Strategic Management

A REPORT OF

Strategic Management

On

“Business level strategy of Incepta

Pharmaceuticals ltd”

Submitted To:

Ms Liza Khanom Assistant Professor Department of Management Studies Jagannath University

Submitted By:

Shubarna Sabrin, Roll:104806, Aklima Akter Lima, Roll:104846, 4th year 2nd semester (Sec-B) Department of Management Studies Jagannath University

Date of Submission: 6th May, 2014

Letter of Transmittal

Tuesday, May 6, 2014,

Ms Liza Khanom

Assistant Professor,

Department of Management Studies,

Jagannath University, Dhaka.

Subject: Submission of the Report on “Business Level Strategy on Incepta Pharmaceuticals Ltd”.

Dear Madam,

I would like to thank you for assigning us to prepare a Report on “Business Level Strategy on Incepta

Pharmaceuticals Ltd”. This task has been given us the opportunity to explore about the important

aspects of strategic management. The assignment contains comprehensive details on the Business

level strategy.

I would be very happy to provide you with any clarification regarding the assignment. Would you

please kindly accept my paper and oblige me thereby.

Sincerely yours,

Shubarna Sabrin, Roll:104806, Aklima Akter Lima, Roll:104846, 4th Year 2nd Semester (Sec-B) Department of Management Studies, Jagannath University.

Acknowledgement

At the very beginning we acknowledge the immeasurable blessing and profound kindness of the

Almighty.

To make a report on “Business Level Strategy on Incepta Pharmaceuticals Ltd” is very interesting and

educative one. As a part of “Strategic Management” course we enjoyed to prepare such type of

Report. To complete this report we have taken help from different sources. We are grateful to our

honorable course instructor Ms Liza Khanom, who has guided us from starting to ending of the report.

It would not be possible to complete the report within the time duration if he didn’t help us. We have

also taken help from different websites what we have mentioned in the appendix. I have worked to

collect data from different sources. Still there may have some errors. We beg apology if there happen

any mistake.

Finally, we are pleased to complete the assignment on the given topic properly & authentically.

Table of Contents

Sl No Contents Page No.

1. Introduction of business level strategy 1

2. Objectives of the study 1

3. Methodology (how to collect data) 1

4. Limitation of the study 1

5. Company Profile 1, 2, 3

6. SWOT Analysis 3, 4

7. Business strategy 4, 5, 6, 7

8. Some Competitive Advantages of Incepta 7, 8

9. Value Chain 8

10. Porter’s five forces model: 9

11. Recommendation: 9

12. Conclusion 9

Page | 1

1. Introduction of business level strategy

In the modern competitive world to survive on any industrial sector an organization must

follow the business level strategy.

Business level strategies is an integrated and coordinated set of commitments and actions the

firm uses to gain a competitive advantages by exploiting core competencies in a specific

product markets.

The purpose of a business level strategy is to create differences between the firm’s position

and those of its competitors. To position itself differently from competitors, a firm must

decide whether it intends to perform activities differently or to perform different activities.

So in this segment, we will try to know what kinds of business level strategy are followed by

the renowned pharmaceutical company Incepta in Bangladesh.

2. Objectives of the study

A clear objective help in preparation of well decorated report in which other take the right

type of decision. More specifically the study is intended to achieve the following objectives:

To know the business strategy practice of Incepta Pharmaceuticals Limited.

To identify the various avenues for developing the strategy of Incepta Pharmaceuticals

Limited.

3. Methodology (how to collect data)

This report is based on both primary and secondary data. Initially, the work is started with

data those were available at Company’s Brochure and other sources. Moreover, it becomes

helpful to gather some more information from the website of the company. Later on, the work

progressed through some depth interviews of good range professionals trying to heat some

expected area of the study. Then I analyze those data from many angles, in different aspect

and present the information in different segment according to their category, in compact way.

4. Limitation of the study

This is my first initiative for making a report on "Business Strategy of Incepta

Pharmaceuticals Ltd" I was really unable to collect enough information from Incepta due to

their official restrictions. Many things were so confidential that I was not entitled to access

there. Beside this I have faced the following hindrances in preparing this report:

Lack of knowledge and experience about Business Strategy.

Short of time

Lack of sufficient privileges

Lack of communication facilities

The report focuses on “Business Strategy of Incepta Pharmaceuticals Ltd". The survey may

not be more comparable or more valid. Moreover, the report is emphasized on the primary

data such as interview of the high officials of Incepta Pharmaceuticals Ltd.

