assignment for project planning-1
TRANSCRIPT
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ASSIGNMENT FOR PROJECT PLANNING &CONTROLGuide: Prof. Deepak Danak
Prepared By:FALGUN BHATT 082125GUNJAN SHAH 082126
MBA PT (2008-11)
INSTITUTE OF MANAGEMENT, NIRMA
UNIVERSITY [This project report is prepared for
pharmaceutical Unit.]
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D E C L A R A T I O N
This is to certify that we, the undersigned, have prepared this report for the submission to
be made under Group Assignment component of assessment for the Project Planning and
Control course. It has not been submitted, nor will it be submitted, for assessment by any
of us or anybody else for any other course.
1) Signature:
Name: Falgun Bhatt
Roll No. 082125
2) Signature:
Name: Gunjan Shah
Roll No. 082126
Date: September 3, 2010
Thanks
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OBJECTIVE: TO ESTABLISH A PHARMACEUTICAL UNIT FORINTERMEDIATES & MEDICINES
INDUSTRY: PHARMACEUTICAL
PRODUCT: INTERMEDIATES / MEDICINES
GENERATION AND SCREENING OF PROJECT IDEAS:
GENERATION OF IDEAS:
(1)SWOT ANALYSIS: Strengths
1. Low cost of production.
2. Large pool of installed capacities3. Efficient technologies for large number of Generics.
4. Large pool of skilled technical manpower.
5. Increasing liberalization of government policies.
Opportunities1. Aging of the world population.
2. Growing incomes.
3. Growing attention for health.
4. New diagnoses and new social diseases.
5. Spreading prophylactic approaches.
6. Saturation point of market is far away.
7. New therapy approaches.
8. New delivery systems.
9. Spreading attitude for soft medication (OTC drugs).
10. Spreading use of Generic Drugs.
11. Globalization
12. Easier international trading.
13. New markets are opening.
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Weakness1. Fragmentation of installed capacities.
2. Low technology level of Capital Goods of this section.
3. Non-availability of major intermediaries for bulk drugs.
4. Lack of experience to exploit efficiently the new patent regime.
5. Very low key R&D.
6. Low share of India in World Pharmaceutical Production (1.2% of world
production but having 16.1% of worlds population).
7. Very low level of Biotechnology in India and also for New Drug Discovery
Systems.
8. Lack of experience in International Trade.
9. Low level of strategic planning for future and also for technology forecasting.
Threats1. Containment of rising health-care cost.
2. High Cost of discovering new products and fewer discoveries.
3. Stricter registration procedures.
4. High entry cost in newer markets.
5. High cost of sales and marketing.6. Competition, particularly from generic products.
7. More potential new drugs and more efficient therapies.
8. Switching over form process patent to product patent
(2)CLEAR ARTICULATION OF OBJECTIVE: The main driving for this project generation is that the pharmaceutical is the
evergreen field as it directly affects the human kind.
Direct medicine manufacturing is more difficult to enter in market both in termsof distribution and brand management and also to develop trust.
So we feel that it will be better to go for low cost, good quality intermediates tothe medicine manufacturers.
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(3)BUSINESS ENVIRONMENT: The Indian Pharmaceutical Industry today is in the front rank of Indias science
based industries with wide ranging capabilities in the complex field of drug
manufacture and technology. A highly organized sector, the Indian Pharma
Industry is estimated to be worth $ 4.5 billion, growing at about 8 to 9 percent
annually. It ranks very high in the third world, in terms of technology, quality and
range of medicines manufactured. From simple headache pills to sophisticated
antibiotics and complex cardiac compounds, almost every type of medicine is
now made indigenously.
Playing a key role in promoting and sustaining development in the vital field ofmedicines, Indian Pharma Industry boasts of quality producers and many units
approved by regulatory authorities in USA and UK. International companies
associated with this sector have stimulated, assisted and spearheaded this dynamic
development in the past 53 years and helped to put India on the pharmaceutical
map of the world.
The Indian Pharmaceutical sector is highly fragmented with more than 20,000registered units. It has expanded drastically in the last two decades. The leading250 pharmaceutical companies control 70% of the market with market leader
holding nearly 7% of the market share. It is an extremely fragmented market with
severe price competition and government price control.
The pharmaceutical industry in India meets around 70% of the country's demandfor bulk drugs, drug intermediates, pharmaceutical formulations, chemicals,
tablets, capsules, orals and injectibles. There are about 250 large units and about
8000 Small Scale Units, which form the core of the pharmaceutical industry in
India (including 5 Central Public Sector Units). These units produce the complete
range of pharmaceutical formulations, i.e., medicines ready for consumption by
patients and about 350 bulk drugs, i.e., chemicals having therapeutic value and
used for production of pharmaceutical formulations.
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Following the de-licensing of the pharmaceutical industry, industrial licensing formost of the drugs and pharmaceutical products has been done away with.
