Term Report
Fall 2012
1
LETTER OF ACKNOWLEDGMENT
nd
22
December, 2012
Mr. Amjad Hussain Course Instructor Strategic Management Institute of Business Management Management (IoBM)
Respected Sir; As directed by you, a review on PharmEvo, a leading pharmaceutical company of Pakistan. We have gathered information to present the market details of the pharmaceutical industry in general and that of PharmEvo in particular, in the light of what we have learned and understood in this Strategic Management Course. The experience in this report making is worthwhile and is going to help us in our professional career with the real working environment, in particular reference to Strategic Management
Regards, Iqbal Lalani Syed Muhammad Asif Umair uz Zubair
2
LETTER OF ACKNOWLEDGMENT
nd
22
December, 2012
Mr. Amjad Hussain Course Instructor Strategic Management Institute of Business Management Management (IoBM)
Respected Sir; As directed by you, a review on PharmEvo, a leading pharmaceutical company of Pakistan. We have gathered information to present the market details of the pharmaceutical industry in general and that of PharmEvo in particular, in the light of what we have learned and understood in this Strategic Management Course. The experience in this report making is worthwhile and is going to help us in our professional career with the real working environment, in particular reference to Strategic Management
Regards, Iqbal Lalani Syed Muhammad Asif Umair uz Zubair
2
Contents
Executive Summary ................................................. ........................................................................... .................................................... ....................................... ............. 5 Business Scope:........................................................................ .................................................................................................. ....................................... .............5 Business Environment: ................................................. .......................................................................... ................................................... ............................ 5 Market Structure: ................................................. ........................................................................... .................................................... ................................... ......... 5 Market Data of Last 4 Years: .................................... ............................................................. .................................................. ............................... ......5 Key Issues: .................................................. ............................................................................ .................................................... ........................................... .................5 Group Introduction ................................................... ............................................................................. .................................................... ....................................... ............. 6 Introduction .................................................. ............................................................................ .................................................... ........................................... .................6 Premier Group of Companies Corporate Profile ............................ ..................................................... ................................... ..........6 Group Companies ................................................... ............................................................................. .................................................... ............................... .....6 i. Premier Distributors .................................................................... ............................................................................................. ................................... ..........6 ii. Premier Agencies ......................................... ................................................................... ................................................... ....................................... ..............7 iii. PharmEvo (Pvt) Limited ............................................... ........................................................................ ................................................ .......................7 iv. Zaman Textile ................................................. ........................................................................... .................................................... ................................... .........8 v. Shield Corporation ......................................................................... ................................................................................................... ............................... .....8 Growth Strategy under taken by Premier Group: ................................................ ...................................................................... ...................... 8 Vision .................................................. ........................................................................... ................................................... ................................................... ................................... .......... 9 Mission................................................ ......................................................................... ................................................... ................................................... ................................... .......... 9 The Business Scope: ................................................... ............................................................................. .................................................... ................................. ....... 11 Regions Where PharmEvo Pvt. Ltd Operates:............................................... ........................................................................ ......................... 11 Functions / Applications / Products .............................. ........................................................ .................................................... ................................. ....... 13 Customers and Users ................................................... ............................................................................ .................................................. .........................14 Value Added Services: ................................................. .......................................................................... .................................................. .........................14 The influencers: ................................................... ............................................................................. .................................................... ................................. ....... 14 Pakistan Pharmaceutical industry is involved with the manufacturing of ................................ ................................ 14 Trade Off:............................................ ...................................................................... ................................................... .................................................. ................................. ........15 Organizational Structure ................................................... ............................................................................ ................................................... ............................. ... 16 PharmEvo HeadOffice ....................................................................... ................................................................................................. ............................. ... 16 PharmEvo factory Organogram .................................................... .................................................... Business Environment ................................................. ........................................................................... .................................................... ................................. ....... 19 3
Market Structure: .................................................................................................................... 19 Market Size Last 5 Years: ....................................................................................................... 20 Market Size 5 Years in Value (Rs. In Billion ) : ...................................................................... 20 Driving Forces And Trends In The Business / Industry: .......................................................... 24 Market Size Next 4 Years Value: ............................................................................................ 26 Assumptions for Growth:......................................................................................................... 26 Products Life Cycle: ................................................................................................................ 28 Distribution Structure in the Industry: ...................................................................................... 29 Competition Segment Matrix ................................................................................................... 33 Competition Segment Matrix/Findings .................................................................................... 34 Michael Porter 6 Forces: ......................................................................................................... 35 Pharmaceutical Industry Analysis ........................................................................................... 41 INTERNAL ANALYSIS............................................................................................................42 SWOT-Analysis: .....................................................................................................................43 Key Issues / Challenges ......................................................................................................... 45 Key Issues ......................................................................................................................45 Product Plan ........................................................................................................................... 49 Strategic Direction .................................................................................................................. 57 Operational Plan to address key issues:.........................................................................57 Communication Plan...............................................................................................................58 Conclusion & Future Guidelines ............................................................................................. 63
4
Executive Summary Business Scope: PharmEvo is in the Healthcare business.Overall the Pharmaceutical industry is worth Rs. 181 Billion with more than 16% annual growth rate over last year. There are majorly 16 therapeutic segments. PharmEvo has presence in 10 segments.
Business Environment: Pharmaceutical industry is worth Rs.181 Billion with more than 650 companies.
Market Structure: All in all there are 16 segments and new channels like Direct selling to patients is now being followed, apart from the normal channels. This is done for hepatitis medicines which are delivered to the patients’ home, similarly blood pressure monitors are delivered to patients directly through PharmEvo sales force.
Market Data of Last 4 Years: Corporation has invested heavily in new products launches the Distribution is changing as there is growing trend of Direct selling to patients (home delivery for life saving drugs)
Key Issues: PharmEvo need to improve new products launching speed, strengthen its Respiratory Segment, increase its production capacity (installation of new plant for liquid injections), Export market regulation compliance is required, rising Raw material cost due to devaluation of Pakistani Rupees, delayed products registrations are problems faced by Pharmaceutical industry.
5
Group Introduction Introduction The introduction comprises of Premier Group and Shield Corporation profile.
Premier Group of Companies Corporate Profile Premier group is in business of distribution of consumer and pharmaceutical products for over 35 years. The group is mainly in sales and distribution of major local and international brands all over Pakistan. The group has also shares in English Biscuits (manufacturer of Peek Freans brand) and National Foods (packaged spices). And also deals in Dental and Baby Care products and manufacturing and marketing of pharmaceuticals. Group’s turnover is over Rs. 10 billion (approx. 167 million US Dollars).
Group Companies Premier group has the following companies: I.
Premier Distributors 1971 Distribution of branded food and household products
II.
Premier Agencies 1975 Distribution of pharmaceutical and healthcare products, and toiletries
III.
Zaman Textile (* Acquired 2002) 1985* Leading manufacturers of export quality 100% cotton yarn
IV.
PharmEvo Pvt. Ltd Sept 1999 Marketing and manufacturing of pharmaceutical products
V.
Shield Corporation (* Acquired 2003) 1984* Leading manufacturers of dental and baby care products
with a well- established
–
brand name, SHIELD
i. Premier Distributors Premier distributors, is one of the largest sales and distribution house in Pakistan, have started its operation in 1971. It deals mainly in distribution of branded food and household products among different countries. Some of its major brands include Cadburys, National Foods (packaged spices), English Biscuits, Mitchell’s, etc.
6
ii. Premier Agencies Premier agencies have started its operation in 1975. It deals mainly in the distribution of pharmaceutical, healthcare products, cereals and toiletries. Some of its major brands include Abbott, Aventis, Otsuka, Becton Dickinson,
etc
iii. PharmEvo (Pvt) Limited PharmEvo has started its operation in 1999. It deals in Marketing and manufacturing of pharmaceutical products. It is one of the fastest growing pharmaceutical companies in Pakistan and in just 13 years managed to rank at 30th position out of 650 pharmaceutical companies maintaining a
7
growth of over 25% annual growth over last year. PharmEvo is known among its doctor’s community
with ethical and cause oriented marketing. It is also the sole marketers and importers of Becton Dickinson Insulin syringes and Bausch and Lomb Visual Care (contact lenses and solutions) products.
iv. Zaman Textile Zaman textile, a leading manufacturer of export quality 100% cotton yarn has started its operation in 1985 and acquired by the group in 2002.Zaman Textile, Textile, acquisition is the example of the Conglomerate Diversification, where the group diversified into a different industry i.e. Textile, with unrelated products. This was done as the group had the financial resources and it ventured into the textile industry.
v. Shield Corporation Shield Corporation, leading manufacturers of dental and baby care products has been in existence since 1976. It is formerly known as Transpak Corporation Ltd., renamed as Shield Corporation Ltd in July 2003. It has a strong brand image and can readily transferable to new product category. It acts as a separate entity and is professionally managed. It also the contract manufacturing for Gillette Pakistan for their Oral B and Contura lines of brushes. It has over 30% market share in baby care products (feeders, (feeders, soothers, nipples, and teethers) within the local market. Shield Corporation Limited was incorporated incorporated in Pakistan on January 10, 1975 as a Public Limited Company and its shares are listed on the Stock Exchange of Pakistan. In 1978, it entered into consumer marketing and became a well-known company across Pakistan in a very short span of time. ‘Shield’ range of dental care was introduced in 1984, and Shield range of baby care products was launched in 1987.
Growth Strategy under taken by Premier Group: Shield Acquisition& establishing its own Pharmaceutical manufacturing company, by the group are examples of Backward integration, integration , where the group was already distributing Pharmaceutical and personal care products, products, hence the group acquired Shield in 2003 and established PharmEvo PharmEvo in 1999. The premier group annual revenues stand at more than Rs.12Billion.
8
Vision •
Our dream is to build a healthier society by becoming a leading and socially responsible global company through innovative solutions.
Mission Our mission is to be a global organization organization whose philosophy is characterized by a highly refined sense of ethics which is expressed tangibly through its dealings while upholding highest standards of integrity. An organization organization that aspires to be a leader in providing quality healthcare solutions and where patients’ wellbeing is viewed as the ultimate concern. Creates differentiation differentiation through pioneer ship in cause oriented marketing. Cares for its employees, recognizes merit through rewards on achievements. Bears a progressive approach thereby encouraging encouraging initiatives, welcoming new ideas and always ready to move off the beaten track. Respects the hands that help relief pain and suffering. Embraces Information Information Technology Technology as heart of the business and employs leading
9
technologies to help achieve defined objectives.
From the desk of M. D. (Message of the M.D. ……….Giving a Vision ) Occasionally I have difficulty finding the words to describe the intangible drive that sets PharmEvo apart from the rest. If I put it mildly, it is the power of dreams that has brought such a phenomenal success in it's wake. Though our challenges are fearsome so are our strength, a force that help us defy being lulled into complacency. complacency. PharmEvo genetic blue print carries these four Cs as its basic constituents: * Competence * Commitment * Consistence & * Compassion Alongwith an indomitable passion to out-perform our competitors helped us forged PharmEvo into a soul now viewed as a yard stick against which ethical practices are measured. We feel proud to serve as a catalyst for integrating the well being of body, mind and spirit as every passing day keeps strengthening strengthening our conviction to stand firmly behind our vision; our dream, a healthier society. M. HaroonQassim Managing Director
10
Business Scope The Business Scope: PharmEvo is in the Pharmaceuticals &healthcare business, providing essential & quality medicines to the customers. c PharmEvo started its operations in 1999 with toll manufacturing*and marketing of medicines. Then its own plant was operational in 2003 at Port Qasim. Pakistan’s Pharmaceutical industry is now worth Rs. 181 Billion and growing with more than
15%growth Rate. In less than 13 years PharmEvo currently PharmEvo enjoys 30th ranking in the pharmaceutical industry annual growth rate of more than 25%. Having annual Revenues of more than Rs. 1.61 Billion. *Toll manufacturing = To do the manufacturing at some other company’s plant also known as contract
manufacturing. Pharmaceutical industry is growing aggressively having broadly 16 segments while PharmEvo is present in atmost 10 segments.
