strategy implementation_div a_group 3

7/23/2019 Strategy Implementation_Div A_Group 3

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STRATEGY IMPLEMENTATION

Key implementation techniques of Sun Pharma amidst changing

strategies

Under the guidance of:

Prof. Srinivasa Addepalli

Group 3

Lakshay Bhatia (A010)

Arnav Gera (A020)

Anurag Goel (A022)

Viraj Kadwadkar (A031)

Saurab Kanwar (A033)

Udit Sharma (A059)

Anirudh Vuyala (A066)


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Executive SummarySun Pharma has grown globally in the past decade and the report tries to capture the key implementation

techniques that they have adopted with changing times. Report tries to capture changing strategies under 4areas, Product/ Segment Choices, Organization Structure, Management Composition and culture.

Comparison with key global competitors has also be done to bring out the differences and similarities in theindustry.

Research Methodology

Primary research was carried out at the corporate Centre J.B. Nagar, Andheri (East), Mumbai. Amember of the group interviewed Ms. Jyothi Shrivastava, HR Manager to analyse the changing

strategy of Sun Pharma and how it affects different aspects of organization.

Also we interviewed Ms. Kanika Srivastava, 2ndYear, MBA Core student, NMIMS who did summer

internship with Sun Pharma.

Secondary research was done to find out information about Pharmaceuticals Industry and changing

strategy of Sun Pharma. Various research websites were used for the same (Details mentioned in

references).


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Table of ContentsExecutive Summary ................................................................................................................................. 2

Research Methodology ........................................................................................................................... 2

Industry Overview ................................................................................................................................... 4

Company Overview ................................................................................................................................. 4

Product/Segment choices ....................................................................................................................... 4

Sun Pharmas globalization strategy through major deals................................................................. 4

Growth Plan Strategies ....................................................................................................................... 5

Diversified Revenue Model ................................................................................................................. 5

Sun Pharma vs. Competitors ............................................................................................................... 6

Future Plans ........................................................................................................................................ 7

Organization Structure ............................................................................................................................ 7Organization Chart .................................................................................................................................. 8

Sun Pharma: ........................................................................................................................................ 8

Ranbaxy: .............................................................................................................................................. 9

Management Composition ..................................................................................................................... 9

Evolution of Sun Pharma Sales Force .................................................................................................. 9

Culture: Sun Pharma ............................................................................................................................. 11

Conclusion: ............................................................................................................................................ 12

Exhibits .................................................................................................................................................. 12

Exhibit 1: ........................................................................................................................................... 12

Exhibit 2: ........................................................................................................................................... 12

Exhibit 3: ........................................................................................................................................... 13

Exhibit 4: ........................................................................................................................................... 14

Exhibit 5: ........................................................................................................................................... 15

Exhibit 6: ........................................................................................................................................... 16


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Industry OverviewIndia's pharmaceutical sector will touch US$ 45 billion by 2020, according to a major study by global

management and consulting firm, McKinsey & Company. The reasons for this optimism are well

founded. In the period 2002-2012, the country's healthcare sector grew three times in size, touching

US$ 70 billion from US$ 23 billion. India's pharmaceutical market experienced a similar boom,reaching US$ 18 billion in 2012 from US$ 6 billion in 2005. The report further states that the Indian

pharmaceutical market will be the sixth largest in the world by 2020.

The rise of pharmaceutical outsourcing and investments by multinational companies (MNCs), allied

with the country's growing economy, committed health insurance segment and improved healthcare

facilities, is expected to drive the market's growth.

India is today one of the top emerging markets in the global pharmaceutical scene. The sector is

highly knowledge-based and its steady growth is positively affecting the Indian economy. The

organized nature of the Indian pharmaceutical industry is attracting several companies that are

finding it viable to increase their operations in the country.

Company OverviewSun Pharmaceutical Industries Limited is a multinationalpharmaceutical company headquartered

in Mumbai which manufactures and sells pharmaceutical formulations and active pharmaceutical

ingredients (APIs) primarily in India and the United States. Over 72% of Sun Pharma sales are from

markets outside India, primarily in the US. The US is the single largest market, accounting for about

60% turnover in all, formulations or finished dosage forms, account for 93% of the turnover. The

company offers formulations in various therapeutic areas, such as cardiology, psychiatry, neurology,

gastroenterology and dialectology. Today Sun Pharma is the second largest and the most profitablepharmaceutical company in India, as well as the largest pharmaceutical company by market

capitalization on the Indian exchanges. The 2014 acquisition of Ranbaxy will make the company the

largest pharma company in India, the largest Indian pharma company in the US, and the 5th largest

specialty generic company globally. Sun Pharma continues to invest independently in generic

research, both for process development for API and formulation development for dosage forms.

