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CHAPTER 1

INTRODUCTION
TO
THE STUDY

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1.1 INTRODUCTION

Prevalent from the birth of mankind, man involved himself in one or another business
through sole proprietorship and partnership form of business. But these forms appeared to
be less perpetual, because of unlimited liability and affections by natural factors viz
death, insolvency or lunacy of the owner or partners. Then company form of organization
came into existence which changed the ‘populi’ view of doing business.
An organization is defined as “a consciously coordinated social unit composed of
two or more people that functions on a relatively continuous basis to achieve a common
goal or set of goals”. In other way round it can also be defined as “a form of every human
association for the attainment of a common purpose or goal”. Thus in a way the term
organization emphasizes upon “the human groupings/associations and whose main
objective is to meet certain predefined goals that may vary from profit motive to serving
the society as well as the nation”.
An organizational study is the study of individual and group dynamics in an
organizational setting, as well as the nature of the organizations themselves. Whenever
people interact in organizations, many factors come into play. Organizational studies
attempts to understand and model these factors.
Being a part of the curriculum under 2 years MBA program, we got the
opportunity to carry out one such organizational study in a large cap public company. The
objective of this study was to enjoin the students with the functioning of the organization,
as also of its departments.
The main aim of the organizational study is to acquire the knowledge regarding
the functional as well as the management aspects of an organization, and its sustainability
towards achieving its mission, vision and values set for growth.

1.2 TITLE OF THE STUDY

Organisation study on “ZIM LABORATORIES LIMITED”

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1.3 OBJECTIVES OF THE STUDY

• To know about the market structure within which the organization is a player.
• To know about the market share and share of competitors.
• To understand key issues in strategy deployment like mission, vision, goals,
objectives etc.
• To study the organizational administrative structure.
• To understand as to how different functional areas of an organization work
together to achieve common objective of the firm.
• To study key business levels functions and process like Marketing, Finance,
HR, Operations, etc.

1.4 SCOPE OF ORGANISATIONAL STUDY

The study focuses on the overall structure of the organization. In this study, the
researcher analyzed the overall functioning of the firm and also the financial performance
of the enterprise. The researcher made a moderate attempt to have the SWOT analysis of
the study. The researcher also experienced practical application of the theoretical
knowledge gained

1.5 LIMITATIONS of the Study

• As the project is prepared for the academic purpose only, it suffers from the
limitation of time, due to which the detailed report about the operations of the organization
was not possible.
• The information given by the persons may not be complete because of their busy
work schedules
• The report suffers from the limitation of meeting only the departmental heads
because of lack of permission to interact with other people.
Certain areas are restricted, so a detailed study is not possible.

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1.6 METHODOLOGY used for Organization study
Primary Data
1. Personal Interview- There were interview sessions with each of the functional
heads, and there was a questionnaire that was followed as questions which were asked
depending upon situations.
2. Observation- There was a keen sense of observation followed during the study
period to follow the various functions of the company.

Secondary Data
1. Internal Data- This includes data provided at the company’s office, like
Organization structures, Balance sheet, Annual reports etc.
2. External Data- It includes organization data derived from internet, and other
information media that gives a wide picture of the Organization with respect to the external
world.

Schedule time frame


Time period: 25 days (17-10-09 to 14-11-09)
Data collection: 7 days (22-10-09 to 28-10-09)
Data analysis: days ( -11-09 to -11-09)
Report preparation: days ( -11-09 to -11-09)
Submission of report: 14-11-09

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CHAPTER 2
INTRODUCTION
TO THE
PHARMACEUTICAL INDUSTRY

Page No.5
2.1 INTRODUCTION
The pharmaceutical industry develops, produces, and markets drugs licensed for use
as medications. Pharmaceutical companies can deal in generic and/or brand medications.
They are subject to a variety of laws and regulations regarding the patenting, testing and
marketing of drugs.

The earliest drugstores date back to the Middle Ages. The first known drugstore
was opened by Arabian pharmacists in Baghdad in 754, and many more soon began
operating throughout the medieval Islamic world and eventually medieval Europe. By the
19th century, many of the drug stores in Europe and North America had eventually
developed into larger pharmaceutical companies.

Most of today's major pharmaceutical companies were founded in the late 19th
and early 20th centuries. Key discoveries of the 1920s and 1930s, such
as insulin and penicillin, became mass-manufactured and distributed. Switzerland,
Germany and Italy had particularly strong industries, with the UK, US, Belgium and the
Netherlands following suit.

Legislation was enacted to test and approve drugs and to require appropriate
labeling. Prescription and non-prescription drugs became legally distinguished from one
another as the pharmaceutical industry matured. The industry got underway in earnest
from the 1950s, due to the development of systematic scientific approaches,
understanding of human biology (including DNA) and sophisticated manufacturing
techniques.

Numerous new drugs were developed during the 1950s and mass-produced and
marketed through the 1960s. Cancer drugs were a feature of the 1970s. From 1978, India
took over as the primary center of pharmaceutical production without patent protection.
By the mid-1980s, small biotechnology firms were struggling for survival, which led to
the formation of mutually beneficial partnerships with large pharmaceutical companies
and a host of corporate buyouts of the smaller firms. Pharmaceutical manufacturing
became concentrated, with a few large companies holding a dominant position throughout
the world and with a few companies producing medicines within each country.

2.2 GLOBAL SCENARIO

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Global Pharmaceuticals Market
1. Size of the global pharmaceutical market was US$ 602 bn. The market has grown
at a CAGR of nearly 11% during 1998-2005.
2. The pharmaceutical markets worldwide can be classified as Regulated, Semi
Regulated and Non Regulated markets.
a. The regulated markets constitute 88% of the global pharmaceutical market.
b. The semi and non regulated markets of Asia, Africa, Australia and Latin
America have been growing at a rapid pace (registering double digit growth in
2005) highlighting the tremendous market potential of these regions.
Global Sales 2005 : US$ 602 billion

The top 10 Pharma companies are facing prospects of slowdown in sales as a large
number of blockbuster drugs that they possess are going off patent.
According to McKinsey & Company report (“India Pharma 2015), the following trends
are expected to influence the growth of the Indian pharmaceuticals market over the next
decade: doubling of disposable incomes and the number of middle-class households,
expansion of medical infrastructure, greater penetration of health insurance, rising
prevalence of chronic diseases, adoption of product patents, and aggressive market
penetration driven by the relatively smaller companies.

Top 14 Pharmaceuticals Markets, 2005 Top 14 Pharmaceuticals Markets, 2015

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US $ billion US $ billion

2.2.1 STRATEGIES ADOPTED BY GLOBAL MARKET PLAYERS


Generic Exports
• The global generics market is expected to continue growing rapidly due to the
underlying demand drivers like an aging global population, growing healthcare
expenditure and low generic penetration across large geographical areas.
• Currently the Indian industry is estimated to account for 22% of the world
generics market which is expected to reach 30% according to the forecasts of
Assocham.
• USA , the largest generics market globally, is also the single largest export market
for Indian generics. The Japanese market is poised to become an important
destination for many global generic players with the introduction of generic
substitution in 2006.

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• Low production costs give India an edge over other generics-producing nations,
especially China and Israel .
CRAMS
• Rising pricing pressure on global revenues and falling trend in R&D productivity
is making it imperative for global pharma players to increase outsourcing to sustain
profitability.
• Custom manufacturing operations in India or China offer unparalleled cost
advantages and increasing pricing pressures is forcing innovators to minimize
manufacturing costs and shift operations to India and China .
• Indian custom manufacturing players have been aggressively acquiring custom
development companies in the EU in order to gain access to a wide gamut of valuable
client relationships, which would have been difficult to obtain otherwise.
• India is also an apt destination for outsourcing of research services due to its large
population with relative underexposure to drugs, significant cost advantage and the
availability of well qualified investigators.