Regions Where PharmEvo Pvt. Ltd Operates: 1. North Region (Pakhtunkhwa) covering cities like Bannu, Peshawar, TimarGarh, Swat, Mardan, Kohat 2.
(comprising of Punjab) Bahawalnagar, Multan, Lahore, Islamabad, RawalPindi, Jehlum, Bhurewala, Bahawalpur, Jhang, Faisalabad, Sialkot, Sahiwal, Layyah, Gujrat, Rahim Yar Khan, Dera Ismail Khan, Okara, Dera Ghazi Khan.
3. Southern Region (comprising of Sindh and Balochistan) Larkana, Sukkur, Mirpurkhas, Quetta etc
Karachi, Hyderabad, Nawabshah,
4. The sales are mainly focused in Urban areas while Rural areas are not covered very well
11
While PharmEvo Export operations are in following Regions of the world: Asian Region:
Afghanistan
SriLanka
Vietnam
Cambodia
Myanmar
Philippines
African Region South American Region:
Kenya
Guate Mala
12
Functions / Applications / Products All in all there are 16 broad segments which are further segmented to 100+ segments. In the 16 broad segments PharmEvo has presence in 10 segments 1. Systemic Anti Biotics(for infections treatment) Augmentin, Ampiclox ,Velocef,Evofix, EvoRox, Evozid 2. Alimentary and Metabolism- (Diabetes, Ulcer ) Amarayl, InsuGet, Evopiride, Zoltar, Innogen 3. Cardiovascular- (blood pressure) Tritace,Ramipace, Telsarta, Tansin 4. Blood and Blood Forming- (Anti Clot and Blood forming) Steplex, Lowplat, Lowplat Plus 5. Musculoskeletal- (Pain, Gout) Voltral, Panadol, Disprin, Nise, Anex, Gouric 6. Respiratory System- (Asthma, cough syrups etc) Actified DM, Sancos,Aireez 7. Nervous System- (Depression, Anti Epilepticetc) Epival, Lyrica, Estar, Voxamine, Klevra 8. Anti Neoplastics- (All type of Cancers) Gemzar, Herceptin Oxalitin, Oncotaxel 9. Various (Infant Nutrition & Adult Nutrition etc) Lactogen, Similac, Ensure etc) 10. Diagnostics Agents (Blood PressureMonitors, Fat monitors& blood sugar monitors) AccuCheck, Omron etc 11. Sensory Organs(Urinary & Sex Hormones) Benesol-N,Polyfax,LidosporinPharmEvo is absent in this segment 12. Genito Urinary & sex Hormones (Urinary & Syntocinon PharmEvo is absent in this segment
Sex
13. Systemic Hormones(anti inflammatory& metabolic Thyroxine PharmEvo is absent in this segment
Hormones)
Urixin,
Hytrin,
hormones) Kenacort-A, Betnesol,
14. Hospital Solutions (Hospital drip solutions) Hemaccel, Calmin-600, LiposynPharmEvo is absent in this segment 15. Dermatology(Skin infections & Skin preparation) PolyFax, Rigix, StieproxPharmEvo is absent in this segment 16. Parasitology (anti viral, anti protozoal diarrhea, malaria etc) Entamizole, Flagyl, MospeletcPharmEvo is absent in this segment
13
Customers and Users In Pharmaceuticals according to Drug Law, companies cannot interact / promote medicines to Customers (patients) directly . So more focus is made to influencers i.e.the doctors while the end users are the patients. However DTC (Direct to Consumer brands can be advertised and promoted to consumers directly e.g. Panadol, Sensodyne Tooth Paste, Dentonicetc) •
•
•
•
•
Doctors (influencers) Hospitals / Institutes Government (Tenders) Wholesalers Retailers
Value Added Services: i.
Innovative molecules for treatment at affordable rates (monoclonal bodies for cancer patients) e.g. Etanercept by Wyeth (now part of Pfizer Pakistan) for bone problems. etc ii. Delivering life saving drugs to patient homes e.g. to Hepatitis patients, Kidney failure cases and to Cancer patients. iii. Bringing ease of administration, taking of medicine by patients i.e. bringing Palatable (easy to swallow) and good taste tablets and sachet formulations of different medicines.
The influencers: The Target audience in Pharmaceuticals is the doctor’s community WHO are the main influencers of the medicines, whether it is about medicine sales from retails through doctor’s prescription or through institution sales (hospital purchases). PharmEvo targets such influencers to get their business. It is how, the pharm. Companies get to their or reach their real customers i.e. the patients.
Pakistan Pharmaceutical industry is involved with the manufacturing of 1. Tablets 2. Capsules
3. Caplets (Capsule shaped Tablets) 4. Suspensions
5. Syrups & Suspensions 6. Injection (Dry and liquid injections)
14
7. Bandages 8. Prefilled Syringes 9. Aerosols (Inhalers) etc
Trade Off: PharmEvo is in the Health Care (i.e. diagnosis, treatment and prevention of the disease) business and following are the tradeoff ) forPharmEvo (which PharmEvo does not offer. 1. Hospital drips 2. Injections. 3. Sutures &Surgicals Instruments. 4. Bandages etc
15
Organizational Structure
PharmEvo HeadOffice
Group chairman
Chairman
Managing Director
Director
Chief
Internal audit
Business
Operating
(Outsourced
Senior
Manager MIS
Manager
GM Finance
GM HR and
Marketing and
Director
Administration
Sales
Medical Affairs
Director Int’l
Marketing Manager
Marketing
Marketing
Market &Nutrition
Institution, Biotech
ManagerDivision I
ManagerDivisionII
Marketing ManagerDivisionIII
Oncolo
Business unit
Business unit
Business unit
Business unit
head
head
head
head
Business unit
Business unit
Business unit
Business unit
head
head
head
head
16
Pharmaevo factory Managing director
Chief operating officer
Productio
Regulator
Quality
Quality
Administrati
n
y affairs
control
assuranc
on
Supply chain
Engineeri
Product
ng
developme nt
e
Raw
Warehou
Export
materials
se
shipment
17
MD of PharmEvo sets the vision of the company and from time to time refreshes the vision and give his input on strategies and objectives. While the 2 COO (Chief Operating Officers) mainly looks after head office and Factory matters. While GM Finance, Director Business Development and the 2 COO reports to the MD. This Year sales goal is set to achieve Rs.3 billion Sales, which is very ambitious, as last year PharmEvo achieved around Rs.1.91 billion Sales.
MD of PharmEvo sets the vision of the company and from time to time refreshes the vision and give his input on strategies and objectives. While the 2 COO (Chief Operating Officers) mainly looks after head office and Factory matters. While GM Finance, Director Business Development and the 2 COO reports to the MD. This Year sales goal is set to achieve Rs.3 billion Sales, which is very ambitious, as last year PharmEvo achieved around Rs.1.91 billion Sales.
18
Environment Scanning Business Environment
Market Structure: 1. End user/application segments 2. Product application combinations 3. Distribution structure *Means PharmEvo is absent in that segment End Users Application Anti Infectives
Alimentary & Metabolism
Products • Augmentin • Velosef •Evofix
•Risek • Insuget • Zoltar
Anti Neoplastics
Parasitology
End Users Application
Products
• Gemzar • Xeloda • Oxalitin
End Users Application
Products
Channels
Channels
Dermatologicals
• Rigix • PolyFax •Stieprox
Respiratory system
• Evpival • Citanew • Estar
• Acefyl • Aireez • Sancos
G. U. & Sex Hormones *
*
• Flagyl • Artequine • Mospel
*
Nervous System
• Urixin • Hytrin • Syntocinon
Diagnostics Agent • Accu Check • Omron
Systemic Hormones * • Betensol • Kenakort-A • Thyroxine
Cardiovascular System • Zestril • Tansin • Tritace
Blood & Blood Forming • Steplex • Lowplat • Ferrum
Sensory Organs *
Hospital Solutions*
• Betnesol-N • Lidosporin • Polyfax
• Hemaccel • Calmin-600 • Liposyn
Various (nutrition) •Ensure • Lactogen • Similac
Musculoskeletal • Voltral • Feldene • Gouric • Nise
Retailers
Wholesalers
Hospitals / Institutes
Sub Distributors
Distributors
PharmEvo
19
Market Size Last 5 Years: In pharmaceuticals the products price vary per unit a lot e.g. a cardiovascular injection Rapilysinis sold for Rs. 75,000 per pack while a pack of blood pressure medicine may sell at Rs. 76 for 10’s tablet. So it is insignificant in Pharmaceuticals to compare and analyze the Units (volume) growth. And assess further. So analysis is done on the basis of Value, which is very important.
