STRATEGIES FOR FIRMS IN EMERGING MARKETS

PROJECT REPORT
ON

COMPARATIVE ANALYSIS BETWEEN ASPEN

PHARMACARE AND LUPINE PHARMACEUTICALS

Submitted to: Prof. Kunal Mankodi

Compiled by:
Jahnavi Soni
1611074

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 Table of Content

Contents
About the Company: ..................................................................................................................................... 3
Institutional Voids faced by the company in home country: ........................................................................ 3
Achievement in domestic Market ................................................................................................................. 6
International Market Achievement ............................................................................................................... 7
Lessons of International market in the home Market.................................................................................... 8
Lesson of Home market in the international market ..................................................................................... 8
Similarities and differences:.......................................................................................................................... 9
Inference for similarities and differences: .................................................................................................... 9
References:..................................................................................................... Error! Bookmark not defined.

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About the Company:

LUPIN PHARMA:
Lupin pharmaceutical was founded in 1968 by Dr. Desh Bandhu Gupta. The aim of Lupin
Pharma was to fight life threatening and infectious disease with affordable and high quality drugs
of the high social priority. Lupin is recognized to be world’s one of the largest manufacturer of
Tuberculosis drugs. It also has significant market share across multiple therapy areas such as
cardiovascular, Diabetology, Asthma, Paediatric, Central Nervous System, Gastro Intestinal,
Anti-Infective and Non-steroidal Anti Infective drugs. Lupin has expanded into various
international markets including USA, Japan, Europe, South- Africa, Philippines and Australia.
USA is the largest market of Lupin. Lupin’s 38% of sales came from USA in 2018.It is USA’s
4th largest Pharmaceutical company. It is serving this market since 15 years. Lupin’s second
largest market is India which contributed 26% in its total sales. It is 5th largest pharmaceutical
company in India. Lupin is tenth largest generic pharmaceutical company by sales in 2015. Asia
pacific contributes to 17% of the global sales. It is sixth largest generic player in Japan. Europe,
Middle East and Africa contributes to 7% of global sales. It has eighteen manufacturing sites
globally. It will be not wrong to deem Lupin as one of the most successful company of emerging
market.
ASPEN PHARMACARE:
Aspen Pharmacare was originally started in 1850 with the name of Lennon ltd. In 1997, business
changed its name to Aspen ltd. Like Lupin, Aspen also has wide global presence. It has presence
in almost 150 countries with business operation in 70 countries. It has presence both in
developed as well as emerging market. Aspen’s business has four primary segments which are as
follow: Regional, Anesthetics, Thrombosis, high potency and cytotoxic, and nutritionals. Its
major revenue comes from the regional brand which is 31% followed by Anesthetics which is
19%, thrombosis which is 15%, High potency and cytotoxic which is10% and Nutritional which
is 7%. Its recent report which is six month unaudited reports mentions that its major revenue
contribution is from sub Saharan Africa which is 24% followed by developed Europe. Emerging
market contributes more than 50% of its total revenue. Its major emerging market includes sub
Saharan Africa which includes countries like Botswana, Kenya, Namibia and Tanzania. This
market is major revenue contributor in Regional brands. 79% of revenue of regional brand is
contributed through this market. Other emerging market in which country has entered include
Latin America; developing Europe which include countries like Russia, Slovakia, Czech
Republic, Romania and Poland; China and Asian countries like Hong-Kong, Philippines,
Singapore and Taiwan. Thus, like Lupin Aspen also has wide global presence.

Institutional Voids faced by the company in home country:

Emerging market face certain kind of institutional voids which can be classified as follow:
 Macro context void
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  Product void
 Labor market void and
 Capital Market void
This section aims to identify voids faced by Lupin and Aspen in India and South- Africa
respectively.
LUPIN PHARMACEUTICAL:
 Price Control: Indian government has set up price control for the drugs which are
of medical important. Thus, companies manufacturing this drugs has to cut down
the cost significantly or has to run their business in losses.
 Generic medicine: Prime Minister Narendra Modi has also proposed to establish
legal framework to prescribe medicines by its International Nonproprietary name
only. This may be disadvantage for the branded drugs.
 Low government spending on the Healthcare: Government spending on the health
care in India is one of the lowest in the world. India only spends 1.46% on
healthcare ranking 187th out of 194 countries. (Ernst & Young Global Limited,
2018). Government assistance in healthcare service is weak in India
 High corruption: India still ranks 78th out of 175 countries. Thus level of
corruption is still high compared to other developed nation.
 Internet speed: India ranks 67th in fixed broadband speed connection and 109th in
mobile internet speed. Which is lower than developed country.

