BUSINESS CONSULTANCY ON DOSACO

LABORATORIES PRIVATE LIMITED

Advisor’s name: Mr. Shahid Malik & Dr. Fatima Omer

Khubaib Malik (17L-4906)
Umer Madni (17L-4946)

Date: June 25, 2021

This project is solely the work of the authors and is submitted in partial
fulfillment of the requirements of the degree Bachelors of Business
Administration
FAST Schools of Management, Lahore
National University of Computer and Emerging Sciences
 Abstract

This consultancy paper discusses the in-depth analysis on the pharmaceutical industry of

Pakistan narrowing down to the trading-oriented manufacturing sector. The company in

consideration for the consultancy is Dosaco Laboratories Pvt. Ltd which was recently taken over

by a new management in July 2020. The management faces several issues regarding corporate

and brand image with an already subverted supply chain network. The external and internal

analysis finds more problems in the company which hinders its smooth running and growth and

expansion development. The identified problems through the analysis have been tackled with

investing and applying different strategies on the aspects of value chain of the company.

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 ACKNOWLEDGMENTS

The consultants and authors of this paper, Muhammad Khubaib Malik and Umer Madni

would like to appreciate constructive feedbacks from Mr. Shahid Malik, Dr. Fatima Omer, and

Miss Beenish Arshad for guiding through every consultation prospect beneficial for the business.

We would also like to express their sincere gratitude to the Director and General Manager of

Dosaco Laboratories Pvt. Ltd, Mr. Zakir Shah to provide us the opportunity to conduct the

business consultancy project. Moreover, we are grateful for the guidance and counseling

provided by Mr. Riaz Malik and Engineer Mr. Rana Abdul Moiz in matters of industrial ins-and-

outs and infrastructure cost management respectively.

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Contents

Abstract

ACKNOWLEDGMENTS

List of Tables

List of Figures

List of Acronyms

1 INTRODUCTION 1
2 INDUSTRY ANALYSIS 1
2.1 Porter’s Five Forces...............................................................................................2

2.1.1 Current Rivalry................................................................................................2

2.1.2 Bargaining Power of Suppliers........................................................................6

2.1.3 Potential Entrants (Barriers to Entry).............................................................10

2.1.4 Bargaining Power of Buyers..........................................................................16

2.1.5 Substitutes......................................................................................................19

3 INTERNAL ANALYSIS 20
3.1 Value Chain Analysis...........................................................................................21

3.1.1 Primary Activities..........................................................................................22

3.1.2 Support Activities..........................................................................................24

3.1.3 Activity analysis.............................................................................................28

3.1.4 Value analysis................................................................................................28

3.1.5 Evaluation and planning.................................................................................28

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4 CONSULTANCY WORK 29
4.1 Problem Identification..........................................................................................29

4.2 Prospective Solutions...........................................................................................31

4.3 Task Division.......................................................................................................31

4.3.1 Task 1: Use of Analytical Tools....................................................................31

4.3.2 Task 2: Supplier Relationship Management..................................................32

4.3.3 Task 3: Expansion of Distribution Network..................................................33

4.3.4 Task 4: Sachet Manufacturing Unit...............................................................35

5 EVALUATION 38
5.1 The Iron Triangle.................................................................................................39

5.1.1 Cost................................................................................................................39

5.1.2 Time...............................................................................................................39

5.1.3 Scope..............................................................................................................40

5.1.4 Quality............................................................................................................40

5.2 Implementation....................................................................................................41

5.2.1 Cost................................................................................................................41

5.2.2 Time...............................................................................................................41

5.2.3 Scope..............................................................................................................42

6 REFERENCES 45
7 Appendix 48

List of Tables

Table 3:1 Value Chain Analysis: Dosaco Laboratories Pvt Ltd....................................................27

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Table 3:2 Value Chain Analysis: Dosaco Laboratories Pvt Ltd....................................................29

Table 3: Expense Breakdown Sheet for Sachet Manufacturing Plant...........................................38

Table 4: Consultancy Evaluation Form Ratings............................................................................44

List of Figures

Figure 1: Problem Identification....................................................................................................30

Figure 2: Prospective Solutions Pathway......................................................................................31

Figure 3: Industry Supply Chain....................................................................................................34

Figure 4: Grey Structure (Roof Plan)............................................................................................35

Figure 5: Grey Structure (Inverted Beam Plan).............................................................................36

Figure 6: Grey Structure (Floor Plan)............................................................................................36

Figure 7: Grey Structure (Foundation Plan)..................................................................................37

Figure 8: The Iron Triangle...........................................................................................................40

Figure 9: Project Timeline.............................................................................................................41

List of Acronyms

COVID-19: Corona Virus 2019.............................................................................1, 6, 9, 17, 33, 35

DRAP: Drug Regulatory Authority of Pakistan......................................................3, 13, 14, 15, 35

FDA: Food and Drug Adminstration.................................................................................14, 20, 21

GDP: Gross Domestic Product................................................................................................17, 36

KPIs: Key Performance Indicators................................................................................................29

MNC's: Multinational Companies.............................................................................................2, 18

MQL: Minimum Quantitiy Level..............................................................................................9, 29

PESTEL: Political Economical Social Technological Environment Legal.....................................2

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PPMA: Pakistan Pharmaceutical Manufacturing Assoication..............................................2, 4, 37

SMEs: Small and Medium Enterprises..................................................................................2, 3, 23

SWOT: Strengths Weaknesses Opportunities Threats....................................................................2

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 1 INTRODUCTION

Dosaco Laboratories Pvt. Ltd is a trading-oriented pharmaceutical company based in the

outskirt of Lahore, 9.5 KM Sheikhupura Road, Pakistan. It was founded in 1968 as a partnered

initiative between two like-minded friends with an interest for manufacturing medicinal drugs

due to its significant return on investment. Over the course of time, the first generation ran the

company quite smoothly and made their lives out of it. Of course, considering the mindsets of

traditional Pakistani businessmen, like any other privately owned business, all the rights were

transferred to second generation young owners of both parties, where conflict of interests was

inevitable. Unfortunately, when the COVID-19 pandemic and lockdown started in March 2020,

with the rise of conflicts, one-party owning 50 percent of the shares decided to sell. Five

opportunistic people instantly bought them and with only one of them had a 20 plus years of

wholesale pharmaceutical business experience in Lahore medicine market: Mr. Zakir Shah, now

one of the directors and general manager of the company. One person is a sleeping partner

whereas the other four are actively managing the company after acquiring the remaining 50

percent of the company shares. As of now, it is a small-sized manufacturing company that

produces a portfolio of 166 products usually some on regular manufacturing, seasonal or on-

demand with a team of 180 employees. The company employs 10 managers who are responsible

of leading different departments such as, accounting and production departments: syrup section,

injection section, tablet section, etc. Whereas, the remaining 170 employees are section workers

along with pharmacists and quality control personnel.

2 INDUSTRY ANALYSIS

Businesses and analysts dig deep in an industry by using a market assessment tool to

understand the competitive dynamics. Industry analysis gives more than just a bird’s eye view of

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what is happening in an industry. This includes supply-demand statistics, competitiveness within

as well as with other industries, future prospects, credit system, and influence of external forces

on the industry (Corporate Finance Institute, n.d.). Industry analysis further deduces into three

optional methods: allowing the intensity to which a researcher wants to analyze, i.e., Michael

Porter’s Five Forces, PESTEL Analysis, or SWOT Analysis.

The area of focus of this consultancy project is the pharmaceutical industry of Pakistan.

More precisely, in Punjab, Pakistan. The industry has more than 700 active players with a strong

hold in the country (PPMA, 2017).

