Indian Pharmaceutical IndustryOrganisation Structure & Strategies

Submitted By: Group 6

Organisation Structure Overview: Industry practices

• Dimensions of organizational structure

• Specialization of activities• Standardization of procedures• Formalization of

documentation

Structuring of Activities

• Centralization of authority• Configuration of role structureConcentratio

n of Authority

Organisation Structure Overview: Industry practices(continued)

• Indian pharmaceutical Industry wide organization structure mostly follows CHANDLER TIME-LINE

t Simple Structure. Centralized. Single Product Line

t+1 Moderate Centralization, Moderate Formalization, Moderate Complexity

t+2High Complexity, Low Centralization, Moderate Formalization

Organisation Structure Evolution: Industry practices

SimpleStructure

FunctionalStructure

MultidivisionalStructure

Sales Growth-Coordination andControl Problems

Sales Growth-Coordination andControl Problems

Efficient implementation of formulated strategy

Efficient implementation of formulated strategy

Portfolio of Companies

Sun Pharmaceutical Industries Limited

Functional Structure (U) form

Sun Pharmaceutical Industries Limited

Sun Pharma follows a Functional Unitary Structure

Structured around a CEO and limited corporate

staff

Activities are grouped together

by common functions.

Each functional unit has different set of duties and responsibilities

Specialization is built into the organizational

structure.

•Optimize Operational Cost

•Vertical Integration

•Differentiation Strategy

•Provides functional clarity

Dr. Reddy’s Laboratories Limited

Strategic Focus

High Quality portfolio :Mix

of limited competition and complex

generics products to significantly

enhance

Service Level excellence: Continued

strong engagement with strategic

customersSteady growing

business : 12-15 new

launches annually with launch-year

Multi-divisional form (M-Form)

Dr. Reddy’s Laboratories Limited

• The company grows through geographical diversification and exploiting synergies among divisions

Monitoring and

comparing performance between divisions

Strategic Planning

Offers high quality

portfolio – easy to manage

because of the various

divisions functioning

Easy to make Strong engagement

with strategic

customers because of separate economic activities

Focus on company’s

overall growth

rather than divisional growth

Lupin Limited

Strategic Focus

Increase in R&D

expenditureand strategic investments

Actively pursue acquisitions inthe American

region

Multi-pronged strategy

to improve its brand image,

increase revenues, and

expand its product and

service portfolio

Strategicalliance Partners

Multi-divisional form (M-Form)

Lupin Limited

•Quasi-autonomous operating divisions

•Organized along Product, brand or geographical lines

•Appropriate for related-diversified businesses

•Having process framework that integrates the entire organization; from strategic support functions like finance, human resources, regulatory affairs to core operations and delivery units like global procurement, research, manufacturing and supply chain.

•Key task of corporate managers is exploiting synergies among divisions

•Managers use a combination of strategic controls and financial controls

•Enables Monitoring performance, Awarding incentives, Allocate cash flows to high yield uses, Perform strategic planning

Ranbaxy Laboratories Limited

Strategic Focus

Outward investment as a strategy to

become a global player

Contract manufacturin

g,licensing and collaborative

research

Strategic Synergies :Daiichi Sankyo Partnership.

Innovator and Generic

Pharmaceutical

Powerhouse

Multi-divisional: Cooperative M form

Ranbaxy Laboratories Limited

Structural Integration

devices create tight

links among all divisions

Corporate office

emphasizes centralized strategic planning,

human resources, and marketing to

foster cooperation

between divisions

Rewards are subjective and

tend to emphasize

overall corporate

performance in addition to

divisional performance

R & D is centralized

activity.Culture

emphasizes cooperative

sharing

Cooperative M form

AdvantagesUses objective market/output performance measures, bureaucratic controls, and clan/cultural controlsEncourages the

exploiting of economies of scope across divisions

Frees corporate to focus on strategic concerns

Facilitates diversification and growth

References

1. http://www.ranbaxy.com

2. http://www.drreddys.com

3. http://www.lupinworld.com

4. http://www.sunpharma.com

5. http://indiaratings.co.in/upload/research/specialReports/2013/1/29/fitch29Pharmac.pdf

6. http://www.cii.in

7. http://www.mckinsey.com