Manufacturers are free to produce any drug duly approved by the Drug Control
Authority. Technologically strong and totally self-reliant, the pharmaceutical
industry in India has low costs of production, low R&D costs, innovative
scientific manpower, strength of national laboratories and an increasing balance
of trade. The Pharmaceutical Industry, with its rich scientific talents and research
capabilities, supported by Intellectual Property Protection regime is well set to
take on the international market.
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MARKET AND DEMAND ANALYSIS:
INTERNATIONAL MARKET:
The global pharmaceutical market will grow 4-6% this year and rise 5-8%annually to 2014, when it will be worth $1.1 trillion, says market researcher IMS
Health.
In its market report, IMS Health said the size of the global market forpharmaceuticals is expected to grow nearly $300 billion over the next five years.
The 5-8 percent compound annual growth rate during this period reflects the
impact of leading products losing patent protection in developed markets, as well
as strong overall growth in the worlds emerging countries. These conclusions are
included in the latest release of IMS Market Prognosis.
The report said global pharmaceutical sales growth of 4-6 percent is expected thisyear, consistent with IMSs prior forecast. In 2009, the market grew 7 percent to
$837 billion, compared with a 4.8 percent growth rate in 2008.
Patient demand for pharmaceuticals will remain robust, despite the ongoingeffects of the economic downturn being felt in many parts of the world, said
IMSs Murray Aitken, senior vice president, Healthcare Insight. In developed
markets with publicly funded healthcare plans, pressure by payers to curb drug
spending growth will only intensify, but that will be more than offset by the
ongoing, rapid expansion of demand in the pharmerging markets. Net growth over
the next five years is expected to be strong even as the industry faces the peak
years of patent expiries for innovative drugs introduced 10 - 15 years ago and
subsequent entry of lower-cost generic alternatives.
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INDIAN MARKET:
According to a Yes Bank report titled 'Indian Pharmaceutical Industry: Vision2015', the Indian pharmacy industry is expected to grow at a Compound Annual
Growth Rate (CAGR) of 14.2 percent to $50 billion by 2015-16.
According to the report, the expected growth rate for exports driven by contractresearch was estimated at a CAGR of 16.2 percent, while the domestic market
growth rate was at 12.50 percent. As an emerging contract research and clinical
trial base, India is expected to garner a significant share of the market. It is
expected that Indian contract research industry to be worth $3 bn by 2015.
The report mentions that the domestic formulation industry grew byapproximately 14 percent per annum over the last six years to reach $8.4 bn in
2007, a growth rate much higher than that of the global pharmaceutical market.
The formulation market is expected to continue its robust growth, touching $21.5
bn by the year 2015. the report also stated that till 2015, the chronic disease
segment will drive industry demand. Also, MNCs will increase their presence in
the domestic formulation market with 35 percent market share. Branded generics
will continue to dominate, while patent protected products are likely to constitute
eight percent of the market within this time frame.
The report on the basis of international growth trends, expects the global genericmarket to grow to $140-150 bn by 2015 and Indian formulation exports to reach
$12-13 bn by 2015. The cost benefits in the pharmaceutical market are expected
to shift from producers to consumers, resulting in lower margins in the generic
business.
The global bulk drug industry has also undergone development as a result ofgrowth in formulation. With a growth rate of 11 percent over the past five years,
the industry reached $90 bn in 2007. The Indian bulk drug exports have reached$4.2 bn in 2007-08 from $1.2 bn in 2002. The report estimated the Indian bulk
drug exports to reach $12.5 bn by 2015.
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BACKGROUND ANALYSIS OF THE INDIAN PHARMACEUTICAL SECTOR:
The Indian pharmaceutical industry was estimated at US $16.6 billion (including exports)
in2007-08. Indias healthcare spending is around 6 per cent of the total gross domestic product
(GDP) of India
Highly fragmented formulation industry:
The formulations industry is highly fragmented both in terms of the number of manufacturers as
well as the variety of products. There are about 300-400 units in the organized sector and
around15,000 units in the unorganized (small scale) sector that form the core of the industry. The
industry has a wide range of over 100,000 drugs spanning across various therapeutic categories.
Supremacy of the Indian companies vis--vis multinational players:
Indian companies dominate the formulations market as seven out of the top ten players
areIndian. The formulation market in India is quite concentrated. The top five formulations
companies, Cipla, Ranbaxy, GlaxoSmithKline, Cadila Healthcare, and Piramal Healthcare,
accounted for about 22.3 per cent of the domestic formulation market in 2007-08. The market is
concentrated at the top with top 10 players controlling about 36%of the total formulaton sales.
Concentrated Manufacturing:
In geographical terms manufacturing operations are largely concentrated in Maharashtra, Andhra
Pradesh.However, many players have shifted their manufacturing bases to excise free zones like
Baddi (Himachal Pradesh) and Haridwar (Uttaranchal) due to the shift towards MRP based
excise duty levy. In 2006, the per capita annual drug expenditure in India was around $3 as
compared to $412 and$191 in Japan and US, respectively. This can be attributed to the huge
population in India and the declining health expenditure as a percentage of total government
expenditure in India.
