Group Members

Ankita Agarwal (61)

Aditi Gupta (71)

Richa Ladha (81)

Deepak Patil (91)

Pinkesh Shah (101)

Shweta Singh (111)

ECONOMIC ANALYSISOF

Content 1. Pharma Industry 2. Overview

3. Type of firm

4. Process of production

5. Demand and its attributes

6. Type of demand

7. Demand curve

8. Sources of Supply

9. Supply & its determinants

10. Cost & cost analysis

11. Break even point analysis

12. Price elasticity

13. Market & competitors

14. SWOT Analysis

15. Conclusion

Pharma Industry

• The domestic pharma industry continues to grow at 11-12 %

• The global average of five-six percent• Vision 2015 statement indicates an 18 percent

plus CAGR for the Pharma sector• Indian pharma industry is 4th largest in volume

terms& 13th in value terms (US Dollar)

Overview

• Manufacturing of Pharmaceutical specialties• Established in year 2000• Core product is Aspirin tablet & its brand name is

Curepill• Liquid orals, Ointments and Capsules • Maintaining high quality norms at all levels are

strictly adhered• Domestic and overseas clients• Competitive pricing policies and service oriented

approach.

cont…

• The factory is Located at Vasai (E), it’s an Industrial Complex

• Qualifies all the norms and regulations of hygiene as space as set forth by the –Schedule M of Drugs & Cosmetics Act, 1940–GMP norms set by the FDA

• Mr. Gopal T. Agrawal, Managing Director of the Company

Firm

Pharmalink Pvt. Ltd.• Owned by Mr. Gopal Agrawal• Sole Proprietorship Firm • Sources of Finance: Self-financed

Process of Production Dry-granulation or slugging Weighing • The Acetylsalicylic Acid, the active ingredient, and the lubricant are

weighed separately. Mixing • Mixing is done in Glen Mixer. The mixture is then mechanically separated

into units which are called slugs. Dry screening • Small batches of slugs are forced through a mesh screen by a hand-held

stainless steel spatula.• Large batches are filtered through Fitzpatrick mill. Compression • The mixture is compressed into tablets• Single-punch machine (for small batches) • Rotary tablet machine (for large scale production).

Attributes of Demand

• Demand is relatively inelastic• Price : Rs.15 (for 10 strips*10 tablets)• Point of time • Market: African countries like Nigeria, Ghana• Quantity: bulk

Type of Demand

• Direct Demand :

– Curepill is a direct demand because commodity demanded by

final consumer are for their own sake.

• Complementary demand:

– it creates a complementary demand for Vitamin B capsules.

• Competing demand:

– Aspirin has a substitute i.e. Paracetamol

10

Demand Curve

Quantity

Ep<1

Price

Quantity Price

100.03 15

100 16

D

D

Y

X100.03 100

15

16

Sources of Supply

It receives its raw materials from:• Nectar Drug, Mumbai• Primer Drug House, Mumbai

Supply and its Determinants• Price of commodity: Rs 15• Cost of production: Rs 10• State of technology • Number of firms : many firms in the market but

has two main competitors.• Government policies : FDA approval and license.

Cost• DIRECT COST–DIRECT MATERIAL : Acetyl Salicylic Acid–DIRECT LABOUR –DIRECT EXPENSES

• INDIRECT COST – INDIRECT MATERIAL– INDIRECT LABOUR– INDIRECT EXPENSES

Cost AnalysisCost per month

(Rs.)Average Cost per

unit (Rs.)

Total Fixed Cost (TFC) 1,50,000 7.5 (AFC)

Total Variable Cost (TVC)

50,000 2.5 (AVC)

Total Cost (TFC + TVC)

2,00,000 10 (AC)

Total Sales 3,00,000 15

Net Profit 1,00,000 5

Contribution (sales-VC)

2,50,000 12.5

15

Short run Cost Curves

Note: The numbers presented are in multiples of 1000s

TC

TFC

TVC

Output

Tot

al C

ost

xo

yTVC

TFC 150

50

200

300

Break-Even Point Analysis

BEP= TFC/(P-AVC) = 7.5/(5-2.5) = 3

TFC

TC 10

TR 15

Profit 5

Loss

Output/ Sales

XO

Y

Tot

al R

even

ue/

cos

t

Break even Point

Variable Cost 2.5

Fixed Cost 7.5

BB

Price Elasticity•Price elasticity shows responsiveness to demand to change in price.Price Elasticity (Ep)

Ep= (Q2-Q1)/Q1

(P2-P1)/P1

= (100.03-100)/100 (16-15)/15

=0.0045Since Ep<1, it is relatively inelastic.

Market & its CompetitorsZenufa

Medicine: ZENASPIRIN 300 ASPIRIN 300 MG

SHALINA LABORATORIES PVT. LTD

• Shalina successfully develop and market innovative products.

• They produce DIAZEPAM

Pharmalink laboratories works in PERFECTLY COMPETITIVE MARKET

SWOT Analysis

Strengths

1. Low cost of production.2. Increasing liberalization of government policies.

Opportunities

1. Aging of the world population.2. Growing incomes.3. Growing attention for health.4. New diagnoses and new social diseases.5.Spreading attitude for soft medication (OTC drugs).

Weakness

1. Lack of experience to exploit efficiently the new patent regime.2.Very low key R&D.3.Low share of India in World Pharmaceutical Production (1.2% of world production but having 16.1% of world's population).4.Very low level of Biotechnology in India and also for New Drug Discovery Systems.

• Stricter registration procedures.• High entry cost in newer markets.• High cost of sales and marketing.• Competition, particularly from generic products

Threats

Conclusion

•Pharmalink Laboratories has a good hold over foreign market.

•It has reached a stage where it is making a adequate profit.

•Works in relatively competitive market.

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