Market Size 5 Years in Value (Rs. In Billion ) : 5 Years Trend of the Industry Avg ± Growth of 5 years
Value in Rs. 2012
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Total Pharmaceutical Market Segments SYSTEMIC ANTI-INFECTIVES ALIMENTARY T.& METABOLISM NERVOUS SYSTEM MUSCULO-SKELETAL SYSTEM CARDIOVASCULAR SYSTEM RESPIRATORY SYSTEM VARIOUS BLOOD + B.FORMING ORGANS DERMATOLOGICALS PARASITOLOGY G.U.SYSTEM & SEX HORMONES ANTINEOPLAST+IMMUNOMODUL SENSORY ORGANS HOSPITAL SOLUTIONS SYSTEMIC HORMONES DIAGNOSTIC AGENTS
share %
181,712,895,131 43,288,189,175 39,985,456,676 16,091,326,379 13,205,647,370 12,760,457,925 12,494,368,583 10,771,421,558 6,065,604,891 5,906,176,195 5,606,724,896 5,144,686,254 3,561,907,533 3,337,471,880 1,675,382,388 1,653,536,478 164,536,950
2011
share %
150,752,445,126 23.82 22.00 8.86 7.27 7.02 6.88 5.93 3.34 3.25 3.09 2.83 1.96 1.84 0.92 0.91 0.09
36,668,547,890 32,132,964,810 13,779,232,363 10,845,890,538 10,697,382,713 10,509,291,816 8 ,443,904,494 5,034,925,729 4,993,844,702 4,548,100,761 4,323,065,695 2,987,789,397 2,881,332,931 1,399,466,863 1,349,162,180 157,542,244
2010 130,905,299,682
24.32 21.32 9.14 7.19 7.10 6.97 5.60 3.34 3.31 3.02 2.87 1.98 1.91 0.93 0.89 0.10
share %
2009 112,721,925,825
share %
2008
share %
95,262,532,608
15.28
32,137,256,485 24.55 28,044,589,217 24.88 23,420,722,468 24.59 27,401,531,960 15.08 23,586,179,576 20.92 19,814,277,271 20.80 12,266,294,975 6.75 10,922,048,638 9.69 9,551,365,602 10.03 9,396,855,714 5.17 8,205,750,511 7.28 6,899,031,550 7.24 9,358,152,138 5.15 8,054,854,130 7.15 6,893,120,141 7.24 9,488,639,372 5.22 8,073,935,854 7.16 7,020,206,533 7.37 6,937,217,569 3.82 4 ,844,205,704 4.30 4,405,820,846 4.62 4,438,000,802 2.44 3,804,107,410 3.37 3,116,937,106 3.27 4,294,838,527 2.36 3,975,888,958 3.53 3,316,541,261 3.48 3,630,232,771 2.00 3,001,536,795 2.66 2,525,824,060 2.65 3,750,528,635 2.06 3,114,431,362 2.76 2,485,009,582 2.61 2,771,304,998 1.53 2,579,024,525 2.29 2,022,238,507 2.12 2,470,414,221 1.36 2,096,583,532 1.86 1,766,734,275 1.85 1,257,300,794 0.69 1,148,085,361 1.02 946,163,451 0.99 1,185,310,433 0.65 1,120,396,962 0.99 966,097,756 1.01 121,420,288 0.07 150,307,290 0.13 112,442,199 0.12
Our Analysis i. Anti Infectives (Anti biotic) segment has grown to Rs.43 Billion market from Rs. 36 Billion, this is mainly due to growth in existing brands like Augmentin Worth annual sale of Rs. 3 billion, Velosef annual sale of more than Rs. 1 billion, Amoxil worth Rs. 1 billion etc. The increased sale in Anti biotic is due to the fact that scarcity of clean drinking water, unhygienic food, unawareness about health issue and environment pollution are leading to more and more infections ranging from common cold n cough, to Pneumonia, T.B (Tuberculosis) etc. ii. In the Alimentary & Metabolism Segment the growth is seen in the anti ulcerants, Nutrition Supplements like Cac-1000, Surbex-Z, the Anti Diabetic market with oral anti Diabetics like Amaryl, Getryl, Sitaglu etc. The rise in anti ulcerants is mainly associated with depression that results in ulcers, High fats intake, eating of junk foods etc. (all these causative agents are proven by studies by leading doctors and health professionals) iii. Nervous System segment has shown a steady growth as its brands like Lamotrigine, Epival and Citanew have shown steady growth. In the Nervous System the problem lies with the
20
15.41 15.74 11.91 14.89 13.50 12.48 25.98 17.75 14.07 18.44 16.41 17.00 17.52 11.53 11.69 7.51
Diagnosis of Nervous (psychiatry problems) as mostly the person having this problem do not refer it to the doctors and even families are unaware of such ailments or do not want to visit a psychiatrist for such diseases etc. iv. Respiratory Segment, has shown very minor growth due to the fact that the major products in Respiratory are the Asthma inhalers that experience a dip in growth due to supply issues. Earlier the govt banned the use of CFC gas in inhalers, later manufacturers like GSK and Macter won a govt stay till 2012 for such products after this period no inhaler should be based on CFC gas which is considered no environment friendly as CFC damages the Ozone layer. While the overall positive growth is seen due to other respiratory medicines like Quibron, Acefyl syrup etc. v. Cardiovasculars segment is experiencing growth, the studies suggest and annual growth of 7-12 % in cardiac arrest cases in Pakistan this is due to unhealthy life style of sleeping too late and rising too late, eating junk food, smoking etc are adding up to these problems. All these condition are leading to Cardiac (Heart) disease and blood pressure. And we have seen a surge in the cardiovascular new products especially in blood pressure drugs like Amlodipine + Valsartan, Telmisartan etc. vi. Parasitology Segment(Anti malarial, anti dirrohealetc). uncleaned drinking water is adding to the diarrhea problem while from late 2007 a surge is observed in Malaria and Dengue cases. The dengue problem is seen to get severe mostly in late Monsoon season. A rush of new launches and heavy investment is seen in new products of Artemether + Lumefantrine combination and Dihydroartemisinin + Piperaquine etc. vii. Anti Neoplasts (Anti Cancer) Segment is seen to have been growing at a slow pace. The main reason is that the cancer products sales data is mostly under reported as here mostly the purchase is done by patiently directly with the distributors that involve at discounted prices and normally a single cancer treatment involves expenses ranging from Rs. 100,000 to Rs. 700,000 depending on the severity of the disease and in later stage of the disease the treatment cause may move uptoRs. 2 million or more etc. viii. Due to constant increase in pollution of air and water borne disease on the rise (WHO). ix. Un healthy lifestyle. Unhygienic food intake leading to diabetes, cardiac and ulcer. (Diabetes is growing more than 15% rate, Cardiac stands at 10% while Ulcer cases hover around 8% rates. x. Nervous system decline due to psychiatric cases are mostly under reported due to unawareness (unlike west). xi. Hospital Solutions segment is seen to grow not aggressively as there are only few manufacturers that produce these products and the hospital sales / institutional sale data is not extensively covered, so here the data is under reported but expert evaluation suggest that around 40% sale of hospital solution is not being reported. xii. Diagnostics Segment is not experiencing significant growth as there are few players in the manufacturing of such Blood Pressure monitors, Fat Monitors, Body Mass Index while people purchase such instruments from local vendors selling unbranded Chinese goods that are cheaper than the branded instruments like Omron, Accu check etc. Sales achieved through new Products in the various Segments during the last 4 years:
21
Past 4 years launches in the segments Value in Rs.
Ranking Rs. Wise 2011 0 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
2011
2010
2009
2008
TOTAL PHARMA MARKET 153,510,438,005 131,821,319,027 114,280,477,382 96,354,648,200 SELECTED TOTAL (LAUNCHES) 14,756,727,618 8,405,552,523 3,599,157,588 420,391,709 SYSTEMIC ANTI-INFECTIVES 3,458,776,885 1,961,741,124 810,377,743 83,833,197 ALIMENTARY T.& METABOLISM 3,148,327,158 1,588,343,565 570,474,763 53,853,325 NERVOUS SYSTEM 1,584,185,203 969,630,254 472,970,179 73,896,441 CARDIOVASCULAR SYSTEM 1,047,043,941 541,820,614 201,835,819 21,433,626 VARIOUS 1,000,640,754 661,887,265 344,128,048 47,691,887 MUSCULO-SKELETAL SYSTEM 970,240,657 560,760,203 253,863,916 16,990,309 RESPIRATORY SYSTEM 730,704,897 402,416,660 216,430,442 38,983,650 PARASITOLOGY 703,412,592 431,979,271 236,595,363 22,603,247 BLOOD + B.FORMING ORGANS 545,554,331 356,996,659 164,115,357 18,762,657 G.U.SYSTEM & SEX HORMONES 485,291,660 250,020,420 62,005,390 3,543,566 DERMATOLOGICALS 363,157,941 226,969,515 108,359,655 14,778,949 ANTINEOPLAST+IMMUNOMODU 348,523,222 225,337,538 73,586,971 11,600,745 SENSORY ORGANS 338,228,566 215,956,354 81,331,881 11,380,488 SYSTEMIC HORMONES 31,773,390 10,979,128 1,962,873 769,760 HOSPITAL SOLUTIONS 840,578 713,953 1,119,188 269,862 DIAGNOSTIC AGENTS 25,843 0 0 0 decline Growth
Following molecules have been launched in following segments that has added tremendous growth (in terms of sales to the pharmaceutical companies) a) Systemic Anti infectives 1. Me too of Augmentin (that is Amoxicillin + Clauvanic Acid) that has added more than 300 Million Rs. In sales to companies 2. Piperacillin + Tazobactum launch by Bosch b) 1. 2. 3.
Musculoskeletal Febuxostat Diclofenac + Misoprostol has added more that Rs. 150 Million sales Ibandronate Sodium More than Rs. 5 Milliion Sale ( a once month tablet for bones, i.e. Rs. 2200 tab of Roche while PharmEvo has launched it at Rs. 385, this is the maximum price allowed by Ministry Of health to launch this medicine.
` c) Respiratory Fluticasone, Beclomethasone launch by other companies. d) Blood and Blood Forming 1. Prasugrel e) 1. 2. 3.
Alimentary and Metabolism Insulin 70/30 by Getz and Novo Nordisk Peg interferon launch by Roche Cac-1000 a nutrition supplement by Novarits has added Rs. 222 million sales
f) Various Segment
22
1. Launch of Meiji Big by Meiji 2. Lactogen Gold by Nestle etc g) Psychiatry Pregabalin molecule was launched in 2007 and companies have so far generated annual sales of around 80 Million each on this molecule while later Pfizer the innovator of this drug took companies to the court and since then no further registration and launch of this medicine is seen.
Strategic Take Home Message for PharmEvo: PharmEvo has, we must say under perform in the new products launches especially in segments like Sytemic Anti Infectives, Respiratory, Psychiatry, Cancer (anti Neoplastics) and Peg interferon. Mergers and Acquisitions& Investments by MNC (Multi Nationals and National Companies) during the last 4 years in Pakistan. 1. Over 3 years competition has entered heavily into Parasitology mainly with anti malaria products.Genixpharma has around Rs.490million sales value in this category with Artemether +Lumefantrine and Artemisinin + Piperaquin. 2. National companies are aggressively investing in procuring Pegylated interferon, which is originally a product of Roche with more than Rs 1 Billion market. Ferozsons a National Co. has invested in the plant of Bio tech to produce this product in Pakistan with license from an Argentinean company, while Getz has arranged this product from other company of Argentina. Many companies are also trying to procure this product. This product is in high demand as it is used in Hepatitis and is superior product that other normal interferons. 3. Getz has procured a 20 acre land and building a new plant for its production.
4. GSK Pakistan has bought the entire stiefel a skin care Co. and in the mean while has also acquired BMS Pakistan operations entirely.
5. MSD (Merck Sharpe &Dhome) has sold its operation to OBS Pakistan. 6. Parke Davis, Farmacia Upjohn have merged with Pfizer Incorporation both locally and internationally. 7. Roche globally and in Pakistan retained its cancer & biotech business while divested other products like Anti biotics and psychiatry segments. In Pakistan these divested segments are
23
purchased by Martin Dow. 8. Astra Zeneca has stopped its plan to enter Pakistan due to law and order and political conditions while continuing to market product with ICI Pakistan. 9. ICI pharmaceuticals is now owned by Lucky Cement group. 10. A Sitagliptin(a diabetes) drug is launched by OBS under license from MSD while Getz, Hilton and CCL has also launched its molecule. MSD has filed suit against these companies for patent violation. The Raw material API is also very expensive at around US $ 3000 / Kg. 11. Nestle is investing more in nutrition products ( infant milk product) and various segments and companies like Cow & Gate and Meiji are also investing in Pakistan. 12. Danone dairy products has entered in the Pakistan market and have launched infant milk products, which are primarily prescribed by doctors. 13. AGP (Ali Gohar Pharmaceuticals has sold its pharmaceutical operations to GETZ Pakistan.
What has been done in PharmEvo for the last 4 years: 1. Launched its Biotech division in 2007 and had sales of Rs 50 Millions in Year 1 of this division launch. 2. In 2008 – 09 industry launched more than 40 brands while PharmEvo launch 4-5 brands. 3. Invested around 120 million in plant expansion in 2008. 4. In 2010 – 11 PharmEvo launch around 12 – 14 products and added revenues of more than 150 million. 5. Planning to invest around Rs. 150 million for liquid injection to strengthen its Anti biotic segment. 6. Entered in diagnostic segment with Omron (Japan). Omron is having 70% BP monitors share globally. 7. Launched Celia infant milk formula in 2010 and achieved sales of Rs 25 million in Year 1 of the launch. IN year 2 Celia brand has achieved sales upto June 2012 with Rs.86million sales.Wwhileplanning to expand this segment with new brands. Celia is a franchise business for PharmEvo so its sales are not directly shown in Sales of PharmEvo but as separate one.
