International Business Strategy
MBA(IB) 21-23 FT(K) Batch
Term Paper
Name: Akash Pattanayak
Roll No.: 64KB
Section: B
Name of the Organization
Piramal Pharmaceuticals
Contents
1
Firm Basic 1
Facts
7
2
Vison, Mission,
2 Goals
8
Influence
ofStrategy
Non-Market Forces
Global
3
Financial Highlights
9
Identification
Strategic Gaps
Influence ofof
Non-Market
Forces
4
CAGE Analysis
10
5
CAGE Interpretation
11
6
Porter’s Diamond
5 Forces
Global
PESTEL
Strategy Framework
Strategic
Actions
and Suggestions
Strategic
Gaps
References
Firm Basic Facts
Name of the Firm: Piramal Group
Industry/ies: Healthcare, Life sciences, Drug discovery, Healthcare
Information Management, Financial Services and Real
estate
Home Country: India
Product Portfolio: Healthcare, Life sciences, Drug discovery, Pharmaceuticals
Host Countries: USA
Listing Status: Listed
If Listed, SEs: BSE/NSE
Vision,Mission,Goals etc…..
Vision Statement
Our purpose provides clear guidance to our people and ensures that we identify
the right partners to create mutual, enduring value
Goals
The values that guide our culture are embodied in our purpose - ‘Doing Well and Doing Good’.
We believe that individual success and organizational growth cannot be mutually exclusive from
responsible and ethical business practices. Our purpose provides clear guidance to our people
and ensures that we identify the right partners to create mutual, enduring value
Mission Statement
The philosophy of 'Doing Well and Doing Good', along with our core values of
Knowledge, Action, Care & Impact have been constant in our journey and serve as
guideposts to help us become the company we would like to be
Financial Highlights
List important financial highlights for the firm
Total Turnover: 3094.95 Crore (INR)
Net-Profit Ratio: 0.11
% of Home sales to Host sales: 41%
% of Home assets to Host assets etc. : 18%
CAGE Analysis
Cultural
Administrative
Geographic
Economic
Ethnic Groups: India
•72% Indo Aryan, 25% Dravidian
Ethnic Groups: US
•White 79.96%, Black 12.85%, Asian
4.43%
Legal System: US
•Federal common law based on the
English legal system; common lawbased state law
Legal System: India
•Separate personal laws based on
religion and common law based on the
English legal system
Lack of sea or river access:
•India & US has a long shore or coastal
line hence connected via sea.
Size of country:
•India is slightly more than one third
of US
Currency US: Dollars
Currency India: Rupees
Religion: India
•Hindu 80.5%, Muslim 13.4%,
Christian 2.3%, Sikh 1.3%
Religion: US
•Protestant 51.3%, Roman Catholic
23.9%
Language: India
•14 official languages
•41% of the population speaks Hindi
•English subsidiary official language
Language: US
•82% English, 10.7% Spanish, 3.8%
Indo-European
Society: India
•Young population, median age of
28.4 years
Society: US
•Median age is 38.4 years.
Individualistic society
Government Type: US
•Constitutional Federal republic.
Strongly democratic
Government Type: India
•Constitutional Federal republic.
Strongly democratic
Legislative System: US
•Bicameral Congress consists of the
Senate and house of representatives
Legislative System: India
•Bicameral Congress of Council of States
International Law: US
•Withdrew participation from ICJ in
2005
International Law: India
•Member of ICJ jurisdiction
Physical remoteness:
•India and US have long geographical
distance between them
Lack of common border:
•Due to large distance they don’t
share any common border
Climates: India
•Tropical monsoon in south and
temperature in north
Climates: US
•Mostly temperate with cold climate
in the northern side bordering Canada
and tropical in West Coast
Weak transportation or
communication links:
•India & US are connected well with
airways and seaways. Also due to large
IT industry in India, communication
links are also well established
GDP US: $22.996 trillion
GDP India: $3.173 trillion
GDP Per Capita US: $63,543
GDP Per Capita India: $1,900
GDP Growth Rate US: 5.68%
GDP Growth Rate India: 8.95%
Labour Force US: 165.16 Million
Labour Force India: 471.6 Million
GDP: composition US (%) 76.7
Services, 22.1 Industry, 1.2 Agricultural
GDP: composition India (%) 55.6
Services, 26.3 Industry, 18.1
Agricultural
Infrastructure differences: US being a
developed country has a world class
infrastructure where as India is still
developing and has a lot of work to do
Gini Index US: 41.1
Gini Index India: 35.7
CAGE Interpretation
The CAGE framework was used to analyze the cultural,
administrative, geographic, and economic differences between
India and the USA, and the results are shown below in terms of
distance scores:
ADMINISTRATIVE
As with the UK's economic structure, the legal
systems of India and the US are comparable.
Additionally, it can be said that India's governmental
structure is fairly pro-American.
3
2.6
2.5
2.17
2.3
2
1.5
1
CULTURAL
The USA is particularly appealing because of low
linguistic barriers (short cultural distance). Since
India was once a British colony, many people speak
English there.
