material and

for that they need Manufacturer name, Address, Product Name and Bank details. To furnish all

these details we will send them the Proforma Invoice in which you have all these details. In this

transaction, payment term agreed is “TT Advance” .i.e. we need to receive the payment in

advance to dispatch the material.

After having Import License they have asked for the pre shipment sample of the product that is

to be dispatched to confirm the material quality. We have provided the same and got

confirmation for dispatch. Also we have received their payment confirmation. We have cross

verified the same with our finance department.

As all the terms are met to enable the dispatch, we confirmed the factory to arrange for dispatch

and the internal process for shipment started with logistics. We will follow up with logistics

regarding the shipment and we receive following details from them

Commercial Invoice

Packing List

CoA

Certificate of Origin

Insurance copy

AWB

Flight details

All the above details will be forwarded to the customer for their reference.

They need handling information on AWB as per purchase order and we have sent logistics

without handling information. So in order to avoid these kinds of issues it is better to have

special instructions which should be highlighted and instructed in a separate email. Also follow

up should be also done for the same. So now the logistics department is instructed to make the

corrections in the AWB. Once this is done it is sent to the customer.

ISSUES FACED:

1. Corrections in AWB: In the purchase order it’s been clearly indicated that they need to

mention the statement in the AWB for Handling Information column. But logistics

ignored the same and we have to again correct the AWB.

Resolution Advised: Specific information required by the customer should be

highlighted to the concern and should given clear instruction that should be followed as a

regular process.

2. Mistake in CoA: Certificate of Analysis comprises of two pages and both these pages

comprises of Header information where in it has Product name, Batch Number, Analysis

date, Expiry Date, Etc. Note that Header information remains same in all the pages of

CoA. But in this consignment, Expiry date mentioned on the first page is different from

the second page which is wrong.

Resolution Advised: To avoid these kinds of issues there is already a mechanism in

which document will be prepared by one personal, verified by another personal and

finally authorized by another personal. Even though the issue proposed is unusual as it

come out through different levels of verification system by qualified personals, we need

to have a document preparation system which avoids these kinds of typo errors.

CUSTOMER 3:

Customer Name : PHARMA OCEAN

Customer Type : Distributor

Country : India (Gujrat)

Product : Sildenafil Citrate – CIF Sea Asuncion

ABOUT:

It was established in the year 2007. Their main markets are South America, Eastern Europe,

Western Europe. Its total sales annual volume is US$1 Million - US$2.5 Million. Its export

percentage is 91% - 100%.  

INITIAL ENQUIRY:

We get inquiries from different channels like customers, agents and distributors. In inquiry they

will be asking for the availability of the product, Quantity they are looking for, price per kg,

shipment terms, payment terms, commission if they are agents etc. Likewise it also includes

details like packing details of the product which varies from market to market. If the customer is

new to company he may ask for different documents like DMF, WHO GMP, Sample COA,

MOA, MSDS etc to analyze the product.

Here customer initially enquires for the product to place the order. In the first step mail

communication he gives us his requirement and he enquires whether we would be able to

provide the product or not. When this communication is initiated from our end one of our

representative responds saying that we could provide the product and also mention about the

delivery timelines. Here we have quoted the price of the product as 37$ per kg. We would

respond accordingly after analyzing the requirement regarding the delivery time. Here in this

case this is decided as 45 days. Now the representative from Pharmacy Ocean responds and says

that they agree with the quantity and price of the product mentioned. For the Payment they

contacted us and said that payment will be made by their Argentinean partner and they will give

their Bank details and we can get ECGC coverage. In addition to this he also enquires about

commission details and also asks us to send the CoA. He would also give us the time by which

the product needs to be delivered at his end. We now check the time frame and do the feasibility

study and reply promptly saying back that we can provide the product with that particular

timeframe or if there are any changes in the timeframe mentioned. We would also mention about

the commission and how it must be paid. Then after we would give the quote with the

commission included the customer bargains for best price that we can offer the product for. So if

the amount given by us is still negotiable we would give him the price by change in the quote if

not we would reply to them saying that we could not decrease our price any further. So after this

the customer now does a study of the price in the market for that particular product and if he is

satisfied by the price offered to us he would get back to us and place the order. After receipt of

the confirmed order, based on that we raise a sales order which is an internal document. In this

document we will give the details that are needed for the dispatch from factory. This document

should be flowed through a hierarchy for approval and once it is approved it will be sent to the

factory. Now factory people would go ahead with the product and once the product is ready it is

sent to dispatch section and from dispatch section to QA team.

Once the product is dispatched the quality check of the product will be performed by the quality

team and should pass QA if the product has to be ready to be sent to the customer. If there are

any discrepancies the product is sent back to the factory people by the QA team. Once the

product is ready we would inform the PHARMA OCEAN representative the same. They would

get back to us with the details of the place where the product needs to be delivered. During this

process the customer send the request for the some of the documents to be sent like the

Invoice

Packing List

CoA

COO

Insurance copy

AWB etc .