2.1 Porter’s Five Forces

2.1.1 Current Rivalry

2.1.1.1 Numerous or equally balanced competitors

With respect to this spectrum, the playing field within the pharmaceutical industry is

quite drastic. It is important to note that within the pharmaceutical industry there are not just

distinctions between industrial leaders and SMEs, but a distinction between MNC’s and local

firms is also present. In recent years with increased competition from local firms, MNC’s have

lost market share constantly. With the overall market dominated by local firms in recent years,

where 69% of the market share is held by the local firms. Moreover, as a trend MNC’s have been

moving away from Pakistan. However, this is not due to lack of opportunities in the market, but

due to the fact that the local firms have capitalized on market trends and formed a blockade on

the upper echelon, with companies like Getz, Sami, High-Q, Ferozsons, Abbott and Hilton

coming out as the big dogs. Competition amongst these competitors is fierce and like a

pendulum, the favorable positions within the markets shifts from one to another, with respect to

strategic decisions, and long-term power moves (Hanif, 2020).

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 Furthermore, the background competition amongst the SME’s is relatively cordial. The

local pharmaceutical industry in the small-scale sector is quite competitive. The fact that there

are more than 700 companies operating in country represents more than 60 percent of these

companies operating in the SMEs segment. These manufacturing firms fight for selling their

products for lowest price possible to the distributors (wholesalers), who fall for the most profit-

making product portfolio of any company. Another factor that plays an important role in this

spectrum is the relationship and trust between the factory owners and wholesalers. Due to this,

the wholesalers go for long credit cycles and always keep a minimum quantity level of products

manufactured by their suppliers. Hence, the manufacturing companies are always in rivalry due

to large number of manufacturers.

2.1.1.2 Slow industry growth

In general, pharmaceutical is an industry which requires constant research and

development to find cure for diseases. In Pakistan, the situation is quite different with respect to

research and development. The government seems to take little interest in this sector despite the

fact it is a $3.5 billion and growing industry. There are no active designated research institutes

for pharmaceutical development other than the fact that it has a regulatory authority as a federal

institute called Drug Regulatory Authority of Pakistan (DRAP). The industry focuses on the

production and promotion to steal each other’s market share on every level of the supply chain.

2.1.1.3 High fixed or storage costs

Companies working in the trading side of pharmaceutical industry in Pakistan generally

fight for a wide, stable, and growing distribution network throughout the country at first. In case

of small sized firms, they often try to find shrewd ways of selling their portfolio of products

outside the country and in the region as well. The more the production at its maximum potential

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will be, the more the profits. Since, the raw material and operations bear high fixed costs as most

of the companies try to go lean manufacturing and economies of scale.

2.1.1.4 Lack of differentiation or switching costs

The fact that more than 700 companies are active in this industry with more than 50

percent of them being trading oriented, have almost similar product portfolios (PPMA, 2017).

Consumers on the end stage, have enough options from any product type with absolute same

composition to make a purchase decision based on price, efficacy, and/or whatever the doctor

has prescribed.

2.1.1.5 Addition of capacity in large increments

Every industry has classes from small to large scale. In the pharmaceutical industry of

Pakistan as a developing economy, industrialists try to sustain their existing setups and expand as

much as they can under their own capacity and ownership. This is also the reason why there is

little presence of local pharmaceutical companies in the Pakistani stock market. In case of large-

scale manufacturers profit margins depend more on sales promotions and internal relationships

rather than capacity management. On the other side of the mirror, small scale industry battles for

production capacity and prices they offer to the distributors based on their capabilities.

2.1.1.6 Diverse competitors

As long as there is no further research and development being forced to the

pharmaceutical industry of Pakistan, there is little diversity among the competitors with respect

to their products, production processes and/or gaining capabilities. For companies modeled

around marketing, sales activity plays an integral role in bulk sales and expansion of the

distribution network. As far as the pharmaceutical industry is concerned, people generally

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confuse that nutraceutical is also pharmaceuticals. In the world of pharma, nutraceutical is

entirely a different sector that is also treated same as pharma sector in Pakistan.

2.1.1.7 High strategic stakes

The general perception of entering in any manufacturing-oriented industry in an

emerging economy is to hit the home runs after getting fully capable. Industrialists in the

pharmaceutical industry, while making an investment, devote their lives to the companies they

own, and clearly are after long-term successes. With multiple partnerships present within the

supply chain, it is essential for companies to maintain normalcy, as hindrances at any particular

point can translate down the line, to a bigger loss. Furthermore, losses might not just be with

respect to capital or labor for the company but it could impact the overall supply of life saving

drugs and equipment’s. Therefore, mostly in the industry, companies have a tendency to bear

their losses in crisis or any economic crunch. Everyone eventually gets their fair share out of the

pool by staying in the field. They do not go desperate about short-term profit making just for the

sake of making money. Moreover, like any other industry, the stakes are high, the more the risks,

more the profit would be. At the end of the day, the fittest survives. The idea is to stay in the

market for long-term rather than looking for short-term ways to increase profit margin. This

industry may enjoy profit margins more than what Dosaco makes.

2.1.1.8 High exit barriers

Like any other industry barriers of exit remain within the pharmaceutical industry and

they are quite high. Firstly, to maintain economies of scale, companies go on to buy; specialized

plants, acquire skilled labor and land. This in turn, minimizes the prospects of a company to exit

the market space, even if it would seem as a feasible option. Consequently, the bigger the size of

a company would be the more difficult would it be to exit the market. Secondly, eventhough the

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fixed cost itself might not present as an extraordinary disadvantage; the nature of the work is a

considerable hurdle. For example, due to the fact that companies are in the business of making

life saving drugs and equipment, leveraging supply and demand principle to gain competitive

advantage is seen as unethical (Piachaud, 2004). Taking this in account companies (especially

the big dogs) cannot abandon their perceived “public duty” to meet the market demands with

respect to particular drugs and equipment; this was most evident in the case of COVID-19

situation, where pharmaceutical industry was deemed an essential business.

2.1.2 Bargaining Power of Suppliers

Supplier power or bargaining power of supplier refers to the extent to which a supplier

can influence strategic decision-making and exert pressure on a particular business: affecting the

company’s bottom line (CFO, 2020). Henceforth, shaping the competitive structure of the

company, depending on whether the supplier holds low or high bargaining power. With the

supplier’s control over pricing, quality, and availability of a particular product, companies need

to access and monitor industry trends. A strong supplier would be a cause of competition in the

industry and decrease in the profit potential of the buyer. Conversely, a weak supplier is at the

mercy of the buyer and strives to fulfill their demands (CFO, 2020).

Moreover, suppliers are categorized, into specific types depending on industry they

operate in and the function they perform. These are categorized as such (CFI, 2020):

 Manufacturer/Vendor: Sell goods or services to other business, wholesalers and retailers

 Wholesaler/Distributer: Sell goods purchase beforehand to local distributers or retailers

 Craftspeople: Selling products directly to retailers or agents

Furthermore, the bargaining power of suppliers can be determined through a number of

factors, namely (CFI, 2020):

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 The number of supplier relative to buyers

 Dependence a supplier has on the buyer, in terms of sale of particular good/service

 The cost of switching suppliers for the buyer

 Availability of supplier, for the buyer in case of immediate purchase

 Likelihood of forward integration for the supplier (in the respective business field)

Within Michael E. Porter’s Five Force Framework, the industry is deemed more

attractive if the supplier bargaining power is on the lower end of the spectrum. In the context of

pharmaceutical industry in general, it is claimed that the bargaining power of suppliers is quite

weak (Whiteside, 2020). The factors that determine the bargaining power of suppliers in

Pakistani pharmaceutical industry are debated below.

2.1.2.1 Number of suppliers relative to buyers

As discussed above, there are more than 700 pharmaceutical companies actively

operating in Pakistan today. It is one of the fastest growing industry in an emerging economy,

there are even more suppliers of raw materials that make the provision of their products to them

to meet the needs. In all the major cities of the country, raw material (chemicals) suppliers are in

great numbers and have enough penetration with competitive prices along with their distribution

networks. The fact that raw materials in pharmaceutical industry are not just chemicals, it also

includes suppliers of packaging materials with further categorization. Years back in Pakistan, it

was seen after a private company, Getz Pharma revolutionized the way pharmaceuticals are

presented in a retail medical store as attractive and eye-catching packaged products. This

triggered other companies to fast follow the trend that created a demand in the packaging

industry. An already saturated packaging industry with low entry barriers started getting more

players just to serve the pharmaceutical purposed packaging. As a result, the suppliers had

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created set lines with the companies by offering most possible competitive prices to the

companies to stay in business.

