1. MANKIND PHARMA
The Growth Strategy
Submitted By:
Abinash Behera (2012PGPRAK006)
Aniket Harsh (2012PGPRAK011)
Anoop Kumar S (2012PGPRAK014)
2. MANKIND PHARMA
April 23,
2013
2
Table of Contents
The Indian Pharmaceutical Market ..........................................................................................................3
Mankind: Profile and Portfolio.................................................................................................................3
Mission and Vision...................................................................................................................................5
Competitive Advantage...........................................................................................................................5
Customer Management...........................................................................................................................6
Growth Story...........................................................................................................................................8
INTERNATIONALIZATION .....................................................................................................................9
Portfolio Analysis...................................................................................................................................10
The way ahead: 5 Forces analysis and Future plans ...............................................................................11
Tackling Challenges and moving forward...............................................................................................13
Exhibits .................................................................................................................................................14
Exhibit 1: Divisions and their products ...............................................................................................14
Exhibit 2: The timeline.......................................................................................................................15
Exhibit 3: Number of Medical Representatives across industry ..........................................................16
Exhibit 4: Prices of Mankind Drugs as compared to Competitors........................................................16
Exhibit 5: Financial Overview .............................................................................................................17
Exhibit 6: OTC and Personal Care brands of Mankind that have celebrities in advertisements............18
References ............................................................................................................................................19
3. MANKIND PHARMA
April 23,
2013
3
The Indian Pharmaceutical Market
India is one of the fastest-growing pharmaceutical markets in the world, and its market size has
nearly doubled since 2005. It is expected to touch US$ 74 billion in sales from the current US$
11 billion in the coming years at an expected growth rate of 13-14% and by 2013 establish its
presence among the world’s leading 5 emergence markets. Currently, Indian pharmaceutical
market ranks third in the world in terms of volume and 10th
in terms of value. The total
domestic market capitalization of Pharma Industry is US$ 10.88 billion.
Low cost of skilled manpower, increasing sales of generic medicine, greater penetration of rural
market and innovation are some of the main factors fueling this growth. Another reason for the
rapid growth of the Indian pharma industry is the increased level of disposable income which
has brought about a drastic change in eating habits & lifestyle. Because of such lifestyle
changes, there has been a progressive growth in lifestyle related diseases like- Cardiovascular
disorders, diabetes, respiratory tract infections, neuropsychiatry disorders as well infective
diseases etc. According to the Department of Pharmaceuticals, the Indian pharmaceutical
industry employs about 340,000 people and an estimated 400,000 doctors and 300,000
chemists. Based on the pharmaceutical customer base, the Indian Active Pharmaceutical
Ingredients (API) manufacturing segment can be divided into two sectors – Innovative or
branded and generic or unbranded. Innovative or branded sector companies seek to develop
new and innovative APIs. Generic companies mass produce APIs for popular/common drugs for
which patents have expired. Most pharma companies run a hybrid structure wherein Generic
section is the cash cow, financing research and development for the innovative products.
Mankind: Profile and Portfolio
Mankind was founded by ex-employee of Lupin, Ramesh Juneja and his brother Rajeev
Juneja with an aim to provide quality medicines at economical prices. It was started with a
4. MANKIND PHARMA
April 23,
2013
4
capital of Rs.50 lakh and 25 medical representatives. Both the founders had accumulated rich
experience working as MRs for Lupin. Mankind started with medicines and has recently
diversified to include Veterinary medicines, pet care and FMCG products in its portfolio. With
its innovative marketing strategies, Mankind now ranks as the eight largest drug manufacturer
in India, ahead of Lupin pharma with a turnover of 2500 Cr. It has successfully maintained a
strong growth rate of 16-18% against the industry average of 13-14% (See Exhibit 5).
Mankind group markets its products through the following divisions catering to various
therapeutic segments (see Exhibit 1):
Mankind Pharma- The parent division founded in 1995.
Discovery Mankind- founded in 2003 for offering a range of products to treat diabetic
metabolic disorders, antibiotics, GI drugs, anti-fungals etc.
Lifestar Pharma- incepted in 2005 for providing comprehensive range of products relating to
ophthalmic, dermal segment and antibacterials.
Special Mankind- launched in the year 2005, marked Mankind’s venture into the OTC segment.
This division is pioneer in launching of premium category condoms, toothbrush, sanitary
napkins & sweeteners.
Future Mankind- started in 2007 this division caters to the needs of acute and chronic
segments like orthopedic and GI
Magnet Labs- Acquired in 2007 to establish presence in the antipsychotic segment
Vet Mankind- Established in 2007 to serve the Indian animal husbandry needs. Products
include antibacterial, nutritional, reproductive, NSAIDS and digestive categories.