Unlike US, India does not have a strong health insurance sector to share the healthcare cost
withthe patient. Consumers do not directly pay for their medicines in the US. Government
organizations and managed care organizations reimburse most of the drug cost to the patients
inUS. However, with rising drug expenditure, patients are being asked to share a large portion of
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their expenses. This has prompted consumers to choose generic drugs and forego the use of high
priced branded drugs.
Porters Five Force Model for Pharmaceutical Industry:
1) Barriers to entry: Licensing, distribution network, patents, plant approval by regulatoryAuthority.
2) Bargaining power of suppliers: Distributors are increasingly pushing generic productsin a bidto earn higher margins.
3) Bargaining power of customers: High, a fragmented industry has ensured that there iswidespread competition in almost all product segments. (Currently also protected by theD
PCOi.e Drug price Control Order).
4) Competition: High Very fragmented industry with the top 300 (of 24,000 manufacturingunits)players accounting for 85% of sales value. Consolidation is likely to intensify.
5) Supply: Higher for traditional therapeutic segments, which are typical of a developingmarket.
6) Relatively lower for lifestyle segment.7) Demand: Very high for certain therapeutic segments. Will change as life expectancy,
literacyincreases.
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TECHNICAL ANALYSIS:
MANUFACTURING PROCESS:
There are two major types of drug design. The first is referred to as ligand-based drug design and
the second, structure-based drug design.
Ligand based
Ligand-based drug design (or indirect drug design) relies on knowledge of other molecules that
bind to the biological target of interest. These other molecules may be used to derive
a pharmacophore which defines the minimum necessary structural characteristics a molecule
must possess in order to bind to the target. In other words, a model of the biological target may
be built based on the knowledge of what binds to it and this model in turn may be used to design
new molecular entities that interact with the target.
Structure based
Structure-based drug design (or direct drug design) relies on knowledge of the three dimensional
structure of the biological target obtained through methods such as x-ray
crystallography or NMR spectroscopy.[4] If an experimental structure of a target is not available,
it may be possible to create a homology model of the target based on the experimental structure
of a related protein. Using the structure of the biological target, candidate drugs that are
predicted to bind with high affinity and selectivity to the target may be designed using interactive
graphics and the intuition of amedicinal chemist. Alternatively various automated computational
procedures may be used to suggest new drug candidates.
As experimental methods such as X-ray crystallography and NMR develop, the amount of
information concerning 3D structures of biomolecular targets has increased dramatically. In
parallel, information about the structural dynamics and electronic properties about ligands has
also increased. This has encouraged the rapid development of the structure-based drug design.
Current methods for structure-based drug design can be divided roughly into two categories. The
first category is about finding ligands for a given receptor, which is usually referred as
database searching. In this case, a large number of potential ligand molecules are screened to
find those fitting the binding pocket of the receptor. This method is usually referred as ligand-
based drug design. The key advantage of database searching is that it saves synthetic effort to
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obtain new lead compounds. Another category of structure-based drug design methods is about
building ligands, which is usually referred as receptor-based drug design. In this case, ligand
molecules are built up within the constraints of the binding pocket by assembling small pieces in
a stepwise manner. These pieces can be either individual atoms or molecular fragments. The key
advantage of such a method is that novel structures, not contained in any database, can be
suggested. These techniques are raising much excitement to the drug design community.
Active site identification
Active site identification is the first step in this program. It analyzes the protein to find the
binding pocket, derives key interaction sites within the binding pocket, and then prepares the
necessary data for Ligand fragment link. The basic inputs for this step are the 3D structure of the
protein and a pre-docked ligand in PDB format, as well as their atomic properties. Both ligand
and protein atoms need to be classified and their atomic properties should be defined, basically,
into four atomic types:
hydrophobic atom: all carbons in hydrocarbon chains or in aromatic groups. H-bond donor: Oxygen and nitrogen atoms bonded to hydrogen atom(s). H-bond acceptor: Oxygen and sp2 or sp hybridized nitrogen atoms with lone electron
pair(s).
Polar atom: Oxygen and nitrogen atoms that are neither H-bond donor nor H-bondacceptor, sulfur, phosphorus, halogen, metal and carbon atoms bonded to hetero-atom(s).
The space inside the ligand binding region would be studied with virtual probe atoms of the four
types above so the chemical environment of all spots in the ligand binding region can be known.
Hence we are clear what kind of chemical fragments can be put into their corresponding spots in
the ligand binding region of the receptor.
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Ligand fragment link
Flow chart for structure based drug design
When we want to plant seeds into different regions defined by the previous section, we need a
fragments database to choose fragments from. The term fragment is used here to describe the
building blocks used in the construction process. The rationale of this algorithm lies in the fact
that organic structures can be decomposed into basic chemical fragments. Although the diversity
of organic structures is infinite, the number of basic fragments is rather limited.
Before the first fragment, i.e. the seed, is put into the binding pocket, and add other fragments
one by one. we should think some problems. First, the possibility for the fragment combinations
is huge. A small perturbation of the previous fragment conformation would cause great
difference in the following construction process. At the same time, in order to find the lowest
binding energy on the Potential energy surface (PES) between planted fragments and receptor
pocket, the scoring function calculation would be done for every step of conformation change of
the fragments derived from every type of possible fragments combination. Since this requires a
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large amount of computation, one may think using other possible strategies to let the program
works more efficiently. When a ligand is inserted into the pocket site of a receptor, conformation
favor for these groups on the ligand that can bind tightly with receptor should be taken priority.
