Economics Project - Cipla

Submitted to the University Business School In partial fulfilment of

requirements for the award of the degree Masters of Business Administration

Submitted to: Submitted by:

Dr. Manoj Kumar Sharma Ankit Kumar
MBA (B)

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Table of Contents Page No.

Introduction 3

Vision and Mission 11

Key People 11

History and Milestones Achieved 12

Product Line 17

Demand Analysis 24

Cost Analysis 30

Production Analysis 34

SWOT Analysis 36

Market Structure 41

Conduct and Performance 43

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Introduction
Cipla was born out of Dr. K.A. Hamied’s vision to harness Indian expertise for self-sufficiency
in the chemical and pharmaceutical industry in India. Dr. K.A. Hamied was an exemplary
visionary who donned various hats; he was a chemist, an entrepreneur and pioneer, an active
participant in India’s independence struggle, a close ally of Mahatma Gandhi, Dr. Zakir Hussain
and various others, a legislator in the Bombay Presidency, head of various associations, Sheriff
of Bombay, proactive supporter and sponsor of institutes of scientific excellence in India. Goal
of the company is to ensure that no patient shall be denied access to high quality and affordable
medicine and support.
The mission of the company is to be a leading global health care company which uses
technology and innovation to meet everyday needs of all patients. Be it the commencement of
bulk drug production in India, the landmark Indian Patents Act of 1970, the several ‘firsts’ in
India and the world, its historic international stance on the price and availability of antiretroviral
drugs for HIV treatment in 2000-2001, its free-of-cost Palliative Care Centre for terminally-ill
cancer patients, Cipla, under the leadership of its current Chairman Dr. Y.K. Hamied, has stood
for fearlessness and compassion. It is not for nothing that we say ‘None Shall be Denied’.

Apart from its various national and international milestones, the story of Cipla’s growth and
expansion, its ups and downs, successes and challenges is also one that deserves to be
chronicled. According to Dr Y K Hamied, Cipla was ranked 56 in the 1960s. It is with this view
that the Cipla Archives project has been launched recently. They treat their proud legacy with the
seriousness and the sense of responsibility it deserves. They want to share Cipla’s story,
celebrate its rich history, remind ourselves of the lessons learned, and reflect on the evolution of
the pharmaceutical industry in India and at Cipla’s role in shaping it. Cipla’s history contribute to
the development of business archives in India, and serve as a forum for debates and discussions
on the history and historiography of science and the pharmaceutical industry in India.

For patients, caring is a promise that the company will do whatever it takes to ensure they have
continued access to the highest quality medicines at affordable prices; whether a disease affects
millions or just a few hundreds. To the medical fraternity, caring means the assurance of world

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class medicines and support across multiple therapeutic areas. For the business partners, caring
bring the confidence of always getting world class quality and competitive prices. For the
employees, caring manifests itself in a safe, equal opportunities work place that faster innovation
for a healthier world.

Cipla is an Indian multinational Pharmaceutical and biotechnology company, head quarter in

Mumbai, India, Belgium and surrey in the European Union and Florida, Indore etc. Cipla
Primarily develops medicines to the widget range of dry power inhaler devices, nasal sprays- A
variety of nasal sprays for treatment of nasal allergy, multi haler- Multi dose dry powder inhaler,
Baby mask and infant mask- For delivery of inhaled medications to young children, zerostat VT-
Non static spacers.

Cipla has emerged as one of the worlds’s most represented pharmaceutical names
not just in India but worldwide. They maintain world class quarterly across all out products and
services. Cipla has 34 manufacturing facilities across India. Company has dedicated plants for
the technologically challenging formulations such as oncology products Hormones, Metere dose
inhalers, Beta Lactams, Cutotoxic, injectectable and cephalosporin’s .Their manufacturing plants
and processes are seen as among the most sophisticated in the world. They roll out world class
products in over 65 therapeutic categories. They use state of the art technology, the most
stringent operating procedures, a highly motivated and technologically competent team, highest
standard of safety practices and environmentally green and clean processes.
Cipla has been at the forefront of innovation for inhalation therapy in India. The Company has
played a leading role in educating the nation on inhalation therapy and over the coming years we
will continue to work on topics such as patient awareness, acceptance, compliance and usage,
physician training, medical camps and counselling. Strongly focused on access and affordability,
Cipla Respiratory continued to strengthen its efforts through the “BreatheFree” patient awareness
and education programs across markets, dedicated to making a difference to both patients and
medical practitioners. Over the last 40 years, the Company has been focused on bringing this
innovation to markets across the globe. The revenue of the Cipla is 104.83 billion.

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 A pioneer in Active Pharmaceutical Ingredients (API) manufacturing in India for over 5
decades, Cipla currently manufactures more than 200 generic and complex APIs. Cipla APIs
cover a broad spectrum of therapeutic categories that are supplied to some of the major
formulation players in the pharmaceutical industry globally - over 350 Drug Master Files (DMF)
and 70 Certificate of suitability of Monographs of the European Pharmacopoeia (CEPs).
In addition, Cipla has a robust pipeline of over 50 APIs at various stages of development.
Cipla maintains long-standing relationships with its existing partners on several APIs to
support them in establishing leading positions for their markets.
Cipla takes pride in its network of modern API manufacturing facilities, all approved by the
US FDA and other major international regulatory agencies. The company also maintains the
most stringent international standards of quality for all its products.

CIPLA GLOBAL ACCESS

Since its inception, Cipla’s ethos has been firmly rooted in the vision “None shall be denied”.
The Company strongly believes that access to high quality, affordable medicines is a basic
human right. Cipla Global Access (C-GA) is a tender based institutional business that
concentrates on four key therapy areas: HIV/AIDS, malaria, multi drug-resistant tuberculosis,
and reproductive health. Cipla has by far the highest number of ARV products approved for the
treatment of both children and adults. In addition newer molecules in novel dosage forms (e.g.
pellets) are being developed to help optimize dosage for the current regimens, for the treatment
of children and also reduce the pill load, thereby offering better adherence and success of
treatment. Cipla is adding new capacity for the growing demand for ARV products and expect
the expansion to be completed in 2016-17. Cipla is also one of the largest suppliers of
antimalarial drugs in the world. This portfolio covered treatment for over 55 million malaria
patients across all the affected countries. The coverage is increasing every year and thus saving
millions of lives.
Cipla anti-malarial treatment costs less than a dollar for the entire course. Cipla has always been
at the forefront in initiatives to identify, develop, manufacture & supply low cost treatment with
the artemisinin-based combination therapy (ACTs). All the ACTs supplied by Cipla are
approved by WHO. Cipla is endeavoring to expand its portfolio. It will be expanded with more
potent and safer antimalarials, using novel drug delivery systems.

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Cipla has a strong second line (SLTB) portfolio for treating multidrug resistant TB (MDR TB). It
is aggressively expanding its MDR TB portfolio to meet the challenges of resistance which
develops among TB patients due to the high rate of dropout from treatment. Till now, Cipla’s
SLTB drugs catered to a moderate patient base globally, but this is likely to increase significantly
with the use of new diagnostic methods of detecting drug resistant TB. Future development in
the MDR TB therapy area will be focused on newer molecules which can significantly reduce
treatment timelines.
Currently, Cipla services around 70 countries in this area. Reproductive health and family
planning segment is an emerging segment in which Cipla currently caters to over 300,000
patients worldwide. Cipla has aligned its strategy with international development initiatives to
provide safe and effective contraceptive drugs for 120 million more women by 2020.
Cipla Global Access also provides medications for infections caused by helminths,
schistosomiasis and kala azar, which pose major health threats in low and middle income
countries (LMIC).
The commitment to high quality standards has made Cipla the most trusted brand among
healthcare professionals. Cipla today has 12 divisions reaching out to more than 20 specialties
from general-practioners to super-specialists. Cipla is a market leader in three therapies —
Respiratory, Urology and Antiretroviral (ARV) with seven brands in the top 100 list.
In the fiercely competitive Indian pharmaceutical industry environment, Cipla scores over with
strong brand equity, product range, unique dosage forms, pioneering work across therapeutic
areas, numerous medico-marketing initiatives, strong distribution network of distribution depots
catering to a network of over 3,000 stockists, reaching out to 7,00,000 chemists and more than
10,000 colleagues with can-do attitude.
Cipla’s approach is to understand unique patient requirements and develop solutions, and also
focus on enhancing patient awareness and medical education. Cipla Medpro, a 100% subsidiary
of Cipla Limited, has a strong presence across therapies in the Republic of South Africa. Cipla
also won government tenders in antiretrovirals (ARV), respiratory and newer areas such as
mental health, cardiovascular and women’s health categories.
Cipla’s manufacturing facility at Durban provides a competitive edge and is the first
Pharmaceutical Inspection Convention (PIC) compliant facility in the country. The brand

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inspires trust and has become a household name amongst consumers, pharmacies, prescribers
and key opinion leaders.
Cipla has a clear commitment to provide access to Africa and other LDCs (Least Developed
Countries). Cipla Quality Chemical Industries Limited (CiplaQCIL) is a state of the art
manufacturing plant in Uganda that manufactures WHO prequalified anti-retrovirals
antimalarials and antivirals for the treatment of hepatitis B. The plant is the largest in East Africa
and supplies the Ugandan market and exports to East Africa, Cameroon and various markets in
southern Africa. CiplaQCIL is currently expanding its portfolio to manufacture medicines for
tropical diseases such as sleeping sickness, worm infestations and hepatitis C. Cipla in South
Africa as one of the largest pharmaceutical companies in South Africa, Cipla has a market share
of more than 5%. South Africa contributes 14% to the overall Cipla revenues on a consolidated
basis. The South Africa business revenue has grown at 9% in the private market over the last
three years. On a like– for–like basis, the South Africa business registered a revenue growth of
4% for the year. The Cipla brand inspires trust and has become a household name among
consumers, pharmacies, prescribers and key opinion leaders.
The private market contributed 73% of revenues. Cipla also won Government tenders in
antiretrovirals (ARV), respiratory and newer areas such as mental health, cardiovascular and
women's health categories.
The manufacturing facility at Durban provides the Company a competitive edge and is the first
Pharmaceutical Inspection Convention (PlC)–compliant facility in the country. The
manufacturing unit generated a profit, as compared to a loss last year, achieved by significantly
improving utilization, improved efficiencies and cost control measures.
Capitalizing on its defined future portfolio, key development and in–licensing projects, and
streamlined global organizational structure, Cipla South Africa will leverage synergies from its
international family. Plans are on track and the integration across manufacturing supply chain,
finance and human resources is complete. The Company has leveraged its skill and scale to drive
down costs in areas such as procurement.
Aligning with Cipla's philosophy of providing South Africans with access to a broader range of
affordable medicines and leveraging the leadership position in South Africa, Medpro
Pharmaceutica (Pty) Ltd — a subsidiary company of Cipla Medpro — entered into a sales and
distribution arrangement with Teva Pharmaceuticals (Pty) Ltd, an affiliate of Teva

