Group 3 || Section C

Adimoolam Madhulika (PGP36103) | Ajay Yadav (PGP36104) | Ayurshi Kapse (PGP36112)

Varun Teja (PGP36120) | Savvy Prasad (PGP36141) | Shubham (PGP36144)
Sonal (PGP36145)
AGENDA

• Elements of Strategy
• Business Level Strategy
• Corporate Level Strategy
• Strategy Canvas
• CAGE Analysis
• Strategic Group Comparison
• Recommendations
 INDUSTRY STRUCTURE
MAJOR PLAYERS
Pharmaceutical
Industry

Contract Research and

Active Pharmaceutical
Manufacturing Formulations Biosimilars
Ingredients (APIs)
(CRAMS)

Branded Acute Chronic

Anti-Infectives, Cardiovascular, Anti-

Respiratory, Pain, Diabetics, Gastro Intestinal,
Generics Gynaecology Neurological

Strengths
Macroecono Industry Structural Key Success Strategic Competitor Opportunitie Strategic Strategic Value Chain Competitive Product
and
mic Analysis Analysis Forces Factors Analysis Analysis s & Threats Intent Assets Analysis Analysis Portfolio
Weaknesses
 Key Success Factors

R&D and Innovation Product variety - No. of

Marketing Expense
Expenditure therapeutic areas

No. of OTC medicine stores across country

Orphan drugs
(distribution channel)
 VISION
“None shall be denied”
The Company strongly believes that access to high quality, affordable medicine is a basic human right

CORE IDEOLOGY ENVISIONED FUTURE

CORE PURPOSE CORE VALUES BHAG VIVID DESCRIPTION

Purpose - Inspired  Target of total To transform into an

Caring for Life Responsibility - business of 5 billion integrated, forward-looking
Centered  dollars by 2024 ( 1 and agile organization while
Innovation - Driven  billion each from continuing to serve our
Integrity & Trust - Africa, America patients with care and
Anchored  Europe and rest of the compassion. 
Excellence- Focused world)

Source : Annual Reports, FY 2014-20

 OPPORTUNITIES AND THREATS
OPPORTUNITIES
• 100% FDI allowed in the automatic
route along with increase in R&D
investment by the leading firms
present great potential for growth in
the industry.
• Low production costs in the country
encourage exports from the country.
• Increasing government spending and
policy regulations in the healthcare
sector drive growth in the
pharmaceutical industry
THREATS
• Entry of new market players
due to ease in government
policies such as FDA
approvals, patent approvals
• Price ceiling on drugs set by
NPPA inhibit growth in the
industry
• Growth in the traditional
methods of treatment such
as Ayurveda as well as the
fitness industry pose a
threat to the growth of the
industry
 STRENGTHS AND WEAKNESSES
STRENGTHS
• Growth in Net Profit over the years
with a consistent rise in margins.
• Investment in cutting edge
technologies like LIMS and ELN as a
part of the digital transformation
strategy
• Steady increase in Return on Assets
• Increasing manufacturing capacity to
boost production
• Wide range of products spread across
multiple categories
WEAKNESSES
• R&D investment has seen a
slight decrease over the
years for Cipla and this can
be related to decrease in
number of patents filed
over the years from 2017-
2020.
• Limited Presence in
Emerging markets
 Elements of Strategy

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison
 Elements of Strategy - Arena
Share of Revenue (%)
GEOGRAPHY

North America Emerging Markets South Africa

India International Europe India

PRODUCT OFFERINGS
Respiratory Anti-infectives
Cardiac Gastro-intestinal
Urology Derma
Pain/ analgesics Opthal/Otologicals
Antivirals Neuro/CNS
Cipla has a strong global Others Gynaec
presence with products spread Anti-diabetic Vitamins

across various therapeutic areas

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source : Annual Reports

 Elements of Strategy - Vehicle
Cipla has followed an inorganic approach of growth through acquisitions and licensing to expand its market
presence and product portfolio

RECENT ACQUISITIONS KEY RECENT LICENSING/ JOINT VENTURES

Mirren acquisition to 80:20 Joint Venture with

strengthen its position in Jiangsu Ace bright (2020)
South Africa (2020)