Therefore it allows us to put several seeds at the same time into the regions that have significant
interactions with the seeds and adjust their favorite conformation first, and then connect those
seeds into a continuous ligand in a manner that make the rest part of the ligand having the lowest
energy. The conformations of the pre-placed seeds ensuring the binding affinity decide the
manner that ligand would be grown. This strategy reduces calculation burden for the fragment
construction efficiently. On the other hand, it reduces the possibility of the combination of
fragments, which reduces the number of possible ligands that can be derived from the program.
These two strategies above are well used in most structure-based drug design programs. They are
described as Grow and Link. The two strategies are always combined in order to make the
construction result more reliable.
Scoring method
Structure-based drug design attempts to use the structure of proteins as a basis for designing new
ligands by applying accepted principles of molecular recognition. The basic assumption
underlying structure-based drug design is that a good ligand molecule should bind tightly to its
target. Thus, one of the most important principles for designing or obtaining potential new
ligands is to predict the binding affinity of a certain ligand to its target and use it as a criterion for
selection.
The sub models of empirical functions differ due to the consideration of researchers. It has long
been a scientific challenge to design the sub models. Depending on the modification of them, the
empirical scoring function is improved and continuously consummated.
Rational Drug Discovery
In contrast to traditional methods ofdrug discovery which rely on trial-and-error testing of
chemical substances on cultured cells or animals, and matching the apparent effects to
treatments, rational drug design begins with a hypothesis that modulation of a specific biological
target may have therapeutic value. In order for a biomolecule to be selected as a drug target, two
essential pieces of information are required. The first is evidence that modulation of the target
will have therapeutic value. This knowledge may come from, for example, disease linkage
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studies that show an association between mutations in the biological target and certain disease
states. The second is that the target is "drugable". This means that it is capable of binding to a
small molecule and that its activity can be modulated by the small molecule.
Once a suitable target has been identified, the target is normally cloned and expressed. Theexpressed target is then used to establish a screening assay. In addition, the three-dimensional
structure of the target may be determined.
Computer Assisted Drug Design
Computer-assisted drug design uses computational chemistry to discover, enhance, or
study drugs and related biologically active molecules. The most fundamental goal is to predict
whether a given molecule will bind to a target and if so how strongly. Molecular
mechanics or molecular dynamics are most often used to predict the conformation of the small
molecule and to model conformational changes in the biological target that may occur when the
small molecule binds to it. Semi-empirical, ab initio quantum chemistry methods, or density
functional theory are often used to provide optimized parameters for the molecular mechanics
calculations and also provide an estimate of the electronic properties (electrostatic
potential, polarizability, etc.) of the drug candidate which will influence binding affinity.
Molecular mechanics methods may also be used to provide semi-quantitative prediction of the
binding affinity. Alternatively knowledge based scoring function may be used to provide bindingaffinity estimates. These methods use linear regression, machine learning, neural nets or other
statistical techniques to derive predictive binding affinity equations by fitting experimental
affinities to computationally derived interaction energies between the small molecule and the
target.
Ideally the computational method should be able to predict affinity before a compound is
synthesized and hence in theory only one compound needs to be synthesized. The reality
however is that present computational methods provide at best only qualitative accurateestimates of affinity. Therefore in practice it still takes several iterations of design, synthesis, and
testing before an optimal molecule is discovered. On the other hand, computational methods
have accelerated discovery by reducing the number of iterations required and in addition have
often provided more novel small molecule structures.
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Drug design with the help of computers may be used at any of the following stages of drug
discovery:
1. hit identification using virtual screening (structure- or ligand-based design)2. Hit-to-lead optimization of affinity and selectivity (structure-based design, QSAR, etc.)3. lead optimization optimization of other pharmaceutical properties while maintaining
affinity
Flowchart of a Usual Clustering Analysis for Structure-Based Drug Design
In order to overcome the insufficient prediction of binding affinity calculated by recent scoring
functions, the protein-ligand interaction and compound 3D structure information are used to
analysis. For structure-based drug design, several post-screening analysis focusing on protein-
ligand interaction has been developed for improving enrichment and effectively mining potential
candidates:
MATERIAL INPUT:
1. APIS2. Sustained & Immediate Release Pellets3. Excipients & Resins4. Plant extracts
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PHASES OF DEVELOPMENT:
New medicines are developed through a series of controlled trials which assess the safety
and efficacy of each new medicine by applying high scientific standards. An experimental
medicine is first tested in the laboratory and in animal studies. After this preclinical testing,
the medicine can advance to clinical testing.
Clinical trials involve volunteer trial participants. To ensure that such trials are conducted
ethically, there are extensive rules and standards governing the trial design; investigator
qualifications and training; external review by an Institutional Review Board (IRB) or ethics
committee; ongoing monitoring of all of the trial sites; and obtaining informed consent after
the presentation to the potential trial participant of the risks and potential benefits of
participation. All trial participants are free to withdraw from the trial at any time.
