2020

Managerial Decision
Sun Pharmaceutical Industries Ltd.

NAME : Sufyan shaikh

CLASS : 5908
DIV : SYBMS
ROLL NO : B

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 Managerial Decision
INTRODUCTION
Sun Pharmaceutical Industries Limited is an
Indian multinational pharmaceutical company
headquartered in Mumbai, Maharashtra, that
manufactures and sells pharmaceutical
formulations and active pharmaceutical
ingredients (APIs) primarily in India and the
United States. The company offers
formulations in various therapeutic areas, such
as cardiology, psychiatry, neurology,
gastroenterology and diabetology. It also
provides APIs such as warfarin, carbamazepine, etodolac, and clorazepate, as well as anti-
cancers, steroids, peptides, sex hormones, and controlled substances.

Sun Pharmaceuticals was established by Mr. Dilip Shanghvi in 1983 in Vapi, Gujarat, with five
products to treat psychiatry ailments. Cardiology products were introduced in 1987 followed
by gastroenterology products in 1989. Today, it is the largest chronic prescription company in
India and a market leader in psychiatry, neurology, cardiology, orthopedics, ophthalmology,
gastroenterology and nephrology.

The 2014 acquisition of Ranbaxy has made the company the largest pharma company in India,
the largest Indian pharma company in the US, and the 5th largest speciality generic company
globally.

Over 72% of Sun Pharma sales are from markets outside India, primarily in the United States.
The US is the single largest market, accounting for about 50% turnover; in all, formulations or
finished dosage forms, account for 93% of the turnover. Manufacturing is across 26 locations,
including plants in the US, Canada, Brazil, Mexico and Israel. In the United States, the company
markets a large basket of generics, with a strong pipeline awaiting approval from the U.S. Food
and Drug Administration (FDA).

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Sun Pharma was listed on the stock exchange in 1994 in an issue oversubscribed 55 times. The
founding family continues to hold a majority stake in the company. Today Sun Pharma is the
second largest and the most profitable pharmaceutical company in India, as well as the largest
pharmaceutical company by market capitalisation on the Indian exchanges.

The Indian pharmaceutical industry has become the third-largest producer in the world in terms
of volumes and is poised to grow into an industry of $36.7 billion from $20 billion in 2015. In
terms of value India still stands at number 14 in the world.

In 2009 Sun Pharma's Caraco Pharmaceutical's plant in Detroit was closed due to unsanitary
conditions resulting in the seizure of $20 million of drugs by the FDA for contamination issues.

In December 2016 the FDA sent Sun a warning letter about nine violations at its manufacturing
plant in Halol.

Sun Pharma requested USFDA to withdraw approval for 28 Abbreviated New Drug Applications
(ANDAs) belonging to its wholly owned subsidiary Ranbaxy Laboratories.

Acquisitions and Joint Ventures

 Sun Pharma has complemented growth with select acquisitions over the last two decades.
In 1996, Sun purchased a bulk drug manufacturing plant at Ahmednagar from Knoll
Pharmaceuticals and MJ Pharma's dosage plant at Halol that are both U.S. FDA approved
today. In 1997, Sun acquired Tamil Nadu Dadha Pharmaceuticals Limited (TDPL) based
in Chennai, mainly for their extensive gynaecology and oncology brands. Also in 1997,
Sun Pharma initiated their first foray into the lucrative US market with the acquisition of
Caraco Pharmaceuticals, based in Detroit.In 1998, Sun acquired a number of respiratory
brands from Natco Pharma. Other notable acquisitions include Milmet Labs and Gujarat
Lyka Organics (1999), Pradeep Drug Company (2000), Phlox Pharma (2004), a
formulation plant at Bryan, Ohio and ICN, Hungary from Valeant Pharma and Able Labs
(2005), and Chattem Chemicals (2008). In 2010, the company acquired a large stake in
Taro Pharmaceuticals,[14] amongst the largest generic derma companies in US, with
operations across Canada and Israel. The company currently owns ~ 69% stake in Taro,
for about $260 million.

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 In 2011, Sun Pharma entered into a joint venture with MSD to bring complex or
differentiated generics to emerging markets (other than India).In 2012, Sun announced
acquisitions of two US companies: DUSA Pharmaceuticals, a dermatology device
company; and generic pharma company URL Pharma In 2013, the company announced
an R&D joint venture for ophthalmology with the research company, Intrexon.

 On 6 April 2014, Sun Pharma announced that it would acquire 100% of Ranbaxy
Laboratories Ltd,[19] in an all-stock transaction, valued at $4 billion. Japan's Daiichi
Sankyo held 63.4% stake in Ranbaxy. After this acquisition, Sun Pharma has become the
largest pharmaceutical company in India, the largest Indian Pharma company in US, and
the 5th largest generic company worldwide. In December 2014, the Competition
Commission of India approved Sun Pharma's $3.2 billion bid to buy Ranbaxy
Laboratories, but ordered the firms to divest seven products to ensure the deal doesn't
harm competition.]In March 2015, Sun Pharma announced it had agreed to buy
GlaxoSmithKline's opiates business in Australia to strengthen its pain management
portfolio.