In case of Dosaco Laboratories Pvt. Ltd, a company based in the heart of Pakistan:

Lahore, has more than enough suppliers to choose who to conduct business with either in the

chemicals (Papar Mandi) or the packaging side.

2.1.2.2 Dependence of supplier on buyer

The fact that major cities of Pakistan have their own chemical markets and they serve

their respective buyers within the region they operate, proves that they are solely dependent on

the companies that adds value to their products. Every manufacturing company in Pakistan has

its network of suppliers in each category that they order from, eventhough they have ton of other

options as well. It is a general practice in Pakistan that one supplier of any category only serves

one company based on the trust, commitment, and relationship with the owner(s).

Even in case of Dosaco, there are suppliers of ampules and bottles that have set up their

businesses just to fill the demand of the company’s regular production. While there are other

suppliers that have the ability to go beyond meeting the needs of Dosaco as well.

2.1.2.3 Switching cost of suppliers for buyers

Building on the point discussed above, manufacturing companies have little relative

dependence on the suppliers because of competitiveness. Most of the manufacturing plants in

Pakistan are situated in the industrial areas in the outskirts of big cities, and almost all suppliers

are based in the wholesale markets. As a result, manufacturing units make purchases of raw

materials from those markets and keep on doing so once with the one when they build a trust

factor. This implies that companies can easily make the same set of purchase from another

supplier in the market without disturbing the cost incurred.

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 Dosaco has done the same with its supplier portfolio by switching without any additional

cost incurred. The chemicals market in Lahore (Papar Mandi) has more than 100 shops that have

almost the same product portfolio to offer. Dosaco has been able to build a supply network that

offers it if not most but competitive enough prices due to its owners’ relations with the people

working there.

2.1.2.4 Availability of suppliers, in case of immediate purchase

In case of chemicals availability unless it is short due to import, manufacturing or

unexpected high demand issues, which usually does not happen, it is highly unlikely for

suppliers to not provide the raw materials in normal circumstances. If one chemical is not

available on one shop, it can be bought from another. However, following the demand and

supply principle, a particular raw material would command relatively increased pricing in such

situations. Moreover, in case of unexpected high demand, the problem most likely to occur is

with the packaging material suppliers. The packing material is normally outsourced in the

pharmaceutical industry, but the companies always have a contingency plan just in case. They

integrate backwards and take things into their own hands to fulfill the demand if their set of

resources allow.

In case of Dosaco Labs, the demand of their Dexamethasone injection got really high due

to COVID-19 as a can-be life-saving drug (Coronavirus disease (COVID-19): Dexamethasone,

2020). The owners decided to raise the minimum quantity level (MQL) of raw materials to be

used for the production. They preordered the ampules and packaging material beforehand to

meet the market demand and added 2 new suppliers to provide them with chemicals.

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2.1.2.5 Likelihood of forward integration for the supplier

The fact that pharmaceutical industry has high entry barriers in general, not just in

Pakistan, that makes it inconvenient to invest resources for a new player. It has been seen that

only the importers and manufacturers of solely chemical raw materials of pharmaceuticals with

deep pockets to forward integrate (Whiteside, 2020). If only the capital resources are not enough,

why dive into a red ocean? Henceforth, forward integration within the industry is highly

unlikely. In contrast, it is usual in Pakistan that backward integration from the distributors and

wholesalers is common because they have prior experience of the products and market dynamics

and they play accordingly. As justified in the above points, the suppliers of pharmaceuticals have

their expertise in trading, which makes the idea of forward integration seem far-fetched.

Dosaco, itself is a product of backward integration. The owners had prior experience of

the market and knew what and how to sell. The company is still running on the basis of relations

that owners made in their active time as a wholesaler in the market throughout Pakistan.

However, the acquisition of the company was a partnered initiative.

2.1.3 Potential Entrants (Barriers to Entry)

Barriers to entry refer to active or passive actions/policies, present within a business

environment, making it harder for potential new entrants to make way in a respective industry.

There are a number of factors that come into play, to judge the extent of barriers to entry. The

barriers can be categorized into seven distinct aspects, namely:

2.1.3.1 Economies of scale

Scalability is always considered to be good for any business and within its scope;

economy of scale is also included. Every business incurs fixed and variable costs, in pursuit of

providing specific good/service. Although, variable cost cannot be cut down on but fixed cost

10
can be decreased, by increasing the production of the good/service. This reduction in per unit

price cost and overall cost is known as economies of scale. Unsurprisingly, an industry is more

attractive for potential entrants if the potential to achieve economies of scale is on the higher

side.

As mentioned above, the idea of a completely new player to dive into this red ocean

industry seems mindboggling. It is because the giants of this industry have already developed

enough infrastructures and distribution network that complements its large-scale manufacturing

of small products i.e., medicines. As a new entrant, it may be initially hard to reach the level of

low fixed cost manufacturing to compete with the big guns, but with constant manufacturing

assessment/evaluation and improvement, it is possible to achieve economies of scale

(Investopedia, 2020). In Pakistan, the trading companies fight for low-cost manufacturing with

large scale facilities of plant(s) and equipment(s) within the limitation of their resources and

capabilities. However, due to pre-determined portfolio of medicinal products, it is easier to

achieve economies of scale.

In case of Dosaco, the new owners of the company are worried about the high fixed costs

that are being incurred at the moment for their manufacturing, the company is slowly trying to

move towards economies of scales starting from their already developed cash cows and

gradually moving on the road to achieve the same in seasonal products as much as possible.

2.1.3.2 Cost disadvantages from other than scale

This refers to cost advantage that could be maintained by a company in an industry

through means other than economies of scale. These advantages can be acquired through

experience curve, proprietary product technology, access to raw materials, favorable locations

and government subsidies. Unfortunately, in case of new entrants, such advantages can be

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discouraging, as in some cases there might not be a particular workaround for them (i.e., path

deficiency).

The large companies in Pakistan play on every platform they can reach with their deep

pockets through government contracts, favorable access to raw materials from China or India or

low-priced raw materials by direct import, marketing a failed batch of finished products

(sometimes), and state of the art machinery that help achieve lean-manufacturing. This creates a

barrier for new comers as they have no prior knowledge of which company has more competitive

advantage in the industry because these are the trade secrets that only the industrial people know

about. These connections in the industry help companies to gain cost advantages other than the

manufacturing; economies of scale.

Fortunately for Dosaco, it turned out to be a lucky coin for the new owners because the

company was already established and had connections throughout the industry. The distribution

network i.e., wholesalers already had some knowledge about the company and its product

portfolio. The idea was to cash the connections of the new owners and bring the company back

on its feet again.

2.1.3.3 Product differentiation

In today’s dynamic industry environment, it’s very important for companies to

distinguish themselves from their competitors. One of the ways this can be done is through

product/service differentiation. Within this spectrum, companies are able to identify and

communicate unique qualities of their offerings, while highlighting the distinct differences

between those offerings and others on the market (i.e., unique selling point) (Kopp,

2020).Product differentiation closely relates to the development of a strong value proposition,

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which would translate to competitive advantage further down the line. With regards to

differentiation, it can be done in a number of ways, such as:

i. Price: Low cost for cost-conscious buyers or premium charged for added value (i.e.,

luxury product/service)

ii. Performance and Reliability: Additional long-term value in comparison to competing

products/services

iii. Location and Service: Companies capitalize on home base advantage and capture

immediate present market, added secondary services also attract customers

Companies in Pakistan in the pharmaceutical industry are finding their niches prior to

their entry. One branch is the nutraceutical industry that is also regulated by Drug Regulatory

Authority of Pakistan (DRAP) under Form 6 and Form 7 (DRAP, 2020). New entrants are

making their way into nutraceuticals because of supposedly high profit margins. Nutraceutical

was the result of pharma being penetrated in the country because no new research is being

conducted in Pakistan for developing new formulas. Although, the trading side is still open with

the same product portfolio that most of the companies are manufacturing under Form 5 of

DRAP, entrants with prior experience in the industry still find their way to make their existence

through either government contracts, infiltration in the distribution network within the country,

or exporting to most easily accessible markets like Africa and Central Asia.

