Project proposal
Basic manufacturing raw material is still little although some of the MNC’s have been making promises to start manufacturing of the raw material but any significant development in the regard h as not been made due to non availability of raw material and some fiscal anomalies. According to the ministry of health about 80% of the countries druid needs of nit by local production. Including 31, MNC’s there are now 235 companies manufacturing drugs in Pakistan of the total units only 1 unit is in the public
However the industry still depend largely on the raw material and on accurate assessment has yet been made of the countries actual requirement of the drugs according to the heal need of the population. the realistic assessment of the real demand for essential drugs corresponding to the population of health need the govt has decided to commission in depth technical, economic and marketing study and a critical analysis of the existing situation in the pharmaceutical sector with the view to finding ways and means of meeting this demand
Pharmaceutical unit in Pakistan
Punjab 117
Sind 96
NWFP 16
Balochistan 5
Azad Kashmir 1
These units are not providing our domestic need of pharma product. Due to increase in population, lake of health facility, urbanization also increasing which increases our demand for health care facilities and phrama product. Keeping in the view scarcity of the foreign exchange and country’s aim to attain self sufficiently it is imperative to establish more pharmaceutical units in the country.
Mission Statement: -
“ To produce high quality life saving drugs.” We have a human orientation, we believe in saving the ailing humanity by producing high quality life saving drugs. We strongly believe in producing products, which help us in establishing Goodwill, & we achieve this goal by stressing on quality.
Second to serve every one by providing drugs which are either better or at least equivalent in quality as compared to MNCs & having a lower price at the same time. This conjecture of us is evident in our commitment to the Motto” Health for all”
Vision
“The opportunity to make a difference to the lives of billions of people” the key to our successes is our desire and patient to pursuer ZPC’s priorities- expressed by our business
Industry overview: -
Category: Pharmaceutical Company.
There are several Pharmaceutical companies manufacturing medicines in Pakistan. They are providing different life saving & general drugs.
Plant capacity:-
It depends upon the sections of different drugs, different dosages form. But for a tablet section or for a new plant; we require minimum capacity of 4 canals
(80 Marlas) Witch is as under but better one is 10 canals (200 marlas).
1 Raw material store.
For the proper handling of raw material there must be a raw material store it should contain proper temperature control system it contains four rooms. 1st room contain ranks where packets of raw material places
2nd a dark room where sensitive chemicals are placed due to their high effectiveness. 3rd room is properly maintained for humidity control. 4th Assistant control room a room where record of raw material is placed it contains a computer software for the proper handling of raw material.
2 Main Production area.
Here the raw material is converted into the final products. Here all the required machinery is installed.
Which have following sections
a. Granulation area.
It consists on three rooms.
b. Compression area.
It is consists on two rooms.
c. Coating section.
It is consists on one room.
3 Packing material store.
The medicines are stored in this store before packing.
4 Finish goods store.
The final material is stored in storeroom where the temperature control system is available here it has three roams.
I. first room is for the medicines which are final and verified by the QC team.
II. The second room is for the medicines which have been rejected by the QC
and it is placed here and remove to the production department.
III. Record room is for the record of packed medicine, so a computer room is here.
5 Quality control lab.
1-Chemical room.
Chemicals are placed in this room under the required temperature
2-Laboratory.
The proper tests of the products are take place in the laboratory by the QC pharmacists.
3-Instrument room.
The equipments are also placed in this room, which are necessary for the tests.
4-Packing hall.
Packing of products is performed in a room where the temperature is also controlled with equipments and machines females do this activity.
Raw material Inputs: -
These items are imported from different countries.
Ø USA.
Ø Russia
Ø China
Ø India
Ø Japan
Ø Germany
Location: -
The site preferably should be in industrial Zone or enter in rural area not too much for from the city. Where transportation cost is cheaper and where raw material is easily received.
Human Resource: -
It always depends upon the capacity of plant or depends upon work position.
Structure of human source: -
It depends on section work. Tablet section requires almost 7 to 8 persons. All these working cost depends upon their skill.