 In 2007, Sun Pharma demerged its innovative R&D arm, and listed it separately on the
stock market as the Sun Pharma Advanced Research Company Ltd. (NSE: SPARC, BSE:
532872). In 2013, SPARC declared revenue of Rs. 873 million.[23] SPARC focuses on
new chemical entities (NCE) research and new drug delivery systems and offers an
annual update[24] of its pipeline (NDDS).

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 SUN PHARMA BOARD AND FOUNDERS OF THE
COMPANY
Israel Makov. [CHAIRMAN]

Mr. Makov is the former President & CEO of Teva Pharmaceutical Industries Ltd (2002-
2007). Among Israel’s most respected corporate leaders, he is widely credited with turning
Teva into the world leader in generic pharmaceuticals.Prior to joining Teva, Mr. Makov led
a number of companies in various industries, and founded Israel’s first biotech company,
Interpharm, which later went public in the US.Mr Israel Makov is Chairman of SUN
Pharmaceutical Industries Limited—the world’s 5th largest specialty generic pharma
company and Chairman of Micromedic Technologies Ltd.—a cluster of companies
engaged in cancer diagnostics.

Mr. Makov is the former Chairman of Given Imaging – the developer and world’s leading provider of capsule
endoscopy and Netafim—the pioneer and global leader in smart irrigation solutions.Mr Makov is a member of the
Board of Directors of the Israel National Nanotechnology Initiative, an initiative he also helped found.  He is a
member of the International Board of the Weizmann Institute of Science, on the Board of Governors of the Technion
– Israel Institute of Technology and President of the Friends of Schneider Children’s Medical Center of Israel.  Mr.
Makov is also Chairman of the Friends of Gesher Theatre, one of Israel’s leading theaters.Mr. Makov has a B.Sc. in
Agriculture and an M.Sc. in Economics from the Hebrew University in Jerusalem.

Sudhir V. Valia.[NON-EXECUTIVE AND NON-INDEPENDENT DIRECTOR]

Member of the Institute of Chartered Accountants of India and carries more than three
decades of experience in taxation and finance. He has been a director of Sun Pharma since
the inception of the company and is also on the board of Taro Pharmaceuticals Ltd.

Mr. Valia has won CNBC TV18's CFO of the Year award in the Pharmaceutical and
Healthcare Sectors for two consecutive years (2011 and 2012). He has also been awarded
the Adivasi Sevak Puraskar (2008-09) by the Government of Maharashtra for his
contribution towards the welfare of tribals, particularly in the field of education in his
capacity as Director of the Shantilal Shanghvi Foundation.

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Sailesh T. Desai. [EXECUTIVE DIRECTOR]

Sailesh T.Desai has more than 28 years of industrial experience, 18 of which

have been in the pharmaceutical industry. Mr. Desai has had comprehensive
corporate affairs experience, being involved in the turnaround at Milmet
prior to Sun Pharma’s acquisition as well as in the early stages of the
company's growth. He holds a BSc degree from the University of Calcutta.

Kalyanasundaram Subramanian. [EXECUTIVE NON-INDEPENDENT DIRECTOR]

Kalyansundaram Subramanian ('Kal'), (born in February, 1954) joined Sun Pharmaceutical

Industries Limited ('Sun') in January 2010 after 22 years with GSK.Kal is a Chemistry
graduate and a Chartered Accountant from India with 37 years of experience. He has over
three decades of experience in the pharmaceutical industry.Mr. Kal's career in the pharma
industry began when he joined Burroughs Wellcome, in New Zealand as Commercial
Advisor in 1988. In his long association with Burroughs Wellcome (which was acquired by
Glaxo to become GlaxoWellcome and finally GlaxoSmithKline) he has held various
leadership positions including Vice President, Head of Classic Brands Business of Emerging
Markets; Area Director South Asia & Managing Director, GSK India; Managing Director –
GlaxoWellcome, Singapore (Singapore, Indochina & Myanmar) & Commercial Director - Burroughs Wellcome,
New Zealand.

In January 2017, Kal moved back to India to manage India and EM regions of Sun and has also been appointed as
the CEO & whole-time Director of Sun Pharma Laboratories Limited, a wholly-owned subsidiary of Sun.

