Pgprak12 group12 mankind pharma

MANKIND PHARMA The Growth Strategy

Submitted By:

Abinash Behera (2012PGPRAK006)

Aniket Harsh (2012PGPRAK011)

Anoop Kumar S (2012PGPRAK014)

MANKIND PHARMA April 23,

2013

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Table of Contents The Indian Pharmaceutical Market .......................................................................................................... 3

Mankind: Profile and Portfolio ................................................................................................................. 3

Mission and Vision................................................................................................................................... 5

Competitive Advantage ........................................................................................................................... 5

Customer Management ........................................................................................................................... 6

Growth Story ........................................................................................................................................... 8

INTERNATIONALIZATION ..................................................................................................................... 9

Portfolio Analysis ................................................................................................................................... 10

The way ahead: 5 Forces analysis and Future plans ............................................................................... 11

Tackling Challenges and moving forward ............................................................................................... 13

Exhibits ................................................................................................................................................. 14

Exhibit 1: Divisions and their products ............................................................................................... 14

Exhibit 2: The timeline ....................................................................................................................... 15

Exhibit 3: Number of Medical Representatives across industry .......................................................... 16

Exhibit 4: Prices of Mankind Drugs as compared to Competitors ........................................................ 16

Exhibit 5: Financial Overview ............................................................................................................. 17

Exhibit 6: OTC and Personal Care brands of Mankind that have celebrities in advertisements ............ 18

References ............................................................................................................................................ 19


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The Indian Pharmaceutical Market India is one of the fastest-growing pharmaceutical markets in the world, and its market size has

nearly doubled since 2005. It is expected to touch US$ 74 billion in sales from the current US$

11 billion in the coming years at an expected growth rate of 13-14% and by 2013 establish its

presence among the world’s leading 5 emergence markets. Currently, Indian pharmaceutical

market ranks third in the world in terms of volume and 10thin terms of value. The total

domestic market capitalization of Pharma Industry is US$ 10.88 billion.

Low cost of skilled manpower, increasing sales of generic medicine, greater penetration of rural

market and innovation are some of the main factors fueling this growth. Another reason for the

rapid growth of the Indian pharma industry is the increased level of disposable income which

has brought about a drastic change in eating habits & lifestyle. Because of such lifestyle

changes, there has been a progressive growth in lifestyle related diseases like- Cardiovascular

disorders, diabetes, respiratory tract infections, neuropsychiatry disorders as well infective

diseases etc. According to the Department of Pharmaceuticals, the Indian pharmaceutical

industry employs about 340,000 people and an estimated 400,000 doctors and 300,000

chemists. Based on the pharmaceutical customer base, the Indian Active Pharmaceutical

Ingredients (API) manufacturing segment can be divided into two sectors – Innovative or

branded and generic or unbranded. Innovative or branded sector companies seek to develop

new and innovative APIs. Generic companies mass produce APIs for popular/common drugs for

which patents have expired. Most pharma companies run a hybrid structure wherein Generic

section is the cash cow, financing research and development for the innovative products.

Mankind: Profile and Portfolio

Mankind was founded by ex-employee of Lupin, Ramesh Juneja and his brother Rajeev

Juneja with an aim to provide quality medicines at economical prices. It was started with a


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capital of Rs.50 lakh and 25 medical representatives. Both the founders had accumulated rich

experience working as MRs for Lupin. Mankind started with medicines and has recently

diversified to include Veterinary medicines, pet care and FMCG products in its portfolio. With

its innovative marketing strategies, Mankind now ranks as the eight largest drug manufacturer

in India, ahead of Lupin pharma with a turnover of 2500 Cr. It has successfully maintained a

strong growth rate of 16-18% against the industry average of 13-14% (See Exhibit 5).

Mankind group markets its products through the following divisions catering to various

therapeutic segments (see Exhibit 1):

Mankind Pharma- The parent division founded in 1995.

Discovery Mankind- founded in 2003 for offering a range of products to treat diabetic

metabolic disorders, antibiotics, GI drugs, anti-fungals etc.