The Phases of Clinical Development
Phase 1
In Phase 1, an experimental medicine, also called an "investigational new drug", is
administered, for the first time, to humans. Phase 1 clinical trials usually focus on safety and
tolerability, rather than the effectiveness of a new medicine. During this phase, low doses of
an experimental medicine are administered to a small number of participants under the close
supervision of an investigator. Trial participants are typically healthy individuals, although
for some medicines, the first trials in human participants are patients with the disease that
the experimental medicine is intended to treat. The dose of the new medicine is gradually
increased during Phase 1 clinical trials to allow the investigator to measure the participant's
clinical response to the medicine, whether the medicine is sufficiently absorbed, how long
the medicine remains in the bloodstream after dosing, and which dosage levels are safe and
well tolerated.
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Phase 2
In Phase 2, the focus of the trials is on the effectiveness of an experimental medicine in
treating an illness or medical condition. Information about the experimental medicine's
safety, side effects, and potential risks is also collected. In this phase, researchers work to
determine the most effective dosages for the experimental medicine and the most
appropriate method of delivering it (e.g., tablets, extended release capsules, infusions,
injections, etc.). Phase 2 clinical trials involve a larger number of trial participants; typically
up to several hundred participants (although in some cases there could be fewer than 100).
The participants studied in Phase 2 clinical trials are usually patients who have the medical
condition that the experimental medicine is intended to treat. They are usually identified by
physicians at research centers, clinics, and hospitals at multiple sites around the world.
Phase 3
Phase 3 trials test the results of earlier trials in larger populations and gather additional
information about the effectiveness and safety of an experimental medicine. This phase will
usually involve several hundred to several thousand participants from multiple sites with
many physician-investigators. These trials are often randomized and "double-blinded."
"Double blinded" means that during the trial, neither the investigator nor the participant
know who in the trial are getting the experimental medicine versus a placebo (sugar pill) oranother medicine (a "comparator"). Phase 3 trials generally provide the primary basis for the
benefit-risk assessment for the new medicine and much of the core information about the
medicine that is analyzed for inclusion that will be described in the labeling of the medicine.
Registration
The next step in bringing a new medicine to market is the filing of an application with the
health regulatory authority of a country in order to obtain approval to market the new
medicine. This step is known as registration. In the U.S., a New Drug Application (NDA) is
filed with the U.S. Food and Drug Administration (FDA). In Europe, a Market
Authorization Application (MAA) is filed with the European Agency for the Evaluation of
Medicinal Products (EMEA). A description of the medicine's manufacturing process along
with quality data and trial results are provided to the health regulatory authorities in order to
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demonstrate the safety and effectiveness of the new medicine. If approval is granted, the
new medicine can then be sold for use by patients.
Recent Approvals
Medicines that have been recently approved for marketing in the U.S. or Europe are known
as "recent approvals."
Phase 4
Phase 4 trials - also called "post marketing studies" - are conducted after the regulatory
approval of a medicine. Through such trials, researchers collect additional information about
long-term risks, benefits, and optimal use. These trials often involve thousands of subjects
and may continue for many years.
LOCATION:
160acre site with 2.7 millionsquarefeet of stateoftheart facility space More than 4,00 highly skilled research scientists, technicians, clinicians, and other
professionals employed
Functions:
Discovery, Drug Metabolism, Pharmaceutical Sciences, Development, Animal Health, and Drug
Effectiveness and Safety Evaluation
Therapeutic Areas:
Inflammation Development, Infectious Diseases (Antibacterials), Cardiovascular/Metabolic
Diseases, Neurosciences
Key Technologies:
Molecular Profiling, GeMM (Genetically Modified Models), Liquid Materials
Management, Reagent Antibody, Discovery High Throughput Screening, ADME
(absorption, distribution, metabolism, excretion and toxicity) Screening, Biocatalysis,
Microbiology, Spray Dried Dispersion, Parental Form, DART, Safety Pharmacology, Whole
Body, Biobank
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FINANCIAL ANALYSIS:
(1)BASIC DETAILS:Name of Company Rolson Pharma Ltd
Currency-Rs.in (M,Cr,)Rs. In Crore
Reporting PeriodYearly
No. of Year
Projected Year-12011
Projected Year-22012
Projected Year-32013
Projected Year-42014
Projected Year-52015
Projected Year-62016
Projected Year-72017
Projected Year-8
2018
Projected Year-92019
Projected Year-102020
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(2)COST OF PROJECT:Cost of Project and Means of Finance
Rs. In CroreCost of Project
Land and site development100.00
Building150.00
Plan and Machinery500.00
Miscellaneous Fixed assets40.00
Preliminary Expenses20.00
Pre-Operative expenses80.00
(including interest
during construction)
Contingency margin60.00
Working capital margin50.00
Total 1,000.00
Means of Finance
Share Capital150.00
Term Loans650.00
State Governments Spicial200.00
incentive loan( Repayable in
6 installments after 12 years)
Total 1,000.00
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(3)INTEREST ON TERM LOAN:Interest on TermLoan
Loan Amount ( Rs.In M ) 650.00Installment No. 16HY installment 40.625Rate of Interest 12%
Rs. In Crore
Year Loan Loan inst. Loan inst. Loan o/s Loan o/s Int. for the Int. for theTotalint.