Vivek Chaand Sehgal. [Non-Executive Independent Director]

Mr. V. C. Sehgal is the Chairman of Samvardhana Motherson Group (SMG). He established

Motherson in 1975 with an approximate equity of USD 17 and started a cable and wire
manufacturing unit in 1977. Today SMG is a USD 9.1 billion (approx.) Group present in 37
countries with over 230 facilities across the globe. Motherson Sumi Systems Limited
(MSSL), the flagship company of the Group, is now one of the largest auto ancillary
companies in India. The Group has a diversified product range covering wiring harnesses,
rear view mirrors, integrated plastic modules, lighting systems and a wide range of modules
and components. The Group today is one of the leading suppliers of rearview mirrors

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globally & the leading supplier of polymer modules in Europe along with market leadership positions in most of the
other product verticals in India.

Rekha Sethi [Non-Executive Independent Director]

Director General of the All India Management Association (AIMA), the apex body for
management in India. She took charge of AIMA in June 2008. She is a member of the Indo-
Netherlands Joint Working Group on Corporate Governance and Corporate Social
Responsibility set up by the Ministry of Corporate Affairs, Government of India. She is also
a member of the Advisory Board of the Switzerland based St Gallen Foundation think tank,
Leaders of Tomorrow – Knowledge Pool. Prior to joining AIMA, Ms. Sethi had worked
with the Confederation of Indian Industry (CII) for over 17 years.

Ms. Sethi graduated in English Literature from St Stephen’s College, Delhi, and has a post-graduate diploma in
Advertising and Marketing.

Gautam Doshi. [Non-Executive Independent Director]

a Chartered Accountant and Masters in Commerce, has been in professional practice for
over 40 years. He advises various industrial groups & families and also serves as director on
boards of public listed and unlisted companies.Mr. Doshi has more than 40 years of
experience in wide range of areas covering Mergers and Acquisitions, Direct, Indirect and
International Taxation, Transfer Pricing, Accounting and Corporate and Commercial Laws.
He has been actively involved in conceptualizing and implementing a number of mergers
and restructuring transactions both domestic and cross border, involving many of the top 20
listed companies on the BSE as also those forming part of FTSE 100.A prolific speaker,  Mr
Doshi has addressed several seminars and conferences within and outside of India and courses organized by the
Institute of Chartered Accountants of India, International Fiscal Association, other professional bodies and
Chambers of Commerce.

He has served on the Councils of Western Region as also All India level of the Institute of Chartered Accountants of
India which has the task of development and regulation of profession of accountancy in India. During his tenure on
the Council, he served on several committees and contributed significantly to the work of Board of Studies which is
responsible for education and system of training of students. He also served as Chairman of Committees on direct
and indirect taxation.

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 FOUNDER OF SUN PHARMA

Dilip Shanghvi is the founder of Sun

Pharmaceutical Industries Ltd. and has
extensive industrial experience in the
pharmaceutical industry. A first generation
entrepreneur, Mr. Shanghvi has won
numerous awards and recognitions,
including Forbes’s Entrepreneur of the Year
Award (2014), Economic Times’ Business DILIP SHANGHVI
Leader of the Year (2014), CNN IBN’s Indian of the Year
(Business) (2011), Business India's Businessman of the Year (2011) and
Ernst and Young's World Entrepreneur of the Year (2011). He has also
been awarded the Economic Times' Entrepreneur of the Year (2008),
Business Standard’s CEO of the Year (2008) and CNBC TV 18's First
Generation Entrepreneur of the Year (2007).

Mr. Shanghvi is also Chairman and Managing Director of Sun Pharma

Advanced Research Company Ltd., and Chairman of the Shantilal
Shanghvi Foundation. He holds a B.Com degree from the University of
Calcutta.

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 SUN PHARMA GLOBAL RANKING

Ranking where listed Year Position

Top 50 Global Pharma Companies 2019 35
By Pharmaceutical Executive
Top 50 Global Pharma Companies 2018 30
By Pharmaceutical Executive
World's Most Innovative Companies 2018 96
By Forbes
Top 50 Global Pharma Companies 2017 30
By Pharmaceutical Executive
Top 50 Global Pharma Companies 2016 31
By Pharmaceutical Executive
Top 50 Global Pharma Companies 2015 32
By Pharmaceutical Executive
World's Most Innovative Companies 2015 71
By Forbes
Top 50 Global Pharma Companies 2014 48
By Pharmaceutical Executive
World's Most Innovative Companies 2014 65
By Forbes

INTERNAL ENVIRONMENT OF SUN PHARMA

 PLANNING STRATEGY:
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Mission:To provide good health and happiness for all. They believe in utilizing
modern science to bring out the essence of nature and provide effective and high
quality medicines at affordable prices.

Vision:With the prime objective of good health to all, they aim to be amongst the
top ten Generic Pharma and OTC players in India in the span of next ten years.
They intend to achieve this with the help of strategic growth and stringent quality
measures.