Lifestar Pharma- incepted in 2005 for providing comprehensive range of products relating to

ophthalmic, dermal segment and antibacterials.

Special Mankind- launched in the year 2005, marked Mankind’s venture into the OTC segment.

This division is pioneer in launching of premium category condoms, toothbrush, sanitary

napkins & sweeteners.

Future Mankind- started in 2007 this division caters to the needs of acute and chronic

segments like orthopedic and GI

Magnet Labs- Acquired in 2007 to establish presence in the antipsychotic segment

Vet Mankind- Established in 2007 to serve the Indian animal husbandry needs. Products

include antibacterial, nutritional, reproductive, NSAIDS and digestive categories.

Pet Mankind- Catering exclusively to basic care, health and hygiene and nutritional needs of

pets.

Offering analysis


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• Acute Drugs- for diseases that usually last for a short duration like anti-infectives,

painkillers or analgesics.

• Chronic Drugs- for diseases that are recurring in nature and include lifestyle diseases

like anti-diabetics, cardiovascular, cancer etc.

• Over the counter (OTC)- are medicines (or medical kits) sold directly to a consumer

without a prescription from a healthcare professional, as compared to prescription

drugs, which may be sold only to consumers possessing a valid prescription. E.g.

PregaNews, Unwanted-72

• Veterinary Products- Medicines catering to diseases in pet animals. E.g.- Petogas,

NewForce pet etc.

• FMCG/Personal Care- Personal care products. E.g.- ‘Adiction’ deodorant and ‘Don’t

Worry’ sanitary napkins.

Mission and Vision

Mission: To support a healthy & active lifestyle through our broad portfolio of Pharma, OTC &

FMCG products.

Vision: To be the No.1 Pharma Company of India by 2015.

Competitive Advantage Mankind is a cost leader. High economic disparity in India spawns a huge chunk of population

that is disadvantaged due to its limited purchasing power. This segment is highly price sensitive

and concentrated mainly in the rural and semi urban pockets. This sensitivity to price is also a

function of whether the drug category is acute or chronic. People are highly price sensitive

when it comes to acute drugs but the trend reverses when it comes to drugs for chronic

diseases. This led Mankind to focus their operations in rural market with acute drugs. Unlike


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their competitor they have followed a bottom up approach. They have started targeting rural

areas first then tier 2 and tier 3 cities in 2002 and later they entered tier 1 cities in 2006. The

target segment for Mankind has been the populace living in the rural and semi urban areas that

does not have the purchasing power to afford costly medicines manufactured by other

pharmaceuticals (See Exhibit 4).

The Juneja brothers themselves started off as Medical Representatives and as such there is a

distinctive leaning towards marketing side of the business to drive sales at Mankind. The

company has a very aggressive marketing policy employing a very comprehensive customer

engagement model. 80% of staff is MR which allows Mankind effectively to employ the Push

strategy to drive sales (see Exhibit 3). Their MRs are amongst the most highly paid in the

industry. The compensation system has a low fixed component. The variable component is a

function of sales and there are no targets. This means that there is no cap or upper limit to the

salary a MR can earn if he is good at selling.

Customer Management The sales of a particular brand of medicine for a region are a function of the number of doctors

prescribing it and availability of that brand in the drug shops of the region. Hence primary

customers for any pharmaceutical company are- Physicians and retail chemists.

Mankind employs the push strategy to drive its sales. The following are the main features of its

customer engagement strategy:

Physicians:

• Selection of the doctors through a detailed survey.

• Positioning of the medicines depends upon the prescribing habits of the physicians.

• Detailing the products to the doctors & providing free drug samples.

• Regular follow-ups with the doctors to check on continuity of prescriptions flow &

availability.


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• Providing informative literatures relating to current developments in the medicines.

• Health check-up camps for the doctors & patients.

• Gifts for incentivizing and showing appreciation.

Depending upon the volume of prescriptions (prescriptions where in Mankind brands have

been prescribed), physicians in any given region are categorized as:

VIP- (Very Important Physicians) Highest levels of sales are through them

IP- (Important Physicians) they generate medium levels of sales.