5. Company Profile

Incepta Pharmaceuticals Ltd. is now the 2nd largest company of the country and recognized

as the fastest growing of the top five manufacturing company in the country. Incepta

Pharmaceuticals Ltd. is a leading pharmaceutical company in Bangladesh established in the

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year 1999. The company has a very big manufacturing facility located at Savar, 35 kilometer

away from the center of the capital city Dhaka.

Incepta began its operation with a handful of highly skilled and dedicated professionals

guided by an able leadership. Proper strategic planning, technical excellence, swift and timely

decisions helped us achieve our objectives leading to much faster growth. Incepta was able to

anticipate the need of the market and provide the right product at the right time. High focus

on R&D investment from the very beginning made possible the introduction of quality

products ahead of its competitors in most cases.

5.1 Mission

Provide people globally with high quality health care products at affordable prices in order to

improve access to medicine and to provide employees an enabling environment that

facilitates realization of their full potential.

5.2 Vision

It wants to become a research based global pharmaceutical company in addition to being a

highly efficient generic manufacturer. To discover and develop innovative, value-added

products that improves the quality of life of people around the world. And contribute towards

the growth of our Nation.

5.3 Products The Company produces various types of dosage forms which include tablets, capsules, oral

liquids, ampoules, dry powder vials, powder for suspension, nasal sprays, eye drops, creams,

ointments, lotions, gels, prefilled syringes, liquid filled hard gelatin capsules, lyophilized

injections, human vaccine etc.

Since its inception, Incepta has been launching new and innovative products in order to fulfill

unmet demand of the medical community. The focus has always been to bring new, more

technologically advanced molecules and innovative dosage forms to this country.

Incepta’s position in Pharma market

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Incepta’s growth in short period of time

6. SWOT Analysis

The factors affecting the organization can usually be classified as:

Internal factors Strengths

Weaknesses

External factors

Opportunities

Threats

6.1 Strengths:

Products acceptable in the global market as ‘Quality Products’

Wide range of products

Strong brand image created by the market leaders parallel to MNC s

Large pool of efficient and qualified technical manpower at minimum cost

Supportive government policy attracting foreign investors

Large domestic market with reasonable growth rate

One of the largest sector of capital investment

6.2 Weaknesses:

Patent law (patents & drugs Act 1911) is not updated to accommodate benefits of

LDCs.

Dependency on imported raw materials

Absence of international standard quality control and testing laboratory

Absence of bio-equivalence testing and clinical facilities.

Absence of API(Active pharmaceutical ingredients) plants

26.5 8.5 11.5

16

2733

39.5

50

65

85

100

122

148

0

20

40

60

80

100

120

140

160

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Incepta’s Sales (in $M

USD)

Year

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6.3 Opportunities:

Huge potential to set-up manufacturing plant for API

Liberal government policy for the foreign investors for joint venture pharmaceuticals

unit.

Large pool of qualified technical personnel may set up manufacturing units in other

LDCs

Positive points of Drug policy, if foreign companies can show 7.5% saving of foreign

exchange mark up is flexible.

Domestic market is gradually increasing with the increase in GDP.

Scope for product diversification into herbal and animal healthcare.

Research and development activities may be initiated with external support.

6.4 Threats:

Cheaper medicine from China and India.

TRIPS may bring tough competition in the local and export market.

The sector is dependent on imported raw materials, any fluctuation in raw material

prices or rate

Neighboring countries supplying products to Bangladesh through unauthorized

channel.

Availability and increase of the active ingredients to Bangladeshi Industry.

WHO GMP has changed to CGMP (Current Good Manufacture Practice) which is

very much stringent to be complied by the new entrant specifically.

7. Business strategy

“Incepta follows the integrated cost leadership/differentiation strategy”

Because Incepta makes the various types of strategy for its each and every department. The

departments are as follows:

� Human Resources Department

� Finance & Accounts Department

� Information Technology department

� Marketing Strategy department

� Production department

� Supply Chain management department

� Administration department

� Quality Assurance department

� Research and development department

� Engineering department

� Technical services department

� Quality Control department

Some strategies are given bellow;

7.1 Recruitment & Selection Strategy

Incepta commits to promote best employment equality practice in its efforts to eliminate

discrimination and create working environments where are treated fairly and with respect.

However the Company believes:

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To have a workforce that reflects the diversity of local communities and the believe that it

can best serve the citizens of the country;

All people should have an equal chance to apply for and be considered for jobs;

Harassment, bullying and discrimination are not acceptable;

People’s differences should be valued.

Comply fully with and implement legal requirements and employment guidance;

Ensure all employees are aware of the Company's Employment Equality Policy Statement

through training and guidance;

Create working environments that promote fair and equal opportunities;

Develop, implement and publish plans for employment equality;

Monitor the existing workforce and job applicants to see if the policy is working and take

action to deal with under representation;

Regularly monitor and review all employment procedures and make changes to them

where they are found to be discriminatory.

