Scientific Costing in Pharma

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IMPLEMENTATION OF SCIENTIFIC COSTING IN BULK DRUG AND R&D DEPARTMENT OF A PHARMA INDUSTRY

Submitted By

KAUSTUBH NIJASURE

Under the guidance of

Prof. P.M. Nayak

A PROJECT SUBMITTED IN PART COMPLETITION OF MMS TO THE

Vidyalankar Institute Of Technology

Wadala (East), Mumbai 400 031

JULY 14th, 2008
Executive summary:

Centaur Pharmaceuticals Pvt. Ltd. has following divisions:

1. Bulk Drug

2. Formulations

3. Research and Development

4. Clinical Research

It is a growing company which has currently 75% of its business spread in formulations and 25% in API.

In coming 3 years the company is going to focus on CRO, API, CRAM and domestic formulations. Centaur ranks among India’s top 50 pharmaceutical companies by prescriptions and by stockist audit.

Centaur has demonstrated its competence in transforming products into strong brands, reinforced by successful extensions, resulting in a formidable presence in key therapy areas.

Centaur is India’s largest manufacturer and exporter of Psychotropic API and have introduced 24 API for the first time in India. Company’s API manufacturing near Mumbai conforms to USFDA standards. Companies clientele includes Big Pharma, generic majors and Indian multinationals.

Objective:

Currently the costing method used by the company is absorption costing. In this method the cost of a particular product is found out by dividing the depreciation of the machine by the optimum number of machine hours that will be taken to manufacture the product. This will give the management the price of the product.

But many times because of using this technique the price of the product quoted is very high than the competitors. Hence the company loses on the order.

To tackle this issue the company is installing new costing system which is based on German Cost Accounting Methodology. In this costing technique the cost of the product is identified by dividing the optimum machine hours that can...
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