Brandmed Acquisition Acquired 4 key brands –

which offers connected Cpink, Cdense, Productiv
healthcare solutions (2020) and Folinine (2020)

Enters into digital

Acquisition of Invagen and therapeutics by partnering
Exelan to expand with Wellthy (2019)
operations in the US (2016)

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison
Source : Annual Reports
 Elements of Strategy - Staging
Introduces the triple Over the years, Cipla has achieved growth by launching
Anti-Retro Viral innovative therapeutic drugs as well as acquiring firms
therapeutic drug to
treat HIV/AIDS (2001) across the world

Acquired a Acquired Stake in

Acquires 100% stake in Quality Chemicals
Medpro to expand its minority stake in
Chase Pharma, Ltd. (2015)
presence in South
Africa (2013) USA (2014)

Enters into digital Launches Acquisition of

therapeutics by Synchrobreathe, a state InvaGen and Exelan
partnering with of-the-art innovative Pharmaceuticals Inc.
Wellthy therapeutics breath actuated inhaler (2016)
Brandmed (2019) (2017)

Leads the fight against Covid-19

Vaccine. Launches global lung
leadership aspiration (2020)

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison
 Elements of Strategy - Differentiator
Cipla differentiates itself in terms of the product portfolio it offers and quality practices it follows to ensure
safety of the patients

Quality Practices that ensure

Largest player in respiratory safety in their processes
medication as well as Anti-
Retro viral drugs

Respiratory Anti-infectives
Cardiac Gastro-intestinal
Urology Derma
Pain/ analgesics Opthal/Otologicals
Antivirals Neuro/CNS
Others Gynaec
Anti-diabetic Vitamins

Supply Chain optimization to

Diverse Product Portfolio reduce COGS
Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source : Annual Reports

 Elements of Strategy – Economic logic
Achieve cost efficiency in manufacturing and make affordable medicine accessible to patients across the globe

Cipla’s COGS comparison for FY 2015-2020

70,000
60,000
50,000
In Rs. Millions

40,000
30,000
20,000
10,000
0
2015-16 2016-17 2017-18 2018-19 2019-20

Cipla Industry Avg. Investment in technology to achieve operational

efficiency and achieve lower COGS
Cipla’s COGS is lower than the industry average

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source : Annual Reports

 Elements of Strategy – Changes over time (1/2)
Element Factor Then Now Reason
• 1000+ Products • 1500+ Products in 65 therapeutic • Increasing intellectual
• Product Categories: APIs (200 categories capital and research
Products), Respiratory (65 • Product Categories: APIs (400+ capability
Product Products), Asthma, Generics Products) , Generics (150 • Need for cure in
Categories Products) , Respiratory, HIV/AIDS, therapeutic areas and
Oncology, Urology, Asthma development of orphan
drugs
Arena
• Presence in 60 countries • Presence in 80 countries • Increase In global
• 35 Plants in 4 countries • 46 Manufacturing plants in 6 demand for generic and
Geographic countries therapeutic drugs
Areas • Increasing presence in
countries other than
emerging markets

• Acquired Cipla Medpro (2013) , • Trademark for Vysov and Vysov-M • Increasing product
InvGen and Exelan an anti-diabetic drug for the portfolio in new
Pharmaceuticals (2016) in Indian Market (2019) therapeutic areas
South Africa and India • Licensing agreement with Multi-G,
Vehicle Acquisitions/ a Belgium based firm.
Licensing • Acquired 4 new brands from
Wanbury to strengthen it’s
women health segment

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source : Annual Reports

 Elements of Strategy – Changes over time (2/2)

Element Factor Changes over the time Reason

Differentiator Image and • Quality Standards (Pharmacovigilance, Quality Management • Increase brand equity
Presence System with latest technologies) and become the market
• 2nd Largest player in respiratory medicines, Urology and leader in respiratory and
HIV/AIDS drugs ARV drugs
• Stands by its vision of making cheap medication accessibile to all
• Focus in emerging markets like India and South Africa
• Sustainable Supply chain and local sourcing

Economic Low Cost • Achieve COGS optimization through local sourcing of raw • Make affordable and
Logic Production materials accessible medicine to
• Provide low cost medicines and make medication affordable and all
accessible to all
• Investment in technology to monitor manufacturing processes
and achieve economies of scale

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source : Annual Reports

 Business Strategy

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison
 How do we compete?
Low-Cost Strategy for High-Cost
Drugs
low cost -> affordability -> sales -> brand awareness -> gain customers -> market share -> bulk purchases -> economies of scale -> low
cost “Cipla developed the world’s first 3-in-1
recommended fixed dose combination
(Stavudine + Lamivudine + Nevirapine) to
fight HIV/ AIDS…It was the first anti-AIDS
cocktail that brought the cost of treatment
down from $12,000 per patient per year
to around $300, enabling millions across
the developing world access to life-saving
therapy.”

