Kalyan Pharma Ltd.

Presented by Group 5
Jayashri S (PGP26090) Mohammed Jafer (PGP26097) Rudraditya Bhattacharya (PGP26110) Sarath U Nair (PGP26115) Saumitra Nanda (PGP26116) Savisesh (PGP26117)

The company
Incorporated In 1907 with a paid up capital of

Rs.5 Lakh Manufacture of glass, pesticides and chemicals, pharmaceuticals, veterinary products and polypropylene fibres Products produced and distributed through independent divisions Annual sales turnover Rs.138.63 crore as on 31st March, 1991 Market share of 2.8 % to 3.1 %

Pharmaceutical Industry in India

Industry has been expanding

Capital investment in industry around 750 crores

in 1989 Categorized into public, foreign, private and small-scale sectors About 8000 firms engaged in production of drugs 200 units registered under the Director General of Technical Development Problems faced non availability of superior technology and trained personnel

Marketing Strategy at KPL

Achieved leading position through continuous

changes in product mix, promotion and distribution Development in response to the changing market conditions As of 1990, product line consisted mainly of formulations 60 different products marketed by KPL Followed a strategy of extensive promotion of its products to doctors, institutions and chemists Major elements in distribution strategy were its wide network and open door policy

Distribution of KPL
Pre 1972 : Sole selling agency
Appointed exclusive sole selling agent for

distribution Agents commission of 15% Commission to cover entire distribution cost free delivery to wholesale chemists, admin and maintenance cost
1972-79 : Regional marketing companies
Strategy of strengthening presence in secondary

and tertiary markets Formed 4 regional marketing companies in 1972 which looked over promoting goods to doctors and retailers

Distribution Contd.
Introduced parenterals and antibiotics, distribution

done from company branch to retailers Wide distribution became less economical and difficult to control Market share started going down due to hike in price of raw materials, increase in wage rate, less efficient and less effective distribution
1979-87 : Introduction of Wholesalers
Started giving goods on credit Annual sales target linked rebate ranging from 2.5

to 5% Companys products were sometimes being used as Loss leaders by the trade

Distribution Contd.
1982 stopped direct supply to retailers, restricted

supply to a few selected wholesalers Did away with the 4 marketing companies
1987-90 : Introduction of Regional Depots (KRDs)
Shut down half of the branches to reduce

distribution costs KRDs to perform the functions of sales promotion, distribution and administration Major disadvantages higher cost of distribution compared to industry and poor customer service Sales promotion was neglected

Present System - 1991

Distributors were introduced in every state

Goods to flow from factories -> KRDs ->

distributors -> supply to wholesalers Purpose to provide better service to customers, reduce account receivables and improve sales and profit Led to reduction in inventory levels along the channel

Future Concerns
Evaluate the new distribution system

Objectives
To improve customer service and sales promotion To bring down the cost of distribution To minimize order processing time To reduce stock levels at different levels in

distribution system To improve profitability

Recommendations
Introduce enterprise wide IT solutions such as

ERP for handling the stock in different KRDs CRM can be used to handle the customer order information and passed on to the distributors Promotion through the branches and distributors Explore areas where the number of participants can be reduced in the distribution channel
Direct contact of retailers with distributors will

enhance promotion

New distribution channel

KRD

BRANCH

DISTRIBUTOR

RETAILER