Pet Mankind- Catering exclusively to basic care, health and hygiene and nutritional needs of
pets.
Offering analysis
5. MANKIND PHARMA
April 23,
2013
5
• Acute Drugs- for diseases that usually last for a short duration like anti-infectives,
painkillers or analgesics.
• Chronic Drugs- for diseases that are recurring in nature and include lifestyle diseases
like anti-diabetics, cardiovascular, cancer etc.
• Over the counter (OTC)- are medicines (or medical kits) sold directly to a consumer
without a prescription from a healthcare professional, as compared to prescription
drugs, which may be sold only to consumers possessing a valid prescription. E.g.
PregaNews, Unwanted-72
• Veterinary Products- Medicines catering to diseases in pet animals. E.g.- Petogas,
NewForce pet etc.
• FMCG/Personal Care- Personal care products. E.g.- ‘Adiction’ deodorant and ‘Don’t
Worry’ sanitary napkins.
Mission and Vision
Mission: To support a healthy & active lifestyle through our broad portfolio of Pharma, OTC &
FMCG products.
Vision: To be the No.1 Pharma Company of India by 2015.
Competitive Advantage
Mankind is a cost leader. High economic disparity in India spawns a huge chunk of population
that is disadvantaged due to its limited purchasing power. This segment is highly price sensitive
and concentrated mainly in the rural and semi urban pockets. This sensitivity to price is also a
function of whether the drug category is acute or chronic. People are highly price sensitive
when it comes to acute drugs but the trend reverses when it comes to drugs for chronic
diseases. This led Mankind to focus their operations in rural market with acute drugs. Unlike
6. MANKIND PHARMA
April 23,
2013
6
their competitor they have followed a bottom up approach. They have started targeting rural
areas first then tier 2 and tier 3 cities in 2002 and later they entered tier 1 cities in 2006. The
target segment for Mankind has been the populace living in the rural and semi urban areas that
does not have the purchasing power to afford costly medicines manufactured by other
pharmaceuticals (See Exhibit 4).
The Juneja brothers themselves started off as Medical Representatives and as such there is a
distinctive leaning towards marketing side of the business to drive sales at Mankind. The
company has a very aggressive marketing policy employing a very comprehensive customer
engagement model. 80% of staff is MR which allows Mankind effectively to employ the Push
strategy to drive sales (see Exhibit 3). Their MRs are amongst the most highly paid in the
industry. The compensation system has a low fixed component. The variable component is a
function of sales and there are no targets. This means that there is no cap or upper limit to the
salary a MR can earn if he is good at selling.
Customer Management
The sales of a particular brand of medicine for a region are a function of the number of doctors
prescribing it and availability of that brand in the drug shops of the region. Hence primary
customers for any pharmaceutical company are- Physicians and retail chemists.
Mankind employs the push strategy to drive its sales. The following are the main features of its
customer engagement strategy:
Physicians:
• Selection of the doctors through a detailed survey.
• Positioning of the medicines depends upon the prescribing habits of the physicians.
• Detailing the products to the doctors & providing free drug samples.
• Regular follow-ups with the doctors to check on continuity of prescriptions flow &
availability.
7. MANKIND PHARMA
April 23,
2013
7
• Providing informative literatures relating to current developments in the medicines.
• Health check-up camps for the doctors & patients.
• Gifts for incentivizing and showing appreciation.
Depending upon the volume of prescriptions (prescriptions where in Mankind brands have
been prescribed), physicians in any given region are categorized as:
VIP- (Very Important Physicians) Highest levels of sales are through them
IP- (Important Physicians) they generate medium levels of sales.
GP- (General Physicians) their contribution towards Mankind sales is low.
Every month, company distributes gifts to each of their listed physicians. The gifts planned are
as per the volume of business given by the physicians and accordingly, the value of gifts differs.
Hence physicians are motivated to move from lower category of physicians to the higher
category. This was most effective in the rural and semi-urban areas as the physicians there had
traditionally been ignored by the top pharma companies. To touch the untouched customers
was the brilliant tactical move that spurred Mankind’s growth.
Retail Chemists:
• Giving discount on purchase to the retail chemists. Largest discounts in the industry are
provided by Mankind.
• Giving gifts on purchase.
• Facility of expiry products reimbursement.
• Frequent visits by MRs to ensure availability of medicines and monitor the levels of
sales.