Driving Forces And Trends In The Business / Industry: Machine cost, new customer group, customer usage, product innovation, innovation, technological change, cost factors etc.
marketing
Pharmaceutical Market is dominated by following Forces 1. Technology Biotech and Oncology Products Plant are expensive to buy and install, so most of the generic companies are opting for these products via import. These biotech segments have seen an influx of medicines from Argentina, China, Brazil and India and every second company in Pakistan want to have these segments in their portfolio. Key technologies and components. 1. Biotech Plants (for Hepatitis, Insulin, Oncology medicines)
24
2. Tablet Manufacturing Plants 3. Cephalosporins Plantsare all expensive and obtained from China, India and Europe.
2. Products Innovation Product innovations are mainly done by the multinational that contribute globally in the R & D after a hectic research of 5 to 7 years and in some cases up to 10 years research come up with a new product for the ailment (disease). The benefit such companies reap in terms of patent protection and earn hefty profits are earned by them in terms of patent exclusivity that grant them the right to manufacture and market the product to 17-20 years and no generic or copy molecule is allowed. 3. General profitability margins in the business. The general profitability margins vary from 30% to around 50%. 4. User appreciations, loyalty. In medicines the importance of influencers (doctors) is the Key as once a drug is prescribed to a patient the patient will religious seek to buy and take the medicine regularly till his ailment persists? Once a brand is purchase very few chance of brand shifting can be seen or the case may be that doctor changes the medicines otherwise the patient will continue to take this medicine. E.g. blood pressure and blood sugar medicines.etc.
5. Certifications PharmEvo is ISO 9001 & 14001 qualified organization, international accreditation and certification like FDA approval (US), EMEA approval will raise the industry competence and make it a formidable force in the Pharmaceutical industry worldwide.
25
Market Size Next 4 Years Value: Future 4 Years Trend of the Industry Value
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
TOTAL Pharmaceutical MARKET Segments SYSTEMIC ANTI-INFECTIVES ALIMENTARY T.& METABOLISM NERVOUS SYSTEM MUSCULO-SKELETAL SYSTEM CARDIOVASCULAR SYSTEM RESPIRATORY SYSTEM VARIOUS BLOOD + B.FORMING ORGANS DERMATOLOGICALS PARASITOLOGY G.U.SYSTEM & SEX HORMONES ANTINEOPLAST+IMMUNOMODUL SENSORY ORGANS HOSPITAL SOLUTIONS SYSTEMIC HORMONES DIAGNOSTIC AGENTS
2012 173,791,187,552 42,272,418,721 37,043,685,157 15,885,043,549 12,503,413,759 12,332,210,226 12,115,374,338 9,734,344,198 5,804,388,254 5,757,029,019 5,243,164,260 4,983,738,210 3,444,398,312 3,321,672,636 1,613,340,386 1,555,347,890 181,618,637
2013 2014 2015 200,350,825,790 230,969,440,741 266,267,345,523 48,732,701,112 42,704,886,341 18,312,675,329 14,414,247,967 14,216,880,254 13,966,906,421 11,221,995,350 6,691,443,888 6,636,846,978 6,044,450,838 5,745,378,002 3,970,788,484 3,829,307,257 1,859,899,131 1,793,043,931 209,374,506
56,180,276,160 49,231,260,596 21,111,309,936 16,617,105,413 16,389,574,979 16,101,398,895 12,936,996,790 7,714,063,801 7,651,123,118 6,968,194,037 6,623,415,395 4,577,624,234 4,414,521,138 2,144,138,216 2,067,065,870 241,372,165
64,766,026,864 56,755,027,997 24,337,645,877 19,156,614,548 18,894,311,775 18,562,095,181 14,914,093,324 8,892,965,601 8,820,406,008 8,033,108,291 7,635,638,853 5,277,199,657 5,089,170,331 2,471,816,138 2,382,965,212 278,259,866
Avg Projected Growth ± 15.28% 15.41% 15.74% 13.91% 14.89% 13.50% 12.48% 22.98% 17.74% 14.07% 20.44% 16.41% 17.00% 17.52% 11.53% 11.69% 7.51%
Assumptions for Growth: 1. New innovative molecules help doctors in treating the diseases these new products ensure, shorter duration of treatment, effective against diseases, having less side effects and plenty of studies to support the new drug claims. 2. These above qualities tempt doctors in prescribing the new medicines. 3. Unclean environment will further aggravate the existing infections, skin infections and viral diseases, so plenty of Growth is seen for Anti Biotics. While more stronger Anti biotics are being used, especially the combination of Anti biotics use is gaining momentum as the existing infection bacteria are becoming resistant or immune to current therapies. In short plenty of growth can be forecasted in this segment. 4. The national companies are more and more spending in their facilities-Capacity building that will result in new products being introduced. 5. Innovative molecules to be introduced in Pakistan for diseases like Cancer, Heart, Bone areas. 6. Growing opportunities in the international market for export, currently stagnating at US $ 141 Million only (industry) 7. Unhealthy life styles and eating habits are leading to Obesity, Diabetes, Cardiac diseases and these conditions will prevail in future as well.
26
8. PharmEvo’sYearly sales are expected to grow around 20% to 30% annuallykeeping in mind PharmEvo’s past 5 years Sales trend. Whiletoout pace the competition a staggering growth of around 35-45% annually is required. 9. 12%-16% annually growth of pharmaceutical industry in Pakistan is expected that will be in 2015 around Rs. 266 Billion industry
Strategic Take Home Message for PharmEvo: 1. PharmEvo can achieve growth of 35% to 45% provided the following things
2. Aggressive launches in segments like Anti Cancer (with mono clonal anti bodies), Various (Nutrition), Women and Child Health, Respiratory, Sytemic Anti Infectives, Respiratory, Psychiatry, Cancer (anti Neoplastics) and Peg interferon. 3. Expanding the base (sales) of their existing products by more penetration in the peripheries of existing cities, and going into new cities. 4. Speedy registration of molecules and timely launch of molecules will help PharmEvo to gain leadership position in various therapeutic segments.
27
Products Life Cycle: Product Segments
INTRODUCTION
GROWTH
MATURITY
Lowplat
Xplendid
Aireez Gouric
Evopiride
Limitrol Evozid i. ii. iii. iv. v.
DECLINE
Telsarta is in growth phase after is launch in late 2010 and earliy 2011 Lowplat is the cash cow product of PharmEvo and now it is in Declining phase X-plendid is in growing phase and it is moving toward maturity Aireez is in declining phase and soon it may have to be divested Gouric is in growing phase and it has Xurig as competitor from GETZ
Strategic Take Home Message for PharmEvo: Majority of PharmEvo’s products are in the maturity phase, (like Tansin, Fasteso, Treatan, EvoRox,
EvoZid, Anexetc, Zoltar, Voxamine,) which needs renewed marketing activities, Close liaison with Doctors and Chemists (whole salers and Retailers) so these could be revived and turned into Star products i.e. the growing in sales and in market share.
28
Distribution Structure in the Industry: Goods flows chart of Competition Sanofi Aventis
29
Distribution Structure Shift from 2008 to 2012: In pharmaceuticals 80% sale is done by the main distributors while 20% sale is achieved through institution sales. 5-10 % sale is done by Sub distributors, While retailers comprise of 60% sale of the Wholesalers sale. Distribution Network of PharmEvo:
PharmEvo’s main distributor is Premier Agencies (The parent company of PharmEvo).
Coverage PharmEvo has main distributors in around 34 cities of Pakistan that also cater to the nearby cities from these locations. Like Multan distributor serves to Bhurewala etc. Sub-distributors While 5 sub-distributors are appointed for better availability of PharmEvo’s goods. To manage the distribution issues professionally PharmEvo has adopted a policy as to treat Premier Agencies as Distributor only and not treat it as Group companies. As earlier, stock delays, expiry issues, payment issues were arising due to this. PharmEvo distributes the general medicines to Chemists and hospitals through Distributors and subdistiributors while for some institutes like Indus hospital, KIHD (Karachi Institute of Heart Disease,
30
NICVD Karachi, etc, special discount offers are made and stock are directly dispatched to them.) For Niche products (Oncology, Hepatitis-Intef) PharmEvo offers the doctors and patients a facility, as to contact PharmEvo sales person and he delivers the medicine at their homes. These medicines require special storage conditions and temperature management at 2-8 ºC ORDERING & INVENTORYMANAGEMENT: Inventory of all products are maintained to six weeks level at any given time. Order are send on PharmEvo Order Format and filled order format are send to PharmEvo by 3 rd of every month thru email. Signed and stamped order Format with DD is send on schedule date with Demand Draft. Order quantity should be as per the carton size. Stocks against the order are sent within six working days (if order receives to us on schedule date) Stocks should be checked before acknowledging to the courier service like number of cartons, carton condition and weight of the shipment. If any breakage, short & less weight of shipment are found than immediately (within seven working days) inform us thru letter or email. Sales Data: Sales data should send on standard format as described by the software company. Sales Data should receive on daily basis. We cannot afford a single day delay so after closing the daily sales, compiled data should send to PharmEvo immediately. Preceding date data should receive to PharmEvo before 12:00 PM of the running day i.e. data till th th 14 Aug should receive before 12:00 PM of 15 Aug.Data received after the dead line should consider late. th th th st Computer generated sales report should receive be sent to PharmEvo on every 8 , 16 , 24 & 1 of the month. NEAR EXPIRY INTIMATION : Near Expiry intimation of market and ware house should be intimated four month prior to the expiry. Near Expiry intimation should be sent before 15th of every month, otherwiseclaimable. Near Expiry intimation should be properly and completely filled like In the month of July the intimation of expiry of November is made.
EXPIRED STOCKS CLAIM: Expired stocks claim are settled for which distributors should send details to PhamrEvo before 10th of every month. Claim should be in our format. If Intimated products get expired than you should lift the stock from the market/warehouse and send to PharmEvo factory and claim to PharmEvo Head Office. Acknowledge copy (by PharmEvo) of Near Expiry intimation should attach with the claim and expired
31
product should be highlighted in near expiry i ntimation. Expired stock should dispatch to our factory and ensure to place filled and complete copy ( Batch Number, Quantity, Expiry Month and etc ) of distributor claim. Short Expiry stocks should only be sending on request. No old expired stocks would acceptable for us; you should send the claim on monthly basis like July expired stocks claim should receive to us before 15 th August. DISCOUNT CLAIM: Discount claim should also receive to us before 10th of every month. Discount approval letter and invoice should attach with the claim. Total discount issued on individual products like discount issued on Evotaxime, Evozid and Evorox should mentioned/calculated in the summary of discount claims. If you can provide software generated one or two page report of customer wise discount issued, invoice number, product detail than no need to attach invoices with discount claim. SHORT STOCK & BREAKAGE CLAIM: It should be sending on need. Courier slip mentioning short stock or breakage/less weight should attach with the claim within 7 days. Courier acknowledge slip contain Number of Big Carton, Weight of Shipment, Number of small carton so you are advise to check carefully before giving acknowledgment to the courier company. Claim should not be settled if courier acknowledged copy will not attach with the claim. OVER NIGHT DISPATCHES: If shortages happen due to the mismanagement of inventory by distributor than PharmEvo will make the overnight dispatches and reduce distributor discount to 5% on particular invoice or product. Any products short with PharmEvo should dispatch overnight without reduction of discount. Any boost in sales and result shortages shall also be dispatched overnight without reduction of discount.
Strategic Take Home for PharmEvo: PharmEvo sales of anti biotics if needs to be improved, for which special handling of institution is needed to meet the sales target, the institution business is vital for the anti biotic business as hospitals are the main source of these medicines.
32
Competition Segment Matrix IMS Aug 2010-July 2011
S. Therapeutic Segments No
Total Pharma Market
Value Wise Share
Growth ±
Selected 8 Corporations Therapeutic Segments Share % in terms of Value Vs PharmEvo
GSK
Abbott Rs. Novartis Getz Rs.
