Strategic Management

Generic Strategy
SUBMITTED TO
Prof. Debdutta Panda
BY

Group-2
Archit More 18A3HP652
Akshita Agarwal 17A3HP469
Bhargesh Patel 18A2HP402
Anubhav Jaiswal 18A3HP624
Himanshu Shekhar 18A1HP055
Osheen Gupta 18A3HP613
Ankur Gupta 18A2HP453
 Broad Market or Narrow Market:
Broad Market- Lupin targets broad market as it operates not only in India but also several other
countries in North America and Asia Pacific which can be seen in the Pie chart below.

It also has a large range of products available to cater the need of the different types of customer,
which can be observed from the following chart.
All the above data shows that Lupin Pharma is a major player of the broader market with a large
variety of medicinal drugs sold for large scale of treatment of diseases in countries all around the
world.

Generic Strategy:
The Compnay follows Cost Leadership Strategy. Factors which indcating this strategy are:
 Net Profit margin of Lupin for the FY 2017-18 is 13% which is low when compared to
other pharma companies like Aurobindo Pharma (17.65%) and Cadila Healthcare
(14.67%).

 Operation Efficiency:
- CII National Lean Six Sigma Award for Operational Excellence in Manufacturing.
- OTIF (On Time in Full) well above 95% in majority of markets. Other metrics like
Forecast Accuracy, Requirement vs Commitments and Adherence to Plan have also
improved.
 - They received the ‘Cardinal Supply Chain Excellence’ award as well as the
prestigious ‘Walmart Supplier of the Year’ for 2017 because of their high degree of
flexibility, speed, reliability and cost efficiency.
- The Company invests in automation of the business operations to continuously
improve efficiencies and reduce costs.
- The Company is investing in the digital strategy, automation and robotics. The focus
of automation is to integrate workflows such as operations, manufacturing and supply
chain as well as to augment their controls with support functions like marketing,
sales, finance and HR.

 Research & Development: The company invests Rs 18.5 billion in R&D and it accounts
for 11.9% of the sales, which is higher than their competitors. Major part of this
investment is made to optimize the production process in order to reduce the overall cost.

 Marketing:
- Lupin’s P2P (principal to principal) business got the first mover advantage when they
tossed several first-to-market products in India and has emerged as a strong and
consistent supplier and partner.
- Lupin holds its leadership position in the Anti-TB finished formulation supply
market. They are the leading supplier to the Global Drug Facility and the Government
of India. Presently, the Company is developing a variety of second line Anti-TB
drugs for Multi-Drug Resistant TB (MDR TB) along with a variety of child-friendly
Anti-TB formulations.
- Above facts suggests that the company is trying to get as much market share as
possible to create brand equity which will further reduce their marketing
expenses.

Labour to Sales Ratio –

Lupin Sun pharma Dr Reddy
Labour 28,647.1 16,176.9 18,430
Sales 155,598.4 79,476 92,468
Labour to Sales 0.184 = 18.4% 0.203 = 20.3% 0.199 = 19.9%
Ratio

Now as we can see from the table above that the Labour to Sales Ratio is the least for Lupin
Pharma than compared to its other competitors which describes that the labour force efficiency is
higher than its competitors which means that the labour force of lupin performs better than other.
Overhead to Cost of Sales Ratio –

Lupin Sun pharma Dr Reddy

Material 52,744 21,675.2 20,110
Labour 28,647.1 16,176.9 18,430
Total COGS 81391.1 37852.1 38540
(material and
labour)
Overhead 45175.30 27141.2 35554
Overhead to Cost of 0.56 = 56% 0.72 = 72% 0.92 = 92%
Sales Ratio

The overhead to cost sales ratio shows a company with insights to growth of overheads as sales
increase over time. So, from the table above we can say that the Lupin is most efficient in
reducing the overhead cost with increase in sales than its other competitors.

These factors clearly explain the reason behind

the increase of sales for Lupin in the domestic
region due to the use of cost-leadership strategy
amidst the challenges in US market which led
to a decrease of overall sales of Lupin from
171,198 million to 155,598 million in FY-2018.