`
(i) G-M
(ii) Assistant Manager.
(iii) Plant Manager.
(iv) Production Manager
§ QC Manager
§ QC Assurance
(v) Assistant production Manager
(vi) Section Pharmacist.
(vii) Section Supervisor.
(viii) Workers.
(ix) Technicians + electrician + painter
Feasibility report
Machinery Estimated cost
(1) Mixer 200,000
(2) Fluid Bed dryer 400,000
(3) Oscillatory Granulator 100,000
(4) ZP-19 (Compression) 500,000
(5) Final mixer 100,000
(6) Coating pan 100,000
(7) Polishing pan 125,000
(8) Blister machine 600,000
Duration of Factory construction: -
Estimated time of factory construction is 6 month. It is minimum time to construct but our workforce take 9 to 10 month to construct the building infrastructure.
Installation of machinery: -
The estimated time to install machinery is 3 months. This installation task can be achieved with help of engineer and pharmacist work together
Duration to start production: -
The estimated time is after all to start production completed in 3 months, which is the minimum time to start production.
(1) Issue of License.
The Ministry of Health sends its Inspection team. They check the
§ Site
§ Building
§ Infrastructure,
§ All the Equipments
§ Machinery
§ Proper production conditions.
Those conditions are following,
Ø Air handling system.
Ø Dust colleting system.
Ø Plan floor roof
Ø Germ free area
Ø Humidity control system.
Ø Emergency exit.
Ø Water supply.
Ø Air filtration.
Ø Proper draining system
Ø Fire saving system.
Ø Wastes drainage system.
Ø Emergency Security system.
Ø Temperature control system
If firm can’t fulfill these conditions the inspection team rejected the license application. If firm fulfill these conditions the inspection team met to GM & Its assistant pharmacists. When they approved all the requirements then they issued the License.
(2) Permission of production.
The Pharmacists produced the first badge of products under the supervision of quality control Management. Then these products are sending to the Ministry of health. The Inspection team then checked the products. They fulfilled all the requirements & specifications. Then they verified our products & Ministry of health gave us the permission to go for production.
Final products: -
It depends upon the will of manufacturers, which he wants to manufacture, but should be registered products.
Product quality: -
Products should be manufactured according to the CGMP (current good manufacturing)
Product size: -
It depends upon the demand of market. How much the potential is present in the market It depends upon the registered products & their quality & depends upon the marketing management how much order it can take from the market.
Offices: -
Ø G.M Office
Ø Assistant G.M Office
Ø Accounts& Finance office
Ø General big hall for employee cabins
Ø QC Manager office
Ø Assistant QC & production manager office
Ø Conference hall
Ø Reception office
Ø Guest room
Ø Repair & maintenance work shop hall
Ø Marketing office in the city.
Comparative advantage: -
Ø Market share.
Ø Product quality:
Ø Customer loyalty:
Ø Competition capacity:
Ø Technological know-how.
Ø Control over supplier & distributor.
Market share:
In medicines market the producers & suppliers bargaining power is very high and on the other side the buyers bargaining power is very low so when the demand of Pharma products is high then it is easy to get the market share in the market. In other words we have a large capital intensity, growth potential, financial stability.
Product quality:
The main aim is to maintain the quality of our products. It will start from gross root level
We have proper handling of raw material. This raw material is imported & improved quality. Our raw material handling conditions are of high quality particularly the temperature &humidity control system, Dust colleting system.
Customer loyalty
We have to build goodwill by producing high quality assured products to satisfy our customer& by giving him required order on time & with price lower than competitor or equal price but with some incentives like free handling of order.
Technological know- how
Our machinery is imported and having a capacity of high productivity & the workforce is high trained to know how to use the equipment efficiently ,particularly our pharmacists & QC Department is very efficient and full knowledge to use all the equipment. So because of these reasons our products quality is very high& our cost of production reduces.
