IndiPharmaCo is an Indian pharmaceutical company that has seen its supply chain disrupted by Covid-19 due to heavy reliance on Chinese suppliers for raw materials. It is exploring strategic responses to protect its supply chain and maintain growth amid deglobalization trends. Options may include diversifying raw material sources, increasing domestic production, and accelerating digital transformation to enable remote work.

1. v
2020 Case Competition: IndiPharmaCo
Navigating to the next normal

2. Acknowledgements
This Case Study has been developed by: María Peña, Juan Guillermo Velasco, Soraya Quiroga
Camacho, Marco de Leon, Ellis Kolber, and Yuki Takeyasu
Under the supervision of Lourdes S. Casanova & Sofia Kalantzi
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WARNING: Participating students are specifically prohibited from sharing any information issued in this case without prior consent from
from the SC Johnson College of Business.

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5. IndiPharmaCo’s supply chain has been disrupted by Covid-19,
what should be its strategic response?
BACKGROUND
• IndiPharmaCo is an Indian Pharma Company
that manufactures and sells pharmaceutical
drugs across many segments including specialty
products, branded generics, complex generics,
pure generics and APIs.
• After 29 years of operation and a strong
acquisition strategy the company has more than
28.000+ employees and 33 manufacturing
facilities in 3 continents.
• The company is one of the world leaders in the
Generic Pharma sector and the leader in India.
CHALLENGE
• What should IndiPharmaCo’s immediate
actions be to protect its supply chain and
the company’s growth in the wake of
Covid-19?
• Given deglobalization trends, how can
IndiPharmaCo maintain its leading
position and profitability in the long
term?
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6. The next normal
▪As stay-at-home orders were enforced around the world, businesses with
capacity to go trough the crisis scrambled to provide employees digital tools
to perform their activities from home. As people became comfortable with
the new work environment, the question of what the “next normal” would be
still lingers.
▪Covid-19 accelerated the adoption of digitalization, this means 1) upskilling all
employees to handle the technological shift to a 100% telecommunications
interaction with every stakeholder and 2) prepare managers to lead their
teams in a fully virtual environment.
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7. Deglobalization trends
▪ Since a few years ago, protectionist ideas have shown growing support around the world. The trade war
between China and the United States, Brexit and wide-ranging governments policies to limit immigration
are examples of how countries are beginning to reduce the free movement of people, goods and
economies. This new trend has a direct impact on the way supply chains work and on global trade
dynamics since companies are starting to source their suppliers locally due to political pressure or public
relations challenges. In fact, in 2019 the value of world merchandise exports fell 3%.
▪ Moreover, the Covid-19 pandemic could accelerate and even deepen deglobalization trends. The WTO
forecasts that world trade will fall between 13% and 32% in 2020 as a result of disruptions caused by the
virus in the economy. Further, the pandemic could exacerbate nationalistic tendencies, as companies and
countries come to terms with their dependence on international trade, and the consequences of
globalization. This could deal an even greater blow to industries of strategic importance, such as
pharmaceuticals. In fact, the US has already expressed its concern about its reliance on India’s generics
and a desire to become more self-sufficient.
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8. Before and after Covid-19
Before After
Private Investment High yield seeking
Reduced as lost revenue put pressure on cash
flows, raised debt, and political agendas of large
economies swing toward deglobalization
Supply chains Cost efficient Resilience efficient
Use of digital
communication tools
Non-essential Essential
Patent protection
Created patent cliffs, slowed R&D, and high
revenue growth
Lack of patent protection will affect product
perception when the country of origin is
questioned
Government expenditure
Slowing since 2009 from 17.8% to 16.9% of world
GDP1
Higher to support reactivation specially in rich
economies2
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1. https://data.worldbank.org/indicator/NE.CON.GOVT.ZS
2. https://www.imf.org/en/Topics/imf-and-covid19/Policy-Responses-to-COVID-19

9. The 10 leading companies in the pharmaceutical industry are
from the US and Europe
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Leading global pharmaceutical companies by pharma revenue in 2019 (in billion U.S. dollars)
51.75
50
47.45
46.84
43.54
42.1
33.27
27.77
26.15
23.57
0 5 10 15 20 25 30 35 40 45 50 55
Pfizer
Roche
Novartis
Merck & Co.
GlaxoSmithKline
Johnson & Johnson
AbbVie
Sanofi
Bristol-Myers Squibb
AstraZeneca
United States
Switzerland
United Kingdom
France
9