2.3 INDIAN SCENARIO


“The Indian pharmaceutical industry is a success story providing employment for
millions and ensuring that essential drugs at affordable prices are available to the vast
population of this sub-continent.”
Richard Gerster

Pharmaceutical Industry in India is one of the largest and most advanced among the
developing countries. It provides employment to millions and ensures that essential drugs
at affordable prices are available to the vast population of India. Indian Pharmaceutical
Industry has attained wide ranging capabilities in the complex field of drug manufacture
and technology. From simple pain killers to sophisticated antibiotics and complex cardiac
compounds, almost every type of drug is now made indigenously.
Indian Pharma Industry is playing a key role in promoting and sustaining
development in the vital field of medicines. Around 70% of the country's demand for
bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules,

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orals and vaccines is met by Indian pharmaceutical industry. A number of Indian
pharmaceutical companies adhere to highest quality standards and are approved by
regulatory authorities in USA and UK.
Indian pharmaceutical industry is undergoing fast paced changes. The Indian
Generics market is witnessing rapid growth opening up immense opportunities for firms.
This is further triggered by the fact that generics worth over $40 billion are going off
patent in the coming few years which is close to 15% of the total prescription market of
the US.
The Indian pharmaceutical companies have been doing extremely well in
developed markets such as US and Europe, notable among these being Ranbaxy, Dr.
Reddy’s Labs, Wockhardt, Cipla, Nicholas Piramal and Lupin. The companies have their
strategies in place to leverage opportunities and appropriate values existing in
formulations, bulk drugs, generics, Novel Drug Delivery Systems, New Chemical
Entities, Biotechnology etc.
The Indian pharmaceutical industry registered strong growth during the Ninth and
Tenth Five Year Plan periods and has emerged as an area of strength especially in
generics. The adoption of world-class patent laws for pharmaceutical products w.e.f. 1
January 2005, pursuant to the obligations under the WTO Agreement, has not dampened
the robust growth but has improved the overall IPR environment. The turnover of the
industry was Rs.72000 crore during 2006-07, having risen more than 12times since 1990.
India has become one of the leading global players, holding fourth position in terms of
volume and thirteenth position in terms of value of production. Exports have also grown
significantly to over Rs.24942 crore in 2006-07 accounting for as much as 34% of the
turnover.
The industry has thrived so far on reverse engineering skills exploiting the lack of
process patent in the country. This has resulted in the Indian pharmaceutical players
offering their products at some of the lowest prices in the world. The quality of the
products is reflected in the fact that India has the highest number of manufacturing plants
approved by US FDA, which is next only to that in the US. Multinational companies have
traditionally dominated the industry, which is another trend seeing a reversal.

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Currently, it is the Indian companies which are dominating the marketplace with
the local players dominating a number of key therapeutic segments. The market is also
very fragmented with about 30,000 entities and the organized sector consisting of about
300 entities. Consolidation is increasing in the industry with many local players building
a global outlook and also growing inorganically through mergers and acquisitions.
The Key to success in this industry is research & development. R&D is the
starting of the industry value chain and is also the most important value creator.
Companies that involve in R&D do so in specific areas. They chose specific therapeutic
areas to target based on their strengths in the market, and the commercial potential.
Kinds of Research :
1. Basic R & D
2. Process Research & Reverse Engineering
3. Analogue or Discovery Research
4. Biotechnology Research
5. NDDS(New Drug Delivery System) Research

2.3.1 Advantage India


(i) Competent workforce: India has a pool of personnel with high managerial and
technical competence as also skilled workforce. It has an educated work force
and English is commonly used. Professional services are easily available.
(ii) Cost-effective chemical synthesis: Its track record of development,
particularly in the area of improved cost-beneficial chemical synthesis for
various drug molecules is excellent. It provides a wide variety of bulk drugs
and exports sophisticated bulk drugs.
(iii) Legal & Financial Framework: India has a 58 year old democracy and
hence has a solid legal framework and strong financial markets. There is
already an established international industry and business community.
(iv) Information & Technology: It has a good network of world-class educational
institutions and established strengths in Information Technology.
(v) Globalization: The country is committed to a free market economy and
globalization. Above all, it has more than 70 million middle class market,

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which is continuously growing.
(vi) Consolidation: For the first time in many years, the international
pharmaceutical industry is finding great opportunities in India. The process of
consolidation, which has become a generalized phenomenon in the world
pharmaceutical industry, has started taking place in India.

2.4 TOP 10 MARKET PLAYERS IN PHARMA INDUSTRY

1. Ranbaxy Laboratories(2007 Turnover – Rs.251.96 bn)


2. Dr.Reddy’s Laboratories (2007 Turnover – Rs.41.622 bn)
3. Cipla (2007 Turnover – Rs.37.637 bn)
4. Sun Pharma Industries (2007 Turnover – Rs.24.635 bn)
5. Lupin Labs (2007 Turnover – Rs.22.155 bn)
6. Aurobindo Pharma (2007 Turnover – Rs.20.801 bn)
7. Glaxo SmithKline Pharma(2007 Turnover – Rs.17.734 bn)
8. Cadilla Healthcare (2007 Turnover – Rs.16.13 bn)
9. Aventis Pharma (2007 Turnover – Rs.9.838 bn)
10. Ipca Laboratories (2007 Turnover – Rs.9.804 bn)

2.4.1 THE STRATEGIES ADOPTED BY MARKET PLAYERS


Business Strategies followed by Indian Pharmaceutical Companies

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Indian Pharmaceutical sector is highly fragmented with more than 20,000 registered units
and is very top heavy. The leading 250 pharmaceutical companies control 70% of the
market with market leader holding nearly 7% of the market share.
There are also 5 Central Public Sector Units that manufacture drugs. These units
produce complete range of pharmaceuticals, which include medicines ready for
consumption by patients and about 350 bulk drugs, i.e., chemicals having therapeutic
value and used for production of pharmaceutical formulations. India is largely self-
sufficient in case of formulations.
More than 85% of the formulations produced in the country are sold in the domestic
market. Some life saving, new generation under-patent formulations are imported, by
MNCs, which they market in India. Over 60% of India's bulk drug production is exported
and the balance is sold locally to other formulators.

2.4.2 DISCOVERY R & D IN INDIA

The Indian industry has attained cost advantages in process research used for generic
drugs & value added generics production, which accounts for 60-80 percent of total sales.
This cost advantage is in the fact that:
- Most infrastructure facilities are much cheaper in India than in developed countries.

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- Indian scientists can be attracted at much cheaper rates than their US counterparts.
The more value added basic research methodologies are being pursued by very
few players like Ranbaxy, Biocon & Dr. Reddys who are willing to take the risk of
investing millions in building research capabilities and developing molecules. In the
absence of product patents, Indian companies ignored basic research and concentrated
their R&D efforts toward producing drugs through alternative processes. Consequently,
total expenditure on R&D was low (multinational pharmaceutical players spend about 13-
16% of total sales on R&D).
Investments made in R&D by the Indian pharmaceutical companies would yield
3-4 molecules a year, which is a very small number. There is very little private initiative
to invest in R&D. The government continues to bear the burden, with industry chipping
in with 10% to 12%. This also evident in the data of patent granted in the country where
the top firms granted patents are mostly MNCs. Indian industry instead mastered the art
of reverse engineering to gain competitive advantage, as the industry structure did not
provide incentives to invest in basic research.
Indian firms have invested very little in R&D in India due to:
- Lack of Product Patent protection: The delayed adoption of TRIPS in India is cited as
the major impediment to the possible investment by international companies in India.
- Inadequate profit base: The price control has squeezed the profit margins making it
difficult for Indian and international companies to cull out and invest sizable sums in
R&D. The profitability of Indian companies is also much lower than international levels.
The pre-tax profit margin of pharmaceutical companies in India is much less than 6% on
sales in sharp contrast to the 18% profit margins common to international companies.

2.4.3 CHANGING SCENARIO OF INDIAN R&D


The acceptance of provisions of the agreement on TRIPS is expected to change the
orientation of Indian companies towards R & D. Indian companies have started investing
in complex R & D activities like novel drug delivery system and new drug discovery. The
advantages of conducting R & D in India are given below:
- Lower costs: R&D expenditure in India is far lower than in the developed countries. The
cost differentials are due to lower costs in machinery and human capital. The cost

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advantages can only be exploited if the necessary funds required can be sourced.
Following India’s acceptance of the provision of Trade Related Intellectual Property
Rights (TRIPS) under the GATT agreement, investments are expected to start flowing
into the area of basic research.
- Population advantages: A larger population base would facilitate clinical trials for
diseases especially prevalent in developing countries. Indian R&D efforts could be
directed towards infectious diseases that are especially prevalent in Asian countries. Such
R&D activities will be targeted towards segments such as antibiotics, anti-parasitics and
other anti-bacterials.

2.5 PEST ANALYSIS

An organisation’s success is influenced by factors operating in it’s internal and external


environment; an organisation can increase it’s success by adopting strategies which
manipulate these factors to it’s advantage. A successful organisation will not only
understand existing factors but also forecast change, so that it can take advantage of
change within the environments in which it operates.

• Pest Factors – These are external forces which the organisation does not have direct
control over these factors. PEST is an acronym and each letter represents a type of factor
(Political, Economical Social and Technological).

• Micro environmental factors – These are internal factors, which the organisation can
control.

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Diagram: PEST analysis and the marketing mix.