0.96
GEOGRAPHIC
China is geographically more enticing than India
because it is closer to the US west coast. The
proximity of regions to one another is a key
consideration when evaluating them as
manufacturing hubs.
0.5
0
ECONOMIC
In software and other disciplines, India is home to
numerous engineers. Additionally, Indian managers
are familiar with Western business practices, maybe
as a result of the elite class's westernization.
CAGE Interpretation
CAGE Distance between India and USA – 12674
Geographic Distance between India and USA - 13132
• Both India and USA are culturally different as per multiple components of the
Hofstede Index .
• Looking at administrations, they have dissimilar perceptions of doing business and
corruption
• Risk perception is different. This leads to some difference between CAGE and
Geographic Distance
• The high geographical distance between the two countries pulls up the CAGE
distance
• On the whole, CAGE distance < Geographic distance because of other favourable
factors
Porter’s 5 Forces Analysis of Industry
1 Rivalry among existing competitors
Threat of
New Entrants
Bargaining
Power of
Suppliers
Rivalry Among
Existing
Competitors
Bargaining
Power of
Buyers
•
One of the global industries with the highest levels of
competition is the pharmaceutical one. The majority of
the industry's participants have been around for a while
and are widely known throughout the world.
•
It is a tremendously competitive industry because of the
high profit margins, numerous small and major players,
and stringent governmental regulations.
•
The current trend of mergers and acquisitions, when
larger businesses absorb smaller players, is another
factor. Biotech and generic drug technological
improvements have heightened competitiveness even
more because businesses have little choice but to adopt
the new techniques
•
As a result, innovation is constantly under pressure.
Sanofi, Pfizer, GlaxoSmithKline, Merck, and AstraZeneca
are a few of the leading rivals. Thus, the overall
competitive rivalry in the US pharmaceutical industry is
high
2 Threat of Substitute Products
Threat of
Substitute
Products
•
There is no alternative to a medicine that is still
covered by its patent. When the product's patent time
ends, however, generic production starts, and several
alternatives emerge.
•
Many medications can be replaced by the promotion
of a better lifestyle that includes a balanced diet,
exercise, and other physical activity. Substitute threat
is therefore minimal to medium.
Porter’s 5 Forces Analysis of Industry
4 Bargaining Power of Suppliers
•
Due to internal medication manufacturing, the US
pharmaceutical sector just needs the raw materials for
the pharmaceuticals. Technology for the
manufacturing and production facilities is the second
necessity.
•
The packaging material is the third thing the vendors
offer. A lot of providers are ready to offer each of
these supplies. As a result, they are unable to
negotiate or make an effort to affect market prices.
Wako Chemicals, Nexeo Solutions, and BASF
Corporation are a few of the vendors. As a result, the
suppliers in the US pharmaceutical business have
relatively little negotiating power.
3 Threat of New Entrants
•
For the US pharmaceutical business, the threat of new
competitors is minimal. Establishing a production
setup, conducting research and development,
marketing, selling, and distributing involve significant
costs.
•
A corporation runs a significant risk of losing millions
of dollars if it is unable to generate the necessary new
pharmaceuticals in a timely manner.
•
The already-established competitors have created
economies of scale, which has improved earnings. The
protracted regulatory authority approval procedure is
another factor.
•
The low entry threat posed by new entrants is also a
result of well-known brands and product
differentiation. A newcomer will likewise struggle to
get entry to distribution networks. The majority of
consumers choose prescription brands they have
already used.
•
Therefore, it will be difficult for a new player to gain
market share. Another factor is that most medicines
are patented, meaning that new competitors must
build everything from scratch. So there is little threat
from new competitors.
5 Bargaining Power of Buyers
•
New drug patents are valid for twenty years, during
which time the company may choose the price. Then
generic production starts, and costs start to decrease.
Similar to huge clients, such as hospitals, individual
customers have very little to no bargaining power. The
brand name is still another element.
•
This significantly lessens the purchasers' ability to
negotiate. Today's consumers have access to the
internet, which enables them to further research
medications in addition to following their doctors'
recommendations, providing them additional
negotiating leverage. Therefore, the overall level of
the buyers' or consumers' bargaining power is
medium.
Analysis using Global Strategy Framework
Global Ambition
Expand Presence of Pharmaceutical vertical in global markets such as US, Europe and Japan with plans to
introduce more products going forward
Enhance production capacity through brownfield expansions
Improve scalability through traditional and modern trade and sales strategies
Continued institutional focus on sustainability
Capability building for improvement in market servicing
Identifying product market opportunities in new markets
Global Positioning
• The values of the group are knowledge, action, care, and impact—are incredibly important to the
group
• Piramal Group is a global company and are going to be India-headquartered. But they have a lot of
global accounts and people and thus connect and integrate that
Analysis using Global Strategy Framework
Global Business System
Research and
Development
Sourcing and
Production
The R&D is
carried out at
various locations
worldwide it
operates in as the
team works
closely with the
regulators and
develops
technology basis
the requirement
It follows a
partially Global
and partially Local
outsourcing of
manufacturing
and other
resources are
sourced Locally
It follows a
different
marketing
strategy in
different
countries as the
client
requirements are
different.