Dosaco has by far no product differentiation within their portfolio, but the company is

still discovering ways to access the all the potential distribution channels according to their

capacity of manufacturing. Moreover, a line extension is on paper for the company as the

company higher ups are weighing in on the decision of setting up a new plant for manufacturing

of powder formulas.

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2.1.3.4 Capital requirements

Capital is an essential aspect for starting any business, regardless of its scale and reach.

However, in some cases requirement of substantial capital, can be a deterring factor for potential

entrants. In some cases, these requirements can be mandated by the government and in other

cases the industry itself has plant, land and labor needs, that increases the startup cost essentially.

Furthermore, in some cases entering the industry might not require substantial capital but the

associated economic cycle and marketing cost might prove to be a hurdle afterwards. In such

cases potential entrants have to consider long and short-term capital requirements, before

investment.

A rough estimate to enter into pharmaceutical industry as a (trading) manufacturer in

Pakistan starts from PKR 60 million to 100 million. And this is just to start the company, the

additional costs are also incurred to make the plant operational and running. This is not a

problem for investors, the real challenge is to sustain and grow the company through deep

connections in the industry. As a result, it is difficult to make way in the industry for a layman.

The company Dosaco was acquired by Lahore real estate investors along with one

pharma experienced colleague Zakir Shah. The acquisition was conducted on behalf of the Mr.

Shah as he saw an opportunity of an already established company which only needed a cash

injection at the time to keep the operations running.

2.1.3.5 Switching costs

Pharmaceutical industry is highly regulated in terms of the standard operating procedures

of manufacturing set by Food and Drug Association (FDA) in US and global market, and DRAP

in Pakistan, which people know very little about. In case of costs of switching, it stands at the

lower spectrum. Mainly, due to the fact that there are a number of suppliers in the market in

14
association to the raw materials, that are required to make specific drugs and equipment.

Furthermore, switching cost could pose a problem, when it comes to times of accelerated market

demand. Its times like this switching suppliers could come with hindrance to production chain

and even incur additional costs. Additionally, when it comes to the corporate image changing

suppliers constantly is not seen as a sign of respect and also does not portray a stable image of

the business. In this case companies avoid changing suppliers and try building a strong business

relation with them. However, if changing suppliers is unavoidable (i.e., in case of inability to

meet demand or price hike) companies do not bat an eye doing so.

The new owners of Dosaco had some prior knowledge about the industry and its

profitability which made them take the decision to acquire it, because the previous owner

defaulted on the payments and cash. Otherwise, it is rare for a company to switch into another

industry or market.

2.1.3.6 Access to distribution channels

Distribution channels represent the chain of processes/transactions that take place when a

finished product/service reaches the final buyer, in any production chain. In terms of access, its

pivotal for cost associated to distribution of product/service to be low and the process itself be

effective and efficient. In most cases, intermediaries take up the role of middle men in

distribution chains, which in turn drives up cost. Furthermore, the channel itself should be

reachable in terms of transportation, dissemination of product/service and availability of

distribution related services.

Most of the big guns in the Pakistani pharmaceutical industry have their penetration in

the distribution networks across the country. Although the big distribution companies do not

work with most of the trading companies, they can still have access to their products that is just

15
one call away. The distribution channels of the trading companies have a more penetrative

approach due to competitive pricing of their products, i.e., wholesale medicine markets in the

major cities of Pakistan. The wholesalers play the role of distributors to these companies for their

direct connections with the retailers across their reach.

Dosaco has now been able to establish new connections with the Lahore wholesale

market due to one of the owner’s prior links and experience in the market.

2.1.3.7 Government policy

Government policies play an important role in Industry formulation and macro trends.

With the pharmaceutical industry, as discussed above, is highly regulated by DRAP in Pakistan.

Last year, when Prime Minister Imran Khan ordered the pharmaceutical industry to cut down the

prices of drugs, while the manufacturing costs were touching the skies; the industry took a major

hit (Desk, 2019). This year (2020), the ministry allowed a rise in prices up to 10 percent due to

the negotiations and valid arguments made by the industry representatives. The manufacturing

costs were rising due to the fact that the government was emphasizing on reducing the imports

and boosting the exports. Little did the government know about the import tariff being imposed

on the raw materials that came from China, as it was the only way to manufacture finished goods

in the country (Yasin, 2020). Another general impact was because of the foreign exchange rate

Pakistani currency lost 40 percent of its value to US dollar.

Dosaco was no exception under the situation, the company was already struggling with

internal issues and PM Imran Khan’s new policies made the external environment for the

industry only worse.

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2.1.4 Bargaining Power of Buyers

Identical in nature to the bargaining power of the supplier, bargaining power of buyer

insinuates the same concept but differs in term of dynamics and perspective. Bargaining power

of suppliers has the same impact on the competitive structure of the company but also determines

the value proposition a company might provide, depending on the extent of the bargaining

power. If the bargaining power is low, the company would not have to be hyper-vigilant on

following market trends and customer needs. Whereas, in case of high customer bargaining

power companies need to have a proactive role in following market trends and meeting customer

requirements. Bargaining power of buyer can be summed up simply in terms of the pressure a

customer can exert on a business, when it comes to value proposition formation/change.

As far as the general perception and a bird’s eye view goes, the bargaining power of

buyers in the pharmaceutical industry high. This is because a new drugs patent lasts for twenty

years before coming to public domain. This indicates that the research organization can exploit

the prices of the products and enjoy its full capitalization period. Although, the big customers

like hospitals and distributors with large coverage areas may have power to influence the

manufacturers, which of course, by all means, they do. The end consumers on the other hand

have little to none bargaining power because of the lack of knowledge (Kasi, 2017).

The situation in Pakistan, as insinuated above, have multiple angles when it comes to

analyzing the bargaining power of customers and consumers of pharmaceuticals. First, it is

essential to know about the country itself, where it stands economically, its direction, and what is

the nature of the economy as a whole. By looking at the GDP as per the current year 2020, it is

expected to be around $270 billion, which is a decline for all sorts of reasons such as COVID-19.

The experts are forecasting that the economy is getting back on track and slowly picking up its

17
natural pace as an emerging market (World Bank, 2020). Also, the poverty stands at a quite

depressing state; around 40 percent of the population deprived, and this figure is expected to

even rise because of the recent pandemic (Shaikh& Anis, 2020). Secondly, the dissection of the

customers is significant as well. For pharmaceutical manufacturing companies that are in trading

side, they have direct relations with the customers, not consumers. Their customers are the

wholesale distributors in the medicine markets of the major cities in Pakistan. And as discussed

above, there are more than enough companies registered on papers to fulfill the demand of the

country. As many as they may be, the fact of the matter is that these companies still make profit

by reaching economies of scale and lean manufacturing processes. The most profit margins are

made by the wholesaler and retailer, which means that these markets are influential enough to

dictate the prices to the manufacturers.

On the other hand, the end consumer may not have a say in pricing the drugs, but it is the

number of companies which has made the market competitive and ultimately gave the power to

customers and indirectly to the consumers. By looking at the economic performance of the

country, it does not seem to be a fruitful situation for the consumers. But the companies do make

pricing strategies according to buying power of the public in general.

As far as the consumers (the patients) are concerned in Pakistani pharmaceutical industry,

drugs are not something to be purchased in bulk just to reduce the overall prices, there is always

a risk of expiry and they are not recommended to be taken for lifetime in general. The products

purchased by consumers do represent a significant portion of their expenses and 90 percent of

the products are standard and undifferentiated. But seldom the consumers know about the detail

of an alternative product, even though the prices of these products are competitive in terms of

national and multinational product categories. In essence, switching costs can incur in-between if

18
the product purchased is a research product: which is mostly an MNC product, or just a generic

one which every company has the right to manufacture (i.e., leading to competitive pricing).

Consumers in almost all cases ultimately have not enough resources and ability to manufacture

their own drugs, neither they have full information of product demand, nor they have any

knowledge about the industry itself.