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source: https://www.livemint.com/market/mark-to-market/cipla-on-a-firm-wicket-sustaining-growth-momentum-margins-hold-key-11614580556945.html
 How do we compete?
Cost leadership Differentiation

low cost -> affordability -> sales -> brand awareness -> gain customers -> market share -> bulk purchases -> economies of scale -> low
Broad
cost
Generics, APIs
• Local sourcing of raw materials
• Project Eagle: Vertical Integration Branded Generics
Strategic Intent

(procurement, supply chain and

operations)
• Automation : e-Auction, e-Sourcing
Narrow
(focus)
Sub-​Saharan Africa Specialty Drugs,
and Cipla Global Access Therapies
• Anti-retroviral,  Chronic & complex • Cipla Technologies LLC (Cip Tec)
ailments, e.g. HIV, IBF • R&D investment
• Laboratory Information Management
System (LIMS)
Competitive Advantage

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source : https://cio.economictimes.indiatimes.com/news/business-analytics/a-look-at-ciplas-tech-innovations-as-it-embarks-on-digital-transformation/71051298 ; annual reports

 Corporate Strategy

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison
 Growth: Ansoff Matrix
Existing Products New Products
Market development Diversification

Esomeprazole, Dymista Nasal AVT02 Avenue

New Market

Spray, Budesonide Respules, • “Alvotech’s AVT02 is in

Phase-3 clinical Therapeutics
Escitalopram, Finasteride, etc. •
development…”
“…make this highly
• “…allows us (Cipla) to
enter the specialty hospital
effective treatment option business in US.”
available to patients in
• First-to-market and differentiated generics
several countries.”

Market penetration Product development

Respiratory, Anti-infectives, Favipiravir, Cipremi,

Existing Market

Cardio-metabolic, Gastro and Remdesivir, Ciplenza,

Urology Actemra, etc.
• “Pharmaceutical firm Cipla is set to launch Covid-19 drug Favipiravir,
• Cipla - 3rd largest pharmaceutical company in India developed by the Council of Scientific and Industrial Research (CSIR)
…”
Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source: Link 1, Link 2, Link 3, Investor Presentation 2016, Cipla’s website

 Growth: Diversification
Diversifica Vertical / Major Entities Relatedne Related moves
tion
Re Type Horizontal involved ss check

Related Vertical Chemical - ⮚ Commissioning micro/flow reactors

industry ⮚ Rs 500 cr investment for API facilities at 3 locations in India
players

Horizontal Companies
dealing with
pharmaceutic 1999 (Cardiovascular
2001(Oncology & cardiovascular) 2010 (API)
als & anti-infectives)

(Match)
Medpro Biopharm SPA 2019 (API)
2013 2015 (Respiratory drugs)

Diversifica Industry Relatedne Related moves

tion Type ss check

Unrelated Digital therapeutics

Partnership in 2019
(Mismatch)

Legend : Supply chain (Input and process) Customer Technology Product

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source : Annual reports, moneycontrol.com/company-facts/cipla/history/C

 Strategy Canvas

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison
 Strategy Canvas
Company Price Product Offerings Dosage Forms Brand Value

Proxy Average Price Product Range Variants of Doses Market Share

2 3 4 3

4 4 3 4

1 1 2 1

3
2 1 2

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source : Annual Reports of Various Companies

 Strategy Canvas
4

3
Relative Ranking

1
Price Product Portfolio Dosage Forms Brand Value
Factors of Competition

Cipla Sun Pharma Aurobindo Pharma Dr. Reddy's

Cipla offers a broad assortment of products in multiple dosage forms at a lower price when compared to its
competitors which aligns with its vision statement of “None shall be denied”