We would coordinate with the required departments and obtain all the documents and send it to

the customer. If there are any doubts or corrections needed to be made in any of the documents

the same is communicated back to us. If there aren't any the documents are approved by the

customer.

Now the pre shipment CoA is sent to the customer and he approves the same and all the

documents required by the customer are being sent in this case like commercial invoice, packing

list which describes about the products contained, Airway bill, insurance copy, certificate of

origin, COA . Once the material is sailed or flied we will get the Bill of Lading/ Air way Bill. A

bill of lading is a type of document that is used to acknowledge the receipt of a shipment of

goods. The Transportation Company or carrier issues this document to a shipper. In addition to

acknowledging the receipt of goods, a bill of lading indicates the particular vessel on which the

goods have been placed, their intended destination, and the terms for transporting the shipment to

its final destination.

PAYMENT:

Meanwhile we would check for the payment if payment is made we would acknowledge the

same if not follow up will be done for the same. Meanwhile the shipping of the product is done

and payment is made by the customer on agreed payment terms. Once the product is reached on

their end and payment is received on our end both parties acknowledge the same.

CUSTOMER 4:

Customer Name : Multi labs

Customer Type : Distributor

Agent : e-chemicals

ABOUT:

Established in 1999, eChemical begin to act on importation and distribution of raw materials for

Pharmaceutical, Cosmetic, Food and Veterinarian markets, always with a commit to offer

quality, competitive prices and time-to-market. We are always developing new partnerships to

assure our mission.

RELATION WITH SMS PHARMACEUTICALS:

E- Chemicals is a new agent with whom we have started interacting for Brazil Market. Knowing

the potential or Brazilian market we have started interacting with E-Chemicals as we have only

one agent working for the company.

BUSINESS INQUIRY:

We have introduced our self to them and asked about some specific products to promote as our

agent in the Brazilian Market. For that we have received a positive response and they have

explained about the market trends and the current constraints in pushing the products. As we

have asked them to push the Pellets which will be termed as Semi finished product that has to be

registered with ANVISA (Brazilian Regulatory Body). So almost every customer who will be

dealing with these pallets have registered a source i.e. a supplier. In order to change the source

they need a strong cause as the process of changing the source involves with lot of testing,

money and efforts. Here in this case we want to seduce the customer with the price factor as we

came to know that we can support the customer with a very good price than they are currently

buying. With this we have started going further with our negotiations.

We have succeeded in dealing with a customer (M/s Multilab) to check our material and for that

they have asked our COA for knowing our specifications.

COA seems ok for them and to confirm as a source they want to have our DMF and for that we

have asked a secrecy agreement.

Secrecy Agreement: It is a document given by the customer before taking some technical data

which should be confidential. It states that data taken will not be revealed to any third party and

also will not be used internally. Only if required it will be presented to the regulatory body for

registration process.

We have received the same from them which is duly signed and stamped. Upon receipt of the

same we have sent the Open part DMF to the customer for their perusal.

Drug Master File or DMF is a document prepared by a pharmaceutical manufacturer and

submitted solely at his discretion to the appropriate regulatory authority in the intended drug

market. In the United States, a DMF would be submitted to the Food and Drug Administration

(FDA). There is no requirement by law or FDA regulation to present a DMF. The document may

be used to provide confidential detailed information about facilities, processes, or articles used in

the manufacturing, processing, packaging, and storing of one or more human drugs.

Drug Master File (DMF) is a master document containing complete information on a API. It is

known as European Drug Master File (EDMF) or Active Substance Master File (ASMF) and

US-Drug Master file (US-DMF) in Europe and United States respectively.

The DMF contains factual and complete information on its subject's chemistry, stability, purity,

impurity profile, packaging and the cGMP status of any Active Pharmaceutical Ingredient (API).

ORDER PROCESS:

While the customer checking the DMF they have asked for 200Kgs material in order to test the

material. We have sent the quote and customer has sent the purchase order. We have dispatched

the material as per the order process

CUSTOMER 5:

Customer Name : Hersil

Country : Brazil

Agent : Lanza pharma

Product :Fluconazole

ABOUT:

For over than 10 years in market, Lanza pharma prides itself on providing high quality of raw

materials for pharmaceutical industry around the world. With an extensive technology

infrastructure and experienced staff administration, sales, law, foreign trade, marketing and

mainly technical areas, the company ensures a meticulous selection and care at every stage of the

services offered.

RELATION WITH SMS PHARMACEUTICALS:

Lanza pharma is an exclusive agent for SMS pharma from the last 3 years. They represent all

SMS products in Brazilian market and promote the same in the market.

