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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.