CIPLA

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NITIE,
Shivtej MUMBAI
Suryavanshi Sourav Patil
 P R O B L E M S TAT E M E N T-
T O I D E N T I F Y A B U S I N E S S S E G M E N T I N T H E W I D E R H E A LT H C A R E E C O - S Y S T E M T H AT C I P L A C A N E N T E R F O R F U T U R E G R O W T H

SUGGESTION: Enter into Healthcare Service Delivery Area and segment Multispecialty Hospitals

PORTER’S 5 FORCES SYNERGY

Threat of new entrants-Moderate Bargaining power of 1. Vertical Integration: Forward integration with the
• High Capital Investment suppliers-Low to Moderate hospitals will enable the company to form a direct
• Regulatory Approvals • Dependency on critical medical channel of distribution of pharmacy.
• Lower Operational Efficiency equipment 2. Cross-Promotion: The hospitals can be used to
• Lower dependency on
promote the pharmaceutical products of the company.
Threat of substitutes-Low pharmaceutical supplies
• Economies of scale due to high
3. Efficient Supply Chain Management: Leverage
• Online Consultations
• volume existing distribution centers/warehouses to manage the
Primary Healthcare Clinics
hospital inventories efficiently and reduce the lead time.
Bargaining power of customers Competitive rivalry-High 4. Network of skilled doctors/surgeons: Utilize the
Moderate • Intense competition among existing network of doctors and healthcare workers to
• Multiple choices available existing hospital chains equip the newly built hospitals with better resources.
• Switching cost is high for patients • Lower service differentiation
• Emotional Factors
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 POTENTIAL OF THE SEGMENT

RIGHT TO WIN INITIAL COST

1. Indian hospital sector is largely fragmented, with the top 3 • Consider per bed set cost of 55 lakhs
signifi cant players holding only 13.89%* of the total market share.
2. Brand & Reputati on: CIPLA is a well-known brand in the healthcare • Beds per Hospital= 500
sector. Pati ents seeking high-quality service will prefer CIPLA • Initial Set up cost= 275 Cr INR (for one
3. Cross-Functi onal Teams Collaborati on: The team of researchers hospital)
from a pharma company can collaborate with the doctors from the
hospital to drive the research in medicine eff ecti vely • Initial set-up cost in Delhi, Mumbai, Chennai,
4. Aff ordability and Accessibility: Cipla can focus on providing quality and Kolkata= 1100 Cr INR
healthcare services at aff ordable rates, aligning with its long-term
goal of “Caring for Life ”

AFTER 5 YEARS REVENUE GENERATED

• ARPOB/day*= 30000 INR

• CAGR of Indian private hospital= 18.60%
• Bed Occupancy= 50% (Assumption)
• Operating Income in 5 years = 219* 513 Cr INR per
annum • Revenue per hospital =273.75 Cr INR
• Profitability can be achieved before 5 years • Total Revenue = 1095 Cr INR
• Operating Income= 219 Cr INR (operating
*Sources: 1. Market Share of Hospital CMIE Industry Outlook: https://industryoutlook.cmie.com/ ; 2. ARPOB/day: margin=20%) 2
https://www.jrfhha.com/doi/JRFHHA/pdf/10.5005/jp-journals-10035-1096; 3. CAGR of private Indian hospitals:
https://www.niti.gov.in/sites/default/files/2021-03/InvestmentOpportunities_HealthcareSector_0.pdf
 MARKET ENTRY STRATEGY

MARKET OPERATIONAL DECISIONS

• Industry CAGR 18.60% in FY 2023 • For Raw materials, we can leverage our
• Boost in Medical Tourism expertise in pharmaceuticals
• Largely fragmented market with 3 • Leverage the network of doctors and
major players medical workers to get a skilled
workforce

TARGETED SEGMENT
• Upper Middle Class
MARKETING
• Rich • Utilize the existing brand value of
• Anyone with health insurance CIPLA to foster trust and emotional
connection with patients
RISK INVOLVED • Use Tagline “Caring for life”,
• Low differentiation in service provided demonstrating the purpose and intent
• High initial investment of Cipla to serve its customers

ENTRY
• Start with Greenfield investment in
metropolitan cities
• Competitive pricing for penetration and
provide value to patients and gain trust
GROWTH PLAN
• Inorganic growth by acquisition of
small market players
• Expansion into Tier 2 cities
Per cent of people spending more than 25% of household consumption on medical expenses SOURCE: 1. CMIE industry outlook; 2. CEIC database
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YOU