Dosaco Laboratories Pvt. Ltd is a manufacturing company which operates in the highly

competitive environment of trading. Their pricing strategy is no different from the competitors

and the only way they achieve their sales target is through their contacts and references in the

market. Hence, the customers (distributors, wholesalers, and retailers) have high bargaining

power for Dosaco as there are more than 700 companies to compete with, and the consumers

(patients) have medium to low bargaining power, depending on the drug being purchased.

2.1.5 Substitutes

Substitutes can be associated as products that can be seen as an alternative to a specific

product/service. Substitutes can be found throughout every industry and market, and to a certain

degree they act as a price control mechanism, as movement towards monopolization and

unwarranted price hikes can be countered by the consumers through use of substitutes.

The substitutes can be categorized into two components, namely:

 Direct: Products that have a strong correlation with each other and they are directly

interchangeable. These products/services are similar in most cases and might just be

associated to different brand/company. Additionally, in most cases they give tough

competition to each other and surplus demand of one product would be fulfilled by a

direct product.

19
  Indirect: Products that are interchangeable but they have a weak correlation.

Moreover, in some cases consumer might be compromising on certain feature/service

while opting for the indirect substitute.

The pharmaceutical industry has little to none substitutes on the face of it. Of course, the

fact that there is low threat of substitutes in the pharmaceutical industry is that patents have a

certain lifetime to fulfill before getting free for generic manufacturing that generates substitutes

directly. Another issue that may occur is development of a new generation of series of

medication, such as, antibiotics or anti-allergies (Moore, 2020). In this way, the medicinal

products get an upgrade on the previous generation that has more efficacy in terms of formula

and composition. These previous generations still stay in production to cover their demand when

the intensity and dosage of the prescribed medicine is low (Robinson et al., 2002). Other than

that, the idea of substitutes for pharmaceutical product little to none.

Contrary to that, some parts of the world have come up with their own traditional and

historic treatments of diseases, such as yoga, meditation, etc. The biggest substitute for

pharmaceutical industry is Homeopathy and Herbal medicines. Plus, following a healthier

lifestyle and balanced diet with nutritional vitamins can also make a body stay healthy and not

prone to diseases.

3 INTERNAL ANALYSIS

An internal analysis of a company is a process of evaluating an organization’s resources

and capabilities. It helps to find the inner most strengths and weaknesses of a company that in-

turn allows the strategic managers to capitalize and rectify on. The analysis explores the

company’s internal core competencies, cost position, and competitive viability in an industry

(Coulter, 2012). Mary A Coulter (2012) explains that internal analysis comprises of looking into

20
an organization’s distinctive capabilities and strengths that gives it a competitive advantage over

the competitors.

The companies operating in the pharmaceutical industry in general have their capabilities

built around the resources they have acquired over years of experience and hard work in the form

of sales, research and development, technology, and operational effectiveness. Whereas the most

attractive point which the pharmaceutical companies capitalize on, is the patent laws on the

researched products. Typically, these laws are more or less same depending upon the type of

government structure. In democracies like USA, the Food and Drug Authority (FDA) authorizes

a company to enjoy a researched patent product for not more than 20 years. After that, the

product formula and composition become available to all companies for generic production for

free (Lewis, 1996). Many companies give away their exclusive rights of producing and selling

products, due to patent laws and this is how other companies, in different regions start

manufacturing.

Henceforth, in Pakistan, the pharmaceutical industry capitalizes on this process. In 2000s,

the local pharmaceutical industry started booming with hundreds of manufacturing companies

stepping in to enjoy such an attractive industry in terms of profit margin. Since, Pakistan has not

been able to research any allopathic cure to a disease that meets the standards to be approved by

the FDA, companies only manufacture and market products that fall in the generic segment.

Another solution that promotion companies have found is global collaborations and synergies for

the products that are still under patent. These products are imported from the respective country

and sold through an already devised distribution network.

This consultancy report revolves around the trading manufacturing-oriented companies

that produce generic products and sell them through a rigid distribution setup that cannot be

21
changed whatsoever because of certain reasons. The trading-oriented companies are not involved

in the traditional selling techniques such as putting up a sales team to promote their products to

doctors for maximum numbers of prescriptions from them. The cost of marketing department

and is allocated to production and the company’s expenses in terms of intangible operations

becomes less. This technique is capitalized in the manufacturing process to achieve economies of

scale and lean manufacturing process in a strict product portfolio. These companies master

themselves in production that they can handle the demand of market when traditional companies

are not able to do so in times of shortage. They provide value to the consumers in low priced

medicines.

3.1 Value Chain Analysis

In order to find out a company’s activities through which it provides value to the

customers and consumers, it is essential to analyze the value chain. This analysis provides

specific information on primary and secondary activities that are interrelated and collective.

Michael E. Porter (1985) presented a model that precisely defines a company’s activities either

primary or secondary, under headings with relevant information. This analysis helps a company

to analyze its processes in order to see where it shines or lacks. It is a process of looking the

activities that go into change the inputs for a product or service into an output with the support

activities such as company’s infrastructure, human capital, technology, and procurement (Zucchi,

2020).

The pharmaceutical industry has clear value chain process model that presents itself in a

manner of primary and support activities in terms of raw material coming in the production

facility and processing it into finished drugs and then selling through a dedicated marketing and

sales team.

22
 This consultancy paper scrutinizes the value chain of trading manufacturing-oriented

pharmaceutical company Dosaco Laboratories Pvt Ltd., in order identify and see where the

decision making needs to be applied in order to provide the best value to the customers of the

company and gain a competitive edge over the competitors if possible.

In order to conduct a value chain analysis, the idea is to advise the client and, in this case,

the owners of the company, where to invest in the value chain and where to pull investment out

because, it is always an investment decision in the value chain analysis. The main processes of

the value chain are jotted down in the text and figure below that show exactly what the company

does:

3.1.1 Primary Activities

3.1.1.1 Inbound Logistics

The company sources raw material and packaging material from the local markets in

Lahore. Papar Mandi in Lahore is the main raw material market which supplies to almost all the

pharmaceutical manufacturing companies in Lahore and its outskirts in wholesale prices with

delivery. On the other hand, the packaging materials such as, labels, unit cartons, bottles/caps,

ampules, etc. are sourced from other companies. These companies work either in their own

manufacturing capacity or as distributors that supply only to pharmaceutical companies. In case

of SME’s, the general manager of the company is responsible to be constantly in contact with

suppliers for purchasing the raw and packaging material.

3.1.1.2 Operations

As the company operates in the manufacturing sector, it has one production plant that

manufactures the product portfolio in batches. Every medicinal product produced requires a

batch-number on the label. The process of dispensing starts from the approval of the production

23
manager, i.e., pharmacist, the raw materials are fetched from the raw material store of the plant,

then raw material conversion starts into finished drugs. The production labor operates the

machines within their specific domain of expertise such as, tablet section, syrup section, and

injection section. Each section labor is not allowed intervene in another section. The packaging

department falls under the operations as well, as the production and packaging go hand-in-hand

at the same time. This process is called on-line packing. This happens in a manner when the

production machine delivers a product and the labor starts to pack it in unit cartons and then in

dedicated cartons specially made for the type of product i.e., syrups, tablets, or injections.

3.1.1.3 Outbound Logistics

After the packing of each batch of medicines, it is then shifted to the finished goods

store. The company owns two pickup trucks that are responsible for the delivery of the finished

goods to the wholesale market of Lahore. Also, the drivers of these trucks are responsible for

delivering the goods sold to other cities, to the goods transport companies also known as bilti

adda.

3.1.1.4 Marketing and Sales

Sales are spearheaded by the general manager of the company who is also in charge of

finding out new clients in the wholesale markets of all cities of Pakistan. He is always in contact

with clients as he had prior connections in the wholesale market of Lahore. Also, to approach

new clients in other cities, he has only one promotions assistant who tours throughout the

country’s big wholesale markets for order taking. As far as the marketing is concerned, there is

no need for a marketing department for trading-oriented manufacturing companies because there

is no new product being developed in these companies. There is a strict product portfolio that

24
falls in the generic production according to the patent laws. However, sales can be increased with

some strategies.