Competition capacity
We have large capital capacity. We have easy to enter into the market because of our product quality and relative prices .The imported machinery increases our growth potential. Our financial potential is stable and our profit potential is also maintained. So that is the reason our competition capacity is in better condition.
Michal E. Porter’s Model
In context of all the pervious detail given, now it is easy for us to further understand the structure of pharmaceutical industry. Vow we apply the Michal e porter’s model of “Structural analysis of industries”
Suppliers bargaining power
Almost all of the raw material used for manufacturing the drugs is imported from foreign countries. Also some of the compounds are under ‘patents ‘. So the suppliers have got a strong bargaining power in this industry (in Pakistan). On one side drug supply us must for human being. On the other hand, we are not making raw material of drugs in our country. Also the govt. has imposed regulatory duty upon the import of raw material and this is probably the only example over the world. also R&D cost for self-reliance are very high and even bank here are not ready to support such programs.
Buyers bargaining power
Naturally a person bearing pain or some disease cannot escape from the purchase of medicine. On one side the doctor’s fee is very high. On the other side buyer is unaware of the substitutes of the drugs prescribed by the doctor. In any case buyer is indifferent in prices of drugs and the cure of pain. But he has to buy. And that’s the point upon which most of cheap minded manufacturers and retailers exploit the buyer.
Potential entrants
Since competition is high. But it is only for those who work under license and have to follow quality control measures. Those who don’t go into the game of branded products have got more liberty and can sell at low price. so such producers are big danger for the branded companies, currently if the same policy of ‘branded products’ goes on then the entry for those who want to come in the industry on the basis of differentiation will remain tougher. But the situation can be better if govt. puts an iron hand on quacks. In fact, there is an uncertainty prevailing for ling. It all depends upon the future drug policies of the govt. although the market and the non –stabilizing pricing policies of govt. It is difficult for even already existing National companies
Threat of substitutes
If we speak of only essential drugs. There are 821 generic drug name (basic compounds) include in the national formulae. So the basic compounds are same. Now the only differ3ece is that which company is more successful in promoting its brand by winning the perception of the buyer. Definitely, the substitute of costly medicine is low cost medicine prepared with the same basic compound. The second important thing is the quality of product and this is the only thing upon which the competitors can fight. The next control is patent rights. Further do some companies on thesw basis of R&D. generate the ‘patent formulas’ but definitely MNC’s are most advanced in their efforts of R&D and quality control. That’s are to work in m0onoploistic mode. Also being the major suppliers of the essential drugs the even manipulate the govt. policy decisions using their hidden powers.
Rivalry among existing firms
A mentioned above there are total 235 registered companies. Out of there 31 are MNC’s and 204 are NCs. There are 15188 registered drugs based on only 971 compounds. Out of these basic in approx 3000 drugs. All the other 12000 drugs are made from the remaining 150 compounds and are less in demand. There is fierce competition between the 31 MNC’s for the top 100 basic compounds, which represent the controlled drugs and are high in demand
The share of national companies of total sale is only 39% and share of MNC’s of total sale is 61%. Now we also see the share of the price-controlled products of the total sales is 72% and that of decontrolled products is 28%. From this data it is easy that MNC’s not only have their overall high share of total sales but have also captured the major segment of the market of essential drugs, the product high in demand. This clearly shows the monopoly of MNC’s and their power to exploit the market and govt. Under this situation, when general public has also good perception about quality of MNC’s products, the life becomes difficult for national companies.
Swot analysis
Strengths
Research and development is one activity performing to get a competitive edge on its rival in market. The formulation has undergone successful in different countries. The R&D division coordinates with the prestigious institution like the H .E. J. Research institute of chemistry and Pakistan council of scientific and industrial research for the guidance and assistance of its new products for the different diseases.
Our firm is basically a quality conscious company and achieve its quality objectives follow a comprehensive and well designed system of quality assurance incorporating good manufacturing process (GMP) and good laboratory practices (GLP).
Our firm developed a house computer package for batch analysis, complaints and tracking. The quality control of our firm outstanding facilities, equipped with most instruments, developing trained and qualified personnel.