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source : Annual Reports

 CAGE Analysis

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison
 CAGE ANALYSIS – Cultural Distance
Country Languages Religion Share of global revenue of Cipla Limited in
India Hindi/English Hinduism financial year 2020, by regionIndia
USA English Christianity SAGA
South Africa Zulu Christianity North America
Australia English Christianity Emerging Markets
Sri Lanka  English Buddhism  Europe
brazil Portuguese Christianity
API
Germany German Christianity
Other
UK English Christianity

100
90
80
70
60
50
40
30
20
10
0
India USA South Africa Australia Sri Lanka  Brazil Germany UK
Power Distance(PDI) Individualism versus Collectivism (IDV) Masculinity versus Femininity (MAS) Uncertainty Avoidance (UAI) Orientation (LTO)

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source: https://hi.hofstede-insights.com/national-culture
 CAGE ANALYSIS – Administrative Distance
Country Health Insurance Paid/Unpaid
India Optional Has to be paid for
USA Mandatory Has to be paid for
South Africa Optional Has to be paid for
Australia Optional Has to be paid for
Sri Lanka  Mandatory Free
brazil Optional(mandatory under certain circumstances) Free
Germany Mandatory Free
UK Optional Free
Source: World Health Organization Global Health Expenditure database (http://apps.who.int/nha/database)

Domestic Government Health Expenditure (% Of Current Health Expenditure)

25%

20%
15%

10%

5%

0%
2011 2012 2013 2014 2015 2016 2017 2018

India USA South Africa Australia Sri Lanka  brazil Germany UK

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

www-economist-com, https://www.transparency.org/en/cpi/2020/index/nzl#
https://www.doingbusiness.org/en/rankings, The Global Competitiveness Report 2019
 CAGE ANALYSIS – Geographical Distance
400
Country Region Number of Climate
Ports
350
• Tropical wet
India South Asia 13 • Tropical dry
• Subtropical humid 300
• Montane

USA North 360

250
America • Continental

South Africa Africa 8 • Temperate  200

Australia Oceania 48 • Tropical 150

• Temperate
South East 100
Sri Lanka  7 • Tropical
Asia

Brazil South 175 (143 private • Tropical 50

America + 32 public) • Subtropical
0
• Temperate ia A ca l ia a  zil an
y UK
Germany Europe 74 In
d US ri a
an
k
Br
a
• Marine Af us
tr r m
h iL Ge
ou
t A Sr
UK Europe 120 S
• Temperate
Number of Ports
Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source: https://www.portsaustralia.com.au/resources/trade-statistics
 CAGE ANALYSIS – Economic Distance
Country Per Capita Income Health Expenditure Per Capita Corporate Tax Rate
India 2099.599 72.835 15%
USA 65297.518 10623.85 21%
South Africa 6001.401 525.957 28%
Australia 55060.326 5425.34 26%
Sri Lanka  3853.084 157.466 24%
brazil 8717.186 848.389 34%
Germany 46445.249 5472.202 19%
UK 42330.118 4315.428 19%
70000 40% 120%
60000 35%
50000 30% 100%
25%
40000
20% 80%
30000
15%
20000 10% 60%
10000 5%
0 0% 40%

20%

0%
India USA Australia Brazil Germany
Per Capita Income Health Expenditure Per Capita
Corporate Tax Rate Percentage of people covered with health insurance

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source for per capita income: World Bank national accounts data, and OECD National Accounts data files.
source for health expenditure World Health Organization Global Health Expenditure database 
 Comparison of Strategic Groups

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison
 Strategic Groups
Number of
Company R&D Intensity therapeutic areas
Cipla 7.05 10
Dr. Reddy’s
Laboratories 11.43018 7

Sun Pharmaceuticals 7.5 16

Divi's lab 0.982 16

Aurobindo
Pharmaceuticals 5.8 6

Torrent
Pharmaceuticals 7.434 10
Lupin 6.5552 10
Pfizer 15.055 5
Novartis 19.04 11