Rs.17.44 B, 10.41 B
Rs. 7.00 B 6.35 B,
Sanofi Aventis
Sami Rs. Hilton PharmEvo 5.77 B, Rs. 4.21 Rs. 1.26 B,
Others
PharmEvo
Remaining
11.16%
6.66%
4.48%
49.57 14.10 17.27 8.33
10.47
15.64
23.01
27.07
48.36
10.05
9.10
10.41
54.50
100.00
28.52
28.02
39.86
22.48
14.27
32.86
18.14
24.73
63.72
100.00
+ +
6.97
10.35
3.24
1.51
9.13
18.54
5.06
4.60
64.20
100.00
+ ++
Share %
Share
Profitability
Rs. 6.25B 4.07% 3.69% B, 2.70% 4.01%
0.81%
Growth ±
Overall
1 Sys Anti Inf
Rs. 36.68 Billion
2 Alim & Metab
Rs. 32.13 Billion
24.32 21.32
3 Nerv Sys
Rs. 13.77 Billion
9.14
12.33
4 Muscu Skelet Sys Rs. 10.84 Billion 5 Cardiov Sys Rs.10.69 Billion
7.19 7.10
15.42 1.09 14.31 1.13
14.65 1 6.26 0.60 7.17
5.38 12.17
0.86 7.11
17.72 1.09
10.76 5.75
13.44 25.94
48.40 29.91
56.30 76.73
100.00 100.00
6 Resp System
Rs.10.50 Billion
8.33
11.78 -
3.03 0.71
8.13 0.06
56.40
100.00
11.40
8.64 -
-16.62
0.63
8.21 1.04
1.56
Rs. 8.44 Billion
10.76 21.72
8.07
7 Various
6.97 5.60
100.00
3.34
13.45
2.90
3.66
0.84
3.59
2.97
8.50
62.71
100.00
++
9 Derma 11 Parasitology
3.31
16.28
0.08
4.04
-
63.37
100.00
-
-
71.92
100.00
+ ++
10 12 13 14
15.27 0.23 7.81 0.51 16.63 3.14 11.31
7.44 0.13 0.00
0.00 15.42 2.28 0.98 0.36 1.51 -
-
25.28
1.42 6.39
0.00
3.02
9.43 1.05
0.75 0.05
18.24
84.12
8 BLOOD & B.form Rs. 5.03 Billion
22.40
+ +
1.36
4.35
36.64
-
-
71.00 100.00 70.30 100.00 73.50 100.00
16 Diagnost Agents Rs. 0.15 Billion
13.82 29.75
Rs. 4.99 Billion Rs. 4.54 Billion
2.87 G. U & Sex Horm Rs. 4.32 Billion Anitneop & Immuno Rs. 2.98 Billion 1.98 1.91 Sensory Organs Rs. 2.88 Billion Hosp Solution Rs. 1.39 Billion 0.93 15 Sys Hormones Rs. 1.34 Billion 0.89
Total Company's Share
0.10 100.00
12.66
1.26
-
-
0.00
100.00
100.00
3.95 6.15 1.70 0.70
100.00
0.65 3.16 3.05
-
-
+
+ +++
-
7.61
0.06
-
-
-
66.20
100.00
+
-
-
-
-
-
-
81.50
100.00
+
-
0.00
-
-
-
-
0.00
100.00
++
100.00
100.00 100.00
100.00
100.00
Historical Growth
15.16
12.17
18.04
19.10
28.03
17.27
37.15
22.16
22.15
Projected Growth
16.00
13.00
17.00
20.00
25.00
18.00
32.00
18.00
23.00
For clear view of this (above mentioned) Competition Segment Matrix, kindly view this attached Excel file.
33
+
PharmEvo’s Therapeutic Segments:
NERVOUS SYSTEM, Rs.0.86 M, 5.36%, +35.71
ANTINEOPLAST+I MMUNOMODUL, Rs.41.01 M, 2.54%, -25.27
SYSTEMIC ANTIINFECTIVES, Rs.122 M, 7.54%, +5.86
RESPIRATORY SYSTEM, Rs.6.29 M, 0.39%, -68.11 CARDIOVASCULAR SYSTEM, Rs.453.38 M, 28.02%, +38.48
MUSCULOSKELETAL SYSTEM, Rs.227.20 M, 14.04%, +33.84
ALIMENTARY T.& METABOLISM, Rs.338.82 M, 20.94%, +47.99
BLOOD + B.FORMING ORGANS, Rs. 342.45 Million 21.17%, +21.11
Competition Segment Matrix/Findings •
• •
•
•
•
Systematic Anti-infective is the largest therapeutic segment followed by Alimentary and Metabolism. Parasitology and Various (Nutrition) segments are the thriving segments. Internationally innovative drugs are being launched in cancer segment (Antineoplast and Immuno.) In anti-Invectives, companies are engaged in unethical practices and PharmEvo refrain from such activities resulting in less growth for PharmEvo in this segment. Moreover, PharmEvo lacks the facility for liquid injections in anti-biotic which is also a hindrance in this segment expansion. For broader anti-infective market penetration PharmEvo needs to have a Parentral (liquid injection) facility. To enter into Penicillin antibiotics manufacturing, a separate area is needed in the plant. For cancer products PharmEvo urgently need to have agreements with good cancer medicine manufacturing companies.
34
•
To enter in the nutrition segment they need to have franchise agreement with good nutrition product companies.
Michael Porter 6 Forces:
Bargaining power of Suppliers: In case of PharmEvo, the supplier does not have high hand in dealing of Raw materials. Companies including PharmEvo engage Raw material manufacturers from India, China, Argentina or western countries.
Bargaining power of Buyers: In this case, the buyers are the patients and institutes and once the patient is suffering from a disease he or she has to bear the cost of medicine, no matter how costly it is. So in this case
35
the buyer’s negotiation power is low. While in case of institutes the buyer power is very much high, and results in great discounts from the manufacturer. Companies, give huge discounts of 30-40% on medicines to large institutes. In case of institutes (hospitals) the buying power is high
Threat of Substitution: Threat of substitution is high for PharmEvo products, although they are quality products but can lose their market share to quality generics products of national companies. E.g. if you look for an antibiotic Cefixime you can find more than 50 brands available in the market, which directly compete with your company brands. The company got the edge by engaging the influencer (Doctor) in writing your brand as prescription. New technologies and/or substitute products. The chance of substitution is high in Pharmaceuticals more than 650 companies are there and in few months’ time a single molecule can as many as competitors resulting in fierce competition and eating in profit margins as prices are greatly reduced by new entrants
Threat of New Entrants: The threat of new Entrants is very high as pharmaceuticals have profit margins as high as 4060%, which make this industry highly lucrative for new entrants. The barrier to entry is also low, as a company can register itself with DRAP (Drug Regulatory Authority of Pakistan) and can start the marketing of products (Medicines) which registrations the firm or company has got in its name. The firm can launch these brands by getting them manufactured in other pharmaceutical manufacturing unit (Toll manufactured or by contract manufacturing). Once these products have good market, then the individual can buy and install the manufacturing plant of such medicines. As this is evident by case of PharmEvo, how they started its operations.
Main entry barriers: The entry barriers in the Pharma Industry are less that is the main reason why more than 650 pharmaceutical companies are there in Pakistan.
New entrants (their origin and competence base). For new entrants it is now not at an easy sailing as you have to compete with fierce competition, establish your name among the influencers (doctors community), win your customers confidence and gain market share etc.
36
Rivalry among competitors PharmEvo has high threat potential from existing national and other multi nationals, whose marketing activities and cheaper products of national companies pose a serious threat to its business. There are a lot of companies competing with each other. There is no clear restriction from DRAP in giving registration to no. of companies. E.g. we can find no. of companies manufacturing and selling molecules like Paracetamol, Diclofenac, Glimepiride etc. However, few Multinationals have restricted local companies in launching and making these new molecules which are protected through patent restrictions. E.g. Pegylated Interferon etc, though few companies have launched this molecule also, but day by day patents are being used frequently by MNCs to stop competition to launch their research molecule as generic. In US, Europe, prior to patent expiry no other firm can manufacture and market the same molecule. This gives an edge to the research company to milk their brand. Recently Pfizer Atrovastatin (Lipitor), went off patent hence Pfizer fears for Revenue loss in billions of US$ in sales to generics.
Relative Power of other stake holders: PharmEvo is owned by private owner, hence it has no pressure from shareholders, the company is part of the family business of Premier Group, while the government regulations impact the company, while there are no Trade unions in PharmEvo.
37
Bargaining power and structure of the buyers (key players in the distribution?) The distribution plays a vital link between the manufacturers and retailers/ whole salers. It is very significant for Cold chain maintenance products and life saving products.
MARKET STRUCTURE, DATA & TRENDS Sales structure of PharmEvo: Have around 730 Medical Sales representative all over Pakistan Having 113 Area Managers Sales Managers 29, Total Sales force of 850 person Head Office Staff:70 Factory Staff: 200 Marketing Department Structure of PharmEvo Chief Operating Officer to whom, Director Medical Affairs, Director International Markets & Nutrition Division, MIS Head, GM HR & Administration & 4 marketing Managers report Marketing Manager Division 1 (Cardio Vascular Division) Marketing Manager Division 2 (Anti Diabetics, Neuropsychiatry, Anti-Obesity) Marketing Manager Division 3 (Bio Tech, Injectableetc) Marketing Manager Division 4 (Oncology, Institution Sales) To a marketing Manager at least 2 Business Unit Managers report To a business Unit manager 3 Product Mangers / Assistant Product Managers report.
38
TOP – 10 External Trends
TREND
1
2
3
4
5
6
Growth of Rural Markets & Focus of Companies on this area
Price fixed by Ministry si nce 2000
Application Segmentation
POTENTIAL IMPACT
PHARM EVO
GETZ PHARMA
Increasing Competition
+= increase penetration in rural areas with low price & good quality medicines
++
+
Margin / Sales Pressure
+ = due to price fixation by Ministry & Increase infl ation the margin & sale pressure has increased
+
Customization
+++ = Entering i n many segments like(Pharmaceutical, diagnostics, Milk product etc)
++= Pharmevo l aunches new molecules before Premium Product Opportunity ant other company, it Growth can charge premium price + = PharmEvo is present in only 8 countries, so it has low International World wi de (i nstant) influence on sales & communication as communication margin compared to MNC,which also reflects its low Sales & less margins ++++ = PharmEvo is the first company in Pakistan to introduce Untapped Market i n complete healtrelated Opportunity Health-care products to the consumers, starting from Prevention to Treatment
- = All the products
7
8
Change in Environment Legislation
TAKING ADVANTAGE SANOFIGSK AVENTIS
Decentralization of Ministry affairsThreat
Foreign Loans / Lack Sales down in Govt of Budget Sector
HILTON
NOVARTIS
+
++
+
++
++
++
++
+++
+
+
+++
+
++
+++
+++
++
+++
+
+++
+++
+
+++
+++
+
+
+++
+
_
_
_
_
_
under regis tration is on hold due to change in ministry policy & has negatively impacted the companies due to which they are unable to launch new molecules +++= it has put companies on fire, due to lack of budget +++ companies cant sale on credit, rather they ask for cash
++
++
+++
++
39
For the details of the 10 External Trends
Relative Importance of Factors
PHARM EVO's RELATIVE IMPORTANT FACTORS FACTOR NAME 1 Parenteral Area (Liquid Injection) to strengthen anti biotic segment 2 Ethical Marketing to influencers 3 Online BMS (Building Management System) for production of medicines 4 Expansion in International Marketing 5 Diagnostic and Nutrition Division 6 Good relation with hospitals / institutions 7 Good printed products
ABSOLUTELY CRUCIAL V. IMPORTANT QUITE IMPORTANT NICE TO HAVE NOT SIGNIFICANT DON'T WANT IT 5 4 3 2 1 0 P P P P P P P
Pakistan Total Multi Nationals Operating in Pakistan
Actually Bristol Myers Squibb and Stiefel Pakistan have been taken over by GSK Pakistan, so now all in All 24 multinationals corporations exist in Pakistan.