3.1.1.5 Services

As a strictly manufacturing company, Dosaco has its sole focus on the production and

there are no services being provided to the customers other than free delivery in Lahore.

However, if there is a need when the company has sole responsibility in principle, the company

guarantees customer satisfaction. This only happens when there is a defect in the product either

in formula/composition i.e., failed batch, which usually does not happen or defect in packaging

due to rain or damage. Only then, the company is liable to call-in the defected product/batch to

the production plant and refund the customer(s).

3.1.2 Support Activities

3.1.2.1 Firm Infrastructure

The firm infrastructure refers to the activities in general planning and management,

accounting and finance, government affairs and legalities, and quality management. The

infrastructure of a company compliments the entire value chain (Administrator, 2018). In the

trading-oriented Pakistani pharmaceutical industry, the usual infrastructure of the companies

revolves around a manufacturing unit and corporate office generally within the same vicinity.

Dosaco Laboratories Pvt Ltd as a trading-oriented company falls in the small-sector

manufacturer category. They have one production plan and a corporate office in the factory area

as well as in Anarkali, Lahore from where all the operations are spearheaded by the owners of

the company under several main departmental heads. The general management and strategic

planning are done by a company shareholder and General Manager, Mr. Zakir Shah. He is also

responsible for the governmental affairs and legalities because he has prior experience in the

25
pharmaceutical industry. In other words, he is the face of the company in the pharmaceutical

market. Secondly, the company’s accounting department has three persons: the senior chartered

accountant and his two assistants who help him make the daily sheets regarding purchases,

production, stocking, and sales. There is no dedicated finance department in the company.

Finally, the quality control department looks over the production all over which is headed by

pharmacists.

3.1.2.2 Human Resource Management

Dosaco employs approximately 180 employees in two main areas: production and

support managerial employees. Firstly, there is a need to understand that there is no dedicated

human resource department in the company which is responsible for hiring, payroll or firing the

employees. The whole situation works around the community of labor in the industry, where

reference-based employment is prevalent. The production labor works full time as permanent

employees in the manufacturing area. The labor in this sector is hired through the community of

the pharmaceutical manufacturing industry in Lahore. There is, as such no other formal source to

hire the technical labor that operates the machines used for the production. However, labor for

non-technical areas such as, labelling and packing department can be hired from other sources in

the industrial area where other factories also operate. All the production and packaging

employees are paid according to the industry average along with the benefits and bonuses. The

discrepancy can be observed in wages with respect to seniority and experience. On the other

hand, the managerial employees are hired on the basis of trust with the owners, with most of

them usually developing prior connections with them, either as family member and/or as

colleagues. Moreover, the pharmaceutical industry also has to adhere to strict government laws

regarding labor safety, pension funds and work place SOP’s. Even the chartered accountant

26
works in the company for part-time due to the trust factor and relationship with the general

manager.

3.1.2.3 Technology

Technology refers to the level of innovation being used to make processes and operations

efficient and effective in a company. Dosaco owns the same machines in the production that all

other companies in the pharmaceutical companies use. There are semi-automated and totally

automated machines used for tablets, syrups, and injections manufacturing.

On the other hand, the company is slowly trying to adapt to the use of computers to

account for the purchases, production and sales. The common practice in the small-scale

manufacturing pharmaceutical industry is using the registers to manually account for stock

taking of the raw and packaging materials. The usage of sales software(s) has been an industrial

norm for years, but Dosaco still lacks in this area and this furthermore hinders its expansion of

the distribution network. The company still depends solely on programs such as Microsoft Excel

to manage data with respect to human resource, procurement and sales. Now, with the new

leadership, the company is gradually evolving to the new standards of accounting.

3.1.2.4 Procurement

Dosaco has been in trouble with its supplier relations due to disturbance in the credit

cycle. The company had not been able to pay the suppliers under previous leadership due to cash

crunch. As the company was acquired in mid-2020, the new owners came with prior relations in

the wholesale markets of the country and raw material suppliers of the Papar Mandi. The

procurement processes started to shape up just to keep the company get back on track after the

general manger started to utilize his relations with the market. Now, there are twenty raw

27
material suppliers and ten packaging material suppliers on the list. The company plans to

diversify its supply-chain with respect to time as the production grows.

Table 3:1 Value Chain Analysis: Dosaco Laboratories Pvt Ltd

[Dosaco Laboratories Pvt. Ltd] – Value Chain Analysis

Dosaco has one corporate office within the vicinity of production plant in
Firm Infrastructure the industrial area of Sheikhupura-Faisalabad Road, Kot Abdul Malik
Lahore.
Dosaco employs approximately180 employees, production workers,
HR Management distribution managers, and corporate employees. The company retains
employees with generous pay, benefits, staff resources, and bonuses.
Within this field Dosaco lags behind the competition. Still opting to use
Tech Development Microsoft Office Suite as an accounting and data management tool.
The organization is dedicated towards supplier relations works with more
Procurement than 20 raw material suppliers, in addition to ten suppliers for packaging
and distribution materials.

Outbound Marketing
Inbound Logistics Operations Services
Logistics & Sales
Dosaco
Dosaco mainly
guarantees
Following promotes on
customer
packaging, pharmaceuticals
satisfaction for
Each batch of shipments are expos and direct
customers
Dosaco sources imported raw medicines is sent to order taking in
(wholesalers)
material from local suppliers to manufactured on- customer's wholesale
only. To
the production facility. The site. Following a wholesale medicine
support this
company also works with quality check, medicine markets. Sales
claim, the
nationwide raw material markets medicines are markets, or are conducted
company
to stay stocked up on these then packaged in directly to through
issues refund
commodities. cartons for hospitals, where wholesale
for defective
shipping. each drug then markets, retail
or
makes its way to pharmacies, and
unsatisfactory
patients. hospitals that sell
products upon
drugs to patients.
request.

Profit Margin

As a result of decades of hard work,

Dosaco has a 15%-18% profit margin

28
 Source: Michael E. Porter (1985)

The value chain analysis is a simple three step process that Michael Porter (1985)

explained for the manufacturing businesses in categories in terms of client and non-client facing

activities namely:

3.1.3 Activity analysis

This includes analyzing the core activities of the company that it feels the most important

about providing value to the customers as well as to the company itself. These activities include

client and non-client activities.

The owners of Dosaco feel that the most critical activities their company performs are

procurement, accounting, production, and sales.

3.1.4 Value analysis

The core activities are then analyzed in terms of the number of values they provide to the

client or non-client.

3.1.5 Evaluation and planning

The evaluation process refers to the challenges faced by the company in which there is

room and need for improvement in the most critical activities and processes.

Table 3:2 Value Chain Analysis: Dosaco Laboratories Pvt Ltd

Activity Analysis Value Analysis Evaluation and Planning

Procurement  Suppliers’ relations  Bulk purchasing

 Credit cycle  Minimum quantity level

(MQL) management

29
  Maintaining Supplier

Relations

Accounting  Chartered account  Data Management

 Use of MS Excel  Use of holistic

 Payroll Management analytical software

Production  Expert pharmacists  Economies of scale

 Experienced production  Achieving KPIs

staff  Quality Assurance

 Quality Control

Sales  Distribution network  Enhance Distribution

 Relationships with network

wholesalers  Contracts with goods

 Free delivery in Lahore transport companies

Source: (Porter & Millar, 1985)

4 CONSULTANCY WORK

4.1 Problem Identification

Problem identification is a very crucial part for any business consultancy project. Mainly

due to the fact that it dictates the pace and directions of further initiatives. In consideration of the

importance of the step, a two-pronged approach was used to identify problems, which were

further divided into categories of expressed and realized issues. Firstly, identification of

expressed issues was done through multiple interviews with companies General

Manager/Director Mr. Zakir Shah. Insight into company processes was gained through these

interviews and close ended questions were used to identify problems within specific company

30
operational areas. Secondly, the realized problems were identified through open-ended questions

in the interview and through observation of company activities.