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Pharmaceutical lndustries Ltd. The collaboration will focus on the following therapeutic areas:
oncology, central nervous system, women's health, cardiovascular, ophthalmology and other
specialty products.
Cipla Europe NV, a 100% subsidiary of Cipla Limited, has presence in several countries in
Europe through its partners and own network. Cipla is focused on offering a new pharma concept
built on layers of value such as newer products, concepts, formats, information and services to
help healthcare providers across Europe. Cipla is making innovative, affordable medication
accessible in over 20 countries across Europe. The European business contributed 4% to the
overall Company revenues, recording a decline of 24% in revenues for the year. The drop was
driven by a one–off event in the previous year, a decline in partner based business and some
supply–related issues. Plans have been put in place to address these issues and regain business
momentum. Cipla is focused on adding innovative elements to products, services and
information through research and partnerships. We now have seven different inhaler products in
the market in at least one European country. Our flagship product, the salmeterol– fluticasone
MDl, is now in the market in Croatia, Germany, Czech Republic, Slovakia, Belgium and
Hungary. The pricing level is set in accordance with the rules set out by individual countries, our
estimation of affordability per country and our cost of goods, so the price differs somewhat from
country to country.
Cipla Europe NV signed a distribution agreement with Serum lnstitute of lndia Ltd. (Sll) to
market pediatric vaccines in Europe and expects to commence filings in the near future.
Cipla also signed an exclusive partnership with BioQuiddity to market OneDose
ReadyfusORTM in anesthetic applications for post–surgical pain management. Cipla intends to
launch the CE Marked One Dose Readyfus ORTM pre–filled with ropivacaine under its own
label in Europe in the next year. The ready–to–use infusion systems are non–electric,
ambulatory, and should enable seamless transition between sites of care.
Cipla offers range of products in Europe —Respiratory, HIV, Vaccines, OTC, API, Plain
Generics and Hospital products. Cipla is focused on adding innovative elements, products and
services by building direct-to-market presence in several countries.
Cipla USA., Inc., the US subsidiary of Cipla Limited, is the first Indian company to be
approved by US FDA in 1985. Through a comprehensive partnership approach model, Cipla has
been dedicated to providing access to medicines to US patients for over 30 years.

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The company has executed US partnerships and has commercialized products in the US. Cipla
has supported the development of more than 170 ANDAs. Cipla has an active internal pipeline
including several key respiratory products and other complex generics. Cipla launched its US
label in January 2015. In September 2015, Cipla's UK arm, Cipla EU has entered into definitive
agreements to acquire two US-based companies, InvaGen Pharmaceuticals Inc., and Exelan
Pharmaceuticals Inc
Cipla has a wide presence internationally, covering South-East Asia, Middle-East, Latin
America, Africa, Australia, New Zealand and Russia-CIS. The company offers a diverse range of
more than 1000 products in over 100 countries.
Cipla has further strengthened its position by establishing its own company and brand presence
in 17 markets including Algeria, Morocco, Malaysia, Vietnam, Yemen and Sri-Lanka among
others, adopting the direct-to-market (DTM) approach.
With a footprint across five continents, Cipla is moving fast towards its goal of making
affordable healthcare available to all.
The Company's revenue from operations on a consolidated basis during the financial year 2014–
15 amounted to Rs.11,345 crore against Rs.10,173 crore in the previous year, recording a growth
of 11.5%. The income from operations for domestic business increased by 18%, from Rs.4,090
crore in the previous financial year to Rs.4,825 crore in the financial year under review. Total
exports increased by 5.6% during the year to Rs.6,058 crore. During the year under review,
operating margin reduced by 2.7%. This was primarily due to the change in product mix, higher
investments in research and development, and talent acquisition. Profit for the year reduced by
15% to n,181 crore from Rs.1,389 crore in the previous financial year. India Ratings and
Research Private Limited, a Fitch Group Company, assigned a Long–Term Issuer Rating of IND
AAA with a stable outlook to the Company. The rating is the highest assigned in Fitch's rating
scale and indicates the highest degree of safety regarding timely servicing of financial
obligations and lowest credit risk. No material changes and commitments have occurred after the
close of the year till the date of this Report, which affect the financial position of the Company.

CIPLA IN INDIA
As one of India's leading pharmaceutical companies, Cipla is in a strong position to fulfill its
commitment to provide modern and affordable medicines to patients. This year, despite the

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challenges, as per IMS Health data, Cipla's domestic business revenues grew by 20% compared
to the industry growth of 12%. India business contributed 42% to overall Company revenues,
with new products contributing 3.2%. Market share of our branded generics currently stands at
5.27%. Cipla continues to focus on in–licensing opportunities. In FY 2014–15, Cipla has in–
licensed darbepoetin.
Cipla successfully launched the generic drug sofosbuvir in India for the treatment of hepatitis–C
under the brand name HepCvir. In India alone it is estimated that 12–18 million patients are
infected with hepatitis–C, of which up to 2 million may need treatment. Sofosbuvir is a new
antiviral drug which in combination therapy has shown to have higher cure rates. It represents a
breakthrough in the treatment of hepatitis C.

In the coming years, the domestic business will continue to focus on these themes:
• Grow well ahead of market growth
• Execute plans for the priority business segments
• Strengthen our leadership in therapy and geography
• Focus on building current and future product pipeline
• Increase sales force productivity with the rollout of Customer Relationship
Management (CRM) and Sales Force Automation (SFA) systems

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Vision and Mission

Cipla’s Vision: An equitable world built on the foundation of ‘Caring for Life’

Cipla’s Mission:

• Create access to health, education and livelihoods for under-served communities.

• Generate evidence, knowledge and skilled workforce in our chosen domains.
• Support replicable and scalable models towards sustainable change

Key People

Board of Directors:

Name Designation
Dr. Y. K. Hamied Chairman

Mr. M. K. Hamied
Vice Chairman

Ms. Samina Vaziralli Executive Vice Chairperson

Mr. Umang Vohra Managing Director & Global Chief

Executive Officer

Mr. S. Radhakrishnan Whole-time Director

Mr. Ashok Sinha Independent Director

Dr. Peter Mugyenyi Independent Director

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Mr. Adil Zainulbhai Independent Director

Ms. Punita Lal Independent Director

Ms. Naina Lal Kidwai Independent Director

Ms. Ireena Vittal Independent Director

Mr. Peter Lankau Independent Director

Management Council:

Name Designation
Mr. Umang Vohra Managing Director

Dr. Ranjana Pathak Global Head – Quality

Mr. Prabir Jha Global Chief People officer

Ms. Geena Malhotra Global Head – Integrated
Product Development
Mr. Kedar Upadhye Global Chief Financial Officer

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History and Milestones Achieved
Cipla Ltd was incorporated in the year 1935 with the name Chemical Industrial &
Pharmaceutical Laboratories Ltd. Khwaja Abdul Hamied the founder of Cipla gave the company
all his patent and proprietary formulas for several drugs and medicines without charging any
royalty. On August 17 1935, Cipla was registered as a public limited company with an
authorized capital of Rs 6 lakh.

In the year 1941 as the Second World War cuts off drug supplies the company starts producing
fine chemicals dedicating all its facilities for the war effort. In the year 1952 the company set up
first research division for attaining self-sufficiency in technological development. In the year
1960 they started operations at second plant at Vikhroli Mumbai producing fine chemicals with
special emphasis on natural products. In 1968 the company manufactured ampicillin for the first
time in the country. In 1980, the company won Chemexcil Award for Excellence for exports. In
1984, they developed anti-cancer drugs vinblastine and vincristine in collaboration with the
National Chemical Laboratory Pune. Also they won Sir P C Ray Award for developing in-house
technology for indigenous manufacture of a number of basic drugs.

In 1991 the company launched etoposide a breakthrough in cancer chemotherapy in association

with Indian Institute of Chemical Technology. Also they manufactured antiretroviral drug
zidovudine in technological collaboration with Indian Institute of Chemical Technology
Hyderabad. In the year 1994 the company commenced commercial operations in their fifth
factory at Kurkumbh Maharashtra. In the year 1999 the company launched Nevirapine
antiretroviral drug used to prevent the transmission of AIDS from mother to child.

During the year 2010-11 the company introduced a number of new drugs and formulations such
as Entavir (entecavir tablets) an antiviral for hepatitis B; Febucip (febuxostat tablets) a drug for
gout; Flosoft (fluorometholone acetate ophthalmic suspension) a topical steroid for eye
inflammation; Foracort (formoterol and budesonide autohaler) an asthma controller therapy in a
new easy-to-use breath actuated inhaler; Furamist AZ (fluticasone furoate and azelastine

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hydrochloride nasal spray) a nasal spray for allergic rhinitis and Montair FX (montelukast and
fexofenadine tablets) an antiallergic combination for rhinitis.

On 3 May 2012 Cipla announced a major price reduction in selected cancer drugs. On 21st July
2012 Cipla announced collaboration with Drugs for Neglected Diseases initiative (DNDi) a not-
for-profit research and development (R&D) organization to develop and produce an improved
first-line antiretroviral (ARV) combination therapy specifically adapted to meet the treatment
needs of infants and toddlers living with HIV/AIDS. On 14 August 2012 Cipla announced the
launch of `Qvir' a novel 4 drug kit priced at Rs 158 for treating HIV/AIDS. On 8 November 2012
Cipla announced a major price reduction on select anti-cancer drugs.