MNCs and National Companies Share % in terms of Value
Disease wise segments’ share in
terms of Sales These includes Cardiovascular, Anti Diabetic, Anti Osteoporotic, Anti Cancer, Respiratory (Cough, Flu, Asthma Products) and other life saving products that includes Anti Biotics, Anti T.B drugs and others. In
44% Mulitnationals Companies National Companies
56%
40
broader category Pharmaceuticals are divided into following segments 1. Systemic Anti Infectives (comprising of Antibiotics: Penicllins, Cephalosporins, Macrolide etc) 2. Anti Alimentary (Anti Diabetics, Anti Ulcerant, Laxatives, Vitamins etc) 3. Parasitology (Anti Malarials, Anti helminthes, Anti Protozoans etc) 4. Dermatology (Medications related to Skin) 5. Musculoskeletal (Muscle relaxants, Pain relievers etc) 6. Cardiovasculars (Anti Hypertensives (Blood Pressure), Cardio protectivesetc 7. Blood and Blood forming Agents (Anti thrombotics (anti blood clotting), blood forming etc) 8. Hospital Solutions (drips and other solutions) 9. Anti Neoplastic (Anti cancer medications) 10. Systemic Harmones (Growth Hormones, 11. Gentio Urinary and Sex Hormones 12. Medical Devices (Blood pressure, blood sugar, body mass monitors etc) 13. Neuropsychiatry (mediations of Epilepsy, Alzheimer, depression etc) 14. Sensory Organs (Ear, Nose medications) 15. Various (nutrition products, infant milk products, energy drinks etc) 16. Respiratory System (Asthma, Cough, Flu, Anti Allergicsetc)
Pharmaceutical Industry Analysis Pakistan Pharmaceutical Industry is one of the leading industries of Pakistan. It comprises of 24 Multinationals corporations and more than 650 national corporations. The total Pharmaceutical industry of Pakistan is worth over Rs. 181.6 Billion (annual sales), with annual growth of more than 15.5%.While it export medicines worth Billion of Rs. to countries like Afghanistan, Philippines, Malaysia, Vietnam, Sri Lanka, Cambodia, Uzbekistan, Myanmar, Tajikistan etc. MNC represent 44% market share of the industry in term of values while 56% of the market is represented by National Companies.
Industry Sales in Billion Rs. 181.000
200.000 140.330
150.000
151.000 2008
123.130
2009
105.000 100.000
2010 2011
50.000
2012
0.000 2008
2009
2010
2011
2012
41
Pakistan Pharmaceutical Industry INTERNAL ANALYSIS Key Indicators of How Well the Strategy Is Working for PharmEvo: 1. Trend in sales and market share: The sales trend of PharmEvo is growing, giving an encouraging sign of Growth that is averagely around 25% over the last 3 years, growing from Rs. 670 Million company to Now Rs. 1.61 Billion company
2. Acquiring and/or retaining customers: According to the sales collection data company of Pharmaceuticals in Pakistan the IMS Health, among the national companies PharmEvo 3. Trend in profit margins: The profit margins are shrinking due rising cost and Rupee devaluation and rise of US $, making the imported raw materials costlier.
4. Overall financial strength and credit ranking: PharmEvo is financially viable and all the expansion in the plant like in 2008 of Rs. 120 million was pumped by its own profits and new expansion is planned in 1-2 Years of about Rs. 140-150 Million. Adding new plant for liquid injection in the PharmEvofacility, that will open a new formulation segment for them to do business and add more good products in their portfolio. 5. Efforts at continuous improvement activities: Continuous improvement of processes, easing the working and removing extra barriers are the hall marks. Adding New product development plan PMA Pre Marketing Analysis, that involves a thorough understanding of the product for its selection, Registraiton, development and launch. 6. Trend in stock price and stockholder value: PharmEvo is not enlisted in The stock exchange, while its image is growing with respect to time. 7. Image and reputation with customers: The image of PharmEvo is improving with the Customers, rather we should say the influencers. PharmEvo is engaging with doctors with Ethical marketing practices, i.e. cause oriented marketing. 8. Leadership role(s) – Technology, quality, innovation, e-commerce, etc:
42
Lowplat, X-Plendid and Orslim are the brand leaders in the Anti Platelet, Cholestrol lowering agent and anti obesity categories.
SWOT-Analysis :
Threats
1. 2. 3. 4. 5. 6. 7.
Multinationals entering into the Generic business DRA formation New Registration (details on page no. 52) Immense Marketing Competition Inflation and Price Ceilings etc. (details on page no. 52) Rivalry among competitions International standard qualification (details on page no. 53) CTD format (explained on page no. 52-53)
Opportunities
1. Ample gaps are there to launch products in ever expanding Women & Child Health, Nutrition, Cancer(oncology) 2. New avenues for launches and plenty of room for new launches.(Strong Pipeline of products few registered and many near registration) 3. Export market of Far East, CIS region, and regulated markets can be won by (CTD) compliance (details on page no. 52-53)
Strengths
1. Skilled Field Force 2. Diversified and Strong Pipeline for future launches 3. Good Reputation among influencers and establishing its brand image in the heart and minds of its Customers. 4. Motivated Team, with the confidence of Winning and doing the Clock Building 5. Strong Distribution Network, as premier Agencies is the parent Company.
Weaknesses
1. Not been able to convert most of the brands among top 5 in their respective categories 2. Products Accessibility is not as extensive as compared to Getz, Sami and Hilton products availability.
43
Confrontation Matrix
OPPORTUNITIES O1
S H T G N E R T S
O3
S1 S2
W1
T1
T2
5
5
3
T3
T4
3 4
4
3 4
4
W2 W3
O4
5
S3 S4
S E S S E N K A E W
O2
THREATS
5 5
2
3
W4
Company’s price and cost competitive?: This is covered in the pricing section on Pg no. 51
44
Key Issues / Challenges Key Issues
Developing the “worry list” of strategic challenges concerning: What Strategic Issues Company Face 1. To combat the product innovation of rivals (Getz, GSK, Sami, Hilton): Timely registration of products, development and launch is the key in Pharmaceuticals to launch the products and compete with the rivals. In Pharmaceuticals the speed in new launches that give an edge to companies to gain premium price on products Win new customers (influencers) with new drugs, adding to the high end patient base of doctors. These are of utmost importance to PharmEvo to cater to these problems. . 2. Reducing the cost of Production. In pharmaceuticals the most costly items are the Raw Materials and the packaging, to reduce the cost Supply Chain needs to be trained in procuring the best quality material at very competitive rates. To reduce the waste of resources, material, time, fuel, electricity and labour are the key in cost reduction. To decrease the bureaucracy in the processes and ease the steps are the requirement that PharmEvo need to look at. 3. Sustaining the company’s present rate of growth or grow the business at a faster rate? Close liaison with Doctors engaging them with CME (continued medical Education), New studies and updates regarding drugs and their treatment in reference to PharmEvo’s products so that it serves as reminder to the influencer regarding prescribing of PharmE vo’s Products. 4. To gain better market visibility for the company’s product? CSR activities (corporate Social responsible activities) like awareness walks regarding disease e.g. about hear attack and prevention, fatness (obesity) etc, Talk shows will create noise among the doctors community, while in order to gain market share, more and more close relationship is to be maintained with doctors to get along with the products promotion and increase market share. 5. How to capture the e-commerce & technology opportunities: The ERP and SAP are the software’s that are revolutionizing the Human Resource & Supply chain. As companies like GETZ, GSK are employing these software’s that result in better management of Human
45
Resources, avoiding of shortages of products and better management of Raw materials for the production. 6. Unethical Marketing practices: There are few companies in Pakistan who bribe doctors to prescribe their products and in doing so, such doctors indiscriminately prescribe medicines to patients. This holds threat to PharmEvo as it become difficult to tackle such wrong strategies and some doctors start prescribing medicines of those companies.
Impact on PharmEvo: All these are critical to PharmEvo’s growth locally and for its Export, while we have proposed the solution for these key issues as follows. 7. Economic climate; growth, currencies, inflation, investment levels, taxes. The recession in Pakistani economy is impacting the Pharmaceutical business as more inflation is being witnessed, eating away the profit margins
8. Imposition on Sales Tax / Sales Tax In medicines companies pay the sales tax to the government but they cannot charge this extra sales tax from patient or consumers as the drug law does not permit the companies. The prices in Pakistan are fixed and centrally controlled by Ministry of Health Price Advisory Committee. Under the new setup of DRAP, price fixing mechanism and body to fix the price is yet to be announced. 9. Pharmaceutical Sector Sales tax raised from 16% to 17%: This has adversely impacted on the pharmaceutical industry as other industrial sectors pass on this impact to their consumers by raising their products prices. Whereas in pharmaceuticals there is no such provision to put this impact on to consumers (patients). In Pharmaceuticals when products are registered by the ministry of health each product is given a sealing price, which is the capping or the maximum price a company can sell at this price and not beyond that and on most of the product the ministry of health has not raised the prices since 2001. 10.
Income Tax on import of Finished Goods has been increased from 4% to 5%. (This will eat away profits on imported medicines like for insulin’s, Hepatitis& cancer drugs for the pharmaceutical companies). Turnover tax increased from 0.5% to 1%
11.
5% withholding tax is levied on Air tickets. In Pharmaceuticals Air Traveling is extensive, in order to monitor the sales force and marketing activities being carried out. This is additional burden on their revenues.
12.
10% Tax Credit will be given on BMR (Balancing, Modernization and Replacement): This is applicable on machinery and plants etc and will motivate people to make repairs of their plants and machinery. (This is beneficial for the industry)
13. Patents: Patent laws are becoming stringent and stringent and it is becoming increasingly difficult for Generic
46
companies like PharmEvo and other national companies to launch new products e.g. recent litigation between multinational and national companies on Sitagliptin In Pakistan Patent regime has been quite weak, but recently we have seen that multinationals have tightened the Patent regime for local companies and sued many companies e.g. 1. Sitaglitpin (MSD Merchk Sharpe &Dhomeis the innovator) filed cases against many Pakistani companies 2. Gemcitabine (Eli Lilly) 3. Vildagliptin (Novartis) 4. Valsartan (Novartis) etc 14. Pricing: The ministry of health, price advisory committee is not allowing pharmaceutical companies to increase the prices of products that were registered 15-20 years back or 10 years back, resulting in financial stringent conditions for the entrepreneurs.
15.
Rupee Devaluation against the US $. In pharmaceuticals most of the raw materials are purchased from abroad and weakening Rupee against the US $ is eating the profit margins and increasing the Cost of Goods Sold.
16.
The biggest expense in the Pharmaceutical company is the cost of goods sold, then the Selling nd and General Expenses is the 2 largest cost.
17.