o/s at paid paid at the end at the end first half second half for the
the for first for second of the first of the year yeartermloan
beginning half year half year half year secondhalf year
1 2 3 4 5 6 7 8 9=7+8
2011 650.00 - - 650.00 650.00 39.00 39.00 78.00
2012 650.00 - 40.63 650.00 609.38 39.00 39.00 78.00
2013 609.38 40.63 40.63 568.75 528.13 36.56 34.13 70.69
2014 528.13 40.63 40.63 487.50 446.88 31.69 29.25 60.94
2015 446.88 40.63 40.63 406.25 365.63 26.81 24.38 51.19
2016 365.63 40.63 40.63 325.00 284.38 21.94 19.50 41.44
2017 284.38 40.63 40.63 243.75 203.13 17.06 14.63 31.69
2018 203.13 40.63 40.63 162.50 121.88 12.19 9.75 21.94
2019 121.88 40.63 40.63 81.25 40.63 7.31 4.88 12.19
2020 40.63 40.63 - - - 2.44 - 2.44
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(4)WORKING CAPITAL REQUIREMENT:Working Capital Requirements
Margin of WC 25%
Rs. In Crore
Sr.No. Item Norms in 2011 2012 2013
Months
A
1 Raw Materials(Including Consumables) 2.00 146.25 170.63 195.00
2 Stock-in-Process 0.50 39.21 45.72 52.27
3 Finished Goods 1.00 78.50 91.52 104.63
4 Book Debts * 1.00 112.50 131.25 150.00
Total Current Assets 376.46 439.12 501.90
B Less : Margin for Working Caiptal from 94.11 109.78 125.48
Long term Sources(25% of Total CurrentAssets)
C Less : Trade Credit for Raw Materials 0.50 36.56 42.66 48.75
and Consumable Stores
D Bank Finance for Working Capital (A-B-C) 245.78 286.69 327.68
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ECONOMIC ANALYSIS:
The days when the Indian pharmaceutical industry was synonymous with cheap generic drug
production are passing. While generics continue to play a major part in the industrys success,
many companies have started down the long road of drug discovery, novel product development
and pharma services. With high-quality research, low-cost manufacturing facilities and educated
personnel, the Indian pharmaceutical industry presents both a competitive threat and partnering
opportunities.
A significant international industry
India is the worlds fourth largest producer of pharmaceuticals by volume, accounting for around
8% of global production. In value terms, production accounts for around 1.5% of the world total.
The Indian pharmaceutical industry directly employs around 500,000 people and is highly
fragmented. While there are around 270 large R&D based pharmaceutical companies in India,
including multinationals, government-owned and private companies, there are also around 5,600
smaller licensed generics manufacturers, although in reality only around 3,000 companies are
involved in pharmaceutical production. Most small firms do not have their own production
facilities, but operate using the spare capacity of other drug manufacturers.
A new approach
The advent of pharmaceutical product patent recognition in January 2005 changed the ground
rules for Indian companies. In the run up to the new post-patent era and since, the Indian industry
has been evolving. R&D departments are moving away from reverse-engineering in favour of
developing novel drug delivery systems and discovery research. It is anticipated that the
experience of selling generics in the international market will hold Indian companies in good
stead for selling their own branded products to these markets in the future.
Focus on...current and future markets
The dynamics of the domestic Indian market have always encouraged Indian industry to pursue
overseas lines of business. Expansion comes at a cost and some companies have had to
restructure. In June 2009, Wockhardt divested its German business, esparma and more recently,
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in March 2010, Orchid sold its generic injectable formulations business to Hospira but came out
of the deal with a long term supply agreement for its APIs.
INDIA
India remains an important market for the vast majority of Indian companies. The indigenous
industry supplies around 70% of the countrys pharmaceuticals. The proportion of revenue
derived from India depends largely on the strategy of the individual company and its penetration
into overseas markets. For example, while Zydus Cadila aims to grow rapidly overseas, India
remains its most important market, accounting for 55.8% of revenue in fiscal 2008/09. India is
also Ciplas key market, generating almost half of the companys revenue in 2008/09, although
this percentage has been declining in recent years as the company has increasingly targeted
overseas markets. Other companies, such as Dr. Reddys, are less reliant on the Indian market; in
2008/09, India contributed just 17% of the companys global revenue.
INTERNATIONAL DEVELOPMENT
The attractive opportunities offered by the loss of patent protection on several major products in
the coming period, and resolution of the biosimilar regulatory issue in the US, has to be offset
against price reduction pressures driven by the ongoing economic downturn and aggressive
competition for the business that is on offer.