 Fragmented supply chain: Pharmaceutical supply chain in India lacks integration.

Raw material requirement of the company are complex and their availability is far
more scattered.
 Issues with raw material: According to AT Kearny report, issues with quality of
raw material has increased in recent years, which leads to rejection of product due
to lack of quality and increase cost.
 Cold storage facility: Most of the third party cold storage provider do not have
adequate facilities and temperature control system. Certain drugs like vaccine
requires continues monitoring at all level of value chain. But current infrastructure
is inadequate for that.
 Lack of control on distribution network: company deals with large number of
distributors that leads to lack of control and visibility in the supply chain.
 Transportation: National highway handles one third of the traffic, rail network is
inadequate and air network is underutilized

 Curriculum development of pharmacy is not up to the date. The concept taught is

outdated and old. Topic taught has little relevance in the today’s era.
 Registered pharmacist do not have any established norms or competencies or
standard of service.

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  Underpayment of pharmacist: Community pharmacist and private pharmacist are
underpaid and under sixth pay commission they were placed at lowest band
structure.
 High attrition rate in field marketing job. This job profile has high demand. Thus,
employee leave job easily if they get better payment at other firms they will leave
the job easily.

 Inadequate penetration of health insurance coverage: Health insurance coverage

has very low penetration in India. It is expected to be 12.6% in 2017-22.
ASPEN PHARMACARE:
 Single Exit price system: Single exit price system is the system in which any
wholesaler or distributor cannot charge price other than single exit price system.
Also, maximum allowable price increase is set up by government.
 Corruption: South Africa is ranked 73rd out of 175 countries in corruption. Thus,
corruption is higher than many developed countries.
 Internet speed: South Africa ranks 76th in terms of broad band speed. Thus,
internet speed is still much lower than many of the developed nation.
 Immigrants: There are large number of illegal immigrants from the other parts of
sub Saharan Africa which creates tension between local and immigrants. Also this
leads to increase in crime rates
 Complex regulatory Environment: Pharmaceutical industry is one in which there
are lot of regulatory restrictions. This leads to delay in various procedures.
 Land reform: Government has made a norm that maximum land holding for a
people of any nationality can be 12000 hectares.
 Low ranking on ease of doing business: South Africa ranks 82 among 190
economies in ease of doing business ranking of World Bank.
 Logistics: Rail and port capacity shortage is severe problem in Africa. However
government has planned to spend R900 billion by 2027. But, project
implementation is very slow. Major freight takes place through road transport.
Which increases cost of transportation.
 Government Jobs: There are 700 government firms and their payment rises more
than inflation do which creates pressure on the private firms to increase their
salaries.
 High corruption in primary education: South African government received
complain about 1000 principal who have stolen money from school bank account.
Principal post were bought and sold in Africa.
 Lack of education Infrastructure: Government has failed to provide supply of
enough classroom for primary education.
 Lack of teacher education and training: It is common in Africa to see the 10th
grade pass teacher teaching 12th grade. This is because of neglected teacher
raining of black population during Apartheid years.

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  Shortage of health care professional: There is shortage of heath care professional
and also there is maldistribution between public and private employment and rural
and urban employment.
 Low number of pharmacist: Number of pharmacist increased by only 16% since
2007 while number of employment in public sector increased by 147%. Country
lacks at least 12000 pharmacist to meet international standards.
 Low number of universities: There are only 8 accredited university offering B
pharm degree in South Africa.