POLITICAL FACTORS ANALYSIS


It is the first element of the study of PEST Analysis. Pharmaceutical Industry in India has
been de-licensed and industrial licensing for most of the drugs and pharmaceutical
products has been done away with. Manufacturers are now free to produce any drug duly
approved by the Drug Control Authority. Indian pharmaceutical industry got a major
boost with the signing of General Agreement on Tariffs and Trade in January 2005 with
which India began recognizing global patents. Besides the industry is also subjected to
provisions under the TRIPS. The application of provisions relating to Minimum Wages
Act, Factories Act 1948 and allied labour and industrial laws also affect the working in
the industry, since the players have to function within the desired provisions. Non
conformance with these legislative obligations can lead to sanctions such as fines,
adverse publicity and imprisonment in certain cases. Ineffective voluntary codes and
practices will often lead to governments introducing legislation to regulate the activities
covered by the codes and practices.

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The pharmaceutical industry has thrived so far on reverse engineering skills exploiting
the lack of process patent in the country.

ECONOMIC FACTORS ANALYSIS


The second element of a PEST analysis involves a study of economic factors.
All businesses are affected by national and global economic factors. National and global
interest rate and fiscal policy will be set around economic conditions. The climate of the
economy dictates how consumers, suppliers and other organisational stakeholders such as
suppliers and creditors behave within society.
The top 10 Pharma companies are facing prospects of slowdown in sales as a large
number of blockbuster drugs that they possess are going off patent. Besides there have
been a number of regulatory developments since 2005, which includes implementation of
VAT, a shift in excise duty levy to MRP based levy and the enactment of product patent
regime.
The rural markets grew by over 40 percent during the calendar year 2006. The higher
growth in acute therapy segments – pain/ analgesics and Anti-Infectives can be attributed
to the fact that epidemics (dengue & chikungunya) were more prominent in rural areas.
Prevalence rates of key chronic diseases in India Percent of population

Looking at the recession period and in order to lower labor costs and savings in
manufacturing costs, several Indian pharmaceutical companies have acquired companies
in the US and Europe and many others are raising funds to do so. For example, Ranbaxy
acquired Romania's Terapia, Ethimed NV of Belgium and GSK's generic business Allen

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SpA in Italy. Dr Reddy's acquired German generic drug maker Betapharm. Companies
like Glenmark Pharma, Lupin, Aurobindo and Jubilant Organosys are on the lookout for
lucrative acquisitions.

SOCIAL FACTORS ANALYSIS


The third aspect of PEST focuses its attention on forces within society such as family,
friends, colleagues, neighbours and the media. Organisations must be able to offer
products and services that aim to complement and benefit people’s lifestyle and
behaviour. If organisations do not respond to changes in society they will lose market
share and demand for their product or service.
Indian people, to a great extent, are becoming health conscious. Gone were the days when
medicines and herbs used to be purchased based on monetary factor. The standard of
living of people has increased to a great extent, and they desire to spend more for
maintaining their health and status. A number of pharmaceutical companies have
therefore come out with such drugs and syrups, that will help people to maintain health
and be happy, ex.Revital. Besides the growing population of India, also provides ample
market place for the pharmaceutical companies to diversify their selling area.
The companies have also to a great extent been able to change the philosophy of timid
Indian towards spending on medicines through aggravating marketing advertisements.
Here to, doctors and physicians play an important role in furthering the advantages of
medicines.

TECHNOLOGICAL FACTORS ANALYSIS


The last element in the PEST study is the analysis of technological factors, which
includes the machinery, software and hardware equipments used in information exchange
system and in managing the business.
A distinguishing feature of the pharmaceutical industries in India is the large scale
investment by big pharma companies in the research and development. According to
industry statistics at global level, only about one in ten thousand chemical compounds
discovered by pharmaceutical industry researchers proves to be both medically effective

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and safe enough to become an approved medicine, and about half of all new medicines
fail in the late stages of clinical trials.
Leading Indian companies have started to look beyond generics and are investing in
discovery R&D (NCE/ NDDS research) for sustainable long term growth. The discovery
R&D pipeline of Indian pharma players has been seeing a steady build up over the years.
Technology has created a society which expects instant results. This technological
revolution has increased the rate at which information is exchanged between
stakeholders. A faster exchange of information can benefit businesses as they are able to
react quickly to changes within their operating environment. However an ability to react
quickly also creates extra pressure as businesses are expected to deliver on their promises
within ever decreasing timescales.
Company Overview of discovery R&D programme

2 NCEs in Phase II and another 4 NCEs in Phase I along with a significant number of pre-clinical
Dr Reddy's Labs candidates. Also partnering with innovative companies on specialty drugs; has a very strong
biogenerics programme

One NCE in Phase II trials in USA ; Also focused on 3 other NCE projects and 4 very promising NDDS
Sun Pharma
platforms

Ranbaxy Has out-licensed a novel statin to PPD ; Has 1 Malaria NCE in Phase II

Conducting clinical trials on Oral Insulin and Monoclonal Antibody for inflammation Has launched
Biocon
another Monoclonal Antibody for head and neck cancer

Has 1 oncology NCE in Phase II and plans to have 7-8 NCEs in clinical trials over the next few
NPIL
quarters

Lupin Conducting phase II trials on the anti-psoriasis NCE

Glenmark Has out-licensed 2 of its NCEs to global pharma companies

2.6 PORTER’S FIVE FORCES ANALYSIS


The most influential analytical model for assessing the nature of competition in an
industry is Michael Porter's Five Forces Model, which is described below:

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Figure: Porter’s Five Forces Model for Industry Analysis

Porter explains that there are five forces that determine industry attractiveness and long-
run industry profitability. These five "competitive forces" are:

• The threat of entry of new competitors (new entrants)


• The threat of substitutes
• The bargaining power of buyers
• The bargaining power of suppliers
• The degree of rivalry between existing competitors

Threat of New Entrants


New entrants to an industry can raise the level of competition, which may cause in
reducing its attractiveness. The threat of new entrants largely depends on the barriers to
entry. In Pharmaceutical industry it is easy to enter but talking about Products it is tough
because it depend on the reliability of customer. Key barriers to entry include
• In industry Economies of scale is very slow because it take time to achieve to
customer loyalty and whole growth is dependant on the loyalty factor only.
• For new entrants, it’s a very big challenge to establish business because heavy
amount of capital and investment is required.

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• Distribution of drugs and vaccines plays a major role with out which it is not
possible for manufacturer to reach prospective customers. The New entrants find
it difficult to cope up with this problem.
We can also infer here the entry of consolidated/amalgamated corporates or newly
acquired organization, which are generally taken up by already substantiable
organizations. These type of co-existence also affects to a great extent the functioning
of small and medium scale organizations. Recent acquisition of Ranbaxy by Daiichi
Sankyo will not only help Daiichi to strengthen its roots in the Indian Pharmaceutical
industry, but will affect the market share of other pharmaceutical organizations also.

Threat of Substitutes
The presence of substitute products in pharmaceutical industry can lower industry
attractiveness and profitability because they limit price levels. The threat of substitute
products depends on:
● In pharmaceutical industry, once competitor gets customer reliability(loyalty), it’s
difficult thereafter to divert customer mind to other substitutes.
● In pharmaceutical industry, price plays a major role and it’s totally dependant on
market price of the goods i.e. substitutes price. The relative price and performance
of substitutes affects the usage of the organizations drugs.

Bargaining Power of Suppliers

Suppliers are those business houses that supply raw materials & other products to the
industry, which go a long way in manufacturing the product.

The cost of items bought from suppliers (e.g. raw materials, components) can have a
significant impact on a company's profitability. Supplier is said to have high bargaining
power where the product sold by him has no substitute or even very close substitute.
If suppliers have high bargaining power over a company, then in theory the company's
industry is less attractive. The bargaining power of suppliers will be high when:
➢ In an industry there are many buyers and few suppliers. But in pharmaceutical
industry there are many buyers and many suppliers so bargaining power over a
company is not much. This factor may apply to new entrants in industry.

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➢ The industry is not a key customer group to the suppliers. Pharmaceutical
industry is the key customer to the supplier because for suppliers other buyers
are few.
Pharmaceutical companies that offer patented drugs with distinctive medical benefits
have more power over hospitals, health maintenance organizations, and other drug buyers
than those drug companies offering generic (non-patented) products.

Bargaining power of Buyers


Powerful customers – the flip side of powerful suppliers – can capture more value by
forcing down prices, demanding better quality or more service (thereby driving up costs),
and generally playing industry participants off against one another, all at the expense of
industry profitability. But in case of pharmaceutical industry, if we talk of retail buyer,
then he can be said to have low or no bargaining power in case of necessary drugs or
vaccines. In case of Industrial buyers, they can be said to have a moderate bargaining
power, since it is a business to business market and the buyer here are the wholesalers,
who can force the organization to produce only such class of drugs or vaccines which is
more popular among their potential customers. But this situation varies in case of drugs
of extreme necessity viz. cancer drugs, where there can be no expectation of bargaining
by the buyers against the manufacturing industries.

