Q9.

For the selected pair of company, give an example of vertical integration. Justify your answer for
each.

1. In terms of backward vertical integration, Pfizer has invested in advanced manufacturing

technology to support its product line and bringing products to market at a quicker pace.
Pfizer uses consumer-directed promotions to reach its customers, which is an example of the
company’s forward vertical integration.
The organization can introduce backward vertical integration due to the benefits that it
provides. This will improve workforce safety and productivity by giving the firm critical
information that is vital in making effective decisions. This will also improve governance and
reporting by capturing information at the point of selling and marketing. This will save on
time and eliminate the aspect of entering data twice.

2. Manufactured by sun pharma means Drugs (Tablets, Capsules, drops, syrups, injections,
ampules) are manufactured by Sun pharma's own plants. So, Company can write on Strip or
on packing that this drug is manufactured by sun pharma.

But sometimes there are overload of orders .So, at that time company has to take help of another company’s
manufacturing plant. Especially in terms of delivery of orders in time. Yes, off course these manufacturing
plants are also previously audited by sun pharma to secure the quality of drugs. Like sun pharma has this kind
of tie up with Akumentis pharma. So, at that Time Company has to write that manufactured by Akumentis. It is
third party manufacturing.

There are also manufacturing rights. It is not applicable to each drug but there are certain new drugs in market
which are manufacturing by only company which have reserved rights of manufacturing. At that time Sun
pharma has to tie up with that company for manufacturing that drug. Like, Rifagut brand (Molecule: Rifaximin)
of Sun pharma is not manufactured by Sun PHARMA .It is only manufactured by Lupin pharma .As Lupin has
reserved manufacturing rights of Rifaximin. So, Sun pharma has to tie up with Lupin for Rifaximin .Off course
on packing there is name of Sun pharma brand Rifagut. But they have to write on packing that manufactured
by Lupin pharma.

Now, come to marketing part. Sun pharma has its marketing team which promoted brands of Sun pharma in
market. So, Marketed by Sun pharma and Manufactured by whichever’s company plant is used for drug
manufacturing. This is an example of Forward vertical integration.

Q10. For the selected pair of company, identify the company as one of International, Multi-domestic, Global,
or Transnational. Justify your answer for each

1. Pfizer sells its products in more than 125 countries world-wide, has 58 manufacturing sites world-
wide, approximately 92,400 employees globally and owns 470 subsidiaries (340 of which are located
outside of the United States). Pfizer can be considered a global company with a total of 11 countries
outside of the United States producing more than $500 million dollars in revenue. Pfizer has
expanded globally in efforts to increase its profitability and growth. Pfizer has done so through market
seeking due to a mature industry, efficiency seeking and resource seeking.

As a global company, Pfizer faces pressure to reduce its cost as well as respond to its local markets. Within the
125 countries Pfizer sells its products in, the company must be aware of local communities, laws and needs in
which it should respond to (Proxy Statement for 2019 Annual Meeting of Shareholders). A conflicting pressure
that Pfizer also faces is the pressure to reduce its costs. Pfizer handles its pressure for cost reduction by mass
producing its generic drugs, driving down costs. Although both global pressures are high, the pressure for local
responsiveness is more prevalent than the pressure for cost reduction. In order to handle two simultaneous
high pressures, Pfizer has globalized using a transnational strategy, where VRIN resources are achieved in each
country.

The first international level strategy recommendation for Pfizer would be to use each country’s specific local
knowledge to customize its products to the needs of the local markets. This can be done by allowing the
subsidiary managers to have substantial control over decision making while still sharing information and
resources with the parent company. Another recommendation to be made is to achieve economies of scale in
each location. The need for location economies with a transnational strategy is critical in handling both
pressures.
 2. Sun Pharmaceuticals (SUNP) is one of the fastest growing companies in India as well as globally. It is

the world's fourth largest specialty generic pharmaceutical company and India's top pharmaceutical

company. A vertically integrated business, it has a highly impressive track record of organic and

inorganic growth and has achieved economies of scale. It provides high-quality, affordable medicines

trusted by customers and patients in over 150 countries across the world. In India, the company

enjoys leadership across 11 different classes of doctors with 30 brands featuring amongst top 300

pharmaceutical brands in India.

Sun Pharma's global presence is supported by 42 manufacturing facilities spread across six continents, R&D

centres across the globe and a multi-cultural workforce comprising over 50 nationalities. Its footprint across

emerging markets covers over 100 markets and six markets in Western Europe.

Its Global Consumer Healthcare business is ranked amongst top 10 across three global markets. Its API

business footprint is strengthened through 14 world class API manufacturing facilities across the globe. Sun

Pharma fosters excellence through innovation supported by strong R&D capabilities comprising about 2,000

scientists and R&D investments of approximately 8 per cent of annual revenues.

Sun Pharma’s various US acquisitions enlarge SUNP’s pipeline with differentiated products. The acquisitions

are positive development for SUNP given the complementarities of businesses. Given the company’s track

record of successfully turning around businesses in a highly profitable manner such as with Taro, TDPL, Natco’s

brands, the company has one of the highest margins and return ratios amongst its global peers.

In April 2014, SUNP announced its biggest merger and acquisition deal ever with Ranbaxy (RBXY). SUNP

currently is the second largest player in the domestic market, while the merged entity will become the largest

player. The company has witnessed depressed profitability and valuations for Ranbaxy. Given its successful

track record, the company could harness Ranbaxy’s existing capabilities, geographical presence and product

portfolio to improve the latter’s profitability and drive long term value creation.
 Q11. For the selected pair of company, give an example of diversification. Justify your answer for
each.

1. Pfizer is involved in corporate related diversification through two major business segments;
innovative health and essential health. As of 2018, Pfizer Innovative Health and Pfizer Essential Health
account for approximately $33.4 billion dollars and $20.2 billion dollars in revenue, respectively
(Proxy Statement for 2019 Annual Meeting of Shareholders). These business segments are closely
linked and neither segment is dominant, meaning that Pfizer’s diversification can be defined as
related constrained.

2. Sun Pharma is diversifying into specialty products like Ilumya, Levulan, BromSite, Cequa, Xelpros,
Odomzo, Yonsa, Winlevi, etc. The launch momentum in India (25 launches in Q3), pick-up in demand
for chronic and sub-chronic segment backed by high PCPM is likely to sustain growth.