Cipla Medpro South Africa is a leading provider of chronic medicines to the public and private
sectors. On 16 July 2013 Cipla announced that it had completed the acquisition of 100% of the
issued shares of Cipla Medpro South Africa Ltd. for an aggregate consideration of ZAR 4507mn
(Rs 2707 crore). On 20 February 2014, Cipla and MSD announced the formation of an India-
specific strategic partnership whereby Cipla will have a non-exclusive license to market promote
and distribute MSD's raltegravir 400mg tablet under a different brand name in India. The drug is
used for the treatment of HIV-1 infection in adult patients as part of combination HIV therapy.
The product is indicated for the treatment of anaemia caused due to chronic kidney disease.On 7
July 2014 Cipla announced its intention to make investments of up to 100 million in its UK
subsidiary over the next few years. The investment will fund the launch of a range of drugs in the
areas of respiratory oncology and antiretroviral medicines as well as research and development
clinical trials and further expansion internationally and in the UK.In its bid to enter the markets
of Czech Republic and Slovaki Cipla on 8 September 2014 announced commercial collaboration
with UK-based S&D Pharma.

On 15 September 2014 Cipla announced that it had signed a non-exclusive licensing agreement
with Gilead Sciences Inc. for manufacturing and distribution of Sofosbuvir mono Ledipasvir
mono the fixed-dose combination of Ledipasvir/Sofosbuvir with each other and the combination
of Sofosbuvir or Ledipasvir with other active substances for the treatment of hepatitis C.On 18
September 2014 Cipla announced that it has granted Salix Pharmaceuticals Inc. a US-based

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speciality pharmaceutical company exclusive rights under certain patent applications in the
`Rifaximin Complexes' patent family controlled by Cipla. The grant is on a worldwide basis
excluding the countries of Asia (other than Japan) and Africa.On 8 October 2014 Medpro
Pharmaceutica (Pty) Ltd - a subsidiary company of Cipla Medpro announced that it had entered
into sales and distribution arrangement with Teva Pharmaceuticals (Pty) Ltd an affiliate of Teva
Pharmaceutical Industries Ltd (Teva) - the largest generic pharmaceutical manufacturer in the
world for the territory of South Africa. As per the tie-up Cipla Medpro a 100% subsidiary of
Cipla Limited will exclusively market Teva's broad pharmaceutical product portfolio in South
Africa.

On 9 February 2015 Cipla announced that its wholly owned subsidiary Cipla (EU) Limited U.K.
has entered into a joint venture (JV) agreement with Cipla's existing business partners in
Morocco - Societe Marocaine De Cooperation Pharmaceutique (Cooper Pharma) and The
Pharmaceutical Institute (PHI). This JV is aimed at strengthening Cipla's presence in Morocco
which is in-line with its global growth strategy to build front-end presence in key markets.On 13
February 2015 Cipla announced that it has been awarded USD 188.95 million of Global Fund
ARV Tender for anti-retrovirals drugs. The Global Fund is a 21st- century partnership designed
to accelerate the end of AIDS tuberculosis and malaria as epidemics.

On 21 July 2015 Cipla announced that its board of directors approved an investment by Fidelity
Growth Partners India and US-based Fidelity Biosciences through FIL Capital Investments
(Mauritius) II Limited or its affiliates in its newly launched consumer healthcare business which
is under incorporation.On 4 September 2015 Cipla announced that its UK arm Cipla EU has
entered into definitive agreements to acquire two US-based companies InvaGen Pharmaceuticals
Inc. and Exelan Pharmaceuticals Inc for $550 million in an all cash transaction. InvaGen
Pharmaceuticals is a leading generic pharmaceutical company in the US. Exelan Pharmaceuticals
is a privately held sales and marketing company with a focus on generic pharmaceuticals for the
government and institutional market in the US.

On 18 February 2016 Cipla announced that its UK arm Cipla (EU) Limited had successfully
completed the acquisition of InvaGen Pharmaceuticals Inc. and Exelan Pharmaceuticals Inc. The

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acquisition was made by Cipla (EU) Limited through a wholly owned special purpose vehicle
which would merge into InvaGen Pharmaceuticals Inc. after the acquisition. On 8 October 2015
Cipla announced that its South African subsidiary Cipla Medpro (Pty) Ltd. entered into an
exclusive agreement with the world's largest vaccine manufacturer Serum Institute of India (SII)
to provide vaccines in South Africa.On 29 October 2015 Cipla announced that it had entered into
a definitive agreement to sell its entire 25% stake in Biomab Holding Limited Hong Kong (BHL)
to Biomab Brilliant Limited British Virgin Islands which holds the remaining 75% stake in BHL
for a total consideration of USD 25775000. Biomab Holding Limited is focused on developing
Biosimilars for the Chinese market.On 21 December 2015 Cipla announced the launch of generic
drug Ledipasvir-Sofosbuvir in India under the brand name Hepcvir-L. Hepcvir-L is the first
once-a-day fixed-dose oral combination therapy that has been approved for chronic hepatitis C
genotype 1 patients.On 6 January 2016 BioQ Pharma Incorporated a specialty pharmaceutical
company focused on the development and commercialization of single-use large-volume ready-
to-use infusible pharmaceuticals and Cipla announced the signing of a strategic distribution
supply and development agreement for the registration and commercialization of BioQ Pharma's
Ropivacaine infusion pharmaceutical in India.

On 12 October 2016 Cipla announced that it has received Establishment Inspection Report (EIR)
from the US FDA for its Indore facility indicating formal closure of the US FDA inspection
conducted in July/August 2015.On 23 November 2016 Cipla announced that Chase
Pharmaceuticals Corporation a Delaware based corporation (Chase) in which Cipla Limited's UK
arm Cipla (EU) Limited (Cipla UK) has 16.7% stake has been acquired by a subsidiary of
Allergan plc. Allergan agreed to pay $125 million upfront plus potential regulatory and
commercial milestones of up to $875 million to the shareholders of Chase. Cipla UK acquired a
minority stake in Chase in May 2014 via a syndicated venture investment. On 17 February 2017,
Cipla announced the launch of adult Hepatitis B vaccine in India.

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Product Line
Cipla's portfolio includes 2000+ products across multiple therapeutic categories, including
treatment for acute, chronic and rare conditions. The company makes affordable medicines and
has played a pioneering role in HIV/AIDS treatment. It is among the leading manufacturers
of ARV (anti-retroviral) drugs in the world, and was the world's first pharmaceutical company (in
2001) to supply ARVs to countries at less than a dollar a day. In the financial year 2014-15
(according to company sources), its ARV formulations were used by more than 2 million HIV
patients in 100 countries.
Cipla has the largest product basket among all the pharmaceutical players in India rangingfrom
prescription to OTC to animal health, besides a big kitty for active pharmaceuticalingredients
(APIs) or bulk drugs.
Prescription
Amoebicides/Antiprotozoals, Anabolic steroids, Anaesthetics, Analgesics/Antipyretics,Antacids
Anthelmintics, Anti-inflammatory drugs, Anti-TB drugs, Antiacne drugs,Antiallergic drugs,
Antialzheimer drugs, Antiasthma drugs, Antibiotics and AntibacterialsAnticancer drugs etc.
OTC
Cipla’s over-the-counter drugs portfolio comprises the following segmentsAnalgesics – Oral,
Artificial Sweetener, Calcium Preparations, Child Care, Cold &
Flu,Constipation, Cosmetics & Skin Care, Dental Care & Oral Hygiene, Diarrhoea, FoodSupple
ments, Indigestion, Infant Food, Medicated Plasters, Medicated Shampoos,Veterinaryetc.Cipla’s
animal health care products division has four sections dedicated for equine, poultry,companion
animals, livestock animals products, apart from Herbal Specialities.
Active Pharmaceutical Ingredients(API)
Cipla is one of the biggest exporter of low-cost, high quality APIs across the world. Major bulk
drugs and intermediates manufactured by Cipla
are:Adefovir Dipivoxyl, Albendazole USP, Albuterol Sulfate, Alendronate Sodium.3H2O,Alpraz
olam, Amlodipine Besylate, Anastrazole, Atorvastatin, Aripiprazole, Azelastine HCletc.

Besides this, Cipla provides products in the following medical divsions:

• Cardiovascular
• Children's Health
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 • Dermatology and Cosmetology
• Diabetes
• HIV/AIDS
• Hepatitis
• Infectious Diseases & Critical Care
• Malaria
• Neurosciences
• Oncology
• Ophthalmology
• Osteoporosis
• Respiratory
• Urology
• Women's Health
• Devices

Cipla has a significant presence in urology, with products in prostate ailments – BPH (Benign
Prostatic Hyperplasia), prostate cancer, bladder disorders, urinary stones, hypogonadism and
sexual dysfunction ailments. Besides developing many of India’s firsts in this therapy, Cipla has
to its credit the world’s first combination products containing Tamsulosin + Finasteride and
Tamsulosin + Dutasteride...milestones in the history of urology.

Some of the other important products in urology include:

1. A selective alpha-blocker that reduces the chances of surgery for BPH patients.
2. Bicalutamide – for prostate cancer.
3. Potassium citrate and Magnesium citrate solution – for the treatment and management of
urinary stones.
4. To maintain our leadership position, we work closely with urologists and surgeons and
support a range of initiatives for those working in the field of urology. We export our
urology products to several countries around the globe

Cipla provides a range of medicines to fight all kinds of infections, be it bacterial, viral or fungal.

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Some of the highlights in critical care:

• Launched Tazobactam + Pipercillin which became a market leader.

• Produced Colistin, a first in India and a big help for the medical fraternity when it comes
to MDR gram negative infections.
• Introduced Vancomycin in oral form to help patients suffering from CDI, a rare but
potentially dangerous infective diarrhea which occurs in hospitalized patients.
• Established the concept of a right ratio (2:1) with the launch of Cefoperazone and
Sulbactum.
• Introduced Liposomal Amphoteracin B, a novel drug delivery system.

With the launch of Paracetamol Infusion, Cipla entered the area of pain management as well. It
was produced in an innovative LDPE pack which was much more convenient compared to the
glass vial used so far.
Cipla Dermatology is based on three pillars: Science, Technology and Aesthetics. This unique 3-
in-1 approach has led it to develop many innovative products and services for both patients and
doctors.

It has a spectrum of products based on a range of formulations for acne, skin infection (bacterial,
fungal & herpes), seborrhoeic dermatitis, psoriasis, steroid responsive dermatitis, hair loss and
aging skin. Products are available as oral and various topical formulations like cream, ointment,
solution, suspension, foam, serum and so on.

In terms of doctor support services, they have ongoing CME in the form of symposia, round
table discussions, webcast meetings, and lectures by internationally renowned experts.