GP- (General Physicians) their contribution towards Mankind sales is low.

Every month, company distributes gifts to each of their listed physicians. The gifts planned are

as per the volume of business given by the physicians and accordingly, the value of gifts differs.

Hence physicians are motivated to move from lower category of physicians to the higher

category. This was most effective in the rural and semi-urban areas as the physicians there had

traditionally been ignored by the top pharma companies. To touch the untouched customers

was the brilliant tactical move that spurred Mankind’s growth.

Retail Chemists:

• Giving discount on purchase to the retail chemists. Largest discounts in the industry are

provided by Mankind.

• Giving gifts on purchase.

• Facility of expiry products reimbursement.

• Frequent visits by MRs to ensure availability of medicines and monitor the levels of

sales.

Consumer engagement (for OTC and FMCG products)

In keeping with their reputation of being aggressive marketers, Mankind ensured high

availability of their OTC products in drug stores through their strong MR network and spent


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millions in advertizing through visual media. Their ads are humorous, catchy and even a 'feast

for the eyes'. Mankind ensures that its OTC products stand out in a crowded market by using

famous celebrities in the ads (See Exhibit 6).

They were the first ones to advertize pregnancy testing kits on television. The advertizing

strategy has worked wonders for Mankind’s OTC division in terms of making it the most

recognized brand where OTC market is concerned. Their investment in advertizing has directly

translated to increased sales.

This however is not true for their personal care and FMCG products. They were able to leverage

their existing channels in promoting and distributing the OTC products. But this channel proved

inadequate when it came to personal care and FMCG products. The presence of well

established brands and large players with extensive channel reach make survival in this market

difficult and costly. As a result Mankind is suffering losses and might look to divest this portfolio

in future.

Growth Story Mankind started its growth organically but later on it adopted the inorganic model for fueling

fast paced growth (see Exhibit 2). They are mainly focused on being a high volume player in the

market which can offset their low price strategy.

During mid 1990s when they had just started, the entire manufacturing was outsourced

as they did not have the high capital required to set up their own manufacturing plant. Later in

the late 1990s they set up their first manufacturing plant in Paonta Sahib, Himachal Pradesh.

Currently they have around 13 manufacturing plant which manufactures around 95% of their

drugs. In absence of any competitor in low price segment they managed to occupy the market

quickly. Due to the price wars they were operating at very low margins. Sustaining at that

margin was very difficult for them. So they decided to diversify their business and entered into

high margin segments like OTC, personal care and Vet-nary market in 2007.

In 2007 the domestic OTC market was worth Rs 5500 crore and was growing at 20-25

percent. They entered this market through their Special Mankind division. Their mainstay


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brands in this segment are Manforce condoms, Unwanted 72-emergency contraceptives and

Prega-news home pregnancy kits. Though high margin was the main motive behind the entry

into the OTC segment, it also resulted in recognition of Mankind as a brand. In the same year

they also entered the veterinary segment with the launch of the division called Vet Mankind.

For both of this new segment they used their existing distribution channel which eased their

entry into the new segment. They also made inroads into the 1000 crore antipsychotic segment

through their Future Mankind division. To further increase their market share in this segment

they also acquired Magnet Labs.

The rapid expansion and diversification in 2007 was funded by Gujarat based ChrysCapital

through a private placement of $24million. In 2008 for a further infusion of funds into the

business, Mankind had planned for an IPO. It was later abandoned because of the 2008

recession. In 2010 Mankind acquired Longifene,A former brand of UCB Pharma.

INTERNATIONALIZATION

They have started exporting to third world countries like Vietnam, Philippines, Srilanka and

Rwanda. The main rationale behind choosing third world countries is their surging economy

and demographic similarities with the market in India in terms of low purchasing power of a

large section of the population.


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Portfolio Analysis

We shall employ the BCG matrix to conduct portfolio analysis for Mankind:-

1. Acute Drugs: The market growth rate is low but relative market share is high. This

makes acute drugs CASH COWS that will generate steady cash flow to finance the

growth of Mankind.

