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ECONOMIC ANALYSIS

OF
PHARMALINK LABORATORIES

Group Members
Ankita Agarwal (61)
Aditi Gupta (71)
Richa Ladha (81)
Deepak Patil (91)
Pinkesh Shah (101)
Shweta Singh (111)
Content
1.Pharma Industry
2. Overview
3. Type of firm
4. Process of production
5. Demand and its attributes
6. Type of demand
7. Demand curve
8. Sources of Supply
9. Supply & its determinants
10.Cost & cost analysis
11.Break even point analysis
12.Price elasticity
13.Market & competitors
14.SWOT Analysis
15.Conclusion
Pharma Industry
• The domestic pharma industry
continues to grow at 11-12 %
• The global average of five-six
percent
• Vision 2015 statement indicates an
18 percent plus CAGR for the
Pharma sector
• Indian pharma industry is 4th largest
in volume terms& 13th in value
terms (US Dollar)
Overview
• Manufacturing of Pharmaceutical specialties
• Established in year 2000
• Core product is Aspirin tablet & its brand name is
Curepill
• Liquid orals, Ointments and Capsules
• Maintaining high quality norms at all levels are
strictly adhered
• Domestic and overseas clients
• Competitive pricing policies and service oriented
approach.

cont…

• The factory is Located at Vasai (E), it’s an Industrial


Complex
• Qualifies all the norms and regulations of hygiene as
space as set forth by the
– Schedule M of Drugs & Cosmetics Act, 1940
– GMP norms set by the FDA
• Mr. Gopal T. Agrawal, Managing Director of the
Company


Firm

 Pharmalink Pvt. Ltd.


• Owned by Mr. Gopal Agrawal
• Sole Proprietorship Firm
• Sources of Finance: Self-financed


Process of Production
q Dry-granulation or slugging
q Weighing
• The Acetylsalicylic Acid, the active ingredient, and the lubricant are
weighed separately.
q Mixing
• Mixing is done in Glen Mixer. The mixture is then mechanically separated
into units which are called slugs.
q Dry screening
• Small batches of slugs are forced through a mesh screen by a hand-held
stainless steel spatula.
• Large batches are filtered through Fitzpatrick mill.
q Compression
• The mixture is compressed into tablets
• Single-punch machine (for small batches)
• Rotary tablet machine (for large scale production).
Attributes of Demand
• Demand is relatively inelastic
• Price : Rs.15 (for 10 strips*10 tablets)
• Point of time
• Market: African countries like Nigeria, Ghana
• Quantity: bulk


Type of Demand
• Direct Demand :

– Curepill is a direct demand because commodity


demanded by final consumer are for their own sake.


• Complementary demand:

– it creates a complementary demand for Vitamin B


capsules.
Demand Curve
 Quantity Price
 100.03 15 Y
Ep<1
 100 16

D


16
Price
15
 D

100.03 X
 100

 10
Sources of Supply

It receives its raw materials from:


• Nectar Drug, Mumbai


• Primer Drug House, Mumbai


Supply and its Determinants
• Price of commodity: Rs 15
• Cost of production: Rs 10
• State of technology
• Number of firms : many firms in the market but
has two main competitors.
• Government policies : FDA approval and license.
Cost
• DIRECT COST
– DIRECT MATERIAL : Acetyl Salicylic Acid
– DIRECT LABOUR
– DIRECT EXPENSES

• INDIRECT COST
– INDIRECT MATERIAL
– INDIRECT LABOUR
– INDIRECT EXPENSES

Cost Analysis
Cost per month Average Cost per
(Rs.) unit (Rs.)

Total Fixed Cost (TFC) 1,50,000 7.5 (AFC)


Total Variable Cost 50,000 2.5 (AVC)
(TVC)
Total Cost (TFC + TVC)2,00,000 10 (AC)

Total Sales 3,00,000 15


Net Profit 1,00,000 5
Contribution (sales-VC) 2,50,000 12.5
Short run Cost Curves

 y TC 200 TVC

Total Cost

 TVC 50


TFC
TFC
150

 o
Output 300 x
Note: The numbers presented are in multiples of 1000s

 15
Break-Even Point Analysis

TR 15

Y TC 10
 Break even of it 5
Pr
Point
Total Revenue/ cost

 B Variable Cost 2.5


s s TFC
 Lo


Fixed Cost 7.5
X

O
Output/ Sales
BEP= TFC/(P-AVC) = 7.5/(5-2.5) = 3

Price Elasticity
 Price elasticity shows responsiveness to demand to
change in price.
Price Elasticity (Ep)

Ep= (Q2-Q1)/Q1
(P2-P1)/P1

= (100.03-100)/100 (16-15)/15
=0.0045
Since Ep<1, it is relatively inelastic.
Market & its Competitors
Zenufa
 SHALINA

LABORATORIES PVT. LTD


 

 Medicine: • Shalina successfully


 ZENASPIRIN 300 develop and market
  ASPIRIN 300 MG innovative products.
• • They produce
DIAZEPAM

Pharmalink laboratories works in


PERFECTLY COMPETITIVE
MARKET
SWOT Analysis

Strengths

1. Low cost of production.


2. Increasing liberalization of government policies.
Opportunities

1. Aging of the world population.


2. Growing incomes.
3. Growing attention for health.
4. New diagnoses and new social diseases.
5.Spreading attitude for soft medication (OTC drugs).
Weakness

1. Lack of experience to exploit efficiently the new


patent regime.
2.Very low key R&D.
3.Low share of India in World Pharmaceutical
Production (1.2% of world production but having
16.1% of world's population).
4.Very low level of Biotechnology in India and also
for New Drug Discovery Systems.
Threats
• Stricter registration procedures.
• High entry cost in newer markets.
• High cost of sales and marketing.
• Competition, particularly from generic products
Conclusion
 Pharmalink Laboratories has a good hold over
foreign market.

 It has reached a stage where it is making a adequate


profit.

 Works in relatively competitive market.


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