Figure 1: Problem Identification

Source: Authors own work (Industry and Value Chain Analysis)

The problems for Dosaco stems mainly form the negative corporate image inherited form

the previous owner’s mismanagement and the organizations inner turmoil. Unfortunately, this

also went onto effect the credit-cycle the company maintained with its key partners becoming a

point of mistrust between them and the company. Moreover, the key partners in this case (i.e.,

the suppliers) became hesitant to work with the company leading to major issues in the

company’s distribution network. Ultimately, impacting the supply chain negatively.

Additionally, with the company’s changing ownership, it was not just facing these issues.

further concern was raised, when it was realized that the company has major concerns with

respect to data management and lacks opportunities of growth.

Eventhough, the problems mentioned above may seem interconnected and thus solvable

through a convergent initiative. Mainly due to the fact that the problems had become deep rooted

in this case and required several initiatives to tackle them in a multidimensional manner.

31
4.2 Prospective Solutions

With respect to the problems mentioned above, a multidimensional approach was chosen

to tackle the issues on multiple fronts. These solutions can be better represented on the process

chart:

Figure 2: Prospective Solutions Pathway

Source: Authors own work (Industry and Value Chain Analysis)

With multiple approaches selected, work was done on multiple fronts simultaneously,

focusing on objectives one to four and keeping objective five as a self-audit initiative, at the end

of the constancy.

4.3 Task Division

4.3.1 Task 1: Use of Analytical Tools

The company was using no accounting or analytical software to account-for the

procurements, stock keeping, production, payroll, and even sales until after mid-2020. After the

acquisition by the new owners, the company’s chief accountant has started using MS Excel

under MS Suite i.e., interconnected use of MS Office in the company, for daily cash keeping

sheets, stock keeping, payroll and procurement. There is still no use of any software in sales in

32
the company as such. The accountant has been trying to contact a software house for a whole use

of analytical tool to account-for every operation and process. For now, as for the consultancy, we

got our hands on the Excel worksheet of purchases file for the month of September and October

2020.

The purchases file on the face of it was quite unambiguous that provided no analysis and

finding out specific data regarding an individual product and/or supplier. Secondly, the data was

formatted in a manner that was not able to show any on the key suppliers that the company

conducted most business with, in terms of finances. Now, this consultancy has provided the

company with easy to see and scrutinized representation of data along with real-time and live

representation of data in form of MS Excel dashboards. The dashboard worksheet shows the

most critical information regarding the suppliers with slicers included on the raw and packaging

material. Once, a slicer is applied on the item(s), the dashboard represents the Party Name, the

Rate in Pakistani currency, the Quantity of purchase and the Amount of the bill. Moreover, a

pivot table is created that shows which supplier has the most balance and the percentage of

business conducted along with a Combo and Pie Chart. By doing this, the owners get a real-time

performance and accounts payables information on the go.

4.3.2 Task 2: Supplier Relationship Management

After the takeover, it was obvious that the management was facing the issue of managing

the suppliers where the credit-cycle issues were prominent. The previous management was not

able to hold their end of the bargain in paying the suppliers on agreed upon terms. This in-turn

created a negative corporate image in the supplier’s market that is situated in Papar Mandi,

Lahore. Considering the research conducted, even though the suppliers tend to have a low

bargaining power, the company Dosaco seems to be on a limp when it comes to choosing the

33
suppliers of raw materials in the same market where the company defaulted on its payments. As

consultants, it was vital that we personally needed to go in the raw-material market and find

some suppliers whom we would be able to convince for supplying raw materials to Dosaco, since

the management had just been changed and they were motivated to turn the tables and better

their corporate image. As this is a highly regulated and sophisticated industry, all the personnel

falling in the supply-chain network need to trust and constantly communicate on a regular basis

to avoid any spurious material to come in the market. We were able to contact with Brother

Chemicals and Alibaba Chemicals in Papar Mandi to get in contract with Dosaco on one-month

credit-cycle that started from October, 2020 and February 2021 respectively.

4.3.3 Task 3: Expansion of Distribution Network

Distribution network is a step of chained processes within the supply chain, relating to

the post-manufacturing aspects, including stages of delivering the finished good to the end

consumer.

Like any other business, the pharmaceutical industry has a set distribution network in

place. Although the distribution network might have certain differences with respect to the type

of company being put under the lens (i.e., promotion oriented or trade oriented). One aspect that

is ever present is the middlemen, and in this case, they are the wholesalers and the distributors.

The process goes as such:

34
 Figure 3: Industry Supply Chain

The product goes from the After order authentication, it is Finally, the product reaches
manufacturing plant to the distributor delivered to the specific location the patient

A B C D E

The product goes from the The order reaches the

distributor to the order taker buyer

Source: Authors own work (Industry and Value Chain Analysis)

Within this process, the middlemen play an essential role when it comes to tracking down

the demand of specific areas and providing them with essential products. However, in case of

Dosaco, we were able to observe that due to the lack of connections outside of Lahore, the

products reached other markets through addition of another middleman in the supply chain, that

in turn, effected the profit margin of the company and also brought in unnecessary cost in the

distribution network.

Working within the capacity of consultants, it was our foremost goal to eliminate such

problems and in turn expand the company’s influence outside of Lahore. To do this, we firstly

identified markets where the company products circulated outside of Lahore. Through our

findings, we were able to classify prospective markets of Sargodha, Faisalabad, Multan, and

Jhang. The further research was helpful in finding a number of credible wholesalers; Asif

Medicine Co. (Sargodha), Tayyaba Traders (Multan), Rehman Traders (Faisalabad), and Al-

Hamd Traders (Jhang). Using prior relations in the market we were able to negotiate terms of

sales with them and the company itself has established a business relationship with them since

November 22, 2020. In the first phase of dealings, the flagship products of Dosaco, Desacon i.e.,

Dexamethasone injection that was claimed to be a can-be lifesaving drug for COVID-

35
19(Coronavirus disease (COVID-19): Dexamethasone, 2020)., Paracetamol, and Amoxicillin,

etc. were shipped.

4.3.4 Task 4: Sachet Manufacturing Unit

With respect to growth opportunities, the sachet manufacturing units planning,

development and deployment is key to the company’s long-term goals. Unfortunately, due to

current circumstances installation of the plant has been postponed until further notice.

However, a key part of this development was the cost of infrastructure associated to this

initiative. Therefore, another task fulfilled within this business consultancy is of calculating the

total grey structure cost associated to the sachet manufacturing plant. The estimated cost was

based on specific company requirements and the available land area for construction, which

amounted to 375sq ft (i.e., 25x15).

4.3.4.1 Roof Plan

Figure 4: Grey Structure (Roof Plan)

Source: Civil Engineer Rana Abdul Moiz

36
4.3.4.2 Inverted Beam Plan

Figure 5: Grey Structure (Inverted Beam Plan)

Source: Civil Engineer Rana Abdul Moiz

4.3.4.3 Floor Plan

Figure 6: Grey Structure (Floor Plan)

Source: Civil Engineer Rana Abdul Moiz

37
4.3.4.4 Foundation Plan

Figure 7: Grey Structure (Foundation Plan)

Source: Civil Engineer Rana Abdul Moiz

For the above-mentioned plans, guidance from a certified civil engineer Mr. Rana Abdul

Moiz was taken. Additionally, cost structure was based on average labor rates and latest material

cost, ignoring additional expenses such as company commission etc.

38
 Table 3: Expense Breakdown Sheet for Sachet Manufacturing Plant

Steel

Usage Type Price/KG Total Cost

Slab Grade 3 (483 KG) PKR 145 PKR 70,000

Beam Grade 4, 6, & 8 (207 KG) PKR 145 PKR 30,000

Reinforcement Cement Concrete

Usage Quantity Price Total Cost

Cement 52 Bags PKR 610 PKR 31,720

87CFT Crush 135 Bags PKR 55 PKR 7,425

Sand 69 Bags PKR 25 PKR 1,725

Bricks 12,000 PKR 13 PKR 156,000

Associated Expenses

Linter Pouring PKR 20,000

Mason Work PKR 4,500

Miscellaneous Expenses PKR 15,000

Total Expense

PKR 336,370

Source: Authors own work

5 EVALUATION

To gauge the success of the business consultancy and the related initiatives, it was

necessary to implement a pre and post method of examination criteria. Covering aspects of

prospective solutions (both financial and non-financial) and other initiatives undertaken for the

growth and expansion of the company.