2. OTC and Veterinary Products- High market growth rate combined with high market

share make OTC and Veterinary Products the STAR. Mankind will reap rich dividend by

continuing to invest in them.

3. Chronic Drugs: are the Question marks. Mankind doesn’t have a substantial market

share in this segment, but if successful it can emerge a star. So Mankind should look at

shifting focus to chronic drugs and continue investing in them.

4. FMCG and personal care products: These are the DOGS in the portfolio that Mankind

should look to divest. The presence of large players in this segment and lack of adequate

channels make it a low growth and low market share segment which should be either

milked for all its worth or divested outright.


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The way ahead: 5 Forces analysis and Future plans Competing on price is not a sustainable strategy. Therefore, Mankind has over the years

diversified into higher-growth, higher-margin over the counter and fast-moving consumer

products categories. Currently, Mankind pharma is focused on pushing its new products,

particularly in segments such as dermatology and cardiology and gain market share to become

the number one company in the India by 2015. This is being done as part of its move to bolster

its position in the chronic drugs segment and make a subsequent shift from the low cost high

volume segment to the higher margin segments.

They are planning to launch 15-16 products in the chronic therapy segment this financial year.

Introducing drugs in the chronic segment would not only contribute to the turnover, but also

boost net profit. In their FMCG venture, new products have been introduced recently. However

the logical course of action would probably be to divest it down the line.


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CIPLA,RANBAXY,GSK,DR.REDDY'S

ETC ARE PLAYING IN THE MAINSTREAM THAT WILL MAKE

MANKIND'S ENTRY INTO CHRONIC DRUGS MORE COMPETITIVE.

CURRENT LOW PRICE SEGMENTS DOMINATED BY MANKIND ARE

ALSO BEING TARGETED BY THESE BIG COMPANIES,WHICH WILL ALSO

POSE THREAT

NEW ENTRANT IN THE LOW PRICE SEGMENT WITH

AGGRESSIVE STRATEGY COULD

WIPE OUT MANKIND,UNLESS MOVE TO OTHER

SECTOR IS INITIATED

CONCENTRATING ON THE LOW PRICE

SEGMENTS THESE YEARS

THE POWER OF BUYERS IS HIGH.

MOVE TO CHRONIC SEGMENT,OTCS

,FMCG

WILL CUSHION THE EFFECT OF THIS TO

AN EXTENT

PATENT PROTECTION AND R&D COULD HELP

IN AVOIDING THREAT FROM

SUBSTITUTES.BUT IT STILL NEEDS TO

IMPROVE PRODUCTS AND PATENTS AND RESEARCH TO

MAINTAIN THE ADVANTAGE

MANKIND WITH ITS HIGH GROWTH

LOW PRICE AND HEFTY PROFIT MARGINS, CAN

CONTROL SUPPLIERS. SO FORCE FROM

SUPPLIERS IS LESS

PORTERS FIVE

FORCES


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Tackling Challenges and moving forward As a part of the growth focus Mankind has realized that the transition to selling products in the

chronic segment in big cities needs more effective strategy compared to the price-penetration

strategy in order to acquire a significant market share. Mankind needs to establish a leadership

position in the cardiac, diabetes and CNS (central nervous system) therapeutic segments before

it can hope to reach the top of Pharma sector.

Mankind is already present in 90 % of the total market product portfolio. Therefore to launch

new drugs it will need to come up with new dosage forms and delivery systems — in much the

way its competitors are doing. Current pricing strategy of Mankind leaves it vulnerable to

attacks from other emerging low price players in the market. Entry of an ultra low cost player

can wipe out Mankind from the market. Another major concern is that there is a perception in

the metros and tier 1 cities that Mankind's drugs are of poor quality simply because they are

cheap. For an aggressive entry in to chronic segment, mankind needs a face change. To

substantiate the quality of their products a modern R&D facility needs to be setup or strategic

alliances should be made. The initial investment is huge and so is promise of high profit

margins. It will also enhance Mankind’s image as a legitimate and credible competitor in the

global pharmaceutical arena.