Rivalry among existing competitors


Rivalry among existing competitors takes many familiar forms, including price
discounting, new product introductions, advertising campaigns, and service
improvements. High rivalry limits the profitability of an industry. The degree to which
rivalry drives down an industry’s profit potential depends, first, on the intensity with
which companies compete and, secondly, on the basis on which they compete.
• In pharmaceutical industry, the intensity of rivalry is very high because there are
more than 20000 registered units, more or less on an equal size and out of which
about 250 are big pharma companies controlling 70% of the market share.
• Despite the exit barriers, small pharma companies find it profitable to remain on
track, and progress through R & D.

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• Big pharma companies in India are competing on the basis of R & D facility and
through scheme of new drugs and vaccines.
• Such degree is very much required between the players in the pharmaceutical
industry, because they are also the provider of great employment opportunities in
urban as well as rural sectors.
Overall, the pharmaceutical industry shows an upward trend in its core markets. The
industry remains highly valued, has a favourable market position with strong financial
make-up and strong earnings growth. Its future potential demand trend is positive and
despite increased competition the industry still shows a continuing upward growth
momentum. The forecast of the leading 16 pharmaceutical companies for 2001 to 2007
suggests that combined sales will grow at a minimum rate of 5.2 percent based on the
potential of their product pipeline.

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CHAPTER 3

COMPANY PROFILE

3.1 BACKGROUND AND HISTORY


The Pharmaceutical sector is one where trends and technologies are in a state of flux.
New breakthroughs in the world & Healthcare occur at a hectic pace. This demands for
expertise & skill to stay ahead. Zim Laboratories Limited exemplifies an organization
displaying these very traits.
The organization has been established under the shelter and support of Universal Group
of Pharmaceutical Companies, one of the leading pharmaceutical group in central India.

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ZIM has made a significant mark as a maverick pharma innovator, constantly penetrating
newer areas of pharmaceutical business & technology, and successfully demonstrating its
commitment to its Missions & Goals.
Headquartered & set-up in the industrial belt of Nagpur City of Central India,
ZIM has established itself as one of the preferred healthcare solution providers in the
field of New Drug Delivery Systems (NDDS). ZIM & Associates are supported by
excellent technical team & sufficient capacity to produce large requirements for different
market segments.

ADDRESS Of Corporate Office and Works Place


Corporate Office Works
545, Shantinagar, B-21/22, MIDC Area,
Nagpur – 440002. Kalmeshwar – 441501.
E-mail : zimltd@dataone.in E-mail – bdd01@zillab.in
md@zimlab.in Website – www.zimlab.in

3.1.1 Accomplishments
 Felicitation of Mr. Zakir S.Vali, Chairman, by Award of Udyog Patra, but the
Deputy Chairman, Planning Commission of India, for being an Eminent
Industrialist.
 Felicitation for contributing to Industrialization and other important, areas to
Mr.Anwar S.Daud, Managing Director by Central Institute of Business
Management Research & Development, India.
 Award of the Best Managed Industry by D.I.C.(Govt.of Maharashtra, India).
 The facilities provided by the organization are WHO CMP, certified by Food and
Drugs Administration, India.
 Registration as vendor by Ministry of Defence (Director General Quality
Assurance), Govt.of India.
 The organization’s systems and documents are in conformance with the ISO
9001:2000 Standards accredited by AQA of USA.

Page No.25
ZIM & its Associate Companies are engaged in the activities of manufacturing,
distribution & marketing of pharmaceuticals in Allopathic & Herbal categories
encompassing almost every dosage form, including Tablets, Capsules, Dry Syrups,
Liquid Orals, External Preparations, SVPs (Injectables), Ointments, Powders, etc.
ZIM has pioneered several innovative technologies & products particularly in the
spheres of Pellets, Multiplets, Resinates, Herbals & Diagnostics. Multiparticulates &
Modified Release Oral Solid Dosage Forms have been identified as a thrust area & key
formulations developed. The wide appreciation for its quality and prompt services to
clients, have ensured a strong presence in the domestic markets, as well as in
the international markets.
The Independent and well - organized Business
Development Department at this organization is in a
position to offer customer support from conception to
product delivery in a strict schedule and provides
services ranging from product development, packaging
development and design, material sourcing assistance
and developments of products based on client's specifications.

3.1.2 The Core Principles of ZIM

The organization articulates its understanding of market, customers, its products


and services through following six core principles :

• UNDERSTANDING markets & Customers

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• DESIGN Products & • MARKET & SELL
Services. Products & Services

• PRODUCE Products & • DELIVER Products &


Services. Services.

• PROVIDE Customer Service.

3.2 MISSION AND VISION

3.2.1 MISSION STATEMENT

“We will exploit our Zeal for Excellence and Spirit of Innovation in the field of Medicine
to ensure our position as a premier pharmaceutical manufacturing
organization specialized in......

• Niche Products and Markets.


• Original Research based Herbals for Chronic aliments.
• Biotechnology based Products & Processes.

....... thereby contribution to make available of High Quality Affordable Healthcare for
the common man and meeting our Obligations to our Employees, Investors and the
Shareholders.”

3.2.2 VISION STATEMENT

"Making Quality Healthcare Affordable"

“We believe that the pharmaceutical business is today poised for a great leap forward.
tryly innovative technologies with the potential to change the nature of human health &

Page No.27
longevity have already appeared and each day brings better & better innovations. There
is a desperate need for solutions that emerge out of these innovative technologies to
reach the common man at an affordable cost so that these benefits do not remain
accessible only to the rich and affluent sections of society.

Ever changing regulatory guidelines, advances in drug therapy & delivery systems, drug
industry Mergers Acquisitions, globalization & evolving market such as those for
nutritional supplements, old-age & alternative therapy medicines pose challenge to every
pharmaceutical organisation to manage and accelerate the drug development process.

We at ZIM, aspire to play a significant role in making the fruits of such technologies
available as affordable healthcare solutions, teaming with like-minded associates in the
pharmaceutical technology business, aiming for Customer Satisfaction, while respecting
the rights of others.

Uniquely positioned to provide expertised drug delivery systems, we support our own &
customer's objectives with specialized formulations to reach the market faster & easier
than ever.

We are committed towards providing our national & international clients an easy &
timely access to sophisticated process technologies & products, give value for money, &
to offer our customers innovative & exclusive quality products that differentiate them
from their competitors & significantly impacts their bottom-line.

That's why, every day we continue to put our Zeal for Excellence and Spirit of Innovation
into all our actions.”

3.2.3 GOALS AND THE VALUE DRIVEN CULTURE


The following best explains the corporate philosophy which ZIM percolates through the
entire organization and hence forms the core :-
 Pursuing Excellence through Continuous Innovations.
 Striving for Customer’s Satisfaction through all their actions.

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 Transacting business with Integrity & Transparency.
 Respecting the Rights of all Stake-holders & Associates.
 Aspiring for a Responsible Corporate Citizenship through our regard for
Environment, promotion of Education, and contribution towards Disease-free
Humanity in constant harmony and Peace.

3.3 SWOT ANALYSIS


Strengths
1. Making Innovative Products
ZIM is very much involved in the production of novel allopathic drugs. For this
purpose and to serve an industry that is rapidly changing, ZIM has assembled a
team of researchers, scientists and technical personnel with competence and
experience to provide the following varied range of services :
(i) Development and validation of formulations
(ii) Analytical development i.e. customizing testing to meet client
specifications through time-valued and cost effective tests at their
facility.
(iii) Performing and monitoring stability testings based on ICH guidelines.
The management very well believes in producing new drugs and vaccines that
will help in the control of diseases.

2. Less through-put time


ZIM has mastered the strategy of involving less time in meeting up with the order
of the clients. This is because of the sophisticated machinery and the great
endeavor taken by the Business Development Department towards fulfilling the
orders of the clients. Less through–put time ensures the organization to cope up
with the future orders and also ensures to maintain quality of the medicines and
the drug processes.

3. Quality drugs and processes

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There is production of drugs and vaccines that meet more than upto the
expectations of the clients. Moreover, facilitating the International Quality
Standards with innovative services tailored to users need, special care is taken at
every stage of the manufacturing process. A well equipped Quality Control
laboratory comprising sophisticated instruments manned by highly experienced
technocrats ensure that the laid down quality policy aspects are strictly adhered to.
ZIM believes that Quality is a continuous process an not an isolated stage.

4. Highly Sophisticated Customer Care department


To be very well proficient with meeting the requirements of the customers and to
stand up in the competitive era, ZIM has a highly developed and sophisticated
customer care department, which is nominated as Business Development
Department. The independent and well-organized BDD is in a better position to
offer customer support from development to delivery of product. This is done in a
strict time schedule. A unique feature of this department is that it provides
services ranging from product development, packaging development and design,
material sourcing assistance and developments of products based on the
specifications or requirements of the clients.
The BDD acts as the connecting link between the prospective clients of the
organization and the company, and provides a standing in-house representation of
the inside company.