Achievement in domestic Market

Lupin Pharmaceuticals:
Lupin’s Indian business contributes to 26% of the sales. It is the 5th largest pharmaceutical
company in India. It can be classified as market follower in the Indian industry. Hence, in the case
of Lupin it is not so successful in India as compared to that in international Market. Lupin’s
strategic focus and dependence is more on international market then of domestic market. Lupin
follows niche market strategy and Lupin has created niche by producing certain type of medicinal
drug. It is ranked number one in anti TB drug and number 2 in respiratory drug. It is world’s largest
manufacturer of tuberculosis drugs. Lupin has high qualitative standard and at the same time it
aims to keep its price affordable to majority of the masses and thus we can say that Lupin focuses
on emerging middle class segment of the economy. Lupin focuses on continues innovation and
thus aim to disrupt market through its innovation. It produces both generic as well as branded
medicines. It has also succeed in Indian market because of strategic alliances. Lupin has also been
earliest to enter in Indian market and hence got early move advantage in Indian pharmaceutical
industry. Lupin has manufacturing operations which are spread over various locations in India.
Recently Lupin has faced various issues mainly of price control and generic prescription.
Companies overcome these by keeping price affordable in the Indian market and it also producer
of generic medicine. Company also has vibrant sales field force which helps company to market
its product well. Company achieves long term partnership with its customer which helps it to
sustain its business for long time.
Aspen Pharmacare:
Aspen has wide product portfolio which includes five segment which are regional brands,
Anesthetics, Thrombosis, high potency ad cytotoxic and nutritional brand. Out of all of this
regional brand has performed well in South Africa. Aspen focuses on price affordability and
quality. Thus, we can say Aspen targets emerging middle class segment of market. Aspen has high
manufacturing capacity and Aspen aim to increase its manufacturing capacity with increasing
target to do capital expenditure by 2021. Also company produces niche products with the high
degree of complexity. Company also aims at vertical integration whenever possible to reduce price.
Also company aims for up gradation of older medicine to meet modern regulatory requirement.
Company also has its own distribution network which is adapt strategy for the emerging market
void. Aspen is the largest generic medicine distributor in the Africa. Company has created good

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environment for its employees which attracts knowledgeable staff. The company has invested huge
sums in HIV medicines. Aspen also conducts various CSR activities like Mandela day celebration
which increased its reputation in the African market.

International Market Achievement

Lupin Pharmaceuticals:
Lupin has major international market. Its major revenue contribution comes from the American
market as compared to that of India. America contributes to 38% revenue of Lupin’s total
revenue. Lupin is fourth largest pharmaceutical industry by prescription. It has been dedicated to
deliver superior quality branded and generic medicine. Its strategy in the USA has been
acquisition and the alliance with USA based R&D firms. It has set up manufacturing facilities in
USA. It has established research and development center in the Florida which enable it to
broaden pipeline for controlled substance, Women’s health and other niche products. It has also
acquired other approved brands in USA. Company is also one of the largest generic brand in the
USA. It is ranked 5th in terms of prescription by generic brands. It is number one brand by
market share. It has succeed in USA because of its supply chain management, constant
engagement with trade partners and customers. Its USA business also has successful branded
business for which it has another strategy. For its branded product it targets high value health
care practitioner. It has also entered into other developed markets like Asia pacific in which
contributes to 17% of its total revenue. It is 6th largest generic player in Japan. In Asia pacific
region each faced downturn in its largest market which is Japan where its revenue declined by
1.3% but it experienced increasing growth in the other emerging market of Asia pacific region
which grew by 14% due to increase in government spending. It also has presence in Europe,
middle-east and Africa which together contributes 7% of the total revenue. It also experience
25% growth in Brazilian market. Lupin is fourth largest generic pharmaceutical company in
South Africa. Latin America region has shown significant growth. Its major global success factor
is number one production of Anti Tb drugs, high investment in research and development.
Company spend 11.9% of net sales in research. Company has more than 3000 patent filed
globally.
Aspen Pharmacare:
Aspen has entered wide range of international market which includes both emerging as well as
developed market but primarily Aspen’s major focus has been on emerging markets. It has
objective of growth of emerging market. Major emerging market in which it has entered includes
South African countries like Botswana, Kenya, Namibia and Tanzania. This is the major market
of the Aspen. This market contributes to over 23% of the company’s revenue. Regional drugs
has performed well in this region. Regional brands contribute to 79% of the revenue in this
region. This region is characterized by various kinds of institutional voids such as poor
distribution channel, counterfeit production, lack of infrastructure, and underdevelopment of
logistic facility. Company has succeed in this region by developing its own strong distribution
channel, conducting vertical integration in supply chain management. Also, company has kept its
price affordable so that this markets can afford this drugs. Second major market is Australia and
New Zealand. This are developed nations and does not possess much voids. This market
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contributes 14% revenue to group’s total business. Here company has achieve advantage because
of Niche product development which reduces its exposure to competition. Again in this region
also major contribution is done by regional brands. It has also entered into emerging markets like
Latin America which contributes 10% of the group’s revenue, developing Europe which
contributes 7%, China which contributes 7%. It has minimum exposure to develop nations like
USA and Canada. Its major advantage is diversified geographical market which reduces its risk
and Niche production which reduces competition. It supply chain is also major advantage for
their business. Its minimum exposure to US has also lead to major advantage as many of its peer
company suffers due to changing regulations in the USA.

