Analysis of Business Model

Topics: Generic drug, Pharmaceutical industry, Pharmacology Pages: 12 (4198 words) Published: March 18, 2012



In the year 1935, the Chemical, Industrial and Pharmaceutical Company came into existence named Cipla. The company was founded by Khwaja Abdul Hamied which was registered as public limited company with a capital of Rs. 6 Lakhs. Every year this industry produces drugs worth Rs. 18000 Crores with a profit of 9%. There are 20000 production units in the home countryand the products are exported all over the world at a cheaper price than other international companies. It soon became the top bestselling producers of generic products within the country.Cipla has a flat organisation structure. The firm consists of a large number of educated manpower which is highly skilled and updated with the new methodologies and systems. The foreign capital investment is open as stated in the foreign policy of the country. Cipla is largely divided into three segments formulations, bulk drugs and technology services. The business model of Cipla pharmaceuticals also focuses on the international strategic alliance pursuing organic growth by reducing capital and risks(Anon., 2005). Q1. Drawing on relevant academic literature and using relevant financial and other information, outline Cipla’s current business model and explain why and how it has changed in the last few years. Cipla pharmaceutical is the largest drugs manufacturing unit in the markets for bulk drugs and formulations. The business model Cipla Pharmaceuticals has attained an esteem growth in Anti-infective and Anti-asthmatic formulations. The company is the major exporter various products like the raw material, intermediates, prescriptive products, over the country products (OTC) and veterinary products across 150 countries and also provides the technology used in the products and processes(Anon., 2005). Cipla pharmaceutical is a large company with lot of segments, following various strategies and policies to accomplish the needs of the customer and strengthen its business. So, the business model is explained by a definition keeping all the factors.

A business model is a systematic concept. There are two major elements important for a business model. First, what the business does and secondly, how does the business makes money by doing all these things(Weill, et al., 2004). Before 2005

From the 1935 Cipla started its production with a vision to make India self reliant in the health care sector. The first product in the market came up in 1937. The world had lost more than 20 million people who died due to the disease named HIV/AIDS in that time. HIV/AIDS was at a high rise so Cipla took a step to fight against this disease. The company created a generic combination of drugs and made it available to local public. Cipla production made it easier for the poor and middle incomes countries to enjoy the most commonly used drugs at an affordable price available in the market. The business of Cipla was going on well due to availability of cheap labour, cheap engineers, cheap raw materials in the market(Rane, 1997). Patent Act 1970:- The Patent Act given by the government worked on the development of the Indian pharmaceuticals and the guaranteed that the Indian Public was able to access the low cost drugs. This act was replaced by the previous act of the British era of ‘product-patent’ and came the start of the ‘process-patent’ which helped the Indian companies to copy foreign drugs without paying any licensing fee(Greene, 2007) Many of the industries started following the system of reverse engineering instead of investing more and more money on research and innovation followed by all the multinationals.Cipla produced many of the expensive heathcare products at a lower price available in the market(Mulleur, 2006).This model earned a good reputation in the market. This also enabled a lot of competition in the market. The multinationals were completely challenged after the acceptance of Cipla’s products in the market....
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