10. Current Pharma Industry drivers will support IndiPharmaCo’s
revenue growth
EXECUTIVE SUMMARY
▪ In the last 5 years the industry has benefited
from an aging population and higher purchasing
power in emerging markets.
▪ The largest companies have increased their
presence in regional markets by accelerating
relationships with governments to hasten drug
approval and reimbursement rates.
▪ Patent cliffs still hamper industry revenues as
large R&D expenditures are diminished by lower
returns.
TRENDS AND PERFORMANCE
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11. IndiPharmaCo’s challenge is to secure profitability in a mature
industry
GLOBAL VALUE DRIVERS
▪ Global number of adults aged 65 and older
▪ Per capita healthcare expenditure of OECD
countries
▪ Regulation for the Global Pharma & Medicine
Manufacturing industry
▪ Technological change
▪ Global per capita income
INDUSTRY STRUCTURE
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12. Generic drugs and the Indian Scenario
GENERICS DEFINITION
▪ A generic drug is a pharmaceutical drug that is
chemically identical to its name brand counterpart.
When the patent protection of a name brand drug
expires, generic drug manufacturers reverse-
engineer the chemical substances of a name brand
drug to create their own offering. Since generic
drug manufacturers do not have the same amount
of up-front R&D and clinical trial expenses, they
are able to offer significantly lower prices
compared to their name brand counterparts.
INDIAN SCENARIO
▪ The Patent Acts of 1970 in India removed the
composition patents for food and drugs, though
process patents remained and were shortened to
a period of 5 to 7 years. This lack of patent
protection gave Indian companies the unique
ability to reverse-engineer chemical and
manufacturing processes for pharmaceutical
drugs. Coupled with its strength in science and
engineering, India has become the world leader
in generic drug manufacturing.
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13. India is a generics powerhouse focused in the US market
INDIAN PHARMA
▪ $20 Billion market in 2019
▪ Largest provider of generics in the world
▪ Contributes 20% of global exports and 40% of US
generics demand
▪ Bears significant footprints in all highly-regulated
developed markets
▪ Earned 304 Abbreviated New Drug Application
(ANDA) approvals from the United States Food
and Drug Administration (USFDA)
RATE OF APPROVAL FOR INDIAN PHARMA
ANDA BY U.S. FDA 2017-2019
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65%
65.5%
67.9%
64.5%
65.0%
65.5%
66.0%
66.5%
67.0%
67.5%
68.0%
68.5%
H1 FY 2017 H1 FY 2018 H1 FY 2019
ANDA
rate
of
approval
Key figures
Pharma Industry in India: Key Statistics 2020

14. Source: MarketLine
30
28
29
31
33
34
35
36
37
39
0
5
10
15
20
25
30
35
40
45
2015 2016 2017 2018 2019 2020* 2021* 2022* 2023* 2024*
Value
in
billion
U.S.
dollars
Size of the Indian pharmaceutical market
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15. Value of Indian pharmaceutical exports
Finances and trade
10.1
12.6
14.5
14.9
16.9
16.8
17.3
19.1
10.8
0 5 10 15 20 25
FY 2012
FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
FY 2018
FY 2019
FY 2020*
Export value in billion U.S. dollars
Pharma Industry in India: Key Statistics 2020
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16. Finances and trade
32.1%
18%
15.7%
6.9%
6.8%
5.6%
14.9%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%
North America
Africa
European Union
Association of Southeast Nations
Latin America and the Caribbean
Middle East
Others
Share of exports
Pharma Industry in India: Key Statistics 2020
FY 2019 Share of Indian pharmaceutical exports by region
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17. Real-time developments will shape IndiPharmaCo’s response
to the crisis
ECONOMY
▪ Covid-19 wrought far-reaching consequences
on the global economy, including:
▪ Forecasted 3% decline in the 2020 global
GDP, much worse than the financial crisis
(IMF).
▪ India GDP growth estimated to drop to 1.9%
from 5.8% for FY20 (IMF).
▪ China’s GDP growth estimated to be 1.2% in
FY20 (IMF).
▪ Cumulative global output loss in 2020 and
2021 could total $9 trillion (IMF).
POLITICS
▪ The Covid-19 global pandemic has shined a
light on many political differences over the use
of science and data for emergency response.
▪ In March, India restricted the export of 26
pharmaceuticals, which amounted to 10% of
the country’s pharma exports. These
restrictions were mostly lifted in April but
could relapse.
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Source: Oxford Analytica, IMF

