Company and Industry Analysis of Cipla Ltd. including SWOT, PORTER and PESTLE analysis

1. ORGANISATION
&
MANAGEMENT
Arun Kumar Bhagyashree Kashwed
Chinthu Ramesh G.V.R Sruthi Sri
Kartik Maniktala Kartikey Singh
Kinay Dave

2. CONTENTS
 THE COMPANY
 PESTLE ANALYSIS
 PORTER 5 FORCES
 SWOT ANALYSIS

3. THE COMPANY
• Founded by Khwaja Abdul
Hamied as 'The Chemical,
Industrial & Pharmaceutical
Laboratories'
1935
• Make India self-
reliant in
healthcare
VISION
• Now a leading player
in anti-infective & anti-
asthmatic formulations
Respiratory, cardiovascular disease,
arthritis, diabetes, weight control,
depression medicines
COMPETITORS
• Sun Pharma
• Dr Reddy lab
• Lupin
• Aurobindo Pharma
• Piramal
• Glenmark
• Pfizer
• Merck
• GSK

4. Currently
Business in 170+
countries including the
United States, Canada,
Europe, Africa,
Australia, Latin America
and Middle East.
44 manufacturing
facilities in India
1400 suppliers globally
2000+ products in 65
therapeutic categories
and 60+ dosage forms,
covering
communicable, non-
communicable,
common and
emerging diseases, and
rare diseases.
ACHIEVEMENTS
• 1960s: Pioneers API(Active Pharmaceutical Ingredients) manufacturing in India, laying the
foundation for bulk drug industry
• 1968: Manufactured ampicillin for the first time in the country
• 1970: Spearheads the New Patent Law, enabling Indian pharmaceutical companies to manufacture
patented products
• 2001: Pioneers access to HIV treatment by making anti-retrovirals (ARVs) available at less than a
dollar a day
• 2005: Produces an anti-flu drug in less than 3 months during the Bird Flu epidemic
40%
19%
20%
11%
4%6%
Revenue Break up
India
North America
SAGA
Emerging Markets
Europe
Others

5. PESTLE
SOCIAL
Wider population in getting
access to essential services
in India
Negative migration attitude
towards India can impact
Cipla’s ability to bring
international leaders &
managers
With increasing
liberalization the attitude
towards health and safety
are getting lax which Cipla
needs to be careful of
POLITICAL
Stable Govt and
major policies
Regulatory
Practices
in India
Other
stakeholders -
such as NGO,
protest &
pressure groups,
activist
movements play
critical role.
Taxation policies
–Cipla has
benefitted from
lower taxation
policies
throughout for 2
decades
Changes can
affect company
Political stability
in other
geographies
ECONOMIC
Indian pharma
market
expected to
grow to USD
55 billion by
2020
Combination
of value and
volume
provides
interesting
opportunities
Increasing
investment in
public
services
Pricing
controls & an
economic
slowdown can
affect

6. TECHNOLOGY
Intellectual property
rights and patents
protection
R&D cost is high in India
compared to western
nations
Technology has
shortened the product life
cycle and has enabled
suppliers to quickly
develop new products
Technology transfer and
licensing issues
Lowering cost of
production
LEGAL
Companies are finding
it increasingly difficult
to engage physicians
and patients in an
information intensive
day and age
India’s drug price
control regime is
erratic in its
implementation.
Government decides
the price and
companies have to
implement it with
immediate effect and
grievances resolution
takes time
ENVIRONMENTAL
Recycling is fast
emerging as a norm
rather than a good
thing to do in India
economy
Regular scrutiny by
environmental
agencies in production
and product design

7. PORTER 5 FORCES
BUYERS
Moderate
Distribution
Channel
Govt control
prices
Fragmentation
of buyer in the
market - online,
consolidated for
hospitals
Competencies
& specialty -
respiratory
Loyal customer
as prescription
is used, high
switching cost
Low price
sensitivity-
Differentiated
pdt
SUPPLIER
High
Raw material
marketing,
labor can
increase your
cost
Switching cost
for companies
is high –
specifications
Suppliers can
form cartel
Supplier can
sell to other
industry
Chemical
industry –
forward
integration
Backward
integration
Depends on
company size
and revenue
percentage
SUBSTITUTES
High
Biosimilars
Generic and
Ayurvedic
Substitutes leads
to price erosion -
competition
Increases cost
Less impact as
people buy with
prescription –
online can
disrupt

8. Easy entry for global players, but Indian companies have upper hand
Drugs worth business of US$80 to 250 billion expected to go off-patent over
next 10 years
Difficult to create brand among doctors, hospitals
Knowledge intensive
Threat of new entrants is moderate
NEW ENTRANTS
Medicines spending in India is projected to grow 9-12 percent over the next five years
R&D spending by other major players can increase
100% FDI allowed, low production cost
Generic medicine competition from domestic & MNC’s,
rising middle class households and improving medical infrastructure
Very High
COMPETITIVE RIVALRY

9. SWOT ANALYSIS
STRENGTHS
Strong R&D: 7.1% in R&D for development &
improvements
Products Range: APIs and formulations for humans
and animal healthcare products. Over 2000 products in
65 categories with constant expansion.
A foremost player in anti-infective and anti-asthmatic
formulations
Social initiatives: Cipla made breakthrough in
reducing the prices of cancer drugs, providing quality
at affordable prices
WEAKNESS
Lack of presence in developed
countries: Presence in over 170
countries but India is major revenue
generator
Governance Issue : Company
appointed new CEO in 2016 who
changed decisions of the former,
such future activities can affect
performance ahead as in past

10. OPPORTUNITIES
Strategic Expansion: Cipla is continuously
looking for investments and acquisitions in India as
well as in the abroad
Treatment of HIV: Cipla offers a wide range of
ARV products for the treatment of HIV/AIDS in
both children and adults. Growing number of
patients can provide opportunities
Growth in Emerging markets: Cipla is focusing
on growing in emerging markets, where medical
infrastructure is improving
THREATS
Drug Pricing control methods in India: India has
proposed a new pricing policy under Drug price control
which can have a negative impact on the industry.
Competition in generics industry: There is intense
competition in the Indian generics industry whic affects
growth potential
Regulatory issues : Indian companies need USFDA
regulatory approvals for facilities & observations given
affect company sales
Fluctuation in Exchange rates: International business is
highly affected

11. RATIOS
Particulars 18-Mar 17-Mar 16-Mar 15-Mar 14-Mar
Basic EPS (Rs.) 18.25 12.13 18.21 14.71 17.29
Net Profit Margin (%) 12.89 9.05 12.06 11.65 14.8
Return on Networth /
Equity (%)
10.4 7.61 12.2 10.65 13.76
Total Debt/Equity (X) 0.01 0.03 0.09 0.12 0.09
Asset Turnover Ratio (%) 66.62 68.99 79.51 66.69 72.58
Current Ratio (X) 2.91 2.48 2.19 1.83 2.11
Inventory Turnover Ratio
(X)
3.75 4.06 4.15 3.08 3.74
Earnings Retention Ratio
(%)
89.05 83.5 87.63 86.41 88.44
Price/BV (X) 3.1 3.72 3.43 5.15 3.06

12. Thank you