Weaknesses
Capacity constraint
The organization faces the problem of meeting to the excess order requirements of the
clients, and that too because of the quality drugs manufactured by it. Many a times, the
order quantity poses a risk to production pattern and hence results in capacity constraint.
Opportunities
Export Potential
ZIM has great potentiality in the foreign markets because of its innovation driving
mechanism which is very well required in this sector. Presently, the company is exporting

Page No.30
its products to more than 25 countries, some of which are Bangladesh, Libya, UAE,
Egypt, Algeria, Morocco, Latin America, Sri Lanka, Nigeria, Vietnam, Iraq and Yemen.
Besides it has also covered several Central and South states in the domestic sector, some
of which are Maharashtra, Chattisgarh and Madhya Pradesh.
The company sees a bright market prospect in the continents of Africa and America. The
reason why it places high dependence on export sales is because of its superior quality
drugs and processes, which makes it one of the better manufacturers among its sector.

Threats
Competition from Indian organizations operating outside India
Operating in the foreign markets requires huge investment besides facing a tough
competition from the operation of domestic organizations in the foreign markets.. The
organization is comprehended to the threat of operations of major domestic players like
Ranbaxy Laboratories, Glaxo SmithKline, and others.

3.4 PRODUCTS AND MARKETS

PRODUCTS

The following specific formulations are offered:-

• Taste and Odour Masked Formulations.


• Immediate Release Stabilised Multi- component Formulations.
• Sustained Release Formulations.
• Enteric Release Formulations.
• Dual Release Formulations (Delayed Release With Enteric Coating Attributes).
• Stability Enhancement----- Premixes & Granulates.
• Bio-availability Enhancement---- Formulations & Powders .
• Dispersible / Mouth Dissolving Tablets and their R C Granules.
• Herbal single & multi-components pre-mixes, granules, and multiparticulates.
• Non-Pareil Seeds & other pre- processed excipients.

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Additionally, the company has the experience & ability
to manufacture and supply large volumes of standard
and customized finished formulations under different
labels & brand names. This large volume capacity
allows us to offer our customers products of consistent
quality with reduced lead-times.

Some of the products in the above category manufactured by ZIM are :

PELLETS
Anti- Hyperacidity,Ulcers Anti- Anti-Allergics
inflammatory Hypertensive
Aspirin Esomeprazole Atenolol Chlorpheniramine
Maleate
Ibuprofen Lansoprazole Nicardipine Cetirizine/Levocetirizine
Indomethacin Omeprazole Nifedipine Loratadine
Ketoprofen Pantoprazole Nitroglycerin
Tramadol Verapamil
TABLETS
Anti- Anti-Hypertensive Anti-Depressant Anti-Diabetic
Asthamatics
Aminophylline Candesartan Clomipramine Glimepiride
Hydrate Cilexetil HCl
Montelukast Carvdilol Citalopram Metformin
Sodium Chewable
Diltiazem SR Metformin
Losartan potassium Repaglinide
& Ramipril
CAPSULES
Anti-Bacterial Anti-Viral Anti-Fungal Anti-Asthamatic
Cefixime & Didanosine Delayed Fluconazole Theophylline SR
Cefdinir Release
TASKS MASKS
Albendazole Azithromycin Cefixime Cefpodoxime proxetil
Cefuroxime axetil Ciprofloxacin Clarithromycin Erythromycin ethyl
succinate
Fluconazole Gatifloxacin Levofloxacin Nystatin
Ofloxacin Roxithromycin

Page No.32
3.5 BALANCED SCORE-CARD
Analysis of the Organization using Balanced Score Card Approach:
The success of any organization is reflected upon by its performance which is in turn
highly dependent upon its strategies. In this era of cut-throat competition, what an
organisation requires is not just framing the right strategies, but also managing the same.
The impact of the right strategies will automatically be reflected in the results. Moreover,
any organisation has to understand that it needs to give impetus not only towards the
financial results but also towards satisfaction of the customers, development of state-of-
the-art technologies and creation of an environment of learning and growth. The
Balanced Scorecard is such an innovative tool which has considered not just the financial
indices but also the non-financial indicators as equally critical in determining
organizational performance. This tool brings a link between strategy and action. Due to

these, the framework is gaining increasing importance among different business houses.

The balanced scorecard is a strategic performance management tool for measuring


whether the smaller-scale operational activities of a company are aligned with its larger-
scale objectives in terms of vision and strategy.

By focusing not only on financial outcomes but also on the operational, marketing and
developmental inputs to these, the Balanced Scorecard helps provide a more
comprehensive view of a business, which in turn helps organizations act in their best
long-term interests.

Page No.33
Balance Scorecard Phases

Page No.34
The long-term success of any organization is determined by the capabilities and the
competencies it has developed. One of the tools for organizational appraisal that is
gaining immense popularity is the Balanced Scorecard, developed by Robert S Kaplan
and David P Norton in 1992. This innovative tool is unique in two ways compared to the
traditional performance measurement tools. They are–
(i) It considers the financial indices as well the non-financial ones in determining the
corporate performance level; and
(ii) It is not just a performance measurement tool but is also a performance management
system.
The tool has given stress on the other areas which are required to ‘balance’ the financial
perspective in order to get a total view about the organizational performance and improve
the same. The framework tries to bring a balance and linkage between the –
(a) Financial and the Non-Financial indicators,
(b) Tangible and the Intangible measures,
(c) Internal and the External aspects and
(d) Leading and the Lagging indicators.
Advantages of using Balanced Scorecard approach :
1. It translates vision and strategy into action.
2. It defines the strategic linkages to integrate performance across
organizations.
3. It communicates the objectives and measures to a business unit.
4. It aligns the strategic initiatives in order to attain the long-term goals.
5. It aligns everyone within an organization so that all employees understand how
they support the strategy.
6. It provides a basis for compensation for performance.
7. The scorecard provides a feedback to the senior management if the strategy is
working.
Example of Balanced Scorecard
A typical scorecard of an organization can be prepared as under:

Page No.35
Observational Analysis of ZIM Laboratories
The Financial Perspective:
The company follows effective financial strategies to maintain stability in
finance and allocation of funds. Since the company is an unlisted one, there arises no
questions of return to the shareholders. Besides, company has negligible funding from
outside sources.
The Customer Perspective:
The company satisfies its customers in an effective way and caters to the
customer requirements very efficiently. They set goals according to national and
international standards and accordingly they take effective measures to achieve them.
This has been carried out to a large extent by the highly efficient Business Development
Department of the company, which looks out for overall satisfaction of its customers.
The Process Perspective:

Page No.36
In process perspective also the company have a very specific goals regarding like
production, logistics or sales and then set goals related to such things as quality,
time/efficiency, and cost reduction. Company generally follows production on the basis
of orders generated from the customers, in order to avoid wastage and spoilage.
The Innovation and Learning Perspective:
In this area, the company is examining measures relating to employee development,
retention, and skills improvement. It also look at measures for research and development.
It focus here is on continuous improvement and value creation, by using the people
resources most effectively.

Note:
Company doesn’t follow balanced score-card approach. The above analysis
has been carried on the basis of observations brought out during the organizational
study.

Page No.37
CHAPTER 4
ORGANISATION STRUCTURE
AND
CRITICAL REVIEW

Page No.38
4.1.1 Why Organizational Design ?
Organizations have become the primary form of social institution in contemporary
society. The way in which an organization is structured creates/restrains opportunities for
interactions with other organizational members, influencing the attitudes and social
relations that emerge over time and the ways in which work related tasks are completed.

4.1.2 Organizational structure


The formal system of task and authority relationship that control how people coordinate
their actions and use resources to achieve goals
Structure facilitates effective response to problems of coordination and motivation

4.1.3 What is Organizational design ?


It is the process by which managers select and manage aspects of structure and culture so
that an organization can control the activities necessary to achieve its goals.
Organization structures may take different forms. Following are the broad types of
structural forms :
1. Functional and Divisional structures
2. Vertical and Horizontal structures
3. Mechanistic and Organic structures
4. The Matrix Structure.
5. Federations

A brief introduction to the above forms of organization structures is given below :

Functional and Divisional structures


The oldest and commonly used organization structure is functional structure. In
functional structure, the organization is departmentalized on the basis of various functions
performed by it viz. production, operations, R & D, Maintenance, Human Resources, etc.
In case of divisional structure, organization is departmentalized on the basis of products,
customer, or region.