Johnson & Johnson 12.89 6

GSK 13.78 4

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source : Annual Reports

 Comparison of Major Elements of Strategic Groups
Arena
Strategic Group
Product Categories Geographical areas Core technologies Value creation stage
# Companies
• Generics and branded • SunPharma – 100 Countries • R&D and innovation is the key • Focus on high value,
generics, speciality products, • Global presence which enables  production of specialty, small/mid-size
API • Cipla: 11 countries technologically complex products
• Diversified product portfolio products.
Sun Pharma, Cipla, of over 1500 products in 65 • Cipla continuously invests in • Committed to serving
Torrent, Aurobindo, therapeutic categories R&D which comprised of 6.9% customers as per their
1 Lupin of revenue in FY 2019-20. requirement and
• Focus on innovation: 288
patents and 2595 ANDAs for executing the orders ‘Just
Cipla in Time’

• Generics, over-the-counter, • Presence in 15+ countries – • In house R&D and use of • Pfizer- Applies science
APIs, Biologics, Differentiated global offices cognitive computing and global resources to
Formulations • 4 R&D land 5 manufacturing • Continuous investment in improve lives.
locations across globe data innovation • Innovatve medicines and
Dr. Reddy’s vacciness of high quality
2 Laboratories, GSK, & safety- Invest in
Pfizer, J & J technology platforms to
develop complex APIs ‒
Flexible to meet
customer demand

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source : Annual Reports, IBEF, Mint

 Comparison of Major Elements of Strategic Groups
Arena
Strategic Group
Product Categories Geographical areas Core technologies Value creation stage
# Companies

• Recognized as ‘Vision-Led-
•  Generic APIs: 30 (+ 10 API in • Presence in 3 countries • Backward Integration Company’
R&D/ pilot development • Own R&D centers • Strives to manufacture high
3 Divi's lab process) quality APIs

• Digital hub called Biome India • Uses advanced therapy

aimed at establishing a network
between Novartis and external
•  Focus on Bone & Pain, Calcium • Global presence: Across 142 partners from across the digital
Portfolio, Gynecology and countries ecosystem.
4 Novartis Neuroscience • The Leopard Project which
helps the company connect
with doctors and other
healthcare workers across the
country
platforms and data science to
become a leading medicine
company powered by
• Sustained research investments
targeting areas of greatest
patient need and scientific
promise to fill unmet medical
need

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source : Annual Reports, IBEF, Mint

 Comparison of Major Elements of Strategic Groups
Strategic Group Vehicle Differentiator
• Strategic partnership with Alvogen for 4 oncology products • High Quality Standard products
• Increase penetration in key markets to establish leadership in • Largest player in respiratory medicines, Urology
volumes of inhalers sold and HIV/AIDS drugs
• Merger and acquisitions • Affordable medication accessible to all
Sun Pharma, Cipla, Torrent, Joint ventures Wide product portfolio with strong distribution
1 Aurobindo, Lupin
• •
network

• Joint venture and Acquisitions, E.g Dr. Reddy has 2 JV as of 2020. • Dr. Reddy – Wide range of product offerings
Agreement with Wockhart ltd to acquire its India business • Low price
Dr. Reddy’s Laboratories, • Pfizer has a Consumer Healthcare JV with GSK • Early mover advantage in Biosimilars
2 • Collaboration, alliance and license agreements with universities & • Branded generics
GSK, Pfizer, J & J
biotechnology companies

• Refrains from making expensive acquisitions overseas. • Cost competitiveness

3 • Instead leverages on its low cost manufacturing base in India • Innovation Strength
Divi's lab Rigorous filtering proess to select limited
•
products

• Joint ventures with companies • Affordable and easy access of products across
• E.g.: Formed a Consumer Health JV with GSK globe
4 Novartis Mergers and Acquisitions - Agreement with US-based The Wide product line
• •
Medicines Company in 2019 and AveXis in 2018 • Access to specialised IT Solutions
• R&D Potential

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison
 Comparison of Major Elements of Strategic Groups
Strategic Group Staging
Sun Pharma Cipla