 Creating sustainable revenue streams

 Enhancing share of speciality business globally.
 Achiveing differentiation by focusing on technically complex products.
 Focusing on key markets –achiving critical mass
 Improvising speed to market
 Ensuring sustainable compliance
 Business development
 Using acquisitions to bridge critical capability gap
 Focusing on access of product,technology and market presense.
 Ensuring acquisitions yield high return investment.
 Focusing on payback timelines

 Core leadership
 Vertically integrated operation.
 Optimize operational cost.
 Balance profitability and investment for future
 Incrasing the contribution of speciality and complex products.
 Future investment directed towards differentiated products.

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  Organizational structure
Sun pharma follows a functional unitary structure
 Structure around a CEO and limited corporate staff.
 Activities are grouped together by common function.
 Each functional set have different set of duties and responsibility
 Specialization is built into the organizational structure.

Various organizing teams are:

 An wide range of specialist and world class doctor.

 Financial audit teams.
 Operational team.
 The R&D centers are supported by around 2000 scientist and cutting edge
technologies.

SWOT ANALYSIS

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  STRENGTHS
 Company with Low Debt
 Company with decreasing Promoter
pledge
 Near 52 Week High
 Annual Net Profits improving for last
2 years
 FII / FPI or Institutions increasing their shareholding
 Strong Momentum: Price above short, medium and long term moving
averages

 WEAKNESS
 MFs decreased their shareholding last quarter
 Decline in Net Profit (QoQ)
 Decline in Quarterly Net Profit (YoY)
 Decline in Net Profit with falling Profit Margin (QoQ)
 Decline in Quarterly Net Profit with falling Profit Margin (YoY)
 Degrowth in Quarterly Revenue and Profit in Recent Results
 Declining profits every quarter for the past 4 quarters
 Major fall in TTM Net Profit
 Recent Results : Fall in Quarterly Revenue and Net Profit (YoY)

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 OPPORTUNITIES
 Brokers upgraded recommendation or target price in the past three months
 RSI indicating price strength

 THREATS
 Red Flags: Firms linked to ongoing regulatory investigations/legal cases
 Profit to Loss Companies
 Increasing Trend in Non-Core Income
 Stocks with high PE (PE > 40)

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 CURRENT FINDINGS AND UPCOMING CHANGES IN
THE MARKET

Sun Pharma trials plant-derived drug to treat Covid-19:

India-based Sun Pharmaceutical Industries has launched a Phase II clinical trial of
plant-derived (phytopharmaceutical) drug AQCH to treat patients with Covid-19.

The company secured the Drugs Controller General of India (DCGI) approval for
the trial in April this year.AQCH is being developed for the treatment of dengue.
The drug demonstrated broad antiviral effect in-vitro and is being assessed as a
potential Covid-19 treatment.

Sun Pharma has been working with DBT-ICGE and CSIR-IIIM since 2016 for the
development of a phytopharmaceutical drug for dengue.

CSIR director general Dr Shekhar Mande said: “CSIR has had a long-standing
association with the pharmaceutical industry in India and welcomes this
collaboration with Sun Pharma in taking forward AQCH into clinical trials for
Covid-19 patients.

“This collaboration aligns with our scientific rationale for the quickest way to
develop drugs against SARS-CoV-2.”

The Phase II clinical trial will be performed in 210 Covid-19 patients at 12 centres
across India. The treatment duration for patients will be ten days, with results
expected by October this year.

AQCH has already completed human safety study, where it was observed to be
safe at the recommended dose for Phase II trial.

Sun Pharma managing director Dilip Shanghvi said: “This is the first
phytopharmaceutical drug approved for clinical trials by the DCGI as a potential
treatment for Covid-19. AQCH has shown anti-SARS-CoV-2 effects in in-vitro
studies conducted in collaboration with ICGEB, Italy.

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“These results combined with information on mechanism of action through in-vitro
and small animal studies give us the confidence to evaluate this potential treatment
option for Covid-19 patients.”

Last week, Sun Pharma secured approval from the DCGI to conduct a clinical trial
of pancreatitis drug Nafamostat Mesilate to treat Covid-19 patients in the country.

The drug has approval in Japan to improve acute symptoms of pancreatitis and
treat Disseminated Intravascular Coagulation (DIC).

Sun Pharmaceutical Industries Advance chart of stock of recent 3 mounths:

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 History Prices :

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 CONCLUSION

As sun pharma being a leading pharmaceutical company,it needs to work on its

drawbacks to retain its market share in global market.

 As sun pharma has acquisition based growth,many a times the organization

fails to recover back its cost.so they should have a market research team
which can give them an overall idea regarding the firms which they can plan
to acquire.
 Sun pharma is a global leader in the pharmaceuticals industry but it lack
presense in the European market. So in order to extend its reach the
company can tie up with medium scale pharmaceuticals companies of
European market.
 Product differentiation and innovation also play a key role in order to
compete with other companies.

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