Governmental regulations (national/international)
18. Products Registration (Delays): To launch a product, a company needs to register a product with MOH (Ministry of Health) Pakistan. Currently more than 70000 products are registered in Pakistan. Without prior registration of drug (medicines one cannot launch a pharmaceutical product). To register a product, product is applied to MOH, which in current days is taking almost 12-14 months in registering a new product and give you a go ahead to launch the product. While normal products Registration period is from 4-6 months which is not the case currently If you launch a product without their registration, a company’s manufacturing license can be cancelled
for good. 19. The 18thAmendment in the constitution The 18th amendment in Pakistan’s constitution has devolved the Ministry of Health to Province that resulted the federal Ministry of Health (MOH) to devolve. This will result in no control of medicines
47
registration and export in Pakistan and even every province might be registering the same medicines separately while earlier only MOH registration was enough to market the medicine in Entire Pakistan. 20. DRA Formation Now DRA is formed, that is Drug Registration Authority which will work Centrally in Pakistan to control the medicine s registration, export and import and assigning the retail price matters. 21. CTD Format For Export PharmEvo and the entire pharma Companies need to update their drugs documents, which include expensive equipment to furnish the detailed quality data of products and stability studies that are too extensive. To sustain in the global Arena pharma companies need to Comply for CTD, a dossier format necessary for products registration abroad. Even countries like Tanzania and Kenya have adopted CTD guidelines.
To meet the challenges posed by global competition in Registration and Product launches (Export):
Without CTD compliance and FDA approval, Pakistani companies will not be able to export and such export will cease to exist and this hold true for PharmEvo as well. To comply with CTD guidelines for Product Registration to be able for export to the world. To be compliant with FDA (Food and Drug Administration of USA), EMEA, (European Medicine Agency Approval) quality standards, and extensive documents are needed which none of the pharmaceutical company in Pakistan qualifies for, this include the MNCs as well. Even the top ranking MNCs in Pakistan like Pfizer, GSK, Abbott cannot export their medicines to US, Canada, UK etc due to non compliance and lack of documentation and standard in conformities. The above is the main reason Pak Pharmaceutical export are limited to Far East countries (Philippines, Laos, Vietnam, Myanmar, Cambodia), SriLanka, Afghanistan, CIS countries, African countries, South America. Providing quality medicines to the patients at reduced prices globally as internationally companies from China & India put forth fierce pressure this make it difficult in Export.
22. FDA & EMEA approvals: In the Pharmaceutical world FDA (Federal Drug Administration) of US and the EMEA (European Medicines Evalution Agency) are the most respected authorities that evaluate global companies for granting them certification and registration approval that pave the way for those countries companies to start exporting medicine to Europe and US accordingly. China has more than 20 FDA approved plants India has more than 15 FDA approved facilities like Dr. Reddy’s, Cipla, Ranbaxy etc, Bangla Desh has 4 FDA approved plant. Pakistan has none FDA or EMEA approvals, even the MNCs in Pakistan do not qualify the quality and safety standards of these
48
agencies.
23. Environmental concern. EHS Environment Health & safety are also very important and this also needs diligence on part of the companies to comply with the environment standards set by the regulators. 24. Installed industrial capacities (surplus/shortages) in the business) Pakistan faces shortages in the Oncology medicines (cancer medicines) that are being imported from abroad while the tablet, capsule and syrups are widely produced in Pakistan.
Product Plan Pricing Strategy •
•
PharmEvo products prices are comparable to Hilton and Getz and in few instances it is lower than the competitors PharmEvo brand leader Lowplat was a me-too of MNC brand, which price was Rs.140per tab, PharmEvo launched it at Rs. 14 per tab, competitive trial were done by engaging leading doctors of cardiologists that ensured that their product is a quality product. Now the brand is worth more than Rs. 250 million with 14% annual growth.
Increase Prices Implications for PharmEvo:Prices of Products are at a standstill since 2001, as Ministry of Health has not allowed companies to increase their prices, special cases are considered which are termed as HARDSHIP cases but that corresponds to very few molecules.
4 problems are there for PharmEvo Regarding Prices a. This is due to the fact, that Ministry of Health grants products registration to companies e.g. Drug A is registered at Rs. 100 for pack of 10’s tabs. But companies launch it at Rs. 80 or 90 per pack. So they have price cushion to increase maximum to Rs. 100 and beyond that they cannot raise prices on their own without prior Ministry of Health Price advisory Committee approval. And for most of the medicines prices are at stand still and is cause of concern for companies in days of High Inflation and rising cost of Fuel, Energy, Materials, Labors ETC which is eating away the profits. b. By interacting with Cost manager of PharmEvo, we came to know that the highest Cost factor is the materials, packaging cost. c. The Government of Pakistan collects Sales tax from companies and in particular
49
Pharmaceuticals cannot pass on the Sales tax burden to consumers as they do not have such price raising flexibility on their own with regard to other business sectors like FMCG, Cement, Sugar, Engineering Goods Etc. d. Rupee devaluation against US $, (as most of the materials is imported in Pharmaceuticals) it is decreasing the profits. To counter this impact the Cost Department at PharmEvo , refers to the State Bank of Pakistan Website for future exchange rate of US $ against rupee for the next 1 year. This helps them to have margin of inflation in their annual budget and keep expenses within their own control. The entire Pharmaceutical import of raw materials and Finished goods are done in US$. The Rupee in last 5 years has lost its value against major international currencies and in 2007 Rs.61 were equivalent to 1 US$, now Rs.98 are equivalent to 1 US$. This adversely effect the profit margins of the companies, as they have to absorb this price impact. Zyloric: (A GSK Product) It is the only treatment available for Gout patients and this drug falls in the category of essential medicines. By virtue of this essential medicine status, GSK is obliged to manufacture and market such medicine. It is registered since1976 and is available as follows: Zyloric 100mg in pack size of 50’s tabs Retail Price Rs. 70.20 Zyloric 300mg in pack size of 30’s tabs Retail Price Rs. 120.98
Issues with Zyloric: The Government has ceased the prices of Pharmaceuticals since 2000 and the raise we see in prices i s not as per the inflation companies are facing. In such scenario Zyloric is not profitable for GSK to manufacture and market, the more they manufacture the more loss GSK has to incur. But as mentioned earlier, Zyloric is one of the essential medicines, which compels GSK to keep manufacturing this product. It is most of the time short from the market and gout patients suffer a lot due to it. This has created a gap for pharmaceutical companies and identifying the gap of supply of this molecule, PharmEvo has launched Febuxostat molecule-brand name GOURIC and is doing very well. PharmEvo Launches FEBUXOSTAT Gouric: So there was a GAP of demand and supply, a novel molecule PharmEvo launched in this segment i.e. FEBUXOSTAT, GOURIC which is priced at around Rs. 25 per tab and is growing very well in 12 months from its launch has done a business of 30 Million Pak Rs.
50
PharmEvo’s Products Price Comparision with Competitors’ products . Per Tablet or Per capsule price/
per injection price S. No Molecules
Segments / Uses
PharmEvo
Hilton
Getz
1
Telmisartan 20mg Telmisartan 40mg Telmisartan 80mg
Caridovascular/ Blood pressure
11.00 20.00 30.00
12.50 19.50 29.75
12.14 21.43 32.00
2
Telmisartan 40mg + HCTZ Telmisartan 80mg + HCTZ
Caridovascular/ Blood pressure
21.00 31.00
19.71 29.75
22.14 33.00
3
Rosuvastatin 5mg Rosuvastatin 10mg Rosuvastatin 20mg
Caridovascular/ Cholestrol Lowering
12.00 20.00 32.00
10.70 19.00 32.50
12.00 20.00 33.00
4
Paclitaxel 30mg
Antineoplast/ Cancer
3500.00
-
-
5
Febuxostat 40mg Febuxostat 80mg
Musculoskeletal / Anti Gout
16.50 29.25
-
16.50 29.25
6
Escitalopram 5mg Escitalopram 10mg Escitalopram 20mg
Nervous System / Gout
8.50 14.50 23.00
11.57 16.43 27.50
14.95
Others
5300.00
GSK
120.00
Sanofi Aventis
7
Cefixime 100mg susp 30ml Anti Infectives / Anti Biotic Cefixime 400mg Cap Cefixime 200mg DS Dry Susp Cap Cefixime 100mg susp 60ml Cefixime 200mg Cap
115.00 47.00 170.00 150.00 -
145.00 63.00 230.00 230.00 27.50
125.00 59.00 209.00 20.00
8
Interferon Alpha 2B 3000MU Interferon Alpha 2B 5000MU
Anti Infectives / Hepatitis
610.00 1020.00
-
700.00 1316.00
9
Peg interferon
Anti Infectives / Hepatitis
-
-
8165.00
10
Clopidogrel 75mg
Blood Blood Forming/ Anti Platelet
14.00
-
-
11
Clopidogrel 75mg + Aspirin 75mg Clopidogrel 75mg + Aspirin 150mg
14.50 15.00
-
-
12
Glimepiride 1mg Glimepiride 2mg Glimepiride 3mg Glimepiride 4mg
Alimentary & Metab / Anti Diabetic
3.00 5.60 8.75 11.75
-
4.10 7.15 9.90 11.75
8.07 16.02 24.02 32.03
Sanofi Aventis
13
Omeprazole 20mg Cap Omeprazole 40mg Cap Omeprazole 40mg IV
Alimentary & Metab / Anti Ulcerant
12.00 240.00
-
12.85 18.50 260.00
10.29 -
Sanofi Aventis
14
Montelukast Montelukast Montelukast Montelukast
Respiratory / Ast hma management
12.00 15.00 12.00 18.00
13.57 20.50 16.07 22.36
12.00 16.00 13.00 18.00
4mg Chew tab 5mg Chew tab 4mg Sachet 10mg Tab
51
PharmEvo Products Details Therapeutic Categories Allergy / Asthma
Generic
Brand Name
Montelukast sodium
Cetirizine HCL
Cardiovascular
Enalapril
Losartan pottasium + Hydrochlorothiazide
Simvastatin
Clopidogrel
Ramipril
Losartan potassium
Losartan potassium
Candesartan Cilexetil
Rosuvastatin Calcium
Dentistry
Naproxen sodium
52
Diabetes
Glimepiride
Gastroenterology
Esomeprazole
Omeprazole
Infectious Diseases
Cefpodoxime
Cefixime
Cefuroxime axetil& Cefuroxime for Inj.