Take seriously any concerns that an existing employee or job applicant raises about

discrimination, harassment or bullying.

7.2 Compensation & Benefits Strategy

Incepta Limited is committed about maintaining salaries and benefits that are fair to all

employees and competitive in the local market place. The management monitors changes in

the economy and salary market to ensure that the overall compensation package is sufficient

to attract, recruit and retain high quality staff within the financial capabilities of Incepta

Limited.

7.3 Strategy for production cost

Incepta has taken the following strategy for reduce the production cost.

(1) Sourcing better quality of raw material at the lower cost

(2) Take initiative to enhancing productivity

(3) Take initiative to minimize production process losses

(4) Take initiative to minimize wastage of finished product

7.4 Strategy for Distribution cost

Incepta has taken the following strategy to reduce the distribution cost. These are

(1) Develop smart distribution system

(2) Give training to distribution assistant to be more efficient.

(3) Update sales territory periodically.

(4) Use of fuel efficient vehicle to reduce the distribution cost.

(5) Take initiative to reduce the inventory cost.

7.5 Strategy for implementing technology

Incepta practice the following strategy to support the other department for smooth operation.

These are

(1) Implement new technology instead of legacy system

(2) Take initiative cost reduction program to reduce the IT cost

7.6 Selling Strategy

Incepta practice the following strategy to increase the sales in terms of taka and product

quantity. These are

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(1) Take initiative to develop loyal customer

(2) Product diversification to enhance product basket.

(3) Give training to enhance selling and communication skill

7.7 Strategy for quality management

The Quality Assurance of consists of Quality Control, Quality Compliance and Quality

Surveillance. The main tasks and duties of Quality Control have been described in the

Quality Manual and relevant SOPs. The Head of Quality Assurance or his delegates are

responsible for releasing drug substances, excipients, dosage forms and packaging materials.

Quality Compliance is responsible for IPC, GMP co-ordination and training. Performances of

routine GMP checks are done as per need. Monitors to respect GMP regulation in the

manufacturing by instant checks of Batch Record completion, visual checks of cleaning of

working place, line clearance, performance checks of balance & other equipment.

Quality Surveillance is responsible for the implementation of the Quality Management

System in different areas in collaboration with different departments. Quality Surveillance

play active role in conducting external and internal audits with their follow-ups.

Research & Development is responsible for formulation development and method

development, implementing technical transfer to Production and Quality Control, and also

covers process validation, cleaning validation, method validation and follow up stability.

The Quality Manual describes how testing instructions are established and used. The testing

instructions include the specifications and testing methods. The testing instructions are

binding for release testing and for follow-up stability testing.

A routine inspection is being done in the name of "Self Inspection" mainly concerned with

safety, sanitation and infra-structural facilities leading to GMP including documentation.

Supply of raw materials is mainly obtained from approved suppliers. We select and evaluate

the supplier as per procedures. This procedure is also applicable in case of supply of Primary

and Secondary Packaging Materials.

7.8 Change Control Procedure

The Quality Unit along with other appropriate functions are responsible for coordinating

activity in their respective areas to ensure that there is an assessment of all proposed changes

and that approved changes are communicated to all affected parties. They are also responsible

for Change Control Procedures, documentation, evidence and continuous support and

maintenance for implemented changes.

All air conditioning system servicing production and service area required for room air-

conditioning and production processes are designed as per International Standard.

The "Site Validation Master Plan" describes the strategy on qualification and validation

covering Equipment Qualification, Process Validation, Cleaning Validation, Method

Validation, System Validation, Personnel Validation etc

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Training is a routine function. The training needs depend on the function of the employee.

Departmental Manager and Supervisors define the training needs.

A medical policy (health) exists for the employees.

7.9 Corporate Social Responsibility (CSR) for maintaining relationships with customers

Incepta achieved its tremendous commercial success through its honesty and sincerity in

business policies. The company aims to become the Nation's most admired company through

its honest and intelligent approach. Company management strives to support community

where they live and also the nation as far as possible in times of need.

Incepta believes it can thrive only if the nation remains healthy. Incepta gives emphasis to its

practice of Corporate Social Responsibility (CSR) and evidence of this commitment is found

in its dealing with clients, suppliers, employees, Government's and the society at large.

Company CSR activity includes its finances because the company pays tax and VAT to the

Government and also settles bank and suppliers liabilities in a timely fashion and disburses

benefits to employees on time. Incepta considers its employees to be valuable assets and

protects their rights and provides a full range of staff facilities including life insurance and

disbursement of 5% of the company profit to them. Incepta maximizes safety in workplace

for its employees and child labor is strictly prohibited.