One of our main strength is measures pertaining to hygienic environment which is evident from the fact that don’t even allow any one to smoke in factory premises
Manpower training being the essence of a good TQM system is given due importance. Through in house and outside training sessions they insured that their key personnel remain breast of the latest concepts of quality assurance
Opportunities
Govt provided the facility to the Pharma investor to invest in that industry to that provided better health facilities provided by the public. That reduce the tax on imported raw material the result that produce the medicine at cheaper the net effect on that public has low price medicine but a standardized medicine.
Banks are provided the funds at cheaper interest rate and under soft condition. That the result is that going to established more production units that we suggested in future like injection production units, syrup production units.
Weaknesses
High cost product with relevant to the competitor countries like china and India. They are major competitor of Pakistan on international level, the price and quality of our product is not under the international standard
To much manual work under the accounts department the result is lot of corruption will be expected and human is blend of errors no one can perform the perfect work
Our firms working team is not experience as compare to the market competitor. The result is in non-consistence in strategies. Mostly working is going to the experimental not 100% accurate
Threats
Since 93% of the raw material is imported therefore the suppliers can exploit the buyer due he inelastic demand of Pharma raw material
The fast devaluation of pak. Rupee has caused a swift increase in price of imported material and is a potential threat in the future as well.
The prices of oil has incremental trend the net result is costly the every product or it is domestic or imported the effect on raw material of Pharma also shows the price of raw material increasing.
Govt drug policy can be a threat e.g. an announcement of Generic Drug Policy, which can eliminate the Branded, drugs Marketing and Companies become bound to sell the drugs with their actual chemical name.
Organizational structure
Authority structure.
All the power and authority is accumulated at the top and the directors with minimal authority being delegated to the GM .Upward communications not straightforward and it has to follow set patterns and the information that reaches the top in our opinion is filtered. This communications has more flexible routes, meaning that there are not many levels from which it has to past through, for example the assembly lines workers are free to communicate any problems faced by them to the production. Manager by passing couple of levels (supervisor & asst. manager).
Balance sheet
| Assets | 2008 | 2007 | 2006 |
| Fixed Assets | |||
| Operating Fixed Assets | 12000000 | 13500000 | 15000000 |
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|
| |
| Current Assets |
|
|
|
| Account Receivables | 6387500 | 5206666 | 3905000 |
| Cash and Bank balances | 1825000 | 1460000 | 1095000 |
| 8212500 | 6666666 | 5000000 | |
| Total Assets | 20212500 | 20166666 | 20000000 |
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|
|
| Equity and Liabilities |
|
|
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| Owners Equity | 15000000 | 15000000 | 15000000 |
| Profit or Loss | 376564 | (93507) | (496980) |
| Current Liabilities |
|
|
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| Creditors, Accruals and Liabilities | 4835936 | 5260173 | 996980 |
| Total Liabilities & Equity | 20212500 | 20166666 | 20000000 |
Income statement
|
| 2008 | 2007 | 2006 |
| Sales- Net | 18250000 | 14600000 | 10950000 |
| Cost of goods sold | 15900000 | 12720000 | 9540000 |
| Gross Profit | 2350000 | 1880000 | 1410000 |
| Selling, admin. And Distribution Expenses | 1830000 | 1896532 |
1844737 |
| Operating Profit | 700000 | (16532) | (434737) |
| Other Charges | -72394 | -76975 | -62243 |
| Profit before Taxation | 627606 | (93507) | (496980) |
| Taxation | 251042 | 0 | 0 |
| Profit / (Loss) after Taxation | 376564 | (93507) | (496980) |
Break-even point
Sale=fixed expense+ variable expense +profit
7.3x=15000000+1.3x+0
7.3x-1.3x=15000000
X (7.3-1.3)=15000000
X=15000000/6
X=2500000 units
Cost production=6.36/ unit
Variable cost=1.3/unit
Selling cost=7.3/unit
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