Product/Segment choices

Sun harmas globalization strategy through major deals

Some of the major game-changing deals done by Sun Pharma are listed in Exhibit 3. It shows

the country where the deal was done as well as the reason for doing that deal.

It shows that Sun Pharma did acquisitions in US to boost its earnings visibility and

strengthen companys presence in the region. It also shows that Sun Pharma did

acquisitions in different parts of the world to increase its product reach to have access to

different types of branded products and to increase its reach in different therapies. Sun

Pharma has started deriving its maximum revenues from international markets to reflect its


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strong presence in international markets created through acquisitions overseas over the last

few years.

Growth Plan Strategies

Diversified Revenue Model

Exhibit 4 lists the Sun Pharma revenue model in the Pre Ranbaxy acquisition and the post

Ranbaxy acquisition eras.

Sun Pharma acquired Ranbaxy in order to strengthen its global footprints as well as to

emerge as a global leader in the pharmaceutical sector. The combined entity has become 5 th

largest global speciality generic pharma company, largest pharma company in India, is

number 1 in 13 speciality segments and has strong OTC business with trusted brands.

In India, the combined entity has 31 brands in top 300, has minimal overlap and enhanced

rural reach. The combined entity has clear leadership in chronic therapies and acute,

hospitals and OTC business.

Create

sustainablerevenue streams

Cost Leadership

Businessdevelopment

Balanceprofitability &

investments for

future

Enhance share of specialty

business globally

Achieve differentiation by

focusing on technically complex

products

Focus on key markets

achieve critical mass

Speed to market

Ensure sustained compliancewith global regulatory standards

Vertically integrated

operations

O timize o erational costs

Increasing contribution of

Specialty and complex products

Future investments directed

Towards differentiated products

Use acquisitions to bridge critical capability

gaps

Focus on access to products, technology, and

market presence

Ensure acquisitions yield high return on

Investment

Focus on payback timelines


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In US, the combined entity has a strong pipeline of 184 ANDAs including high-value FTFs, has

clear dermatology leadership (No. 1 in generic dermatology, No. 3 in branded), coverage

across anti-fungal, acne etc.

In Emerging markets, the merged entity has global footprint across 55 markets, extensive

product basket-largely branded business with minimal overlap, strong doctor relationships,and opportunities to leverage market presence to cross-sell products as well as strong

product pipeline for high-growth emerging markets.

Sun Pharma vs. Competitors

First diagram in Exhibit 5 lists the position of Sun Pharma vis--vis the global competitors

whereas the second diagram in Exhibit 5 lists the position of Sun Pharma vis--vis Indian

pharmaceutical companies. Sun Pharma has become the fifth largest company in the world

post Ranbaxy acquisition. Moreover, it has increased its product portfolio as well as entered

many new geographies because of that. It also resulted in Sun Pharma strengthening itself

in the US and emerging as a strong force in emerging markets to challenge the leaders in

these territories.

In the Indian context, Sun Pharma-Ranbaxy combined entity has attained the number one

position with a market share of 9.2% overtaking Abbott. Due to this acquisition, the

combined entitys manufacturing facilities, production capacity; distribution network has

increased for

it to attain market leader position.


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Future Plans

Organization Structure

Organization structure can be of three types Simple, Matrix and Bureaucracy. Since Sun Pharma has

offices at different locations they follow matrix structure. For e.g. they have employees working in

finance department at all the location. The head of that department reports to location head as well

as overall Finance head in Headquarters.

In order to understand the organizational culture we asked questions about different kind of culture

which are promoted in the organization. The outcome of the survey is as follow:

Global Consumer

Health care

R & D Develop more products through expanded R&D team for global

markets

Focus on developing complex products across multiple dosage

Maintain leadership in existing markets through focus on

innovative solutions Enhance presence in high growth markets

Regulatory/

Quality

Ensuring 24x7 compliance to cGMP is imperative for a global business Continuously enhance systems, processes, human capabilities to ensure

compliance with global regulatory standards

Ensure resolution of consent decree at Ranbaxys facilities

Financials Target sustainable and profitable growth Deliver on the US$ 250 million synergy benefits from Ranbaxyacquisition by FY18


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From the above data we can conclude that Sun Pharma has the culture of Innovation, stability and

Team orientated, while there was very low culture of attention to details and aggressiveness.

Organization Chart

Sun Pharma:

0%

10%

20%

30%

40%

50%60%

70%

80%

90%

100%

Strongly Agree

Agree

Neither Agree or Disagree

Disagree

Strongly Disagree


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Ranbaxy:

Management Composition

In the early years, Sun Pharma was mostly run by a close-knit team. Most of the meetings

used to be informal and were held around Shanghvis table. This helped quick decision

making and Shanghvi led most of the activities. As years passed by and the company

expanded through mergers and acquisitions, the need for a strong, distributed management

team grew more and more. Globalisation too posed a huge challenge for the company.