Cefotaxime sodium
Ceftazidime
Roxithromycin
Levofloxacin
Osteoporosis
Alfacalcidol
Alendronate sodium
Pain & Inflammation
Nimesulide
Celecoxib
53
Psychiatry
Sertraline HCI
Fluvoxamine maleate
Brand Name
Generic
Pack Size
Enalapril 5 & 10mg
10's/20's
Saccharomyces Boulardii 250mg
10's each
Montelukast sodium 4, 5 & 10mg
14's/30's/30's
Naproxen sodium 275 & 550mg
30's each
Alfacalcidol 0.25, 0.5 & 1mcg
10's each
Alendronate sodium 10mg & 70mg
10's
Cetirizine HCL 10mg
10's/60ml
Medicated Toothbrushes
1's
Losartan pottasium 50mg + Hydrochlorothiazide 12.5mg
10's
Topiramate 25mg & 50mg
60's
Escitalopram 5, 10, & 20mg
10's each
54
Cefpodoxime 100mg/40mg per 5ml
10's/50ml
Cefixime 400mg/100mg/5ml
10's/60ml
Glimepiride 1,2,3 & 4mg
20's each
Cefuroxime axetil 125,250mg & Cefuroxime 250, 750 (Inj.) 10's10's/1's/ 1's
Cefotaxime sodium 250mg/500mg/1g
1's each
Ceftazidime 250mg/500mg/1g
1's each
Esomeprazole 20 & 40mg
14's each
Iron Polymaltose Complex + Folic Acid 60ml, 100mg
1's/10's each
Sertraline HCI 50 & 100mg
30's/20's
Gabapentin 200mg, 400mg , 600mg
10's each
QuetiapineFumarate 25mg, 100mg
10's each
Simvastatin 10 & 20mg
10's/5's
Simvastatin + Ezetimibe 10mg+10mg & 20+10mg
7's
Clopidogrel 75mg
10's
Clopidogrel + Asprin
10's
55
Nimesulide 100mg
20's
Orlistat 120mg
30's
Roxithromycin 100, 150 & 300mg
10's/10's/5's
Ramipril 1.25, 2.5, 5 & 10mg
10's/10's/28's /28's
Celecoxib 100 & 200mg
10's each
Medicated Toothbrushes
1's
Levofloxacin 250 & 500mg
10's each
Iron ProtienSuccin ylate 60ml, 120ml
1's each
Losartan potassium 50mg
10's
Losartan Potassium 100mg
10's
Candesartan Cilexetil 4, 8, 16mg
14's/14's/28's
Candesartan + Hydrochorothiazide
14's
Fluvoxamine maleate 50 & 100mg
10's each
Rosuvastatin Calcium 5, 10 & 20mg
10's
Omeprazole 20mg
14's
56
Strategic Direction Operational Plan to address key issues: To address the key issues highlighted earlier in the report, proposed operational plan sets out the clear strategic direction for PharmEvo. 1. New product Development / R & D: A pure R & D in true sense in Pakistan is absent as R & D of new molecules take minimum of Rs. 2-4 billion of Rs. Investment, which might not always result in success. 2. While for the new launches the international molecules are being identified evaluated by their Business Development Department through PMA (Pre Marketing Analysis document). After the selection, products are being applied for registration and plenty of new products are being developed with safety studies to launch the product in time once the registration is obtained. 3. To launch a product a minimum of 6 month (accelerated) stability studies are required, that ensure that the product after its manufacture will retain its shape, color, efficacy during the next 2 years. This the quality test for the formulations. 4. Add more production capacity: Expansion of Rs. 120 Million is done at PharmEvo facility in 2008 while a new plant for liquid injection is being installed for Rs. 140-150 Million in 2012-2013. 5. Cut prices in response to the action of competitors: PharmEvo has cut prices in the Respiratory product Aireez to match the competitors marketing as done in response to their price reduction. In general prices are not lowered for most of the medicines. 6. Add new features that will boost the performance of company’s product: PharmEvo has come along with patient compliant medicines like Prefilled syringe products for its Hepatitis products like Inteferon. That reduces the chance of wrong dosage as the medicine is already filled in the injection and the patient just has to inject it in his/ her body. 7. Go forward with investments in foreign markets: CIS states (Uzbekistan, Ukraine, Tajikistanetc), Far East Asian & South American region countries are being evaluated for Export.
57
Communication Plan Marketing and Management Strategies implied so far To sustain in the business world companies need growth in their revenues and reduce their costs, following ways are adapted by PharmEvo Differentiation and image building: PharmEvo came up with the launch of existing selling brands at competitive prices. Launched innovative molecules at low prices like Rosuvastatin, Clopidogrel, Sitagliptin, Prasugreletc. To win the hear of the customers PharmEvo Being a new organization from its birth in 1999, a pharmaceutical company has to face a lot of challenges especially the one to win the confidence of the influencers and its customers (the institutes and patients). The PharmEvo Team had a BHAG (Big Hairy Audacious Goal to be among Top 10 Companies in Pakistan in 10 years time. In about 13 years time, PharmEvo is among top 19 National Pharmaceutical companies and overall stood at 30th position in National and Multinationals rankings. To win the confidence utmost importance and Zero Tolerance policy on Quality was adopted, which is still in force. All Good Manufacturing Practices are adopted for manufacturing of Medicines.
Prune Away Marginal Activities Implications for PharmEvo: PharmEvohasfrom time to time divested products like Zemitra, Teganorm, Epik, etcthis is done as these products were hardly meeting their break even and company has simply discontinued them. Out Source some or All procedures Implications for PharmEvo: In this regard, PharmEvo has all manufacturing &packaging of products are done at PharmEvo ’s own facilities, so outsourcing is not true for PharmEvo’s.
Creating Blue Ocean: The launch of INTEF, interferon in PharmEvo was about creating Blue Ocean in this particular segment. Prior to PharmEvo few companies have launched Interferon injection (A Hepatitis Drug) and were doing a very good business. At that point of time, PharmEvo launched INTEF a prefilled syringe at low price than the available brands. Those brands were only vials and patient had to buy separate syringes for injecting this drug, also increasing chances of improper dosing and chances of contamination. PharmEvo’sINTEF avoided this problem of Dosing and to buy separate syringe with prefilled syringe at
58
prices competitive to vials. This was a major force behind this products success in a year it achieved sales of Rs. 50 Million. Retaining Staff: Employee Retention is one area that gives stability to the organization. Training: To ensure corporate growth PharmEvo understands the need to Training and Professional development of its employees. For this purpose a full fledge Training Manager is hired, while the Executives are send to external trainings as well. Recently an MBTI assessment was also conducted for the entire PharmEvo head office colleagues to let them know, how they can be successful in managing their lives with a little effort. Hiring Young Team: It is very peculiar for PharmEvo, in the Pharmaceutical industry the average age of a business manager is around 32 years old while in the industry it is around 40-44years. Similarly the entire PharmEvo work force is quite young, that ensures one thing that there is no scarcity of energy and it is only channelized to get the desired results. Promoting Internal Employees first: In case of any growth (senior position) internal employee is considered to fill the space and mostly promotions are made from within the company that adds to stability of the company and also ensure the steady Growth pace of the company.
Values of the Company: PharmEvo is known in the industry with its Ethical marketing practices and cause oriented marketing activities. Promoting literature among the various circles of the society, is PharmEvo’s hallmark. Various, programs on literature, poets, poetry, scientific advancements are arranged by PharmEvo. PharmEvo also launches the annual calendar which is based on some theme. This year calendar 2013 theme is JAMAL –E-Hikmat o Danish KaAinaHaiKitab”.
59
Cause oriented marketing & Corporate Social Responsibility activities conducted by PharmEvo. Targetingthe influencer VI.
As a pioneer of cause oriented marketing in the Pakistani pharmaceutical industry, PharmEvo (Pvt.) Ltd has been instrumental in changing the landscape of pharmaceutical marketing practices. Today PharmEvo has earned a matchless reputation among their customers and community at large through their unique marketing philosophy i.e. differentiates with a cause. A number of feats have been accomplished to date and become examples for others to follow. These projects made PharmEvo stand out in the crowd and have opened new vistas in pharmaceutical marketing arena of Pakistan.
1. PharmEvo is actively engaged in sponsoring bright students e.g. PharmEvo extends scholarships to promising medical students who want to do the fellowship (FCPS) in Pakistan. Besides PharmEvo also have examples where it sponsored the entire degree course (MBBS) for students. Impact: Making available good and skilled human resource to the society to serve them that would have otherwise ruined if financial help would not be available. (Establishing good relations with Influencers) 2. On similar pattern, seminars on diseases and their current treatment are held from time to time. One such event held in Sri Lanka 2010 and one in Cambodia. 3. PharmEvo chose to provide education and trainings to doctors’ community to benefit the society in a larger context rather than rewarding them personally. Impact: PharmEvo is relentlessly working to make a paradigm shift in marketing practices of Pakistani Pharmaceutical Industry, where dignity of Massihas could be restored and patients didn’t have to pay for unnecessary medications on prescriptions. 4. Learning Resource Centers (LRC) and information kiosks at major hospitals in Pakistan like DUHS(KHI), NICVD, Indus hospital, KIHD, ShaikhZaid, DHQ (Faisalabad) ,King Edward(Lahore) etc. LRCs are provided with computer systems by PharmEvo to train the faculty members and junior doctors on basic computer skills (Microsoft office).
60
5. Regular research methodology and SPSS workshops (so far 14 hosted) thus circa 280 doctors have been trained on how to conduct their research work and bringing our doctors at par with global standards when it comes to gaining cutting edge information.
6. PharmEvo weekly inspirational quote on front page of DAWN. Friday DAWN regularly carries an inspirational quote and there are reasons to belie ve that it impresses a positive mark on the minds of reader and helped in improving their lives.
61
7. Supporting philanthropic institutions (e.g. Indus Hospital) in providing best possible care to the patients. PharmEvo assistance has literally made Indus a paperless facility which has enhanced its efficiency. 8. Built children playing area at different hospitals that provides a good source for social and emotional development of the young generation. Other Cause Oriented Marketing Activities 9. PharmEvo calendars have gained a unique positioning in the pharma industry and amazes everybody that how calendars can be used as an effective tool to educate people. Our calendars are not merely aesthetic day reminders but also attract spotlights as an extremely powerful memorandum that constantly stir up an incessant desire to question and evaluate our way of life. Since its inception, 1999 PharmEvo has brought out twelve calendars, all carrying powerful messages e.g. Rise and Fall of Nations (in the light of Quran),Quran –the ultimate miracle,Qitadat&Hukumrani etc. Moreover PharmEvo published corporate books (so far twenty four) e.g. Zafran-e-zar, Golden words (vol.1 & 2),Dewane-Ghalib 3)Muslim scientists etc.
Impact: Inculcate the reading habit at its core as well as re-establishing acquaintance between our forgotten values/culture and masses to improve our confidence and self-image as a nation. 10. Hosted career guidance programs for Pharmacy students, for which a permanent facility, has been established at Karachi University, Faculty of Pharmacy. Impact: Proper guidance to the youth holds the key in redefini ng nation’s landscape and PharmEvo is at the heart of it. 11. PharmEvo also routinely engages itself in thought provoking programs like evenings with famous personalities especially from Urdu literature, for example, several evenings with renowned poet, Ahmed Faraz ,Mushtaq Ahmed Yousufi, AnwerMaqsood and Amjad Islam Amjad etc. Arranged in 2009 Impact; Historically literature has great impact on human minds. It helps the society to develop depth in their thoughts and also create a positive energy in them. In nutshell, such programs pay great dividends in relieving stress and improving interpersonal skills of the participants that can go a long way in enhancing the quality of life in any society.
62
Conclusion & Future Guidelines A bright future awaits PharmEvo, a staggering growth of 35-40% can be achieved by following ways.Key elements of PharmEvo’s Success in future will depend on the followings: Improving relations with the Doctors (influencers) Improving products penetration (availability) to the peripheries of the city. Improving Field Force working (by strict vigilance from Marketing, Sales managers & giving proper training to the Staff and Field Force) Launching of new products with good speed. Winning new customers with the new launches and strengthening of relations with the existing customers by giving doctors choice of new treatment to their patients with the novel drugs launched. Adding liquid injection facility and adding these formulations in their product portfolio. Adding products in Child Health, Nutrition and Women Health Launching of New Monoclonal bodies with good companies collaboration in Pakistan. Reducing the cost with good management of Supply Chain Optimizing the production out put with the exisiting resources Upgrading of their quality process for Export like preparing for CTD, FDA and World Health organization (WHO) qualification. Ethical Marketing – Cause Oriented Marketing (strengthening existing relationship with customers by continued marketing activities. Name
PharmEvo Pvt. Ltd
Business
Pharmaceuticals and Health Car Business
Owned by
Premier Group. PharmEvo was Established in Sep 1999
Annual Sales Revenue
Rs. 1.61 Billion (upto July 2012 figures)
Listings on Stock
It is not a public listed company.
Employees
Over1,000 Employees
Field Force
800-850Field Force (Sales Persons)
Regions
Mostly the urban areas and very less presence in Rural areas.
Market Share
0.9% of total market share
Head Office
Address:402 Business Avenue, Block-6 P. E.C. H. S Shahrah-e-Faisal Karachi-75400, Pakistan Phone:+92 21 34315195 Fax: +92 21 34556344
Factory
Address: A-29, North Western Industrial Zone, Port Qasim Karachi-75020 Phone:+92 21 34720158-64 Fax: +92 21 344720161
63