Brazilian market has a regulatory body called Anvisa with which each and every customer has to

be registered. Lanza pharma as an agent SMS, will follow up with the customers to do these

registrations. Mr. Dantas was the person from Lanza pharma who dealt this transaction.

BUSINESS:

As Lanza pharma is an agent for SMS pharma, it will be getting orders from the customers. In

this case we have an order for Fluconazole from the customer Hersil and we are selling the same

from couple of years. Unfortunately production blow is under maintenance and product is not

available. But to support the customer we have decided to buy the product from an outside

source and send the material to customer which we term it as trading.

ORDER PROCESS:

We found the manufacturers who are manufacturing this product. The manufacturers are

Manthena Drugs from Hyderabad, Auctus from Hyderabad, KRR from Hyderabad. We have

requested for the quote from all the three manufacturing companies. After receiving the quote,

the order is given to Auctus depending on the factors like

Price

Payment terms

Availability

Product specification

The price quoted by Auctus is Rs.3800 , payment terms are 60 days and the availability is

immediate. After deciding the manufacturer, our purchase department sent the purchase order to

Auctus and the material is procured as per the terms and specifications.

Once the material is in our sight, we have sent the material in regular order entry process. Here

the price which we sold for Hersil was $110.

But for such type of trading, trading license is mandatory. Certificate Of Analysis should be on

trade license.

12. CONCLUSION

Indian pharma industry has large market due to large population. It has Large exports (US$600-

800 million) which is around 6-8% of global drugs market . Out of 475 drugs used, 425 are

locally produced. Most of the bulk drug companies are Indian companies, whereas some of the

major pharmaceutical formulation companies are MNCs.

The contribution of Indian pharma industry on the Indian economy is increasing. It was earlier

growing at a rate of 14% annually but like all other industries it is also hit by recession. Because

of this presently, the growth of this industry is expected to be at 7%-8% and is expected to rise to

13% of GDP by 2015. Indian Bulk drug industry is a growing industry. The growth and

achievement of the Indian bulk drug industry has been highest among the developing countries.

It was established by the study that innovations have a positive impact on not just the bottom

lines but also is vital for survival in this industry where the entry of the competitors is marked

quite early due to the copying mechanism.

There is no general formula for formulation of innovation strategies targeted at growth at various

levels which would prove effective for an Indian company in the bulk drug industry

The combination of the basic growth strategies would depend on the business environment.

Though the customer centered as well as competitor centered companies have performed better

in the Indian bulk drug industry. Sustainable Competitive Advantage in the bulk Drug industry

can be attained mainly by way continuous product & process innovations

Over time the international pharmaceutical industry has been finding great opportunities in India.

The Indian pharmaceutical industry players in the future can continue to look forward with

confidence. There are immense opportunities for pharmaceutical players both at the domestic as

well as the global level, but along with opportunities are challenges which need to be overcome

in order to achieve sustainable growth in the future. The future will be extremely promising with

many more milestones to come in the journey of the Indian pharmaceutical industry.

13. RECOMMANDATIONS

In most of the pharmaceutical companies, the business is through agents and distributors rather

than direct customers. Thus Pharma companies must strengthen their networking channels. To

build their margin companies must have direct contacts with customers rather than having

mediators like agents and customers. Instead of paying commission to the mediators, the

companies can have profit.

In SMS pharmaceuticals, their main concentration is on the Ranitidine which is the main product

for the company. Maximum of the income is from Ranitidine. Due to this reason they

concentrate more on Ranitidine. Due to this there is less growth of other products which they are

producing. If marketing of other products are also concentrated, there would be huge profits for

the company.

14. BIBLIOGRAPHY

WEBSITES:

1. www.capitaline.com

2. www.google.com

3. www.wikipedia.com

4. www.altavista.com

5. www.pharmainfo.com

6. www.etintelligence.com

7. www.pharmainfo.net

8. www.kpmg.de

9. www.info.shine.com

10. www.expresspharmaonline.com

11. www.kpmg.com/IN/en/WhatWeDo/.../ Indian %20 Pharma %20Outlook.pdf

12. http://www.pharmaceutical-drug-manufacturers.com/pharmaceutical-industry/

13. http://www.medind.nic.in/haa/t06/i1/haat07i1p83.pdf

14. www.medind.nic.in/haa/t06/i1/haat07i1p83.pdf

15. www.smspharma.com

JOURNALS:

1. Indian Pharmaceutical industry-surging globally” published by Quest

2. Performance of Indian pharmaceutical industry post TRIPS period- A Firm level

analysis” by Ravi Kiran and Sunitha Mishra

3. Drugs and Pharmaceuticals: International Pharmaceutical Industry-A Snapshot,Jan 2004, ICRA

4. Presention by Jerry A. Rosenblatt, PhD on“Predicting 2008: Global Pharma Market

Forecast” Global Practice Leader, Forecasting & Opportunity Assessment November 14,

2007