They have a local
team and heads
concerned to
different
departments to
handle any
complaints the
customers have
Global
Local
Local
Local
Marketing
Customer
Services
Finances
HRM
Whole of the
finances are
controlled from
the Head
Quarters and the
country heads do
not have the P&L
responsibilities.
Local HR teams in
every office to
deal with the
employee
grievances.
Global
Local
Analysis using Global Strategy Framework
Global Organization
Influence of Non-market Factors
•
•
Recent innovations include blockchain, Industry 4.0,
additive manufacturing, and artificial intelligence (AI)
which influence key decision factors
•
Customers' attitudes are evolving over time as well. The
technical changes have a significant impact on how this
transformation is modelled. The business plan must be
adaptable to deal with shifting client attitudes as a result
of trends like artificial intelligence (AI), additive
manufacturing, blockchain, and other Industry 4.0
technologies that have repeatedly turned the industry
upside down.
•
Some of the Non-Market Factors
Any company operating in the USA must adhere to the
government's regulations regarding the evolving nature
of the business
Understanding the workplace culture of the local
workforce is crucial while conducting business in a foreign
country since it serves as the foundation for daily
operations
1.
2.
3.
4.
5.
Changing Attitudes of Customers
Legislative Power of Regulators
Withholding Power of Investors
Withholding Power of Employees
Disruptive Influence of NGOs
•
Other non-market elements, such as the influence of
NGOs, CSR, trade associations, the media, activists,
etc., can also have an impact on a company's
business in addition to the ones mentioned above.
•
The influence of NGOs and CSR initiatives helps to
build a positive brand image among investors, which
is beneficial for the organization's long-term
performance
•
The operating strategy of the company is passively
influenced by the media and activists
Identification of Strategic Gaps
1
2
3
4
The company should also focus on
emerging countries such as Latin
America and Middle East where
the demand for quality healthcare
services on the rise
Giving relevant host nation leaders
P&L obligations would strengthen
their commitment and aid
businesses in achieving their
worldwide objectives
Piramal Group should aim to
expand in the specialist markets
that the pharmaceutical business
has to offer
HCL should strengthen their
Digitisation capabilities as it is a
key area to focus upon these days
Strategic Actions and Suggestions
PRIORITIZE PORTFOLIO COUNTRY BY COUNTRY
Due to their prices, regional clinical routes, or disease prevalence for an emerging market,
products that are economically successful in established areas may not perform as well in
emerging markets. This necessitates a thorough product mapping for each nation in
emerging markets. While specialty products call for a more innovative approach involving
both public and private partnerships, strong market-access capabilities, and novel pricing
models, mature products allow companies to pursue a traditional approach to
differentiation based on share of voice, key-account management, and other familiar
elements.
CHANGE FOCUS FROM CONVENTIONAL COMMERCIAL STRATEGIES TO ACCESS-DRIVEN
ONES
The company needs to re-evaluate their market-access strategy by forging solid
connections with local authorities, investing in market-access talent, utilising cutting-edge
pricing strategies (such as GDP-based models), and forming inventive access partnerships
(such as volume agreements with government institutions and outcome-based contracting)
Strategic Actions and Suggestions
ADAPT TO THE DEMANDS OF THE CONSUMER AND UNREGULATED MARKETS
In emerging nations, private insurance and out-of-pocket spending account for a sizeable
portion of healthcare costs; in certain cases, this percentage is virtually entirely out-ofpocket. The company should focus on the largest pools of patients, including newly
emerging urban centers with growing middle classes, in order to seize this opportunity.
They should also test various scenarios for reaching a larger audience at a lower cost with a
second brand while concentrating on the cities with the largest pools.
AIM HIGHER THAN THE BUSINESS MODEL
Companies should look beyond sales and marketing when looking for ways to stand apart.
Even though R&D is conducted internationally, it can nonetheless adjust to local
circumstances by, for example, engaging in licencing and M&A to broaden the country
portfolio or by creating medications particularly to address local needs, such as medicines'
stability at higher temperatures. When local manufacturing is not a prerequisite for
entrance, it can also serve as a significant difference. And in markets like sub-Saharan Africa,
where delivering medications to patients through pharmacies and other channels continues
to be difficult, supply-chain expertise can give a competitive edge.
References
https://www.globenewswire.com/newsrelease/2020/01/17/1972092/0/en/Global-Pharmaceuticals-Industry-Analysis-andTrends-2023.html
https://www.mckinsey.com/industries/life-sciences/our-insights/whats-next-forpharma-in-emerging-markets
https://www.piramal.com/
https://www.piramal.com/wp-content/uploads/2022/07/PEL_Annual-Report-FY2021-22.pdf
https://www.bloomberg.com/news/articles/2022-02-11/billionaire-piramalexpects-pharma-unit-demerger-by-end-of-2022
https://www.moneycontrol.com/india/stockpricequote/pharmaceuticals/piramale
nterprises/PH05
THANK YOU