39
 With the main goal of the consultancy being to bring about considerable positive change

within the company, this objective required more than just the scrutiny of the prospective

objectives but also transparency within the chosen method of evaluation.

5.1 The Iron Triangle

The iron triangle is a triple constraint project management tool used to evaluate success

of a project while simultaneously adjusting project goals with respect to change in objectives or

time consideration (Barnes, 1980). Considering the fact that project success indicators differ

from one another, with respect to specific projects, the iron triangle gives a project manager a

unique advantage, as it has a multi-purpose approach based on three fixed aspects. The iron

triangle approach can be used to not just evaluate project progress or success but also determine

under what conditions can the project achieve set goals. Moreover, the constraints on which the

iron triangle relies on are:

5.1.1 Cost

Cost is the associated financial constraint on the project that any project manager has to

take into account while working on achieving project goals. Furthermore, the cost associated to a

project itself is influenced by elements such as, resource abundance (both material and people)

and fixed cost associated to project.

5.1.2 Time

This is the projected schedule, within which the project has to meet set goals. Managing

time itself is not an easy task and requires for managers to break down tasks into individual

processes, that are completed in a sequential or independent manner. Team sizes can vary,

depending on the project scale and delivery schedule.

40
5.1.3 Scope

The scope of a projects comprises of the tasks that are necessary to achieve for the

completion of project goals. Also, scope itself can be seen as a major controlling factor when it

comes to the cost and time allocated to a project. Thus, controlling the scope of a project is

critical and any sort of adjustment with project scope guarantees change in the time and cost of

that project.

5.1.4 Quality

Figure 8: The Iron Triangle

Source: (Barnes, 1980)

Lastly, for any project the completion of set objectives is not the only indicator of

success. The thing that matters the most is the quality of the deliverables. In the case of iron

triangle, the quality of a project can be judged based upon the evaluation of the three constraints

41
time, scope and cost. Thus, the aspect of quality falls in the middle of the iron triangle, supported

by the three constraints: see figure 4.

5.2 Implementation

5.2.1 Cost

As illustrated above, the cost associated to this particular project for the company was

PKR 4,000 per month starting from October 2020 to May 2021 paid to both of the consultants,

that makes it PKR 8,000 collectively. The cost was utilized as fuel expense to commute to the

production site at Sheikhupura once or twice a week depending upon the tasks. Hence, the total

cost incurred by the company was PKR 48,000 excluding the months of December 2020 and

January 2021.

5.2.2 Time

The time constraint for the project practically started from October 2020 to May 2021: 8

months. The time factor was strictly crucial for us to achieve our project milestones illustrated in

the figure below (see figure 5).

42
 Figure 9: Project Timeline

Source: (Authors own work)

5.2.3 Scope

The scope and quality of this consultancy project is intended to be tested in a two-

pronged manner: financial and non-financial.

5.2.3.1 Financial Impact

The financial impact is measured through the scrutiny of sales data gathered from the

company starting from November 2020 to May 2021. In our period of work, as mentioned under

the “Expansion of Distribution Network” heading, we were able to analyze only the sales made

through our channel of connections i.e., Asif Medicine Co., Rehman Traders, Tayyaba Traders,

and Al-Hamd Traders. The sales data provided to us was comprised of the party names, products

sold, and their quantities. Normally, the prices and balances are also in the sales data, but due to

data breach and privacy issues, both of these columns were eliminated from the files. Hence, in

order to condense this data limitation aspect, we assumed the prices listed on the

43
Druginfosys.com website for Dosaco Laboratories Pvt. Ltd.:

http://www.druginfosys.com/productlist.aspx?companycode=43&type=1. This analysis was

conducted on the quantities available over the course of time for the project, the cumulative sales

were approximately PKR 2.55million averaging monthly PKR 318,750. The net profit margin at

16% was PKR 408,000. The company was better off with PKR 360,000 calculated through

subtraction of our cumulative salary i.e., PKR 48,000 for the project.

5.2.3.2 Non-Financial Impact

The consultancy work was not just focused on finding ways for the company to make

money, but our goal was to become effective and efficient in both monetary and non-monetary

terms. In order to gauge the non-financial impact i.e., the managerial efficiency achieved through

application of analytical tools within the spectrum of company’s understanding, the most

effective method was to conduct a survey through questionnaire. Additionally, this survey

eliminates the possibility of self-assessment biasness in our examination of work.

The operational effectiveness was intended to increase the ability of the company’s

employees in the use of data: sales, purchases, and stock keeping. The analytical tool MS Excel

was used to analyze data in the form of dashboards which furnished the identification and

representation of the key elements present in the data files. This aided the company with key

decision-making that ultimately enhanced the supply-chain network.

5.2.3.2.1 The Evaluation Form

The questionnaire is basically an evaluation form that takes into account the whole

project appraisal which revolves around the ideology of the three aspects of the iron triangle. The

quantification of the data will be aided by Likert scale close-ended 14 questions that are

envisioned to measure how much exactly did the consultancy satisfied the company’s owners.

44
Only one dichotomous question was included to inquire the endorsement of the respondents to

hire the consultants as full-time employees.

There are a total of 4 sections within the evaluation form that compute the validation of

our work on budget and use of resources, work done in the time limitation, quality of

deliverables, and value of the service provided by us. The evaluation ratings devised with use of

Likert scale were 1 to 5, with 1 being the lowest: “Did not meet the requirements/expectations”,

to 5 being the highest: “Exceeded the requirements/expectations”. All four sections were

important to be tested, but there were 1 or 2 important pin pointed questions that directly queried

the legitimacy of the effort. We were also recommended by the owners to be hired as full-time

employees in the company.

Table 4: Consultancy Evaluation Form Ratings

Sections Ratings/Scores

Budget Control Performance 19

Schedule Performance 13

Quality of Deliverables 11

Value of Service 19

Cumulative Score 62

Source: (Authors own work)

45
 6 REFERENCES

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Triangle. Stakeholdermap.com. Retrieved 13 June 2021, from

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%20Iron%20Triangle%20of%20time,cost%20and%20time%20are%20interrelated.

CFI. (2020). What is Bargaining Power of Suppliers? Retrieved from Corporate Finance

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https://strategiccfo.com/supplier-power-one-of-porters-five-forces/

Coulter, M. (2012). Strategic Management in Action (6th ed., pp. 92-110). Pearson.

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Desk, (2019). PM Imran Khan Orders To Bring Down Drug Prices - SUCH TV. [online]

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 7 APPENDIX

1. Consultant Project Evaluation Form

Project Name _______________ Project Number ____________

Award Date ________________ Evaluation Date ___________
Consultant Firm _____________ Agreement Amount ________

Evaluation Ratings
5 = Significantly Exceeded 2 = Met Some Requirements/Expectations
Requirements/Expectations
4 = Exceeded Requirements/Expectations 1 = Did Not Meet Requirements/Expectations
3 = Met Requirements/Expectations N/A = Not Applicable

Period Description: Evaluation Performed after 100% submittal

Budget Control Performance Evaluation Ratings

A) Budget allocation was justified
B) Effectively managed and controlled the
total project cost
C) Changes were timely and accurately
addressed
D) Cost estimates were accurate with
appropriate detail

Schedule Performance Evaluation Ratings

A) Quality of baseline schedule
B) Productive and timely schedule updates
C) On time performance, responsive to
company needs

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 Quality of Deliverables Evaluation Ratings
A) Deliverables Met or exceeded project
objectives
B) Sufficient accuracy & detail in
deliverables
C) Clarity of information in deliverables

Value of Service Evaluation Ratings

A) Quality solutions addressing company
needs
B) Effective communication with all parties
C) Responsiveness to changes and company
needs
D) Proactive, effective project management

Overall Evaluation Relative to Expectations

Q. Would you recommend Yes No
hiring this consultant?

50