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Vertical and Horizontal structures
In an organization, both absolute centralization and decentralization are neither desirable
nor possible. Hence, the writers and organizations began to explore ways to modify the
two structures. The essence of modified structure lies in the modifications to the classical
principles of delegation of authority and standard of control. Accordingly, organizations
having a series of narrow span of control were termed as vertical structures.
On the contrary, structures incorporating wide spans and limited layers of control at
horizontal levels were called horizontal structures. However, both these structure have
their own advantages and disadvantages.

Mechanistic and Organic structures


Two contrasting types of organizational structure were recommended by Bruns and
Stalker in their study of twenty industrial firms in England. Accordingly, the
organizational structure suitable to stable conditions was termed as mechanistic structure,
while the organizational structure which was considered appropriate to changing
conditions was called organic structure.

Matrix Structure
The matrix organization structure was proposed by Dairs and Lawrence for Aero space
programme of the United States. In this structure, attempts were made to combine the
advantage of product and functional departmentalization to achieve the organizational
goals. In other words, this dual structure simultaneously organizes part of organization
along product lines and part of the organization along functional lines to gain the
advantages of both.
In a matrix organization, each department reports simultaneously to both product
managers and functional managers. The product managers and functional managers have
equal authority within the organization, and employees report to both of them.
Matrix forms of management can be regarded as an early form of 'network' structure.
They focus on project teams, bringing skilled individuals together from different parts of
the organization. Individuals were made responsible both to their line manager and the
project manager involved.

Page No.40
Federations
This form is a variant of the divisional organizational structure which has great
importance because of its human resource factor. The federations is a loosely connected
arrangement of businesses with a single holding company or separate firms in alliance.
But this form of organization has attracted criticism from stock market analysts who find
difficulty in comprehending its subtle informality.

4.2 ORGANISATION STRUCTURE OF ZIM LABORATIES


Zim Laboratories follows Horizontal form of organizational structure, since the power of
management control is divided between the Financial Director and Executive Director
from the Managing Director.

CHAIRMAN

Page No.41
MANAGING DIRECTOR

FINANCIAL DIRECTOR EXECUTIVE DIRECTOR

PURCHASE A/C EDP ERP ADMIN. HR SECURITY


OFFICER OFFICER OFFICER MANAGER

INWARD /
ASST. ACCOUNTANT ADMIN. OUTWARD
PURCHASE ASST. INCHARGE

ALL ASST. ALL ASST.

VPBDD INTERNAL AUDIT MANAGER V.P. PROJECT OSD


INCHARGE R&D OPERATION INCHARGE

QC QA MANAGER
MAINTENANCE
ENGG.

ALL ALL ALL ALL R&DS PRODUCTION


ASST. ASST. ASST. ASST. R. OFFICER ALL
EXEC ASST.

PRODUCTION STORE STORE STORE PERSONNEL


MANAGER INCHARGE(FG) INCHARGE(RM) INCHARGE(PM) OFFICER

ALL ALL ALL ALL ALL


ASST. ASST. ASST. ASST. ASST.

4.3 CRITICAL REVIEW of the Organizational Structure


1. The Chairman is concerned with policy making matters.

Page No.42
2. The Managing Director is entrusted with the functions of routine management.
3. During the Board Meetings there has to be reporting of policies framed and
exceptional functions performed during the routine management.
4. The Finance and the Executive Directors are under the supervision of the MD.
5. The Finance Director controls not only the accounts department, but also the
purchase department, EDP and ERP functions also.
6. The MD also supervises the working of the following departments / functions :
a. Business Development Department
b. Quality Control and Quality Assurance
c. Internal Audit
d. Research and Development
e. Operations
f. Projects
7. Like a just organization, the production, stores and personnel departments are
under the control and supervision of Operations department.
8. The organization operates in a B2B market, wherein it is desirable to have a
horizontal organization design. The only misconception about this form of design
is that the MD has to operate and hear from all the departments functioning within
it. Therefore he is burdened with the task of responding to each of them, which
requires technical as well as functional expertise on his part.
9. Since MD is to concern himself with the making of policies in an organization,
this form of organization design poses a great challenge for him, which can have,
to some extent, a demeaning effect on the working of the MD.

Page No.43
CHAPTER 5
BUSINESS LEVEL FUNCTIONS
AND
PROCESSES

5.1 FUNCTIONAL DEPARTMENTS OF ZIM LABORATORIES


1. Business Development Department

Page No.44
2. Administrative Department
3. Purchase Department
4. Accounts Department
5. Research & Development
6. EDP & ERP
7. Quality Assurance
8. Quality Control
9. Production Department
10. Materials Department
a. Raw Materials
b. Packing Materials
c. Finished Goods & Dispatch
11. Maintenance Department
12. Personnel Department
13. Human Resources Department
14. Marketing Department

5.2 HUMAN RESOURCES DEPARTMENT

5.2.1 Recruitment / Training and Development Process

Vacancies Arise in the Respective department

Job advertisement is given in the newspaper & Applications are collected

The Resumes received are then scrutinized

The Respective Head of Department further scrutinizes the application

A Committee Panel is established and a date & time is decided from the Panel

Candidates selected from Preliminary Interview are called for Final Interview

Page No.45
Selected candidates are called for Preliminary Interview

Selection and Disbursal of Offer letters

Appointment and Joining Formalities

Induction Process

Internal Training and Development

Performance Appraisal (Self-Appraisal by employees)

Appraisal by the Head of Department whose employees are evaluated

Review with Committee Panel

5.2.2 Promotion Policy, Performance, Incentives and Leaves


It was informed that there were no extra incentives to the employees apart from the
monetary allowances. Extra incentives are pointed out here in the sense of overtime work.
There is no payment for overtime work. Instead, these credit hours are adjusted the
emergency hours i.e. whenever employee wants to work less on any particular day of the
week, then if he/she has done some overtime work before, then that overtime work hour
is adjusted towards in such emergency situation. This generally happens in case of family
or social functions at the employees residence or in case of accident or other uncertainity
of any of his/her family members.
5.2.3 Number of Employees
Administrative
Category of Employee Total Number
Trainee 52
On Probation 22
Confirmed Posts 82
Total 156
Non-Administrative (Workers)
Permanent workers 54

Page No.46
Casual (on contract basis) 300-400

5.2.4 Matters dealt with by the department


1. Salary & Wages
2. Incentives and Bonus Payment
3. Provident Fund
4. Activities concerning welfare of employees
5. Canteen facility
6. Bus facility
7. Scrap. Spoilage and Wastage
8. Sale of Scrap.

5.3 MARKETING DEPARTMENT

ZIM Laboratories has its registered office in Mumbai, for the reason of it being the
financial capital of India.

5.3.1 Role of the Marketing Department


The Mumbai Office takes care of the Marketing function of the organization. Marketing
is generally done of Finished goods and Semi-finished goods.
In case of exports, only Semi-finished goods are marketed, while in case of finished
goods, they are marketed for the government and institutions, and also for export
purposes in some cases.

5.3.2 Method of Marketing deployed


The organization has not employed any of the direct marketing strategies i.e. no
questionnaires nor behavioral method. Instead customers visit the factory outlets and
place direct orders with the organization. In case of exports, there are also frequent visits
by the Health Ministers and other top officials of the health department of the foreign
country.
In case of transaction with governments and institutions, the usual process adopted is :

Page No.47
8. Tender participation
9. Tender awarded
10. Finally, supply of goods.
However, export marketing usually involves following steps :
A. Where organization visits foreign country :-
1. Country visit
2. Appointment of local agents in foreign country
3. Meeting customers through local agents appointed in that country.
B. Buyers directly approach the organization through informed visits to factory, and
thereafter places the order accordingly.

5.3.3 The Market Strategies or the Business Models


1. Export
The organization has export in more than 25 countries. Presently, the company is
exporting its products to more than 25 countries, some of which are Bangladesh,
Libya, UAE, Egypt, Algeria, Morocco, Latin America, Sri Lanka, Nigeria,
Vietnam, Iraq and Yemen. Besides it has also covered several Central and South
states in the domestic sector, some of which are Maharashtra, Chattisgarh and
Madhya Pradesh. ZIM holds –
i. ISO 9001:2000
ii. WHO Certification (for Export and Registration)
iii. NAFDAC (National Agency for Food & Drugs Administration and
Control) which is helpful mostly for export of products in the country
of Nigeria.
2. 3rd Party Export
It is selling goods locally in more than 15 countries.
3. Contract Manufacturing
The organization is involved in selling of allopathic drugs according the
requirements of the customer i.e. custom manufacturing. The greatest advantage
of this type of strategy is that there is following of JIT system to the tune of 80-

Page No.48
90%, since production is carried out only after receiving the specification or
requirements of the order.
4. Loan License Manufacturing
Under this strategy, the organization used to sell/manufacture drugs with specific
names of clients on the products as per its requirements. This is just indirect
manufacture, wherein ZIM used to manufacture the drugs and medicines and
dispatched them under the name and seal of the client, as if to appear that the
product has been marketed by that client. In fact the manufacturing rights
remained with ZIM and were displayed as ‘Marketed By : ZIM Laboratories’ on
the tablet / capsule strips or syrups or related products.
5. Government and Institutes
ZIM also supplies drugs and syrups to government and allied institutions, some of
which are ESIC, WCL, RDPL,etc. The organization holds a Certificate of
registration from DGQA i.e.Director General of Quality and Assurance for supply
in Defence sector.
6. Trade Marketing
This comprises of own marketing of products, which excludes direct marketing
techniques. It is the customer who directly approaches the organization either
through
7. Trading
ZIM also aids those organizations which find it difficult to import instrument parts
and other quality control equipments for manufacturing purposes. Many a times, it
is the foreign entities who approach ZIM in order to purchase these machinery
and equipments, since these organizations face the problem of finding the right
supplier.