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Exhibits

Exhibit 1: Divisions and their products

Division Products

Discovery

Mankind

Diabetic, metabolic disorders, antibiotics, gastro-intestinal and

antifungal

Lifestar

Pharma*

Ophthalmic, dermal and antibacterial.

Special

Mankind

Premium category condoms, sanitary napkins, body spray,

pregnancy test kit, toothbrush and sweeteners

Future

Mankind

Orthopedic and gastro-intestinal

Magnet Labs* Antipsychotic segment

Vet Mankind Veterinary products like antibacterial, nutritional, reproductive,

NSAIDS and digestive categories.

Pet Mankind Exclusively to the Basic Care, Health, Hygiene and Nutritional

needs of the Pets


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Exhibit 2: The timeline

1995•Inception of Mankind Pharma

2002

•Company established its operations all over India

•Launched new division Discovery mankind for the segments- Diabetic,, Metabolic Disorders, Antibiotics, Gastro-intestinal, Anti-fungals.

2005

•Celebrated “Decade of trust” with medical fraternity

•Launched LifestarPharma for the segments - Ophthalmic, Dermal, Gynae ,Antibacterials

•Won the Indian Express Pharma Pulse Award for “Overall Best Performance”.

2006

•Established Injectable state-of-the-art unit at Paonta sahib (HP)

•Group Turnover surged up to Rs.512 Cr.

2007

•Launched Future Mankind, Special Mankind and VetMankind to cater to various therapeutic segments.

•Acquired Magnet Labs Pvt. Ltd. and marked a marketing presence in antipsychotic segment.

•Chrys capital became an investor partner.

2007

contd...

•Bestowed as "Emerging Company of the year" at Pharma Excellence Award.

•Teamed up with Roche Diagnostic for the marketing of product ’Accuchek Go’

2008

•Certified as the Most Potential & “A” Grade Vendor in Supply Chain Management by HINDALCO (Aditya Birla Group)

•Achieved 35% growth

•Ranked 1st all over India as per Prescription/Doctor/Month

2008

contd...

•Ranked 4th in India & 3rd in North India as per IMS Health &Stockiest Secondary Audit 21 brands at No. 1 position & 14 brands atNo. 2 Position as per IMS Health &Stockiest Secondary Audit 53 brands in top 5 positions as per IMS Health &Stockiest Secondary Audit

2010

•Successfully launched OTC products like Prega News, Adiction, Unwanted-72, Don't Worry

•Spread the wings globally with the launch of Mankind in Sri Lanka

•Established State-of-Art manufacturing Unit for liquid dosages & tablets

2011

•Incorporation of the R&D and Learning & Development Centre – Mankind Research Centre in NCR.

•Successfully acquired Longifene – the former brand of UCB Belgium

•Launched a new division “Pet Mankind” for the basic Care, Health, Hygiene and Nutritional needs of Pets

2011

contd...

•A step towards sustainability with the instigation of the CSR wing of Mankind – Care Mankind

•Crossed the threshold with the launch of Kustody Deodorant for women. Retained No. 1 rank in the number of prescriptions as per the P/D/M Audit Ranked 8th largest Pharmaceutical Company of India as per IMS-Health. 60 brands placed amongst the Top 5 brands with 28 brands at no.1 and 22 brands at no.2 position

2012

•Aim to enter the league of top five in the pharma space in the next three years and reach thetop slot by 2016.

•They plan to add another 1000 people to their workforce within two years as a part of their new growth orientation.


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Exhibit 3: Number of Medical Representatives across industry

Exhibit 4: Prices of Mankind Drugs as compared to Competitors

Composition Name Mankind Price Ranbaxy Price Cipla Price

Glaxo’s Augmentin Moxikind-CV 12.5 Moxclav 40.3 Advent 18

Cetirizine Cope (30 Ml) 16.6

Okacet (30Ml) 22

Amoxicillin (80mg) |

Clavulanic Acid

(11.4mg/1mL)

Moxikind Cv

Drop

37 Enhancin

Drops (10Ml)

(1) 46.2

Ofloxacin Zenflox Plus 40

Zanocin (60

Ml) 69.9

Amoxicillin (250 mg)

| Clavulanic Acid (125

mg.)