Consumer engagement (for OTC and FMCG products)
In keeping with their reputation of being aggressive marketers, Mankind ensured high
availability of their OTC products in drug stores through their strong MR network and spent
8. MANKIND PHARMA
April 23,
2013
8
millions in advertizing through visual media. Their ads are humorous, catchy and even a 'feast
for the eyes'. Mankind ensures that its OTC products stand out in a crowded market by using
famous celebrities in the ads (See Exhibit 6).
They were the first ones to advertize pregnancy testing kits on television. The advertizing
strategy has worked wonders for Mankind’s OTC division in terms of making it the most
recognized brand where OTC market is concerned. Their investment in advertizing has directly
translated to increased sales.
This however is not true for their personal care and FMCG products. They were able to leverage
their existing channels in promoting and distributing the OTC products. But this channel proved
inadequate when it came to personal care and FMCG products. The presence of well
established brands and large players with extensive channel reach make survival in this market
difficult and costly. As a result Mankind is suffering losses and might look to divest this portfolio
in future.
Growth Story
Mankind started its growth organically but later on it adopted the inorganic model for fueling
fast paced growth (see Exhibit 2). They are mainly focused on being a high volume player in the
market which can offset their low price strategy.
During mid 1990s when they had just started, the entire manufacturing was outsourced
as they did not have the high capital required to set up their own manufacturing plant. Later in
the late 1990s they set up their first manufacturing plant in Paonta Sahib, Himachal Pradesh.
Currently they have around 13 manufacturing plant which manufactures around 95% of their
drugs. In absence of any competitor in low price segment they managed to occupy the market
quickly. Due to the price wars they were operating at very low margins. Sustaining at that
margin was very difficult for them. So they decided to diversify their business and entered into
high margin segments like OTC, personal care and Vet-nary market in 2007.
In 2007 the domestic OTC market was worth Rs 5500 crore and was growing at 20-25
percent. They entered this market through their Special Mankind division. Their mainstay
9. MANKIND PHARMA
April 23,
2013
9
brands in this segment are Manforce condoms, Unwanted 72-emergency contraceptives and
Prega-news home pregnancy kits. Though high margin was the main motive behind the entry
into the OTC segment, it also resulted in recognition of Mankind as a brand. In the same year
they also entered the veterinary segment with the launch of the division called Vet Mankind.
For both of this new segment they used their existing distribution channel which eased their
entry into the new segment. They also made inroads into the 1000 crore antipsychotic segment
through their Future Mankind division. To further increase their market share in this segment
they also acquired Magnet Labs.
The rapid expansion and diversification in 2007 was funded by Gujarat based ChrysCapital
through a private placement of $24million. In 2008 for a further infusion of funds into the
business, Mankind had planned for an IPO. It was later abandoned because of the 2008
recession. In 2010 Mankind acquired Longifene,A former brand of UCB Pharma.
INTERNATIONALIZATION
They have started exporting to third world countries like Vietnam, Philippines, Srilanka and
Rwanda. The main rationale behind choosing third world countries is their surging economy
and demographic similarities with the market in India in terms of low purchasing power of a
large section of the population.
10. MANKIND PHARMA
April 23,
2013
10
Portfolio Analysis
We shall employ the BCG matrix to conduct portfolio analysis for Mankind:-
1. Acute Drugs: The market growth rate is low but relative market share is high. This
makes acute drugs CASH COWS that will generate steady cash flow to finance the
growth of Mankind.
2. OTC and Veterinary Products- High market growth rate combined with high market
share make OTC and Veterinary Products the STAR. Mankind will reap rich dividend by
continuing to invest in them.
3. Chronic Drugs: are the Question marks. Mankind doesn’t have a substantial market
share in this segment, but if successful it can emerge a star. So Mankind should look at
shifting focus to chronic drugs and continue investing in them.
4. FMCG and personal care products: These are the DOGS in the portfolio that Mankind
should look to divest. The presence of large players in this segment and lack of adequate
channels make it a low growth and low market share segment which should be either
milked for all its worth or divested outright.
11. MANKIND PHARMA
April 23,
2013
11
The way ahead: 5 Forces analysis and Future plans
Competing on price is not a sustainable strategy. Therefore, Mankind has over the years
diversified into higher-growth, higher-margin over the counter and fast-moving consumer
products categories. Currently, Mankind pharma is focused on pushing its new products,
particularly in segments such as dermatology and cardiology and gain market share to become
the number one company in the India by 2015. This is being done as part of its move to bolster
its position in the chronic drugs segment and make a subsequent shift from the low cost high
volume segment to the higher margin segments.
They are planning to launch 15-16 products in the chronic therapy segment this financial year.
Introducing drugs in the chronic segment would not only contribute to the turnover, but also
boost net profit. In their FMCG venture, new products have been introduced recently. However
the logical course of action would probably be to divest it down the line.