5.3.4 Sales Promotional Techniques


ZIM follows basic promotional techniques and does not goes for mere technical tools.
1. In case of Trade Marketing, tools adopted are :

Page No.49
 Conferences, Gifts, Coupons and Prizes.
2. In case of Export Sales, tools and techniques adopted are :
 Bonus goods or free goods, Commission or Discount on further purchases.
3. In case of Marketing of products, ZIM provides only promotional materials to its
customers, simply because the superior quality of products provided by it to them.

5.3.5 Marketing Information Systems


Marketing Information Systems is generally brought in application of Age analysis of
Debtors and Creditors of the organization. Age analysis means how old or for how much
time the party is appearing as Debtor or Creditor in the Ledger of the organization. For
this purpose, a provision is made to exclude a specific amount of debtors from the total
amount.

5.4 FINANCE DEPARTMENT


The recording of transactions with respect to purchase of raw materials, payment of
revenue expenditure and receipts is regulated and functioned by the finance department in
any organization. In fact, finance is considered to be the backbone of any organization,
since it brings forth the true and correct position of the organization.
The recording of transactions relating to raw material starts with the security check and
entry in the Register Inward kept for the purpose at the entry gate of ZIM Laboratories.
Materials in this case usually consists of :
i. Inputs (Raw Materials or Packing Materials)
ii. Capital Goods (generally Machinery)
iii. Spares & Consumables (Factory Expenses)
Thereafter, they are transferred to respective departments after making an entry in the
Outgoing Register. Input goods are transferred to Raw Materials/Packing Materials
Department, Capital Goods are transferred to Production Department, and Spares &
consumables are transferred to Stores Department.
A Goods Receipt Note(G.R.N) is issued by the respective departments on receipt of raw
materials/capital goods.

Page No.50
5.4.1 Posting of Transactions
After issue of GRN, there is made an entry of receipts in registers kept for the purpose :
i. Receipt Register (Raw/Packing Materials)
ii. Inward/Fixed Assets Register (Production Department)
iii. Receipt Register (Stores Department)

5.4.2 Dispensing / Basis of Issue of Raw Materials


On the receipt of requisition from respective user department, a slip is issued in favor of
the respective department and finally an entry in made in outward register. Accordingly,
i. Issue Slip (by Raw/Packing Department) and entry made in Outward /Issue
Register.
ii. Delivery Memo to Stores (by Production Department). It also acts as register
entry.
iii. Issue Slip ( by Stores Department) and entry made in Issue Register.

5.4.3 Posting of Issues


After issue of raw materials or spares and entry in department outgoing register, the issue
is posted in Ledger(financial effect) and Invoice/Sale-Book(Inventory effect).

5.4.4 Financial and Inventory effects of transactions


Only payment related details are entered in the financial books viz. date, cheque no.,
amount, etc. and in case of inventory books the unit price per material is entered along
with issue slip issued by the raw materials or stores department. In case of deviation from
the required quantity, a Debit Note is issued by the department in favor of the party for
verification and variation. After the entire cross verification, entry is made in the financial
accounts.

5.4.5 Payment method

Page No.51
Generally, payment for raw material purchases is done on cash or cheque basis. In case of
cash payment, payment entry is posted in Party account by cash register. Similarly, on
payment through cheque, entry is posted in respective Party account by Bank Register.

5.4.6 Recording of Raw Material/Packing Material Purchases


 At Security check point, entry is made in Entry Register and GRN issued.
 Material passes to Quality Control department for sample checking.
 If the material is approved by the QC department, an entry to that effect is made
in the Materials Receipt Register and posted in Party’s Ledger account.
 Requisition slips are filled by the departments in need of the raw material and
issued in favor of materials and stores department.
 In return, the materials and stores department issues ‘Issue Slips’ and enters the
transaction into Issue Register.
 Finally, the entry is posted in Ledger and Stock Register is updated.

5.4.7 Books of Accounts maintained


1. Cash Book
2. Bank Book
3. Journal
4. Purchase Registers
i. Raw Materials PR
ii. Packing Materials PR
iii. Finished Goods PR
5. Sale Registers
i. Commercial SR
ii. Excisable SR
iii. Other SR
6. Credit Note Register
7. Debit Note Register
Credit note and Debit note Registers are maintained by the organization for
entering Rate Difference and Short quantity.

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8. Ledger Accounts

5.4.8 Budgets
In consonance with the general practices and like other organizations, ZIM also concerns
itself with the preparation of various budgets viz.
1. Cash Budget
2. Sales Budget
3. Purchase Budget
4. Financial Budget
5. Overheads Budget / Cost Budget

5.4.9 Voucher Entries


ZIM follows the practice of entering transactions of normal or regular expenditure only
through supporting vouchers. In fact, no entry is made in the books of accounts or no
payment is made, unless there is some voucher to support its nature of transaction.

5.5 BUSINESS DEVELOPMENT DEPARTMENT


ZIM believes that the pharmaceutical business today is poised for a great leap forward.
The BDD is just like the Customer Care department which functions to face the
competitors and focus to customer requirements. The department is a one window
concept which means a one stop place for outsiders, more specifically customers, for
transacting with the organization.

5.5.1 Functions of BDD


a. To develop the organization business
b. To represent and deal on behalf of customers with the organization.

5.5.2 Activities of BDD


1. Fulfilling customer requirements.

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2. Ensuring shipment of products in time.
3. Follow-up of customer and agent payment.
4. Timely intimation to customers about introduction of new drugs and processes.
5. Monitoring performance of the agents appointed in foreign countries as also the
performance of the customers with regard to the use of the products.
6. Payment of Commission to agents appointed in foreign countries on time.
The BDD acts as a connecting link between the organization departments on one hand
and the agents and customers on the other hand. The position can be better explained with
the help of following diagram :-
5.5.3 THE BDD CUSTOMER RELATIONSHIP MODELS
BDD Relationship Domestic Customer Model
Prodn
Customer
.
1
HR Customer
2
BDD
QC Customer
3
Mkg Customer
4
A/c

BDD Relationship Export Model


Prodn
Customer
.
1
HR Customer
2
BDD Agents
QC Customer
3
Mkg Customer
4
A/c
The independent and well-organized BDD is in a better position to offer efficient
customer support, right from conception to product delivery, keeping in view a strict time

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schedule. The BDD provides services in the form of product development, packaging
development and design, material sourcing assistance and developments of products
(drugs) based on specifications provided by the clients.

5.5.4 Composition of BDD


The BDD is constituted of four interrelated cells with well-defined activities
encompassing:
b. Procurement Teams
c. Regulation and Commercial Documentation Team.
d. Packaging Development Team, and
e. Logistics Management Team.
All the activities of BDD are geared towards providing a standing in-house representation
the company to its valued customers.

5.6 PRODUCTION DEPARTMENT\

5.6.1 The Production Plant


The production facilities are located at Kalmeshwar Industrial Area near Nagpur in
Central India. Advantages of having the production plant in such area are numerous,
some of which are :
 Easy access by all means of transportation to all parts of the country.
 Plentiful electricity and water.
 Easy availability of technically qualified work force.
 A cosmopolitan, secular atmosphere and work culture.
 A dry dock facility and further development of the nearby Industrial area
(Butibori), such that both facilitate direct export/import.
 Easy and economical availability of raw and packing materials.
 Moreover, Central India is surrounded by vast tribal forest areas having their own
wealth of plants of medicinal value giving it easy, local availability of the required
plant raw materials.