• 2013 –
Became world’s fifth largest specialty generic pharmaceutical
company with acquisition of Ranbaxy
• 2017 –
Agreement signed with National Institute of Virology, India
• 2018 –
Announced acquisition of US-based specialty pharmaceutical
company Avenue Therapeutics for Rs 1502.635 crore
• 2019 –
Sun Pharma, Sun Pharma and AstraZeneca entered into a licensed agreement
1 Cipla, Torrent, for novel oncology products in China
Aurobindo, Lupin • 2020 –
Announced five-year sustained efficacy and safety results for
ILUMYA in patients with moderate-to-severe plaque psoriasis
• 2013 –
Acquires 100% stake in Cipla Medpro, South Africa
• 2014 –
Acquired minority stake in US based Chase Pharma
• 2016 –
Chase Pharma (Disinvestment), Acquisition of InvaGen
Pharmaceuticals Inc. and Exelan Pharmaceuticals Inc. thus
expanding its reach and product portfolio in the US
• 2017 –
Launches Synchrobreathe, a state of-the-art innovative
breath-actuated inhaler helping people with Obstructive
Airyway diseases like Asthma

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison
Strategic Group Staging
Dr. Reddy Pfizer
• 2005 – • 2003 –
Acquires Roche’s API business in Mexico Pfizer’s merger with Pharmacia which resulted in enhancing the
• 2007 – distribution network.
Launches Reditux™ (Rituximab) – the world’s first biosimilar • 2008 –
Dr. Reddy’s of a monoclonal antibody Ranbaxy and Pfizer have formalised an alliance with fast-moving
2 Laboratories, GSK, • 2009 – consumer-goods (FMCG) company ITC to tap the rural markets for
Pfizer, J & J Announces Strategic Alliance with GlaxoSmithKline for their over-the-counter (OTC) products.
emerging markets • 2018 –
Joint merger of their consumer healthcare division with UK
pharma giant GSK

• 2002 –
Divis commences the setting up of its 2nd Manufacturing Facility at Visakhapatnam.
Divi's lab • 2003 –
3 Divis opens a new research center for fundamental research in selected niche business core segment
• 2010 –
Sets up a new unit in SEZ at Vishakhapatnam

• 2016 –
Acquired US-based hematologic and inflammatory disorder therapeutics developer Selexys Pharmaceuticals
Novartis • 2016 –
4 Acquired Endocyte, a biopharmaceutical company focused on cancer treatment
• 2020 –
Acquired Vedere Bio which allowed Novartis to expand its footprint in ophthalmology, as well as improve its position as an
AAV-based gene therapy provider.

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison
 Comparison of Major Elements of Strategic Groups
Strategic Group Economic Logic
Cost Leadership by Vertical Integration
Sun Pharma, Cipla, • Focus on COGS optimization
1 Torrent, Aurobindo, •
• Sales through global generics and new innovations
Lupin

Dr. Reddy’s • Pfizer- Shift from fee-for-service payment towrds outcome-based payments – Lower price
• Significant price erosion due to increased competition across some major products
2 Laboratories, GSK,
Pfizer, J & J

• Indigenization of supplies which leads to lower procurement and logistics costs

3 • Commercially viable prices
Divi's lab

• Access framework: Adapted to the needs of people across income segments

• Equitable Commercial model: Low Income
4 Novartis • Donations & Strategic Philanthropy: Poor
• Generics and Original brand: Middle & High Income

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source : Annual Reports, IBEF, Mint

 Recommendations

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison
 Recommendations
Cipla can increase its retention ratio and invest in R&D to explore opportunities in new areas of therapeutic
medicine

Urgency: High Retention Ratio

100%
R&D Investment and Patents filed
80%
40
35 8.0% 60%
30
25 6.0% 40%
20
4.0% 20%
15
10 2.0%
5 0%
2015-16 2016-17 2017-18 2018-19 2019-20
0 0.0%
2017-18 2018-19 2019-20 Cipla Dr. Reddy's Aurobindo
No. of patents R&D (%of Sales)
Feasibility : Retention ratio of Cipla has seen a
Reason: Decreasing R&D investment decreasing trend and is lower than its competitors in
correlated with decrease in patents filed the recent years. Increase retention ratio to invest in
R&D

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source : Annual Reports, Money Control

 Recommendations
Optimize its capital structure by leveraging Debt and increasing the D/E ratio