Below are some of the products provided by Cipla in Dermatology and Cosmetology:

• Fluocinolone acetonide shampoo and Ciclopirox shampoo for seborrhoeic dermatitis

• Minoxidil solution/foam with hydrolysed keratin and gel with silk amino acid for hair
loss
• Salicylic acid foaming face wash for oily, acne prone skin
• Valacyclovir tablet for herpes infection
• Volumising shampoo for thin hair

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 • Boswellia serrata cream for psoriasis
• Vitamin C 15% serum for aging skin and hyper-pigmentation
• Hair nourishing capsule for hair loss

MAJOR THERAPIES OF CIPLA

CARDIOVASCULAR
Forty years ago, Cipla started its fight against heart disease with innovative and high-class drugs.
They introduced Propranolol, the first beta blocker in India way back in 1972. This ushered in a
new age of affordable beta blockers. Over the years, they have developed several products that
help treat various diseases like MI, angina, heart failure, hypertension, arrhythmia, lipid
abnormalities and diabetes, and obesity. Apart from innovation in cardiology, they also provide
valuable services to the medical fraternity, in the form of the latest medical updates, CMEs and
workshops. Not to mention many international symposia and webcasts with the world’s leading
minds in cardiology, and conferences conducted in collaboration with international scientific
bodies.
Besides, they are committed towards disease detection and patient awareness programmes like
KBC (Know your Blood Cholesterol) and Check BP which can help doctors reach hundreds of
undiagnosed patients and improve patient care and treatment adherence. In the years to come, we
shall continue to introduce novel drugs and combinations. They are also exploring the
therapeutic potential of stem cells as part of our commitment to fight heart disease.

DIABETES
Cipla has played a significant role in diabetes treatment and control and has developed a range of
anti-diabetic drugs for the management and control of diabetes and the treatment of
complications that arise due to it. Besides, the doctor and patient services are aimed at creating
greater awareness to fight the disease.

Some of cipla’s highlights:

They have several products as single and combination pills to treat diabetes: Metformin, a
single drug, Metformin plus Glimepiride, a dual combination and Metformin plus Glimepiride
plus Pioglitazone, a triple drug combination.

20
 They also have drugs to manage diabetic complications like Atorvastatin and Fenofibrate for
high cholesterol, Pregabalin for painful diabetic neuropathy and Cilostazol for intermittent
claudication.
Physical activity is one of the key factors in controlling glucose levels. We have made
considerable efforts to educate patients about the importance of exercise in diabetes
management. One of their unique tools is an exercise reminder on the flap of each pack.
They conduct several clinics where we regularly carry out the screening of patients for early
diagnosis of diabetes and its complications.
They provide valuable services to the medical fraternity - the latest medical updates, CMEs,
workshops and conferences conducted in collaboration with international scientific
organizations.
In fight against diabetes they are committed to introduce new drugs and patient services that
focus on better management of this disease.

HIV/AIDS
Cipla has been committed to the cause of HIV/AIDS for over two decades. In crusade against the
disease, they have developed over 15 single and combination medicines that revolutionized HIV
therapy, not just in India but across the world.
In 2001, they introduced the world’s first ever recommended 3-in-1 fixed dose combination
(Stavudine + Lamivudine + Nevirapine) to fight AIDS. It was made available at less than $1 per
day compared to over $12,000 per patient per year prevailing in most countries throughout the
world. It lifted the death sentence from millions across the developing world. They have also
done pioneering work in pediatric HIV and addressed the needs of every kind of HIV patient,
from pregnant mothers to babies and from children to adults. Not surprising that today around 1
million patients in the world are on our antiretrovirals, and with regular therapy they can live for
years and lead a near normal life. Besides, world class scientific resources and educational
platforms are helping physicians across India and the world manage the disease effectively. Cipla
have even given our support to the development and dissemination of guidelines for the medical
community in India.

21
MALARIA
It has always been Cipla’s mission to reach out whenever there is a need. That’s why they are
committed to fighting malaria, one of the world’s most dreaded diseases. It is a leading cause of
death due to limited availability of anti –malarial drugs and accurate diagnosis.
The fight against malaria goes back to World War II when we made quinine available to soldiers
fighting in the eastern part of India. In the 1960s and 1970s, the incidence of malaria in India
came down dramatically due to Government initiatives which used insecticides to kill the
mosquito which carries the parasite that causes malaria.
However, the mosquito developed resistance to insecticides and the malaria parasite to
chloroquine. In order to counter this, we relaunched quinine, one of the most potent and effective
anti-malaria drugs. Since then, they have made a significant contribution of anti-malarial
products, not just to India, but to the world. We are one of the largest suppliers of anti-malarial
drugs in the world.

HEPATITIS
Cipla has played a significant role in the management of Hepatitis B & C with a wide range of
drugs. Our role in health care goes beyond providing the best drugs for diseases to equipping
doctors and their patients with the latest information available, aimed at creating greater
awareness to fight against the disease.
Some of the highlights:
Cipla have one of the widest range of products for hepatitis B and C in India.
Cipla have drugs to treat Hepatitis B like tenofovir, entecavir, peg-interferon alfa 2-b and
lamivudine and for Hepatitis C like sofosbuvir, ledipasvir-sofosbuvir fixed dose combination and
daclatasvir.
In Cipla’s fight against Hepatitis, we are committed to introduce new drugs and patient
services that focus on better management of these diseases.
Hepatitis B & C are often known as silent diseases as patients are usually unaware of the
infection. To increase awareness, our initiatives for Hepatitis B & C are BInvolved and ACT-C
respectively which are aimed at creating greater awareness by educating patients on Hepatitis B
& C.

22
 They work closely with the medical fraternity and provide valuable services including the
latest medical updates, continued medical education (CMEs), workshops and conferences
They conduct several camps/clinics where we assist in screening patients for early diagnosis
of hepatitis and its complications.
The journey doesn’t end here. Cipla’s endeavour is to support patients suffering from Hepatitis B
& C and will continue to work with healthcare providers to increase disease awareness and
ensure access to the latest treatments at affordable prices.

UROLOGY
Cipla has a significant presence in urology, with products in prostate ailments – BPH (Benign
Prostatic Hyperplasia), prostate cancer, bladder disorders, urinary stones, hypogonadism and
sexual dysfunction ailments. Besides developing many of India’s firsts in this therapy, we have
to our credit the world’s first combination products containing Tamsulosin + Finasteride and
Tamsulosin + Dutasteride...milestones in the history of urology.
Some of Cipla’s other important products in urology include:
A selective alpha-blocker that reduces the chances of surgery for BPH patients.
Bicalutamide – for prostate cancer.
Potassium citrate and Magnesium citrate solution – for the treatment and management of
urinary stones.
To maintain their leadership position, they work closely with urologists and surgeons and
support a range of initiatives for those working in the field of urology. They export our urology
products to several countries around the globe

23
Demand Analysis

Demand drives economic growth. Businesses want to increase demand so they can
improve profits. Governments and central banks boost demand to end recessions. They slow
it during the expansion phase of the business cycle to combat inflation. If you offer any paid
services, even you try to raise demand for them.

What drives demand? In economics, there are five determinants of individual demand and a sixth
for aggregate demand.

The five determinants of demand are:

1. The price of the good or service.

2. Income of buyers.
3. Prices of related goods or services. These are either complementary, those purchased
along with a particular good or service, or substitutes, those purchased instead of a certain
good or service.
4. Tastes or preferences of consumers.
5. Expectations. These are usually about whether the price will go up.

For aggregate demand, the number of buyers in the market is the sixth determinant.

Demand Equation or Function

This equation expresses the relationship between demand and its five determinants:

qD = f (price, income, prices of related goods, tastes, expectations)

It says that the quantity demanded of a product is a function of five factors: price, income of the
buyer, the price of related goods, the tastes of the consumer, and any expectation the consumer
has of future supply, prices, etc.

24
How Each Determinant Affects Demand

You can understand how each determinant affects demand if you first assume that all the other
determinants don't change. That principle is called ceteris paribus or “all other things being
equal.” So, ceteris paribus, here's how each element affects demand.

Price. The law of demand states that when prices rise, the quantity of demand falls. That also
means that when prices drop, demand will grow. People base their purchasing decisions on price
if all other things are equal. The exact quantity bought for each price level is described in
the demand schedule. It's then plotted on a graph to show the demand curve.

If the quantity demanded responds a lot to price, then it's known as elastic demand. If the volume
doesn't change much, regardless of price, that's inelastic demand.

The demand curve only shows the relationship between the price and quantity. If one of the other
determinants changes, the entire demand curve shifts.

Income. When income rises, so will the quantity demanded. When income falls, so will demand.
But if your income doubles, you won't always buy twice as much of a particular good or service.
There's only so many pints of ice cream you'd want to eat, no matter how wealthy you are. That's
where the concept of marginal utility comes into the picture. The first pint of ice cream tastes
delicious. You might have another. But after that, the marginal utility starts to decrease to the
point where you don't want any more.

Prices of related goods or services. The price of complementary goods or services raises the
cost of using the product you demand, so you'll want less. For example, when gas prices rose to
$4 a gallon in 2008, the demand for Hummers fell. Gas is a complementary good to Hummers.
The cost of driving a Hummer rose along with gas prices.

The opposite reaction occurs when the price of a substitute rises. When that happens, people will
want more of the good or service and less of its substitute. That's why Apple continually
innovates with its iPhones and iPods. As soon as a substitute, such as a new Android phone,

25
appears at a lower price, Apple comes out with a better product. Then the Android is no longer
a substitute.

Tastes. When the public’s desires, emotions, or preferences change in favor of a product, so does
the quantity demanded. Likewise, when tastes go against it, that depresses the amount demanded.
Brand advertising tries to increase the desire for consumer goods. For example,
Buick spent millions to make you think its cars are not only for older people.

Expectations. When people expect that the value of something will rise, they demand more of it.
That explains the housing asset bubble of 2005. Housing prices rose, but people bought more
because they expected the price to continue to go up. Prices increased even more until the bubble
burst in 2006. Between 2007 and 2011, housing prices fell 30 percent. But the quantity
demanded didn't grow. Why? People expected prices to continue falling. Record levels
of foreclosures entered the market due to the subprime mortgage crisis.

Demand didn't increase until people expected future prices would, too.