As its commitment to society the company donates medicine to the Government Relief Fund

during natural disaster. Incepta also provides financial assistance for expensive treatment

including heart and cancer and disburses its corporate Zakat for relief of distressed people

every year.

Incepta also produces life-saving "import-substitute medicines" at affordable price for the

people of Bangladesh as an expression of true love and compassion for the people. Incepta

strongly believes that commitment towards people and the society as a whole positively

contributes towards its business objective.

8. Some Competitive Advantages of Incepta

8.1 Equipment Facilities for R & D

Incepta have a separate Galenical laboratory for R & D, equipped with all the necessary

machineries & equipments of GMP standard in small scale for the team to develop products.

Analytical development is supported by Quality Control Department. Quality Control

Department is equipped with highly sophisticated instruments like UPLC, Gas

Chromatography, Atomic absorption spectrophotometer, FTIR, etc. A dedicated team is

involved in the development and validation of methods of API, raw materials & finished

products. A highly sophisticated microbiology laboratory has been setup to cater to the need

for quality control of regular products as well as control of all the different biological

products that the company produces.

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8.2 Zirabo plant project

At the Zirabo plant the following activities are carried out

Pharmaceutical Manufacturing – processing and packaging of pharmaceuticals to

supply to the local market and for Export to 3rd parties. Approved suppliers supply

the active substances used in manufacturing. Most of the auxiliaries used for

production are bought from approved third parties.

Logistics, Warehousing – Storing of raw and packaging materials to meet the

requirements of production and also storing and dispatch of finished products as per

concept of Good Storage Practice of pharmaceuticals.

Engineering/Industrial Engineering – In line with pharmaceutical production, health

safety and environmental protection, infrastructure maintenance, machinery and other

maintenance. Effluent treatment and safe disposal of pharmaceutical waste.

Quality Assurance/Quality Control – Quality Control of pharmaceuticals, raw and

packaging materials, reagents and chemicals, plant and personnel hygiene, method

and process validation, and overall quality assurance of pharmaceuticals.

Research & Development – Formulation development and adaptation for scale up

production with process validation,

9. Value Chain

Value chain of integrated cost leadership/ differentiation strategy is illustrated bellow;

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10. Porter’s five forces model:

Rivalry with existing competitors:

Low cost position is a valuable defense against rivals as well as customers tend to be loyal

purchasers of products that are differentiated in ways that are meaningful to them. So, as

incepta follows integrated cost leadership/differentiation stategy Currently the Zirabo plant

consists of several building with state of the art technology. Dedicated cephalosporin

manufacturing building, a specialized manufacturing building for the production of

lyophilized products, insulin and amino acids and newly built liquid and semisolid

manufacturing building and large warehouse is also in operation to compete with the rivals.

Bargaining power of buyers:

Potential customers can force a cost leader to reduce its prices but customers are willing to

accept a price increase when a product still satisfies their perceived unique needs better than a

competitor’ offering can. So in that case, it offers wide range of products - more than 383

molecules in over 700 dosage forms and continually searches for ways to reduce its costs

relative to competitors’.

Bargaining power of suppliers:

In this case, Incepta normally needs high quality of raw materials. So, it driving up the firm’s

cost. But as it is a brand, the high margins the firm earns in these cases partially insulate it

from the influence of suppliers in that higher supplier costs can be paid through these

margins. Sometimes it uses its power with suppliers to extract lower prices from them.

Potential entrance:

High technological equipment, skilled human resource, customer loyalty, and the need to

overcome the uniqueness of differentiated product present substantial barriers to potential

entrance.

Product substitutes:

With its brand name, it positions effectively against product substitutes.

11. Recommendation:

• Strengthen norms, standards and policy options; promote quality of medical products,

vaccines and technologies.

• Efficient procurement systems to combat counterfeit and substandard medical

products, vaccines and technologies.

• Promote good governance and transparency in procurement and medicines pricing.

• Strengthening capacity of drug administration authority.

• Ensure equitable access, rational use and adherence to quality medicine

• Monitor quality and safety of products/vaccines/technologies.

• Establish Active pharmaceutical Ingredients (API) park, which could enable

• Local pharmaceutical companies to produce raw materials.

12. Conclusion

Pharmaceutical companies provide both products and services. Incepta is the most known and

leading pharmaceutical company in our country. Behind every success or failure all activities

are considered the ultimate deciding factor. That is why Incepta always gives high priority in

the overall strategy practices. I think its business strategy in Incepta is competent and

effective enough, but if any problem arises then they should solve it in a proper way.