USA: The largest generic market and the most sought after target for Indian companies involved
in the generic business, is the US. As more companies gained the expertise to file for FDA
approval, the number of ANDAs approved increased dramatically. In 2005, the number
increased to 52 and subsequently increased year-on-year, to reach 132 in 2008. In 2009, the total
number of ANDA approvals was 125. In the first quarter of 2010, a further 20 were approved.
UK: Over 80% of prescriptions in the mature UK market are written generically. The UK has
always been a focus for Indian companies with 9 companies running 11 manufacturing sites.
Between January 2009 and January 2010, Indian companies had more than 260 marketing
authorisations approved by the UKs Medicines and Healthcare Regulatory Agency (MHRA) for
a wide range of products. During this period, Ranbaxy received 55 approvals; Dr. Reddys
received 54; Aurobindo received 39; and, Lupin received 25.
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Europe: Beyond the UK and Germany, significant European markets have been slow to adopt a
vigorous generics drugs policy. However, pressure on governments to cut costs in the face of
burgeoning drugs bills and economic recession, are seeing countries such as France, Italy and
Spain exploring the increased use of generics. A number of Indian companies are either
monitoring them from the sidelines or have already identified growth potential; Ranbaxy, for
example is established in France, Germany, Italy and Spain.
Brazil: Brazil is perhaps the most notable emerging generic market in recent years. According to
the Brazilian generic industry association, Pr-Genricos, prices of generic medicines have to be
at least 35% cheaper than prices of original medicines but, in practice, they are up to 50%
cheaper. In 2009, generic medicines represented 19.4% of the pharmacy sector by volume,
increasing 19.0% over the previous year to 330.0 million units. In value terms, pharmacy sales of
generic medicines increased by 24.0% to R$4.5 billion (US$2.2 billion). Indian companies have
been present in the Brazilian market for several years. In 2008, Indian pharmaceutical exports to
Brazil were valued at around US$166 million per year and made up a significant part of all trade
between India and Latin America.
Australia: Due to low prices of branded products, Australia is not yet a major market for
generics. A number of leading drugs are due to lose patent protection, but price competition
tends to be muted for off-patent drugs. The government is, however, currently looking at ways to
boost generic consumption in an effort to rein in the overall drugs bill. The market is beginning
to attract Indian companies, a number of which have gained approval from the Therapeutic
Goods Administration for their manufacturing facilities and a range of products.
Indian pharmaceutical companies are no strangers to competition. The Indian market is highly
competitive with more than 300 organised players and branded promotional costs associated with
every product, yet the industry is able to offer low-priced products and remain profitable in
India. However, whether the Indian industry will be able to maintain the pace of expansion
across the world is questionable in the current economic climate.
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The Indian Pharma Industry - looking beyond generics
The Indian pharmaceutical industry has a long history of reverse-engineering and its ability to
produce and distribute globally generic copies of pharmaceutical products is well proven. Post
TRIPs, the R&D focus of Indian companies has shifted towards novel drug delivery systems or
discovery research. But the global launch of innovative new products is still some way off, so
what are the options for companies going forward?
In-licensing and custom manufacturing are alternative strategies to generics
Building upon its strengths in chemical synthesis and process engineering, the availability of
highly-skilled labour and a low-cost manufacturing base, some companies have elected to pursue
alternative business strategies.
Piramal Healthcare has always partnered global innovator companies and, in addition to an
extensive Indian generic business, is a global player in custom manufacturing and has a number
of early stage development candidates. In May 2010, it was announced that Abbott had agreed to
pay a total of US$3.7 billion for the domestic drug business, leaving Piramal to concentrate on its
research, formulation and customer manufacturing businesses.
Another company with a diverse portfolio of services is Jubilant Organosys. The companys
main focus is its Pharmaceuticals and Life Sciences Products and Services business, which has
grown significantly over the last few years. Jubilant is active in APIs, proprietary products,
contract manufacturing of liquid and lyophilized sterile injectables, ointments, creams and
liquids, radiopharmaceuticals, drug discovery services, medicinal chemistry services, clinical
research services, generic dosage forms and healthcare.
Biosimilars
The resolution of the regulatory issues surrounding biosimilars in the USA has removed at least
one obstacle to the development of these products. As one of the leading producers of generic
drugs, it is logical that Indian companies would see biosimilars as a natural follow-on business.
Recent milestones in the development of biosimilars include:
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Biocon signed a collaborative agreement with Mylan in June 2009 on the development,manufacturing, supply and commercialisation of multiple, high-value generic biologic
compounds for the global marketplace. The collaboration combines Biocons scientific
and biologics manufacturing with Mylan's global commercial footprint.
In March 2010, Ranbaxy and the San Diego, California-based Pfenex announced thatthey had entered into an agreement under which Ranbaxy will develop an undisclosed
biosimilar therapeutic produced in the Pfenex Expression Technology platform, a
pseudomonas-based recombinant protein technology.
In February 2009, Wockhardt announced that it had launched Glaritus, a recombinantlong-acting human insulin analogue, in India. The company commented that it was the
first company in the world, after the innovator, to launch this particular type of insulin,
which works slowly for over 24 hours.