Number of buyers in the market. The number of consumers affects overall, or “aggregate,”
demand. As more buyers enter the market, demand rises. That's true even if prices don't change.
That was another reason for the housing bubble. Low-cost and sub-prime mortgages increased
the number of people who could afford a house. The total number of buyers in the market
expanded. This increased demand for housing. When housing prices started to fall, many realized
they couldn't afford their mortgages. At that point, they foreclosed.

That reduced the number of buyers and drove down demand.

Characteristics of demand for pharmaceutical products:

The pharmaceutical industry has always been of interest to economists as a large and
internationally competitive industry. Recently it has come under policy scrutiny as a component
of a much-debated health care system, with proposals ranging from preserving the current status
of the industry to full price controls on pharmaceuticals. To understand the implications of

26
various proposals, it is important first to understand the market environment in which the
industry operates; of particular interest is the degree of price sensitivity.
In pharma, everyone knows that what gets prescribed doesn’t match what gets shipped from the
factory. And Dell’s much publicized build-to-order approach to reducing order-to-cash and
working inventories might be fine for Dell, but most pharma manufacturers will continue to
function as build-to-plan operations. In addition, many are now facing margin pressures that
have caused the old requirement of “never run out of stock” to be supplemented with the
seemingly contradictory “and reduce costs”.

With all the headaches coming from the increasing complexity, velocity and volatility of today’s
markets, we have probably realized that now, more than ever, predicting the future is not getting
easier, and no plan is ever going to be good enough. For this reason, leading companies are
using a combination of improved demand sensing and increased supply chain agility to improve
product availability while reducing inventories.

Demand volatility is the biggest risk to supply chain

When the respected analyst firm, AMR Research, asked 100 U.S. companies, “Which of the
following risk issues present a challenge to your company today?”, 64% of the respondents
indicated that demand volatility is the greatest challenge to their supply chain. The primacy of
demand-side risks over supply-side risks was found to be consistent across verticals.
Over the last 5 years there have been some very public cases of companies surprised by quarterly
earnings and consequently punished severely by the market. In some cases, unexpected returns
have been sufficient to drive earnings restatements. A clear understanding of wholesaler
inventory requirements and positions lessens the chances of these nasty surprises. While
wholesaler order variability has significantly declined with the recent shift away from investment
buying to the Fee-For-Service distribution model, it is clearly still important to understand
channel inventory plans and trends and incorporate this knowledge into production planning.

Sensing demand is not easy in pharma

Demand in the pharmaceutical market is a complex combination of push and pull driven demand
and regulatory and pricing pressures. Third parties decide on formularies that influence
prescription behavior, while pharmaceutical companies use lawyers, managed care, detailing,
27
and direct-to-consumer campaigns to influence the FDA, pharmacy benefit providers, doctors
and patients to prolong the patent, promote on formulary, prescribe and request their products.

Unlike some other industries, point-of-sale data is not readily available, which creates a demand
visibility problem. Manufacturers typically purchase data on filled prescriptions and dispensed
drugs from third parties. Prescription data suffers from a time lag – it is usually available 10-12
days following the preceding month. In addition, the data relies on sampling and extrapolation
for locations such as independent pharmacies and clinics.

Channel data provides a timely indicator of demand

The movement of product through the distribution channel involves a wide assortment of
wholesalers, mail order, chain warehouses, stores, secondary wholesalers, specialty wholesalers,
hospitals, doctors, and clinics that share data on sales and inventories to varying degrees. While
distributors typically provide channel sales and inventory as part of their distribution agreement
with the manufacturer, some downstream customers require that the distributors block or mask
their sales data from the manufacturer.

Despite these challenges, channel data provides a timely and reliable leading indicator of near-
term wholesaler demand, as well as downstream demand. In addition, the inventory information
helps to explain wholesaler positions. Finally, the three largest wholesalers, which account for
approximately 90% of US pharmaceutical distribution, all provide at least a four week prediction
of demand. One wholesaler provides a 13 week output from their procurement system. The
combination of wholesaler’s knowledge of their customers demand, together with the
manufacturer’s knowledge of changes to formularies and campaigns, provides the best possible
insight into demand. Leading manufacturers are using cleaned and validated channel data as a
demand input to their Sales and Operation Planning processes, and to fine tune inventory
planning.

Rapid detection and response can increase market share

A rapidly growing biotech provides an example of how channel data can be used to increase
market share following a product launch. Within days following the launch, it was clear from the
channel data that physicians were prescribing more of the 15mg dosage than the 30mg, opposite

28
to what had been expected. Left undetected, this would have led to shortages of the low dosage,
and overstocks and returns of the high dosage product. Fortunately, while there is often little
flexibility and long timelines associated with pharma production planning, there is usually a
much shorter timeline and flexibility to adjust final fill-and-finish inventories. This
manufacturer rapidly adjusted their fill-and-finish inventory plans to match actual demand,
which resulting in maximized product sales and market share.

Leverage channel data to be a supply chain leader

There really is no excuse today to be surprised by what's going on in the channel. Leaders are
using channel data for real-time insight on the gaps between what’s being prescribed and what’s
going out the door. This knowledge powers rapid responses to demand changes and adjustments
to the production plan, which is one reason why leaders are achieving improved product
availability together with lower inventories, and avoiding nasty earnings surprises.

29
Cost Analysis
Cost analysis provides a complete accounting of the expenses related to a given policy or
program decision. It supplies the most basic cost information that both decision makers and
practitioners require and forms the foundation of all other economic analyses.

A cost analysis sounds simple, but it requires effort to perform a cost analysis thoroughly.
Analysts frequently identify only the most obvious costs, such as staff salaries, and fail to
account for many others. A complete cost analysis needs to consider:

Know your costs

1. Direct costs
• Staff salary plus fringe benefits (e.g., health insurance, employer’s share of social
security, workers compensation, unemployment insurance, pension contribution, vacation
wages)
• Equipment, such as computers and office supplies
• Rent, occupancy, office maintenance, and other space-related costs
• Training
• Indirect costs
• Executive staff
• Central support (e.g., human resources, fiscal, information technology)
• Start-up and one-time costs (e.g., furniture, equipment, consultants)

2. Future costs
• Wage increases, including anticipated collective-bargaining settlements
• Additional pension contributions
• Anticipated health-insurance escalation
• Capital expenses
• Project planning, design, development, and professional services
• Real estate, materials, and construction
• Contingency

30
 • Debt service
Total Sales, Total income and Total Expenses for Cipla from 2000 to 2018 is
shown below:
Year Sales Total Income Total
Expenses
2000 771.51 762.56 573.12
2001 1,063.66 1,042.88 786.97
2002 1,400.51 1,402.44 1,067.79
2003 1,572.78 1,563.56 1,218.15
2004 2,055.42 1,928.34 1,480.04
2005 2,400.89 2,397.42 1,816.10
2006 3,103.62 3,187.90 2,381.81
2007 3,656.92 3,631.94 2,709.43
2008 4,293.95 4,379.58 3,392.49
2009 5,295.33 5,208.33 4,103.00
2010 5,657.85 5,915.49 4,408.85
2011 6,331.09 6,561.44 5,149.10
2012 6,977.50 7,114.56 5,384.40
2013 8,202.42 8,722.30 6,374.03
2014 9,479.41 9,818.69 7,548.88
2015 10,224.72 10,628.74 8,519.52
2016 12,117.72 12,162.67 9,835.94

10,974.58 10,849.00 9,115.96

2017

11,444.81 11,861.08 9,406.40

2018

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 Sales
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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Sales(in Rs Cr.)

Total Income
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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Total Income(in Rs Cr.)

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 Total Expenses
12000

10000

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Total Expenses(in Rs Cr.)

Cost Curve
12000

10000

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Axis Title

6000

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2000200120022003200420052006200720082009201020112012201320142015201620172018
-2000
Axis Title

Total Expenses(in Rs Cr.)

33
Production Analysis
Production is concerned with the way in which resources or inputs such as land, labor, and machinery are
employed to produce a firm’s product or output. Production may be either services or goods. To produce
the goods we use inputs. Basically inputs are divided into two types. Those are fixed inputs and variable
inputs. Fixed inputs are the inputs that remain constant in short-term. Variable inputs are inputs, which
are variable in both short-term and long-term.

Production Function
Production function expresses the relationship between inputs and outputs. Production function is an
equation, a table, a graph, which express the relationship between inputs and outputs. Production
function explains that the maximum output of goods or services that can be produced by a firm in a
specific time with a given amount of inputs or factors of production.
Production Function: Q = f (K, L)
We are producing Q quantities of goods by employing K capital and L labor.
Here
Q Represents quantity of goods
K Represents Capital employed
L Represents Labor employed

Production Function:
“Production Function” is that function which defines the maximum amount of output that can be
produced with a given set of inputs. -Michael R Baye
“Production Function” is the technical relationship, which reveals the maximum amount of
output capable of being produced by each and every set of inputs, under the given technology of
a firm. -Samuelson

From the above definitions, it can be concluded that the production functions is more concerned
with physical aspects of production, which is an engineering relation that expresses the
maximum amount of output that can be produced with a given set of inputs.
Production function enables production manager to understand how better he can make use of
technology to its greatest potential.

34
 The production function is purely a relationship between the quantity of output obtained or given
out by a production process and the quantities of different inputs used in the process. Production
function can take many forms such as linear function or cubic function etc.

Assumptions for Production Function:

1. Technology is assumed to be constant.

2. It is related to a particular or specific period.
3. It is assumed that the manufacturer is using the best technology.
4. All inputs are divisible.
5. Utilization for inputs at maximum level of efficiency.

Significance / Importance of Production Function :

1. Production function shows the maximum output that can be produced by a specific set of
combination of input factors.
2. There are two types of production function, one is short-run production function and the other is
long-run production function. The short-run production explains how output change is relation
to input when there are some fixed factors. Similarly, long run production function explains the
behaviors of output in relation to input when all inputs are variable.
3. The production function explains how a firm reaches the most optimum combination of factors
so that the unit costs are the lowest.
4. Production function explains how a producer combines various inputs in order to produce a
given output in an economically efficient manner.
5. The production function helps us to estimate the quantity in which the various factors of
production are combined.

35
SWOT ANALYSIS

Strengths
• Developed good positive image by providing support to cancer patients
by issuing drugs at low cost .
Cipla Ltd., one of India's largest generic drug manufacturers, said it is cutting prices on its cancer
medicines by up to 75%, a move likely to further complicate efforts by big Western
pharmaceutical companies seeking to develop their businesses in India. In Cipla they provide
medicines for the cancer patients at lower cost as compare to the other pharmaceutical industries.
For this they use low cost technologies and materials and provide the medicines at low costs.