Lessons of International market in the home Market

Lupin Pharmaceuticals:
Lupin has invested lot of money in Research and development in the developed market.
Company has acquired existing firms from the developed market. Thus, this firm will help the
company to gain knowledge of developed market. Company can utilize benefit of the intellectual
knowledge of developed market workforce to develop new products which can help company to
launch in other emerging market. Company can also learn to improve quality standard and
develop niche product through research and development.
Aspen Pharmacare:
Aspen has mainly diversified into other emerging market with the same kind of institutional void
as faced in its home market. Thus, there is no major difference in the operating procedures.
However, it has also entered into some of the developed market like Australia and New Zealand
from where company can learn to improve its distribution network and up gradation of the product
to meet international quality standards. But, companies strategy is such that company do not have
to do major changes in the operating procedures. And thus only learning which company derives
is the up gradation of the product to meet international quality standard.

Lesson of Home market in the international market

Lupin Pharmaceuticals:
Domestic market of the Lupin has forced it to cut down the cost and reduce the price due to
government regulation of price control. This helps Lupin to achieve efficiency in the production
which gives it advantage in the International market. Also, due to government regulation company
was forced to adopt strategy to promote generic medicine. Which can be marketed in another
countries as well.
Aspen Pharmacare:
Aspen has mainly entered similar markets. Its major market is sub Saharan Africa which has
similar characteristic with that of its home country. Thus it can implement major lessons learn in
its home country to that in foreign market. Aspens efficiency in distribution network and vertical
integration strategy business model can be well implemented in the other South African countries.

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Similarities and differences:
Similarities:
There are various similarities between the two countries in terms of void. Both the economies
feel pressure to reduce price due to government regulation which force them to reduce operation
cost. Both of them has their own niche segment. While Lupin has specialized into Anti TB drugs,
Aspen has specialized into HIV drugs. Both face problem of lingering corruption in the public
sector in their respective economies. Also. Internet speed is low in both the economies. Both
economies face problem in transportation. Major similarity in strategy is both the economies
have focused more on international business rather than domestic business.
Differences:
Major difference can be seen in the international business strategy adopted by both of the
company. While Lupin has focused more on the developed market to grow its business, Aspen
has started with emerging market which has same characteristic which it has. While Lupin’s
revenue contribution is quite concentrated. Aspen has diversified revenue coming from the
diversified economies. Major focus of Lupin has been innovation and thus it spent much on
research and development. On the other hand Aspen’s major focus is on cost and availability of
the medicine and Thus, Aspen spent much on production and distribution of the medicine

Inference for similarities and differences:

Similarities:
As both the companies belong to emerging market which has large number of population with
low income. Both the company feels pressure to reduce price from the government. There are
certain infrastructural challenges which are faced by both the companies. Major reason for
companies to adopt focus on international strategy more is because of the reason that emerging
market, due to high government regulation does not allow to grow much. Companies cannot
increase revenue by increasing price and increasing quantity sold is also difficult as there are
regulation for advertisement which is faced by both the firms. Hence, to conclude both the firms
face high pressure to globalize.
Differences:
Differences in the international strategy can be seen because of the company’s ideology. While
one focuses on growth through innovation other focuses on growth through reduction in risk
through diversification. While Lupin has higher growth prospects as it focuses on developed
market. Aspen has lower risk due to diversified economies. Due to which Lupin’s financial
performance was affected by regulation of USA’s government but Aspen was not affected

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References
Aspen holding. (2018). 2018 Integrated report. Aspen holding.

Ernst & Young Global Limited. (2018). Global anlysis of health insurence in India. E&Y.

Ipharmaadmin. (2018). Regulation and guideline. Retrieved from Indian Pharaceuticle association:
https://ipapharma.org/portfolio/regulations-and-guidelines/

Lupim Pharmaceuticle. (2018). Annual report 2018.

Lupin Pharmaceuticles. (2019). Our world. Retrieved from Lupin: https://www.lupin.com/our-world/

ray, T. (2012). Tapan Ray website on Health care. Retrieved from Tapan Ray website on Health care:
http://www.tapanray.in/nine-major-challenges-constraining-indian-pharmaceutical-industry-
from-taking-a-quantum-leap/

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