Role of Pharma Sector in Indian Economy:
The Indian Pharmaceutical industry is currently the largest amongst the developing nations
andone of the flagship sectors of the Indian economy. Indian pharmaceutical companies continue
tomove to the center stage of the global pharmaceutical market. As such The Indian government
has listed the pharmaceutical industry as an intellectual industry and investment in research and
Development has been enhanced.
The pharmaceutical industry in India has emerged, as a prominent maker ofhealthcare products, currently meeting almost 95% of the domestic healthcare
needs.
From a modest beginning in 1970, today the total Indian pharmaceutical sector isvaluedat US $ 8.8 billion with a growth rate of 8 %. The Indian pharmaceutical industry
is a netexporter of bulk drugs and generics and ranks 17th in the world in terms of bulk
drug andformulation exports. In 2004-05 the net pharmaceutical export was more than
US $ 3.75billion, formulations accounted for 55% while the remaining 45% came from
bulk drugs.
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Exports of pharmaceuticals have been consistently outstripping the value of
corresponding Imports in the period 1996-97 upto 2008-09.Thetrade balance
increased from Rs. 2157 crores in 1996-97 to Rs29881 crores in 2008-09.
India, with its increasing pool of. 29881 crores in 2008-09. intellectual workforce andlower production costs israpidly turning into a manufacturing hub for global outsourcing.
The average life expectancy in India is 63 years as compared to 78 years in developedcountries. However, Indias improving healthcare delivery infrastructure has ensured the
continued rise in life expectancy and maternity child care measures. There has been a
strengthening of specific programs, such as the Expanded Program on Immunization
(EPI) and the introduction of Oral Rehydration Therapy (ORT) in 198687. Ongoing
measures seek to control local endemic diseases. The consequent increase in life
expectancy drives the growing proportion of an aging population - the 60+ age-group will
account for 11% of total population by 2021. This will further boost growth of the
pharmaceutical industry.
As the Indian Pharma Industry grows- more and bigger players gear up to bringglobal blockbusters in the Indian market, as such bringing in more funds to the
Indian economy through FDI Investments and Joint Ventures. The Pharmaceuticals
sector has been able to attract FDI amounting to Rs.21409 million during the period fromApril, 2007 to April, 2009including Rs. 43.42 million in the first month of the current
year.
The pharmaceutical industry in India has made phenomenal progress in the past 10 years.With over $ 8 billion in domestic sales and another $ 5 billion in exports in the year 2006,both growing at double digit, it has acquired its place in the sun. It has also started
making global footprints and over $ 2.5 billion worth of acquisitions were made overseas
in past couple of years.
Employment:Indian pharmaceutical sector employs over 42 lakh people directly and
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Indirectly.
Exports of pharmaceuticals at Rs 38433 crores in FY 2008-09 registered a growth rate of25% in
2008-09. This is quite impressive, given the growth in the countrys total exportsof all
commodities was at 16.9% in the corresponding period
Social Benefits:
Major causes of concern are environmental issues pertaining to pharma industry. With the
funding from world bank technological advances can be made moving towards cleaner
environment. Thus reducing health hazards resulting from toxic wastes. This would intern result
in higher life expectancy thereby increasing the potential workforce for the entire Indian
economy
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ECOLOGICAL ANALYSIS:
Basic Principles on the Environment
1. Overall Policy
Give serious consideration to the impact on the environment in every aspect of corporate
activities, including R&D, production, distribution, marketing, procurement and clerical
works, and make the best efforts to conserve and improve the environment.
2. Efficient Utilization of Resources and Minimization of Waste
Conserve energy and other resources, and actively pursue waste minimization and resource
recycling.
3. Assessment of Environmental Impact from Products and Manufacturing Processes
When developing new products and processes, evaluate the impact on the environment in
advance, during development, and periodically after commercialization. Consider the entire
business cycle from procurement of raw materials and supplies through the use and the final
disposal of products to reduce the impact on the global environment.
4. Development and Utilization of Environmental Technologies
Develop technologies for environmental protection and improvement, and actively pursue
outside technologies when it is beneficial.
5. Response to Emergencies
When an adverse effect on the environment is foreseen, exercise the best possible contingent
efforts to eliminate or minimize such adverse impact.
6. Clear Definition of Accountability and Responsibility
Appoint executives and managers in charge of environment-related activities and clearly
define their authority.
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7. Cooperation with the Community and Society at Large
Actively cooperate with the environmental efforts of local communities and provide fair and
unbiased information.
8. Education and Training
Educate and train each employee to understand and realize the importance of environmental
issues and to act accordingly in his or her daily routine.
Environment and Safety Management Structure
ISO14001
Rolson Pharma Ltd. Also plan for ISO 14001 certification, a globally accredited authentication
for an environmental management system.
Responsible Care Activities
Responsible Care
Responsible Care is an international voluntary program dealing with the management of
chemical substances by businesses, with activities now extending to 52 countries. The purpose of
the program is to secure "environment," "safety" and "health" while handling chemical
substances and Rolson has plan to implement such activities.
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