Cipla cut the price of its generic version of Nexavar to 6,840 rupees ($128) for a month's supply
from 28,000 rupees ($523). Bayer's patented medicine costs 280,000 rupees ($5,234) for a
month. Cipla also slashed the cost of its copies of AstraZeneca PLC's lung-cancer drug Iressa by
almost 60% and brain-cancer drug temozolamide by 75%. Bayer declined to comment on Cipla's
move, while AstraZeneca couldn't be immediately reached for comment. Y. K. Hamied, Cipla's
chairman and managing director, cast the move as an attempt to bring cheap cancer medicines to
the world, just as the company became a champion of HIV patients in Africa a decade ago by
using its cheaper manufacturing base to sell AIDS drugs at a deep discount.
• 3rd position in Indian market
Cipla is the third positionin the Indian market in the ORG-IMS rankings for the month of
November with a market share of 5.42 per cent and sales of Rs 146.32 crore, edging out Ranbaxy
which stood at second position with 5.09 per cent market share and Rs 137.49 crore sales. Sun
Pharma and Abott are the first and second positions in the Indian market.
• A foremost player in anti-infective and anti-asthmatic formulations
Forty years ago, Cipla started its fight against heart disease with innovative and highclass drugs.
They introduced Propranolol, the first beta blocker in India way back in 1972. This ushered in a
new age of affordable beta blockers. Over the years, they
have developed several products that help treat various diseases like MI, angina, heart failure,
hypertension, arrhythmia, lipid abnormalities and diabetes, and obesity. Apart from innovation in

36
cardiology, They also provide valuable services to the medical fraternity, in the form of the latest
medical updates, CMEs and workshops. Not to mention many international symposia and
webcasts with the world’s leading minds in cardiology, and conferences conducted in
collaboration with international scientific bodies.

• Skilled workforce
Cipla employees handpicked professionals not just for their knowledge and experience but for
their zeal to make a difference to the world of healthcare. The company believes that their
biggest assets are the employees, who lead us to prosperity and growth in the future. Driven by
the vision, “None shall be denied”, Cipla’s focus has always been on making affordable, world-
class medicines with a reputation for uncompromising quality standards across the world.
• Has a strong employee force of over 20000
Cipla having more than 20000 employees .So they consider the workers are the strength of the
company. They helps for the growth and development of the company. The company believes
that our biggest assets are the employees, who lead us to prosperity and growth in the future.
Driven by the vision, “None shall be denied”, Cipla’s focus has always been on making
affordable, world-class medicines with a reputation for uncompromising quality standards across
the world.
• High profitability and revenue
Cipla having high profitability and revenue. Cipla have revenue 108.83 billion. The high
profitability and revenue are consider as the strength of the Cipla.
• Experienced business unit
Cipla started their business in 1935 onwards . Apart from the various national and international
milestones, the story of Cipla’s growth and expansion, its ups and downs, successes and
challenges is also one that deserves to be chronicled. According to Dr Y K Hamied, Cipla was
ranked 56 in the 1960s

Weakness
• High dependence of few key products
Cipla’s main product is inhaler and other cardiovascular diseases products. So they mainly
focused on these products. Because of that they less invented other new products.

37
• Work load is high and employee turnover is also high
CIpla having employee turnover is high because of high work load. Heavy workloads can
negatively affect the psychological well-being of employees. High turnover may be harmful to a
company's productivity if skilled workers are often leaving and the worker population contains a
high percentage of novices. In Cipla there having no job rotation, so this may also causes for the
employee turn over.

Opportunities
• It can venture into many disease medication
Cipla introduced medicines for many diseases. Cipla’s commitment to women’s health began in
1979, with the launch of Clominphene citrate for infertility in women. Cipla MDIs are designed
to deliver accurate and consistent dosing by using the most sophisticated metered dose valves,
canisters and actuators. Forty years ago, Cipla started its fight against heart disease with
innovative and high-class drugs. They introduced Propranolol, the first beta blocker in India way
back in 1972. They also introduced medicines for HIV/ AIDS, oncology,malariya,urology etc..
• New therapy approaches
Cipla introduced various new theraphies like oncology, urology etc.Cipla are present in 9 key
pediatric therapeutic segments:
Anti-bacterials
Gastro-intestinals
Anti-asthmatics
Nutritional supplements
Allergic Rhinitis therapy
Anti-pyretic medicines
Surfactant therapy for premature babies
Chelation therapy
• Growing demand
The demand of the medicines from Cipla is increasing and Cipla become the third largest
pharmaceutical company in the Indian market .By the use of the fast foods and the way of living
people having many diseases and automatically the demand of the medicines also increases
• Growing income and growing attention to health

38
Today the living condition of the people is entirely different than the early days. The income of
the people is increases and also their attention to the health also increases. So this become the
opportunity of the pharmaceutical companies.

Threats
• High cost of discovery new products and few discoveries.
The development of a new drug requires a major investment of capital, human resources, and
technological expertise. It also requires strict adherence to regulations on testing and
manufacturing standards before a new drug can be used in the general population. The items for
manufacturing for the medicine is too costly so as the result the few discoveries.
• Prices of medicines rises
The trends are clear: patients and institutions across the nation are concerned about skyrocketing
drug prices. This post offers some information about drug pricing, explores the notion of market
intervention, and proposes a series of responses to high pharmaceutical costs. So due to the
increase in price of the medicines the poor people face difficult to buy the medicines.
• High competitions
The pharmaceutical sector is, perhaps uniquely, an industry in which the normal processes of
competition do not work in a textbook manner. On the demand side, apart from standard over-the
counter medicines, we do not have individual consumers exercising their freedom to choose
between competing products, based on their features and relative prices. Although the exact
chemical composition of medicines is mandatorily printed on the packaging, most consumers are
not qualified to understand the pharmacological properties of these ingredients. In India having
many pharmaceutical industries and having high competition in the market. This become the
threat of the pharmaceutical industries.
• The government companies provide free medicines
India is proposing an ambitious plan to substantially raise spending on providing free drugs for
India’s 1.2 billion population. India has put in place a $5.4 billion policy to provide free
medicine to its people, a decision that could change the lives of hundreds of millions, but a ban
on branded
drugs stands to cut Big Pharma out of the windfall. The sector is a major source for various
medicines, drugs and other related pharmaceutical formulations. The main aim of these public

39
sector companies is to manufacture quality products and to distribute to all at affordable prices.
There are mainly five government owned pharmaceutical companies in the country. Indian
Drugs and Pharmaceuticals Ltd. (IDPL), Hindustan Antibiotics Limited (HAL), Bengal
Chemicals and Pharmaceuticals Limited (BCPL) etc. Are the major government pharmaceutical
companies in India. The government plans to roll out a nationwidefree medicine scheme by
November,
which will offer quality essential drugs to all the patients in state-run hospitals and treatment
centres, a senior health ministry official said. The main aim of the companies is to the welfare of
the public. So they provide the medicines freely to the people. It become one of the threat of the
growth of the private pharmaceutical companies in India.

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Market Structure

The pharmaceutical industry in India ranks 3rd in the world terms of volume and 14th in
terms of value. According to Department of Pharmaceuticals, Ministry of Chemicals and
Fertilizers, the total turnover of India's pharmaceuticals industry between 2008 and September
2009 was US$21.04 billion. Hyderabad, Mumbai, Bangalore and Ahmedabad are the major
pharmaceutical hubs of India. The domestic market was worth US$13.8 billion in 2013.

Cipla under Hamied and his trusted brain trust, former joint MD Amar Lulla, has always been
defiant and disruptive, especially since the turn of the century. But in the past six years, since
Lulla passed away in 2011, the incessant change of strategy, precipitated largely by the regular
churn of leadership, has left the company hamstrung.

Delay in ramping up business in developed markets and strategy U-turns compounded by

lacklustre performance in domestic and emerging markets resulted in stagnant market share and
decelerating margins and return on capital employed.

The stock has been the second worst performer on the pharma index since 2010. From being the
third most valuable Indian pharma company in market cap at end of fiscal 2011, its down to no.
5. When the BSE Healthcare Index returned a whopping 261% from 2010 till date, Cipla’s
returns stood at a meagre 60% .

From its heyday in the 80s and 90s, Cipla today they find itself at a crossroads, with the market
dynamics and competitive landscape changing dramatically. But, even today, the stock
commands a premium — trading at 25 times its estimated earnings for FY18 compared to 18-23
times in case of its peers — on the back of a strong legacy and absence of serious regulatory
issues. As Kaul puts it, “It needs to reinvent itself on a war footing to reoccupy its lost glory and
audacity.” The clock is ticking.

41
Top 9 Publicly Listed pharmaceutical companies in India by Market Capitalization as of
2017.

Market Capitalization
Rank Company
2017 (INR crores)

1 Sun Pharmaceutical Rs 1,55,716 Crore

2 Lupin Ltd Rs 68,031 Crore

3 Dr. Reddy's Laboratories Rs 49,293 Crore

4 Cipla Rs 47,319 Crore

5 Aurobindo Pharma Rs 41,283 Crore

6 Zydus Cadila Healthcare Rs 31,631 Crore

7 Piramal Enterprise Rs 30,975 Crore

8 Glenmark Pharmaceuticals Rs 25,302 Crore

9 Torrent Pharmaceuticals Rs 22,742 Crore

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Conduct and Performance

1. Ethics Transparency & Accountability

Cipla’s commitment to good governance has led to enhanced stakeholder’s value and protection
of their interests. The Company has always emphasised on the values of fairness, transparency
and accountability for performance at all levels. To implement its commitment to good
governance Cipla has adopted a business Code of Conduct (Code). The Code’s main objective is
to guide employees and Directors to conduct business in an ethical, responsible and transparent
manner. The Code directs that any Director or employee of Cipla shall not engage in any
business, relationship or activity, which might detrimentally conflict with the Company’s
interests. The Code accentuates the need for transparency at Cipla, as it directs all Directors and
employees of the Company to conduct the business with utmost transparency – except where the
needs of business security dictate otherwise. The Code further prescribes that such transparency
shall be brought about through appropriate policies, systems and processes. The Company
expects its conduct to be extremely transparent and aims to be perceived as a transparent
organisation by third parties. Cipla does not tolerate any kind of bribery or facilitation payment.
The Company’s corporate governance framework is bolstered by a Vigil Policy that serves as a
mechanism to report concerns about unethical behaviour and actual or suspected fraud. It is
available to the employees and Directors to contribute to Cipla’s high ethical standards. The
Vigil Policy allows people to report genuine concerns without fear of reprisal, and helps ensure
that the Company continues to uphold its high standards. In FY 2016-17, the Company received
six complaints and all were duly investigated and stand closed as on the date of this report.