One of the steps towards achieving this objective was to bring Israel Makov, who was the

former president of Teva Pharmaceuticals, to head the board in 2012. Israel was focused

more towards strategy and the bigger picture while Shanghvi had knowledge of the specifics

of the industry. In fact, Makov was the one who initiated talks with Daiichi Sankyo for the

Ranbaxy acquisition. Makov emphasized more on the need to build management capability,

so that Sun Pharma can respond to, problems quickly.

Mr. Keki Mistry is a non-executive independent director of SunPharma since 2002. He has

been associated with HDFC bank since 1993 in various directorial capacities. He was

brought on board SunPharma to help in it transition to an International researchbased


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Pharma company. Mr Mistry is a certified chartered accountant and has an excellent track

record.

Rekha Sethi was appointed as an independent director on Feb, 2104. She is also the doirector

general of AIMA. A St Stephens graduate, she also has worked with CII for over 17 years.

Hasmukh Shah is a non executive independent director since 2001. He also served as joint

secretary to PM Morarji Desai. He is the ex chairman of IPCL. He has more than four

decades of senior management experience. He was also an adviser to GE in India.

Over the years, Shanghvi has changed the senior management team quite a number of times.

Shanghvi brought in Kal Sundaram who was a friend of Mr. Shanghvi and the then India

head of GlaxoSmithKline. Shanghvi was able to convince Kal Sundaram to join Sun Pharma

as its India CEO. This has, in fact, helped Shanghvi to take a step back from getting involved

in almost all the companys decisions.Kal Sundaram was later made the CEO of Taro

Pharma in 2013 which Sun Pharma had acquired in 2010.

In 2012, Shanghvi again reshuffled the top management team handling the India operations

and finance. Abhay Gandhi who was formerly heading Suns rest of the world business was

made the executive vice president of marketing. Abhay had joined the company in 1990s as a

product manager. He later on went to become the CEO of India business.

Similarly, Uday Baldota, who headed investor relations and communications was made the

chief financial officer in 2012. He replaced Sudhir Valia who had been with Sun Pharma for

two decades. Sudhir Valia continues to be on the board of Sun Pharma as an executive

director.

Another member of the senior management team has been Shanghvis son, Mr. AalokShanghvi who had joined the company as a product manager in 2007, he became the senior

general manager in the companys international marketing unit and then its Vice President.

While Shanghvis daughter, Vidhi Shanghvi, heads one of the diabetology brands.

With the recent merger with Ranbaxy, there have been numerous changes in the management

team of Sun Pharma. It has retained several of Ranbaxys management team but a lot of

redundant posts could be created. Because of this, Sun Pharma has asked 18 top Ranbaxy

executives to leave. These include the President and CFO, Mr. Indrajit Banerjee, country

head (India) Ranbaxy, Maninder Singh, VP Marketing, Govind Jaju and some others.

However Ranbaxy CEO and MD Arun Sawhney has been retained and Sun Pharma has been

looking out for a new role to be given to him.

Ranbaxy was perceived to be paying higher salaries than Sun, about as m uch as 30-50%.

This is going to be a big issues and has already led to reshuffling of senior management.

Further, Sun Pharma in its bid to seamlessly integrate operations with Ranbaxy has been on a

hiring spree. It recently was able to secure the services of Yashwant Mahadik, an industry

veteran who has been the Vice President of Global HR with Philips in Europe.

Furthermore, the existing senior management team has been assigned new roles. Kal

Sundaram, who is CEO (North America) for Sun Pharma will lead the North American

business including the US & Canada markets for the combined entity. He will also continueto be the CEO of TARO Pharma. Another important executive in Sun Pharma, Mr Michael


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Perfetto, who is the chief commercial officer of Generic & OTC business of Sun Pharma US

andTARO,will assume responsibility for the Ranbaxy's generic and OTC businesses. Abhay

Gandhi, CEO at India business of Sun Pharma, will lead the Indian subcontinent business for

the merged entity, whereas Aalok Shanghvi, son of Dilip Shanghvi and vice-president of Sun

Pharma, will lead the emerging markets business., focusing on regions and markets around

the world that represent significant growth opportunities.

Evolution of Sun Pharma Sales Force

S. No. Past Present

1. Sales representative role fairly

standardised

Different roles: KAM, Relationship reps,

Sample dropper and Power rep.