12. MANKIND PHARMA
April 23,
2013
12
CIPLA,RANBAXY,GSK,DR.REDDY'S
ETC ARE PLAYING IN THE
MAINSTREAM THAT WILL MAKE
MANKIND'S ENTRY INTO CHRONIC
DRUGS MORE COMPETITIVE.
CURRENT LOW PRICE SEGMENTS
DOMINATED BY MANKIND ARE
ALSO BEING TARGETED BY THESE
BIG COMPANIES,WHICH WILL ALSO
POSE THREAT
NEW ENTRANT IN
THE LOW PRICE
SEGMENT WITH
AGGRESSIVE
STRATEGY COULD
WIPE OUT
MANKIND,UNLESS
MOVE TO OTHER
SECTOR IS
INITIATED
CONCENTRATINGON
THELOW PRICE
SEGMENTSTHESE
YEARS
THEPOWER OF
BUYERS IS HIGH.
MOVE TO CHRONIC
SEGMENT,OTCS
,FMCG
WILL CUSHION THE
EFFECT OF THIS TO
AN EXTENT
PATENT
PROTECTIONAND
R&D COULD HELP
IN AVOIDING
THREAT FROM
SUBSTITUTES.BUT
IT STILL NEEDS TO
IMPROVE
PRODUCTS AND
PATENTS AND
RESEARCH TO
MAINTAIN THE
ADVANTAGE
MANKIND WITH
ITS HIGH GROWTH
LOW PRICE AND
HEFTY PROFIT
MARGINS, CAN
CONTROL
SUPPLIERS. SO
FORCE FROM
SUPPLIERSIS LESS
PORTERS FIVE
FORCES
13. MANKIND PHARMA
April 23,
2013
13
Tackling Challenges and moving forward
As a part of the growth focus Mankind has realized that the transition to selling products in the
chronic segment in big cities needs more effective strategy compared to the price-penetration
strategy in order to acquire a significant market share. Mankind needs to establish a leadership
position in the cardiac, diabetes and CNS (central nervous system) therapeutic segments before
it can hope to reach the top of Pharma sector.
Mankind is already present in 90 % of the total market product portfolio. Therefore to launch
new drugs it will need to come up with new dosage forms and delivery systems — in much the
way its competitors are doing. Current pricing strategy of Mankind leaves it vulnerable to
attacks from other emerging low price players in the market. Entry of an ultra low cost player
can wipe out Mankind from the market. Another major concern is that there is a perception in
the metros and tier 1 cities that Mankind's drugs are of poor quality simply because they are
cheap. For an aggressive entry in to chronic segment, mankind needs a face change. To
substantiate the quality of their products a modern R&D facility needs to be setup or strategic
alliances should be made. The initial investment is huge and so is promise of high profit
margins. It will also enhance Mankind’s image as a legitimate and credible competitor in the
global pharmaceutical arena.
14. MANKIND PHARMA
April 23,
2013
14
Exhibits
Exhibit 1: Divisions and their products
Division Products
Discovery
Mankind
Diabetic, metabolic disorders, antibiotics, gastro-intestinal and
antifungal
Lifestar
Pharma*
Ophthalmic, dermal and antibacterial.
Special
Mankind
Premium category condoms, sanitary napkins, body spray,
pregnancy test kit, toothbrush and sweeteners
Future
Mankind
Orthopedic and gastro-intestinal
Magnet Labs* Antipsychotic segment
Vet Mankind Veterinary products like antibacterial, nutritional, reproductive,
NSAIDS and digestive categories.
Pet Mankind Exclusively to the Basic Care, Health, Hygiene and Nutritional
needs of the Pets
15. MANKIND PHARMA
April 23,
2013
15
Exhibit 2: The timeline
1995
•Inceptionof Mankind Pharma
2002
•Company establishedits operations all over India
•Launched new division Discovery mankind for the segments-Diabetic,, Metabolic Disorders, Antibiotics,Gastro-
intestinal,Anti-fungals.
2005
•Celebrated“Decade of trust” with medical fraternity
•Launched LifestarPharmafor the segments - Ophthalmic,Dermal, Gynae ,Antibacterials
•Won the Indian Express Pharma Pulse Award for “Overall Best Performance”.
2006
•EstablishedInjectablestate-of-the-artunit at Paonta sahib (HP)
•Group Turnover surged up to Rs.512 Cr.
2007
•Launched Future Mankind, Special Mankind and VetMankind to cater to various therapeutic segments.
•Acquired Magnet Labs Pvt. Ltd. and marked a marketing presence in antipsychotic segment.