2. Product Life Cycle Safety and Sustainability

Cipla is among the world’s leading generic pharmaceutical manufacturers. It has been at the
forefront of research and development, with a mission to provide affordable and accessible
medicines for all. With the principle of “None shall be Denied”, Cipla has, through its persistent
efforts, been able to scale down prices of some of the world’s most expensive medicines used for
treatment of cancer, HIV/AIDS, pulmonary and other rare diseases, among others. The Company
is consistently working towards making its products more affordable. Few products that testify
Cipla’s sustained efforts towards providing affordable medicines are:

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1. Iron Chelators – For Thalassaemia, Cipla is the only company to have both the oral iron
chelators
(Deferiprone and Deferasirox) at an affordable price.
2. HEPCVIR & HEPCVIR L– For Hepatitis C infection
3. HEPCDAC – For Hepatitis C infection
Cipla is cognizant of the importance of adopting world-class environmental and social practices
at its manufacturing locations. The Company manufactures and distributes a wide range of
branded formulations, generics and active pharmaceutical ingredients at its cutting–edge
manufacturing facilities. It has a multi-product, multifacility production system and hence, it is
not possible to determine product-wise energy consumption. Variations in energy consumption
patterns have been observed in manufacturing units based on product mix, batch size and time
cycle, among others. Further, as consumption of energy per unit depends on the product mix, it is
difficult to set specific standards to ascertain reduction achieved at product level. Cipla
consistently strives to reduce raw material consumption during API manufacturing. These efforts
resulted in a 10-15% reduction in the consumption of raw materials in FY 2016-17 in around
seven APIs. Simultaneously, the Company is making efforts to diminish raw material usage in
manufacturing and packaging.

To strengthen its commitment to lifecycle safety and sustainability, Cipla has implemented
several measures to reduce energy and water consumption through specific energy and water
saving projects. These measures have helped the Company to save about 2% energy on a yearon-
year basis. The Company’s major facilities are ISO 50001 Energy Management System certified.
Cipla’s products do not have any broad-based impact on energy and water consumption by
consumers.
The Company has identified various opportunities to save energy by implementation of new
technology, energy source substitution and use of renewable energy sources. Moreover, it has
employed electronic control application, replacement and / or upgradation of selective system
components to diminish energy consumption. Some of the major projects pursuant to the afore-
mentioned are listed in the paragraph under Principle 6 of this report. Cipla follows a formula of
‘reuse, recycle and repurpose’ wherever possible. The Company’s API plants with ‘zero liquid
discharge’ recycles waste water to reduce intake of fresh water by 40%. Similarly, its

44
formulation units use waste water for gardening, diminishing use of fresh water by 20%. The
Company is consistently pursuing new methods to decrease generation of waste at source. It
disposes wastes as per statutory environmental permits. Cipla follows a strategic approach
towards waste
minimisation and recycling. The Company recycles almost 20% solvents in API manufacturing.
Through consistent monitoring the Company is aiming to minimise its solvent loss. During FY
2016-17, Cipla has reduced solvent loss by about 5% vis-à-vis last year across all API units. The
Company strategically manages its mixed solvents (also known as mother liquors) by selling
them to authorised solvent recovery plants. Cipla has a well-defined and documented procedure
for vendor approval. The Company procures all raw materials only from approved domestic and
overseas vendors. Cipla’s procurement team along with its Vendor Quality Management Team
conduct vendor audits. The audits serve to provide relevant quality checks; and statutory
documents are arranged and recorded for the vendor approval procedure. Besides, the Company
procures goods and services from local and small producers, located near its manufacturing sites.
This enables Cipla to promote growth and development in its vicinity while reducing lead time,
inventory and transportation cost. Moreover, the Company extends technical support and
guidance
to vendors in developing new products, procedures and automation. In addition, the Company
shares knowledge and good practices with respect to new regulations. On site trainings are
conducted at supplier’s end to improve quality and awareness in-shop floor workers. The
Company also promotes local alternatives to reduce dependency on import.
3. Employee Well-Being
Cipla believes its workforce drives its success. Hence, employee well-being and holistic
development are at the top of Cipla’s Human Resource (HR) agenda. The HR agenda aims to
create a high-performance work culture, while building employee capabilities that deliver, and
enable effective cross-functional roles. The Company’s Code ensures to build a workplace based
on trust, mutual respect and personal growth for all. Its people policies endeavour to provide an
inspiring work environment that is safe, secure, non-discriminatory and rewarding with
definitive career paths for everyone. A zerotolerance approach is adopted towards issues
concerning discrimination on the grounds of race, religion, nationality, ethnic origin, colour,
gender, age, citizenship, sexual orientation, veteran status or any disability.

45
1. Total number of employees 23,043
2. Total number of employees hired on contractual/ casual basis 9,331
3. Number of permanent women employees 2,562
4. Number of permanent employees with disabilities To eliminate any possibilities of
discrimination, Cipla does not record any information regarding employee disabilities.
5. Do you have an employee association that is recognised by management? Yes, Cipla has three
employee associations, one each at Patalganga, Kurkumbh and Bangalore for permanent
employees employed at these locations.
6. What percentage of your permanent employees are members of this recognised employee
association?
1. Patalganga: 9.94% of total permanent employees at Unit 1
(Unionised Workers: 96, Total Headcount: 966).
2. Kurkumbh: 4.48% of total permanent employees at Unit 1
(Unionised Workers: 56, Total Headcount: 1249).
3. Bangalore: 10.79% of total permanent employees at Virgonagar Unit (Unionised Workers: 64,
Total Headcount: 593).

The Company has a strict Prevention of Sexual Harassment Policy (POSH) in accordance with
the statutory requirements of the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013. All such complaints are diligently reviewed and
investigated by an Internal Committee (IC) constituted under the POSH. During the last financial
year, Cipla has undertaken several measures for creating awareness on POSH, some of them
being; POSH Refresher Awareness/ Training programmes were conducted for employees,
managers and IC members to educate and equip them to handle POSH cases appropriately. There
were no instances of any child labour, forced or involuntary labour, discriminatory employment
during the FY 2016-17. A total of three cases were reported under POSH during FY 2016-17,
and all cases have been satisfactorily addressed and appropriate action taken.

Learning and Development (L&D)

While Cipla has always placed great importance in developing knowledge and skills of its
employees as a means of gaining and retaining its competitive edge, this agenda took a giant leap

46
this year with the conceptualisation and launch of Cipla University, which is a strategic learning
vehicle to drive OneCipla capability building. Cipla University aspires to support the Company
in achieving its current aspirations and make it future ready by providing best-in-class training
and promoting continuous learning. As a means of actualising this, it has under its fold a
OneCipla
Leadership Academy, which will build leadership and managerial skills across the employee life
cycle and domain specific Functional Academies. In the past year, some notable contributions of
Leadership Academy include: Steering the design and launch of Cipla’s First Principles
including exhaustive efforts to enroll all employees starting with senior leadership; Anchoring
the 360 degree process for senior leadership; launching executive coaching for select
leaders; Executing growth summit for top 70 leaders as a means of chartering the Company’s
growth agenda; Rolling out MiCipla – Cipla’s signature induction
In the functional domain, Sales Academy was launched in January 2017. In its phase one, Sales
Academy has played a significant role as a key enabler to the Sales Force Effectiveness process.
Technical Academy and IPD Academy are poised for launch. In phase one, technical academy
will
focus on building sterile capabilities and IPD Academy will place its emphasis on capabilities
related to developing First Time Right products. All academies will cater to the global
organisation over a period of time and ensure OneCipla approach to capability building. As a
means of creating a culture of self-learning, an online platform called Keep Educating Yourself
(KEY) utilising the
Massive Open Online Courses was launched to address some of the fundamental work skills of
employees. Cipla University introduced and institutionalised the powerful ‘Six Disciplines of
Breakthrough Learning’ as its design framework, which is a powerful tool for defining and
measuring the business impact of learning.

Employee Safety
At Cipla, safety is an integral component of the management system, where Environment Health
and Safety (EHS) management is viewed as an investment rather than an expense. The
Company’s focus on safety measures remains unwavering as it believes breach of safety norms
can lead to major disruptions for the business. Thus, Cipla invests in equipment with built-in

47
safety features to reduce chances of accidents. The Company follows the principle of first time
right. Thus, it spends a large part of the project development time in designing the right factory
that ensures safety of its people. As a commitment to its principle of getting first time right, the
Company adopt measures to eliminate or at least minimise risks at source. For Cipla personal
protective
equipment (PPE) is the last resort. Moreover, Cipla is striving to maximise the use of green
chemistry in designing its manufacturing processes, which helps greatly in reducing risks. In
addition, the Company is focused on training its employees and contractors that helps in further
reducing risks. Besides, Cipla has created EHS review committees at its factory and department
levels to execute and monitor the EHS improvement plans.
4. Stakeholder Engagement
Stakeholder engagement at Cipla is a constructive process, which enables the Company to devise
strategies that mirror stakeholder expectations and address their concerns. The Company has
developed mechanisms to engage various stakeholders; and the outcome of these engagements
help in business planning and improvement. Additionally, the Company engages with
stakeholders
as and when they seek information and strive to provide them reliable information. The major
stakeholders identified by Cipla are employees, contract workers, customers, chemists,
government bodies, shareholders or investors, distributors, stockists, doctors, patients, healthcare
providers, business partners, contractors or vendors or suppliers and local communities, among
others. Besides, Cipla works closely with the disadvantaged, vulnerable and marginalised
groups. These include the elderly and the specially-abled, patients from low socioeconomic
strata, cancer patients, and people from disaster affected communities.
5. Human Rights of Stakeholders
Cipla follows a philosophy towards respecting human rights and upholding the dignity of every
individual associated with the Company. The Company showcases a strong commitment to
human rights and its policy on maintaining the same is detailed in its Corporate Responsibility
Policy under ‘Human Rights’ sub-section. The Constitution of India, the United Nations’
Universal Declaration of Human Rights (UNDHR), International Labour Organization (ILO)
guidelines and the Indian Factories Act, 1948 provide the overarching framework for the
Company’s approach towards human rights. Cipla strives to provide a non-discriminatory and