Moxikind Cv

3(75Mg)10.5

10.5 Mox Clav

3(75Mg)

(10S) 33.53

Pantoprazole (40 mg) PANTAKIND tab 2.99

PANTOSEC D

tab 7.13

Cefixime (200 mg) Mahacef (200Mg) 6.5

OMNIX CV tab 20.95

Telmisartan Telmikind (20

Mg) 1.35

TELEACT

tab 3.68

CRESAR AM

tab 3

70006000

4500 4400

Number of MR

Number of MR across industry

Mankind Cipla Ranbaxy Cadila


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Exhibit 5: Financial Overview

Starting with a turnover of Rs 3.8Cr in 1995 Mankind Pharma is expected to touch Rs

2500 Cr in 2013.

Mankind Pharmaceutical business has been growing at about 18 per cent annually,

compared with the industry average of 13-14 percent. But the profit margin is growing

at 12-13% compared with industry average of 20%.

They operate at profit margin of 13-14% compared to industry average of about 25-30%.

0

500

1000

1500

2000

2500

3000

2007 2008 2009 2010 2011 2012 2013

Mankind Pharma Sales


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Exhibit 6: OTC and Personal Care brands of Mankind that have celebrities in

advertisements

Product

Category Brand Ambassador

Manforce Condoms OTC Sunny Leone

Prega News (Pregnancy testing kit) OTC Shilpa Shetty

Adiction Deodrant Personal Care Neil Nitin Mukesh

Kaloree 1 (sweetener) OTC Wasim Akram

Kustody (Face wash) Personal Care Genelia D’Souza

Kustody (deodorant) Personal Care Bipasha Basu

Gas-O-Fast (for gastric relief) OTC Satish Shah


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References

IIM Indore Library

http://www.maheshsundar.com/Home/maheshsundarcom---pharma-updates/the-upsurge-of-mankind-

pharma

http://articles.economictimes.indiatimes.com/2012-06-13/news/32215529_1_mankind-pharma-

pharma-majors-consumer-brands

http://www.business-standard.com/article/companies/mankind-pharma-set-to-tap-core-drugs-market-

112071900076_1.html

http://buildingpharmabrands.com/tag/mankind-pharma/

http://www.financialexpress.com/news/advertising-sans-barriers/677381

(http://www.mankindpharma.com/about.php#

(http://www.business-standard.com/article/companies/mankind-pharma-set-to-tap-core-drugs-market-

112071900076_1.html

(http://www.dnaindia.com/money/report_mankind-on-a-mission-to-rewrite-the-pharma-story_1114225

http://business.outlookindia.com/article.aspx?279322

http://www.finance-trading-times.com/2008/04/mankind-pharma-ipo.html

http://www.youtube.com

http://www.maheshsundar.com/Home/maheshsundarcom---pharma-updates/the-upsurge-of-mankind-pharma

http://www.maheshsundar.com/Home/maheshsundarcom---pharma-updates/the-upsurge-of-mankind-pharma

http://articles.economictimes.indiatimes.com/2012-06-13/news/32215529_1_mankind-pharma-pharma-majors-consumer-brands

http://articles.economictimes.indiatimes.com/2012-06-13/news/32215529_1_mankind-pharma-pharma-majors-consumer-brands

http://www.business-standard.com/article/companies/mankind-pharma-set-to-tap-core-drugs-market-112071900076_1.html


http://buildingpharmabrands.com/tag/mankind-pharma/

http://www.financialexpress.com/news/advertising-sans-barriers/677381

http://www.mankindpharma.com/about.php



http://www.dnaindia.com/money/report_mankind-on-a-mission-to-rewrite-the-pharma-story_1114225

http://business.outlookindia.com/article.aspx?279322

http://www.finance-trading-times.com/2008/04/mankind-pharma-ipo.html

http://www.youtube.com/

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