18. IndiPharmaCo’s Financials
KEY STATS
▪ Market cap 2019: USD $13 billion
▪ EBITDA margin 2019: 20%
▪ Net income margin 2019: 11.3%
▪ R&D investment 2019: 8% of revenue
▪ Debt-to-equity ratio 2019: 17%
IndiPharmaCo vs. Leading generics
pharmaceuticals EBITDA margin (%)
28.5% 28.8%
20.0% 20.7% 20.0%
24.6%
22.2% 21.3% 21.8% 22.3%
0%
5%
10%
15%
20%
25%
30%
35%
2015 2016 2017 2018 2019
IndiPharmaCo Top 10 generics pharmaceuticals average
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Source:
Capital
IQ
Included
companies;
Sanofi,
Teva,
Mylan,
Sun
Pharmaceutical,
Dr
Reddy's,
Cipla,
Hikma,
Lupin,
Sandoz,
Sawai
18

19. IndiPharmaCo relies heavily on the US market
INDIPHARMACO REVENUE
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3,882
3,741
4,332
3,559
3,695 3,793
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2014 2015 2016 2017 2018 2019
Revenue
in
million
U.S.
dollars
2019 REVENUE SOURCES
US
38%
India
29%
Emerging
Markets
12%
Europe, Canada, Japan,
Australia, New Zealand
14%
API
7%

20. IndiPharmaCo’s latest M&A’s shows a new interest of the
company in the API sector
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2015 2019
2017
2016 2018
• 12 Chinese generic
brands licensing
• 2 API companies
• API company
• Japanese
pharmaceutical
• Russian
pharmaceutical
• Merger: Indian
pharmaceutical
• US pharmaceutical
• 14 prescription
brands in Japan
• 2 US
pharmaceuticals
• Israeli
pharmaceutical

21. IndiPharmaCo’s finished dosage manufacturing facilities
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10 – India
2 – US, Japan
1 – Canada, Hungary , Israel,
Bangladesh, Malaysia,
Romania and Russia

22. IndiPharmaCo’s API
manufacturing facilities
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7 – India
2 – Australia
1 – US, Israel, Hungary

23. IndiPharmaCo’s supply chain is highly dependent on Chinese
suppliers
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China
69%
India
16%
US
4%
In-house
production
4%
Others
7%
IndiPharmaCo’s material and component supplies by country of origin, 2019

24. IndiPharmaCo’s supply chain disruption
RAW MATERIAL IMPORTS
▪ IndiPharmaCo currently imports about 70% of its
raw materials from China. The impact from Covid-
19 was severe, as no contingency plan had been
put in place to procure replacement raw materials,
either internationally or domestically.
▪ Many raw materials factories in China were out of
commission for multiple weeks, drastically
inhibiting IndiPharmaCo to meet increased
demand caused by Covid-19.
VALUE CHAIN DISRUPTION
▪ IndiPharmaCo is looking for ways to stabilize
their supply chain to be prepared for another
global pandemic. Specifically, they deem their
raw materials import to be the weakest portion
of the supply chain. IndiPharmaCo must
optimize the tradeoff between domestic and
international options.
▪ Likewise, IndiPharmaCo seeks to mitigate the
impact of new social and political trends on its
revenues, particularly in countries like the US.
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25. Thank You!
We, at EMI, thank you for your interest and time for engaging with us!
About EMI
Emerging Markets Institute (EMI) at SC Johnson College of Business at Cornell University was
founded in 2010 with a mission to prepare and support business leaders who seek a
competitive advantage to become experts in emerging markets. The institute brings together
preeminent practitioners and academics from around the world to develop the next generation
of global business leaders and create the premier research center on the role of emerging
markets in the global economy.
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