48
harassment-free workplace for all employees and contract staff. Moreover, all employees and
contract staff are
empowered to report any incidents of discrimination and harassment. Besides, the Company
mandatorily reviews and monitors the statutory compliance of all contractors on minimum wage
payments. Through its induction programme and periodic communication regarding Cipla’s
values, the Company sensitises its employees and contractors on aspects of human rights. In FY
2016-17, no stakeholder complaints pertaining to human rights violations were received.
6. Environmental Protection
Cipla, as a responsible corporate citizen, is committed to conducting its operations in an
environment friendly and sustainable manner. For the Company, environmental protection is an
integral part of its business sustainability plan. The policy dealing with Health, Safety and
Environment illustrates our stand towards environmental protection that we have implemented
and is applicable to all employees, workers, contractors and sub-contractors of the Company.
All manufacturing sites of Cipla in India are ISO 14001 certified for Environmental Management
System. The Company assesses environmental aspects and its impacts of its activities, products
and services based on which, the Company undertakes corrective and preventive measures to
minimise the impacts. The Company has placed several environmental risk abatement measures
in place by installing state-of-the-art waste management facilities that are continuously
monitored. Moreover, Cipla is focusing on resource conservation as an integral part of the
system. The Company has no pending show cause legal notices from pollution control
authorities.
During the year, Cipla undertook the following key environmental initiatives that have
contributed towards reduced carbon footprint:
1. Renewable Energy Utilisation:
a. Installation of roof top 130 kWp solar power plant in Goa, and 35 kWp solar power plant in
Kurkumbh.
b. Solar light pipe installation for natural illumination in Acid Store at Kurkumbh
c. Solar system for hot water generation using evacuated tube type solar collector (panel)
with capacity of 300000 Kcal/day. This helps in saving thermal (steam) energy and reduce the
steam consumption at Patalganga.

49
2. Water Recycling: Biologically treated effluent is recycled through double stage Reverse
Osmosis system at Kurkumbh. This is utilised for Boiler feed and Cooling tower makeup.
3. Reducing energy consumption through adopting Energy Efficiency measures: All major
manufacturing units in India are certified to ISO 50001: Energy Management System (EnMS).
Few major initiatives under this, during the year:
a. Phase out plan of equipment having life more than 10 years by replacing old motors with new
energy efficient motors and pumps at Kurkumbh and Patalganga.
b. Energy efficient light fixtures installed at Baddi, Bommasandra, Goa, Indore, Kurkumbh,
Patalganga, Sikkim and Virgonagar.
c. Installation of heat recovery from air compressor and autoclave at Goa; supply of chilled water
from a centralised common chiller instead of a dedicated chiller at Virgonagar; replacement of
conventional hot water system with PHE (Plate Heat Exchanger) based hot water system at
Kurkumbh and Bommasandra.
d. Modification of compressed air pipe line for separation of instrumentation and high pressure
line at Virgonagar for need based requirements.
e. Optimising the precooling coil chilled water flow of AHU cum dehumidifier at Indore.
f. Optimisation of aeration blower of ETP by use of right capacity blowers at Baddi.
g. New technology absorption through installation of Envelope/Integrated Variable Speed (IVS)
pump for cooling water based on process requirement at Patalganga.
h. On-line auto-clean filtration system for cooling water at Kurkumbh and Patalganga.
i. Installation of automatic valve for chiller performance improvement at Kurkumbh.
j. Installation of Variable Frequency Drive (VFD) system for various process and utility
equipment
like AHU fan blower, pumps, and process equipment, among others at Bommasandra,
Goa, Kurkumbh, Patalganga. Newly purchased equipment is equipped with VFD.
k. Process area equipment usage optimisation:
i. Interlocking of process area equipment with ventilation system at Goa for solid OSD
manufacturing,
ii. On/Off Logic implementation for HVAC system at Goa and Baddi through BMS.
iii. AHU operation optimisation at Indore.
4. Environment Protection Initiatives

50
a. Installation of ‘Volute’ - 4th generation dewatering equipment from Japan saving more than
99% of electrical energy with respect to conventional decanter centrifuges at several sites.
b. Installation of poly house for drying of dewatered sludge at Bommasandra and Kurkumbh.
This reduces the volume of sludge by over 80% and enhances fuel conservation during
transportation.
c. Installation of Energy conserving CSTR based anaerobic digester for treatment of high COD
effluent stream at Kurkumbh. This recovers methane, a greenhouse gas, which is flared.
d. Installation of energy efficient and environmental friendly modified Phytorid system for
treatment of sewage at Indore.
e. Implementation of well-structured utility leak arrest programme at Baddi, Bommasandra, Goa,
Indore, Kurkumbh, Patalganga, Sikkim and Virgonagar. Replaced PU (polyurethane) tube with
PPCH (Pneumatic Piping for Compressed air Handling) / SS pipes for FBD in API plant to avoid
the air leakages and to minimise the breakdown time at Patalganga and Kurkumbh.
f. Implementation of online monitoring system for
ETP discharges at all the API manufacturing plants.
7. Responsible Policy Advocacy
Cipla works closely with multiple national and international industry and trade associations. It is
represented in Indian Pharmaceutical Association (IPA); Federation of Pharma Entrepreneurs
(FOPE); Federation of Indian Chambers of Commerce and Industry (FICCI) and Confederation
of Indian Industry (CII), among others. Through active participation across these platforms,
Cipla ensures to advance its views on new standards or regulatory developments pertaining to the
pharmaceutical manufacturing industry. Besides, its policy agenda in these circles is centred
around affordability, economic reforms, best practices, corporate governance and corporate
social
responsibilities, among others. The Company endeavours in making sound policy decisions to
drive change in public policies that are beneficial to the industry. Moreover, it endorses inclusive
development policies and sustainable development principles through participating in CSR
forums, which have such agendas.
8. Inclusive Growth and Equitable Development
Cipla is aware that an enterprise possesses the entrepreneurial energy to transform communities
through their Corporate Social Responsibility (CSR) initiatives. CSR activities of Cipla are

51
guided by the philosophy of Caring for Life. The Company’s CSR strategy continues to be a
holistic framework incorporating its CSR principles for sustainability. With the key objective of
reaching the unreached, the Company executes its CSR programmes to make services available,
accessible
and affordable to communities, especially the vulnerable and high-risk groups like the specially-
abled and the elderly. Cipla’s CSR efforts continue to focus on the four pillars of Health,
Education, Skilling and Disaster Response for relevant target groups, ensuring diversity of
beneficiaries. The Company undertakes CSR programmes in line with the requirements of the
section 135 of the Companies Act 2013. The Company has instituted a CSR policy duly
approved by the Board. In an endeavour to achieve its vision and fulfil its commitment to be a
socially responsible corporate citizen, the CSR policy was formulated with the following
objective: To undertake projects or programmes which will enhance the quality of life and
economic well-being of the communities in accordance with Schedule VII of the Companies Act,
2013 (Act) and read with the Companies (Corporate Social Responsibility Policy) Rules 2014
(Rules), as amended from time to time. The Company’s CSR projects are initiated and
undertaken through:
Cipla Foundation Cipla Cancer & Aids Foundation (CCAF) and Implementing Partners
Cipla has collaborated with various stakeholders and domain experts on multiple projects to
ensure social wellbeing. The Company’s CSR spend has increased substantially in FY 2016-17
over the previous few years. The Company has spent an amount of 28.25 crore on CSR in the FY
2016-17.
For more details on the Company’s CSR activities, please refer to Cipla’s CSR Report forming
part of Cipla’s Annual Report 2016-17 and available on the Company’s corporate website.
9. Customer Value Creation
Cipla has always had a customer-first approach and is committed to deal with its customers in a
professional manner and maintain the highest standards of integrity and honesty. The Company
has in place a Standard Operating Procedure (SOP) for providing facts about its products. Part of
the SOP is to create awareness with respect to dosage compliances and guidance on taking
complete course of prescribed treatment. Cipla has a dedicated website www.ciplamed.com,
which is aimed at meeting the needs of any stakeholder. This website is directed to meet the
needs of medical professionals who require information about Cipla’s products, dosages,

52
potential side effects and more. Cipla follows the packaging and labeling standards, regulations
and guidelines for producing any promotional material. It has recently formed a Business Ethics
and Compliance team to ensure that internal compliances are followed for promotion, advertising
and partnering with HCPs. There is no significant case filed and pending as on the end of FY
2016-17 against the Company regarding unfair trade practices, irresponsible advertising or anti-
competitive behaviour. The Company has put adequate checks and balances to ensure that the
business is conducted in a fair and responsible manner. A structured customer complaint
redressal system helps address customer concern or grievance which either pertain to mainly:
1. Product quality; and
2. Drug safety.
All product quality related complaints received from customers are acknowledged, investigated
and responded as per the Standard Operating Procedures prescribed by the Corporate Quality
Assurance (CQA). Any customer complaint lodged is passed on to the individual unit for
investigation; and wherever necessary a Corrective Action Preventive Action (CAPA) is
generated. CAPA generated for any complaint is assessed for Global CAPA, wherein the CAPA
generated by one unit is shared with other units manufacturing the same dosage form or having
same systems. Thus, evaluating the same and taking necessary action to prevent the reoccurrence
of similar kind of complaints. A strong change management process is in place at the Company
through which impact analysis is undertaken before any change is permitted. There were 2,383
such complaints received in FY 2016-17 of which 185 complaints are under investigation.
Preliminary responses have been provided for these complaints and appropriate action is being
taken to address them. There has been no impact on product quality and patient safety. Cipla has
developed a strong global pharmacovigilance system along with SOP for handling and
processing safety related complaints received from consumers, patients and healthcare
professionals. The Company has a dedicated phone line and a mailbox wherein safety related
complaints are received. Each complaint is diligently followed up with the reporter to enquire the
patient’s safety and to get adequate information to assess the safety profile of a drug. Cipla’s
field team, being an important link between the Company and end-users, is sensitised
periodically about importance of pharmacovigilance through appropriate trainings. In FY 2016-
17, 4,839 drug safety related complaints were received of which 35 are under investigation. After

53
thorough investigation of all complaints, it was found that there was no concern regarding safety
profile of any product.

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