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Amrutanjan

The story of a 125 year company famous for its Pain management products
over time

Nageshwara Rao Pantulu, started a


patent medicine business under the
name Amrutanjan Deport at Mumbai 1893
1936 Went Public and renamed the
company to Amrutanjan Limited
Launched a series of products starting from
1972, including MahaInhaler, Dermaointment,
Dragon Liquid Balm and Coldrub

2004 Launched Affair”- A


mouthfreshner

Renamed the Company to


Amrutanjan Healthcare Limited
2007
Launched 2 new products
Cutis(Olive Oil) and organic home
insecticides 2007
2008 Launch of a nation wide “Be ready
campaign”

Currently
AHCL had a turnover of around INR
890 Million in 2009, and was the
third largest player in the pain
balm category
A products offered by the company
include the following
• The Rubefacient market is around INR
4.43billion large with an annual growth at
8%
• AHCL tried to expand the business
through Inorganic growth strategy and
as part of that diversified in to various
unrelated businesses.
• The company had started Amurtanjan
wellness centers which dealt with pain
relieving products
• The company had forayed in to
Beverages and ready to eat segment
Rubefacient Market in
India (Overview)
 Indian pharmaceutical industry - $4.5
billion in 2011, growing at 8 – 9%
annually
 The pharma market consists of
prescribed drugs and over-the-counter
(OTC) drugs
 The OTC pharma market was
estimated at $1.8 billion in 2009
 The OTC pharma market is expected
to have a higher growth compared to
the overall pharma market
PHARMACEUTICAL
MARKET

PRESCRIBED OVER-THE-
DRUGS COUNTER DRUGS

ANALGESICS VITAMINS,
AND PAIN COUGH, COLD GASTRO-
MINERALS AND
RELIEVERS AND ALLERGY INTESTINAL
SUPPLEMENTS

RUBEFACIEN
T (BALMS
TABLETS
AND
OINMENTS)

The players in balm included Iodex- 16.5%, Zandu-36% and Amrutanjan-26.6% in the year
2008-09
OTC pharma Market growth

 Factors that lead to the growth:


- Increased focus on “wellness” than “illness”
- High cost of the medical treatments encourages people to opt for preventive
methods: Nutritional supplements
- Increase in disposable income and lifestyle diseases
- “Wellness” market comprises of slimming centers, ayurvedic centers and spas
which use OTC products
Major brands in Indian Rubefacient
market
Major Brands in the Rubefacient market

Elder Healthcare’s Tiger Balm – 5%


Zandu Pharmaceuticals – 45%

Amrutanjan Healthcare Limited – 29% *2010’s Statistics


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Concept associated with the case: Diversification

Diversification:
• Diversification is the art of entering product markets different from
those in which the firm is currently engaged in. It is helpful to divide
diversification into ‘related’ diversification and ‘unrelated’
diversification

• Risk reduction and growth are the 2 main motives for diversification
• Risk reduction: diversified risk across different products
• Growth: Avenues to achieve corporate growth in other
industries and markets.
Competitive advantages: Relating to diversification

Economies of scope:
• Tangible Resources( Distribution Networks, IT Systems, Sales Forces,
R&D Labs)
Strong distribution network in India
• 0.35 Million retailers, 1750 stockists promoting the
brand
• Export networks to middle east, Africa and neighboring
countries.
Higher fixed costs over diversified products----> Low per unit
costs

• Intangible Resources ( Brands, Corporate Reputation, IT knowhow,


Goodwill)
Leveraging its heritage status, and its products have been
attributed with being-strong, pure, natural, healthy, wellness etc…
Related Diversification:

A related diversification is one in which the two involved


businesses have meaningful commonalties, which provide the
potential to generate economies of scale or synergies based
upon the exchange of skills or resources

• Exchanging skill and resources- Existing Distribution network


can be shared
• Brand name-Heritage that speaks about health and wellness.
• Marketing skills- 360 degree marketing
• R&D and product development
• Exploiting excess capacity
• Achieving economies of scale
We look at the example of Fruitnik where amrutanjan believed that
the keywords associated with the brand such as “strong”, “pure”,
“natural”, “Healthy” would be translated into their new venture
into the Fruit drink segment.

However, The public association of Amrutanjan as a strong scented


pain reliving balm did not allow them to market fruitnik
successfully.
There existed a disconnect, between the public perception of the
iconic amrutanjan product and Fruitnik.
Unrelated Diversification: Risks and Threats

Leveraging strong brand goodwill.


• Increasing competition.
• Tweaking distribution from pharmaceutical led
company to FMCG friendly.
• Existing players in the market.
• Late mover
• Difficulty in understanding needs of a new market
• Brand association with young customers
• Increasing menthol prices.
• Extra cost of expanding supply chain and logistics.