Urgency: Medium
Feasibility: India Ratings and Research has
D/E Ratio issued a AAA/Stable rating for long term
0.70 debt of Cipla.
0.60 • Higher rating results in lower Cost of
0.50 debt to for the company.
0.40 • The expected cost of debt is 5.11%
0.30 • Inclusion of debt in the capital
0.20
0.10
structure gives tax benefits which can
0.00 be used to finance other projects
2015-16 2016-17 2017-18 2018-19 2019-20 • Cipla’s WACC is 11.47% which is higher
Cipla DRL than the industry average of 10.4%
Sun Pharma Aurobindo Pharma which can be optimized by issue of
Reason: Low D/E ratio compared to other debt
industry players. Its D/E ratio is close to 0

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source : Annual Reports, Money Control

 Recommendations
Cipla should focus on increasing its presence in the South African Market based on CAGE Analysis

Urgency: Medium
Reason: Global Revenue
- Has similar performance as India on Hofstede’s cultural APIOthers
Europe 4% 2%
dimensions. 5%
Emerging Markets*
- South Africa has higher per capita income($6000) and 9%
India
health expenditure per capita ($525) than India i.e. 39%
potential of higher revenue
- Insurance is non mandatory, gives a chance to exploit
generic drugs market North America
23%
Feasibility/Area of focus :
- Aligns with company’s BHAG – generate $1B sales from SAGA*
South African market 18%

- Aligns with the core purpose of making generic drugs India SAGA* North America
Emerging Markets* Europe API
affordabale for the masses Others
- Aligns with the economic logic – reducing COGS via
continuous manufacturing & reducing inefficiency
Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source : Annual Reports, Statista, SAGA : South Africa, Sub-Saharan Africa and Cipla Global Access
 Recommendations
Focus on developing complex APIs
Urgency: Medium Capability
Strong R&D, and innovation

Strategic Assets Opportunities

• 200+ generic and complex APIs Growing Indian API market
• API Business covers 60 countries across the globe
• 4 sites with dedicated facilities for high potent APIs Indian API Market Size (In Bn, INR)
• 3 API R&D Centres
1,200
1,000
Cipla’s API Revenue (in Bn, INR) 800
10 600
8 400
6 200
4 0
FY 2017 FY 2018 FY 2019 FY 2020 FY 2024*
2
0 Series 1
FY 2017 FY 2018 FY 2019 FY 2020
Revenue (in Bn, INR)

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison
 Recommendation
Cipla would benefit from growing in the digital therapeutics market
Urgency: High Opportunities
• Global digital therapeutics market size expected to reach $13.80
billion by 2027 with a CAGR of 20.5%
Strategic Assets • Growing demand of digital therapeutics due to :
• Strategic Partners: Wellthy, BrandMed 1. smartphone and 4G penetration
• Proprietary platforms: CiplaMed, Breathfree 2. COVID-19

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison
 Recommendations
Cipla can focus on increasing its presence in the emerging markets

Urgency: Medium Feasibility/Area of focus :

Reason: Due to Cipla’s consistent focus on India and • Between 2015 and 2020 pharma sales growth estimates
US market, which accounts for 39% and 23% of its scored higher in emerging countries than in
total revenue share, the share of global revenue from developed countries. This suggests a high scope of
emerging markets remains at 9%
expansion in the emerging countries.
Global Revenue
APIOthers
• Favorable demographic and economic factors such as
Europe 4% 2% increased life expectancy, improved access to healthcare
5%
Emerging Markets* services and public or private funding, and growing
9%
India populations.
39%
• Estimation of flattened growth in the matured market due
to enforcement of tight regulations.

North America • There has been a recent up-selling of local generic drugs
23%
as generics cost only 20% of its branded counterparts.
SAGA*
18%

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source : Annual Reports, Statista

 Recommendations
Invest more in technology

Urgency: Medium

Reason:
Cipla’s vision of making cheap medication accessible to all and a
large part of the company’s overall revenue comprises generic
drugs.

Feasibility/Area of focus :
To achieve consistent growth in revenue and align their operations
with their vision, Cipla should make further investment in
technology such as AI and analytics to continue to achieve
streamlined workflow process and optimized outputs.

Strategic Group
Elements of Strategy Business Strategy Corporate Strategy Strategy Canvas CAGE Analysis Recommendations
Comparison

Source : Annual Reports, Statista