•Chrys capital became an investor partner.
2007
contd...
•Bestowedas "Emerging Company of the year" at Pharma Excellence Award.
•Teamed up with Roche Diagnostic for the marketing of product ’Accuchek Go’
2008
•Certifiedas the Most Potential& “A” Grade Vendor in Supply Chain Management by HINDALCO (Aditya Birla
Group)
•Achieved35% growth
•Ranked 1st all over India as per Prescription/Doctor/Month
2008
contd...
•Ranked 4th in India & 3rd in North India as per IMS Health &Stockiest Secondary Audit 21 brands at No. 1 position & 14 brands at
No. 2 Position as per IMS Health &Stockiest Secondary Audit 53 brands in top 5 positions as per IMS Health &Stockiest Secondary
Audit
2010
•Successfullylaunched OTC products like Prega News, Adiction,Unwanted-72,Don't Worry
•Spread the wings globally with the launch of Mankind in Sri Lanka
•EstablishedState-of-ArtmanufacturingUnit for liquid dosages & tablets
2011
•Incorporationof the R&D and Learning & DevelopmentCentre – Mankind Research Centre in NCR.
•Successfullyacquired Longifene – the former brand of UCB Belgium
•Launched a new division “Pet Mankind” for the basic Care, Health, Hygiene and Nutritional needs of Pets
2011
contd...
•A step towards sustainabilitywith the instigationof the CSR wing of Mankind – Care Mankind
•Crossed the threshold with the launch of Kustody Deodorant for women. Retained No. 1 rank in the number of
prescriptionsas per the P/D/M Audit Ranked 8th largest PharmaceuticalCompany of India as per IMS-Health.60
brands placed amongst the Top 5 brands with 28 brands at no.1 and 22 brands at no.2 position
2012
•Aim to enter the league of top five in the pharma space in the next three years and reach thetop slot by 2016.
•They plan to add another 1000 people to their workforce within two years as a part of their new growth orientation.
16. MANKIND PHARMA
April 23,
2013
16
Exhibit 3: Number of Medical Representatives across industry
Exhibit 4: Prices of Mankind Drugs as compared to Competitors
Composition Name Mankind Price Ranbaxy Price Cipla Price
Glaxo’s Augmentin Moxikind-CV 12.5 Moxclav 40.3 Advent 18
Cetirizine Cope (30 Ml) 16.6 Okacet (30Ml) 22
Amoxicillin (80mg) |
Clavulanic Acid
(11.4mg/1mL)
Moxikind Cv
Drop
37
Enhancin
Drops (10Ml)
(1) 46.2
Ofloxacin Zenflox Plus
40
Zanocin (60
Ml) 69.9
Amoxicillin (250 mg)
| Clavulanic Acid (125
mg.)
Moxikind Cv
3(75Mg)10.5
10.5
Mox Clav
3(75Mg)
(10S) 33.53
Pantoprazole (40 mg) PANTAKIND tab
2.99
PANTOSEC D
tab 7.13
Cefixime (200 mg) Mahacef (200Mg) 6.5 OMNIX CV tab 20.95
Telmisartan
Telmikind (20
Mg)
1.35
TELEACT
tab 3.68
CRESAR AM
tab 3
7000
6000
4500 4400
Number of MR
Number of MR across industry
Mankind Cipla Ranbaxy Cadila
17. MANKIND PHARMA
April 23,
2013
17
Exhibit 5: Financial Overview
Starting with a turnover of Rs 3.8Cr in 1995 Mankind Pharma is expected to touch Rs
2500 Cr in 2013.
Mankind Pharmaceutical business has been growing at about 18 per cent annually,
compared with the industry average of 13-14 percent. But the profit margin is growing
at 12-13% compared with industry average of 20%.
They operate at profit margin of 13-14% compared to industry average of about 25-30%.
0
500
1000
1500
2000
2500
3000
2007 2008 2009 2010 2011 2012 2013
Mankind Pharma Sales
18. MANKIND PHARMA
April 23,
2013
18
Exhibit 6: OTC and Personal Care brands of Mankind that have celebrities in
advertisements
Product
Category Brand Ambassador
Manforce Condoms OTC Sunny Leone
Prega News (Pregnancy testing kit) OTC Shilpa Shetty
Adiction Deodrant Personal Care Neil Nitin Mukesh
Kaloree 1 (sweetener) OTC Wasim Akram
Kustody (Face wash) Personal Care Genelia D’Souza
Kustody (deodorant) Personal Care Bipasha Basu
Gas-O-Fast (for gastric relief) OTC Satish Shah