2. Reach and frequency paradigm Relationship paradigm

3. Share of voice Share of relationship

4. Sales forceMain promotional channel MC2= Multi-client/ Multi-channel

5. Molecular targeting Atomistic targeting

6. Individual incentives Team incentives

7. Technology used by innovators Effective use of technology

8. Sales force efficiency function infrequent Sales force efficiency function contributing

to ROI

9. Empirical decision making Evidence based decision making

Culture: Sun Pharma It was noticed by the employees post Ranbaxy that there was rampant discrimination

between employees of the two entities with the employees of Ranbaxy been treated as

lesser entities in the organization.

It was also reported that the appraisal and award system of the organization were quite

erratic.

On discussion with one of the employees working in plant on social media we came to know

that culture is not exactly same across location. Culture differs little bit as per locations as

staff at lower level is a local residents and forms majority at their location.

From our interviews with Sun Pharma, Cipla and Pfizer employees (who choose to remain un-

named) we have found the following ratings:

3.7

1.4

2.8

3.7 3.73.4

3.1

3.9

2.8 2.9

4.2 4.33.8

3.3

4.6

0

1

2

3

4

5

T R A N S P A R A NC Y R E W A R D S A N DR E C O G N I T I O N S

L E A R N I N G A N DD E V E L O P M E N T

W O R K L I F EB A L A N C E

D I V E R I T Y

SCORE

ASPECTS OF CULTURE

COMPARISON WITH CIPLA & PFIZER

Sun Pharma Cipla Pfizer
http://timesofindia.indiatimes.com/topic/TAROhttp://timesofindia.indiatimes.com/topic/TAROhttp://timesofindia.indiatimes.com/topic/TAROhttp://timesofindia.indiatimes.com/topic/TARO


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Conclusion:We found out that there are three main divisions for pharmaceutical parent company by using

organizational chart: API, FP, and business development. Generally, parenting responsibility is withAPI and FP divisions. These two divisions create a fit between headquarters and subsidiaries in order

to achieve the advantage. An organization chart was presented to reflect the parent structural fit

through using value-driver factors and value creating strategy. The parenting advantage can be

possible through applying value approach which provides the context of considering the parent as

the centre of excellence.

Exhibits

Exhibit 1:Geography-wise global pharmaceutical spending

Exhibit :

Geography wise Growth contribution

34

31

15

12

8

US $ 965 Bn

US ROW EU5 Japan China

31

33

13

9

15

US $ 1,170-1,200 Bn

US ROW EU5 Japan China

2017


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Exhibit 3:

Acquisitions

Year Deal Country Rationale

2014 Sun Pharma-Ranbaxy merger

US, India,

Emerging

markets

Fifth largest global speciality pharma

company, No. 1 pharma firm in India

and strong positioning in emerging

markets

2013Formation of Sun-Intercom

JVGlobal markets For ocular therapies

2012 Acquired DUSE Pharma, Inc. US Access to branded derma products

2011 100% ownership of Carazo US Privatisation

2011 Formation of Sun-MSD JV Emergingmarkets

Develop and commercialisetechnology-based combination

products

2010

Acquired Taro

Pharmaceutical

Industries Ltd.

Israel

Dermatology and tropical product

manufacturing plant in Israel and

Canada

2008Acquired Chatted

Chemicals, Inc.Tennessee, US

Import registration with DEA, API

Plant approved by DEA in Tennessee,

US

2005 Assets of Abe labs New Jersey, US Dosage form plant (NJ, NS) and IP

2005 Formulation plant in Bryan Ohio, US Dosage form plant (Ohio, US)2005 Acquired ICON Hungary Hungary API and dosage form plant (Hungary)

41%

34%

16%

6%3%

US $ 230-260 Bn

ROW

China

US

Japan

EU5


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Exhibit 4:

60%12%

5%

23%

Sun Pharma(Pre Ranbaxy Acquisition)

US Formulations

Rest of World

API and Others

India Branded

Formulations

50%

24%

14%

8%4%

Sun Pharma (Post Ranbaxy Acquisition)

US Formulations

India Branded

Formulations

Emerging Markets

Western Europe and

Other

Markets


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Exhibit 5:

Companys culture is conveyed to employees by 4 ways namely Stories, Rituals, Material Symbols

and language. Sun Pharma uses all four of them but at different stages. Like In the induction

programme they show stories of companys history to the new recruits and inform them how and

why these cultures became part of it. At manufacturing level they follow rituals of delivering

motivational speeches by production in charge and thus motivate them. Sign board displaying

companys culture Local HR at different location use their own methods to encourage culture in

respective location.


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Exhibit 6:

Competitors Organization Structure:

Novartis

The organization structure at Novartis is similar to the structure being followed at Sun

Pharma. CEOs of both the organization have wide span of control. Thus various division

heads directly reports to CEO. The main reason for this type of structure could be because of

the type of industry where not only Sales and marketing but also effective research anddevelopment is crucial for the sustenance of the firm. Hence this type of structure is widely

adopted by pharmaceutical companies across the world.

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