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5.6.2 Production Processes
The normal production process followed by ZIM is given below :
1. Receipt of order from the customer.
2. Raw Material and Packing Material planning
3. Material requirement planning
4. Receipt of Inputs
5. Testing of Inputs received.
6. Actual manufacturing of products (drugs or processes)
7. Testing of the manufactured product.
8. Packing of products.
9. Sampling and re-testing of products packed.
10. Transfer of packaged products to Finished Goods store for dispatch.
Steps involved in CAPSULE PROCESSING
1. Bringing in Raw Material(Active/Inactive)
2. Checking ; Sifting; Blending & Weighing
3. Analysis & Release
4. Passing to Quarantine area
5. Empty capsule loading
6. Capsule filling
7. Inspection and Polishing of the Capsule
8. In Process Quality Control Check and Release
9. Unit Packing and re-IPQC Check and Release
10. Final Packing of the Capsules
11. Quality Assurance Analysis and release
12. Passing to Quarantine section
13. Passing to Finished Goods and Packing Material Stores
Finally, the capsules are ready for packing and distribution. Capsule section is divided
into following :
1. Mixing / Blending
2. Polishing Section.
Steps involved in the process of PELLETS and TABLETS Manufacturing

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1. First, Powder is prepared
2. The defective tablets are purified using the Bulk Tablet Machine.
3. Thereafter using PVC Sheets, the tablets are covered in the Blister Cell.
The Double track machine.
4. Then there is weighing of the powder and tablets using the electronic
balance.
5. After weighing, preparation of Binder and there is drug layering through
coating the pan.
6. Then the tablets/pellets are dried using an Oven and passed through
vibratory sifter.
7. It is then proceeded by an IPQC checking with regards to Moisture
content, bulk density and total assay & drug release.
8. The products are then coated and dried using a coating pan/fluid bed
coater.
9. There is re-IPQC checking.
10. Finally, the tablets and pellets are packed after electronic balance
checking.
The above steps lays down the general process for the production of tablets and pellets.
However there are certain additional steps in the preparation and processing of tablets.

5.7 R & D DEPARTMENT

5.7.1 Research and Development wing at ZIM


The requirement of a sophisticated research and development wing is very essential from
the point of view of pharma industries. R & D requires not only a good technical team but
also following of Quality check and Quality policy.
ZIM possesses an exceptional technical team, an independent Research & Development
department and a full fledged quality Assurance department. The R & D and Technical
Services departments are key focus areas. A good number of talented professionals are
engaged in the unending endeavor to break new grounds and bring forth fresh solutions.

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These talented team members ensure that the company’s customers, to a great extent and
even perpetually, derive the advantage of Innovative, cost-effective and Quality products
being produced after much research & development. This ensures the company an
unbeatable edge in the competitive market place.

5.7.2 The Technology path


ZIM provides its customers a wide spectrum of value-added & cost-effective services
whether pertaining to manufacturing, product development, pharmaceutical & analytical
method development, technical assistance or regulatory affairs. Customers at ZIM obtain
high-tech product advantage, new therapeutic classes besides renewing the interest for the
older drug molecules by their continual improvisation through elimination of their
negative attributes which otherwise would have rendered those molecules obsolescent.
Products in several categories are available with diverse attributes that include conversion
of Hygroscopic molecules to Non-Hygroscopic forms, Solubility and Stability
enhancement, Site specific/Target release characterization, Enteric Release specifically
for Acid-labile drugs, Taste-masking and flavouring technology for masking bitterness
and obnoxious odour of active drug ingredients, and Ready for Compression Granules for
unstable, or, corrosive and hazardous, and otherwise conventionally unworkable materials
rendering them Environmental friendly or processable.

5.7.3 Activities undertaken at R & D Department


1. Formulation Development
Whenever an order is placed by a customer regarding manufacturing of a new
drug or process, the company’s R & D department comes into play and develops
the product through its sophisticated technical department and panel of technical
team members. ZIM has a team of researchers, scientists and technical personnel
who have great competence and experience to provide a range of services,
including development and validation of formulations. The formula is developed
after great research and experimentation required specifically in the field of
medicines and drugs.

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2. Formulation Redesigning
ZIM also undertakes the redesigning of formulations pertaining to products
already in the market. Formulation redesigning is done only after receiving the
requisition from the client regarding redesigning of product subject to change in
the processes previously involved in the manufacture of the product. The
company generally carries out this activity with regard to the products already
manufactured by it.

5.8 ERP & EDP


The company has installed the Enterprise Resource Planning Software 2 months before,
and informed with respect to the functional softwares, that there will be a single software
which will control all the functional departments. Where a purchase order has been
placed by the purchase department, the information will be updated for reference and
approval by other departments.

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CHAPTER 6
OBSERVATIONS
LEARNINGS
AND
CONCLUSIONS

It was an interesting and practical experience that was gained at ZIM Laboratories during
the study .The company Heads and Managers have been highly cooperative and had made
good arrangements for the interactions despite their tight schedule.

6.1 OBSERVATIONS

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1. For efficient functioning of its departments, ZIM has divided them into 15
different departments. This ensures timely implementation of functions
concerned.
2. The company has excellent research and development wing, which ensures
quality products and processes.
3. The company has ensured following of the quality policy through quality control
and assurance department.
4. The company in consonance with point 2 facilitates international quality standards
with innovative services tailored to users need.
5. The company’s market strategies which comprises of seven different models are
unique and distinguishing.
6. The machinery used in the production of powders, pellets, tablets and capsules
have all been imported from China, which can be operated using the touch-screen
system.
7. Despite the general performance appraisal procedures, ZIM goes for self-
appraisal, which ensures evaluation of the true and correct productivity of the
employees. The self-appraisal forms are then re-evaluated by a separate team of
members appointed from each department, specially the department heads.
8. The company has not involved itself in the providing of extra incentives to its
workers and employees, but follows the simple and lucid system of crediting of
excess worked hours towards emergency hours required by the workers.
9. Because of the quick functioning of the BDD, it ensures, besides, timely delivery
of products to its customers, proper co-ordination between the different
departments functioning within the organization.

6.2 KEY LEARNINGS


The study has facilitated me in learning the following things :
1. Understanding the functioning of the various departments in the organization.
2. Requirement of better co-ordination between the departments for their effective
functioning.

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3. Placing Customer care and Customer Service at the apex of objectives list.
4. Necessity of great division of labour and technical skills in such an industry is of
vital importance, and that no organization can succeed without taking into
consideration this fact.
5. Learned how to carry on the SWOT, PEST and Porter’s Five Forces analysis.
6. Understanding the organization structure and the decision making process, as also
the reporting procedure between the departments.

6.3 CONCLUSIONS
An organization is a unified group of individuals who work laterally to achieve the
desired goals and objectives. But what comes of more importance is the functions of the
organization, or to be more specific, the departments comprised in the organization. The
working of an organization is very well reflected by the working of its departments. The
better the co-ordination between the departments, more will be the growth of the
organization. Through this organizational study, we get to know the working of
organization and have an overview of its functional departments.
Thus the overall study in ZIM Laboratories was a learning experience. ZIM is a
pharmaceutical manufacturing company having diversified market strategies, and fame &
reputation in the central industrial belt comprising Maharashtra and adjoining states. The
company believes in providing “Affordable Quality Healthcare through Zeal and
Innovation in Medicine”.
The main focus on the study in ZIM was on coverage of all the departments in average.
The unique feature observed was that the Business Development Department was the
intermediary between the customer and the organization. All the departments are linked
with each other. They maintain good relation within the employees as well as with the
customers.
There is healthy competition in the industry with entry of global giants. The Indian firms
should put in good efforts to overcome the competition. By having joint venture and
collaboration with the foreign companies the industry can overcome the competition and
at the same time it can upgrade its production technology. The company has good
marketing strategy for export and domestic market.

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Thus the company has enabled me to learn the various aspects of management,
production, marketing, finance which will be useful for my further studies.

ABBREVIATIONS AND MEANING OF TERMS

NDDS - New / Novel Drug Delivery System.

Drug discovery is the process by which potential drugs are discovered or designed.

Drug development refers to activities undertaken after a compound is identified as a


potential drug in order to establish its suitability as a medication. Objectives of drug

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development are to determine appropriate Formulation and Dosing, as well as to
establish safety.
Insulin is a polypeptide pancreatic hormone which lowers the glucose levels in the blood,
a lack of which causes diabetes.
Penicillin is an antibiotic produced naturally by certain blue moulds, and which is now
prepared synthetically.
Generic Drug is a drug which is produced and distributed without patent protection.

BIBLIOGRAPHY

Books and Magazines


1. CHRONICLE Magazine– March 2009
2. Harvard Business Review- January 2008 (Porters 5 forces)

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Websites
1. www.zimlab.in
2. www.special.rediff.com
3. www.marksonspharma.com
4. www.learnmarketing.net
5. www.wikipedia.org
6. www.hrmguide.net (orgnaisation structure)
7. www.marketingteacher.com (balance scorecard)
8. www.balancedscorecard.org
9. www.managementhelp.org
10. www.themanager.org

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