Topic of Case:

Lupin Limited: A pharma dinosaur, with no plans for extinction.

Group Members:
Rajarshi Das
Aparupa Das
Arka Chanda
Sourav Roy
Somnath Jana
Pankaj Kumar Gupta

Under the guidance of:

Prof. Sanjib Biswas
Prof. Indranil Ghosh

..
The contents of the case report is declared as genuine content.
The declaration is made by the above stated authors of the case.

INTRODUCTION:
Lupin Limited originates from India and is headquartered at Mumbai, Maharashtra.
Its time of inception was 1968.Various industries performed in include pharmaceuticalsbranded and generic drugs (including API) with a global area of operation.
Current CEO is Ms. Vinita Gupta managing a revenue of 2.06 Billion USD.
According to IMS National Prescription Audit [1], LUPIN has been the forecast growing
pharma player in US for the last 3 consecutive years.
Lupins huge number of prescription description dispensed account to make LUPIN the 5th
largest generic pharma company.
They are already established market leaders in over 49% of their offerings.
Lupin key drivers were customer relationship management, an ever growing generic product
line like a venture into different therapeutic areas (eg: Opthalmics)
Constant R&D investment set the seeds for Lupins growth as a globally integrated network
comprising of 11 manufacturing facilities (best in class) across the world.
Strategic acquisitions and differentiation & technical focused strategy of top management has
steered the company forward.
Before the 1990s, the pharma companies in India had their own ware house depots and the
Indian pharma industry was the highly fragmented like the retail industry.
With the shift of depot to tier based regulated structure consisting of and Stockists, retail
pharmacy outlets franchise and other forms of pharmacy business types like Hospital (nursing
home, hospital, clinic), Standalone(residential area), Chain (mall), Township (housing
township area)
The Indian pharma market is booming at 22 Billion $ worth, and global pharma market
valued around 50 Billion $[2].
Even today rural market is largely untapped in India and it is a huge market tipped to grow
man fold.
A supply chain is a system of organizations, people, activities, information, and resources involved in moving a
product or service from supplier to customer. Supply chain activities involve the transformation of natural
resources, raw materials, and components into a finished product that is delivered to the end customer.
(source: https://en.wikipedia.org/wiki/Supply_chain)

Lupin has established itself as a market leader based on highly efficient supply chain
management.

..
[1] - https://www.imshealth.com/files/web/IMSH%20Institute/NSP_Data_Brief-.pdf.
[2] - https://www.dolcera.com/wiki/index.php?title=Indian_Pharma_Industry_-_Distribution_
%26_Sales_Force_Structure

INDIAN PHARMA SUPPLY CHAIN:

Figure: 1. Pharmaceutical Distribution in India

(Source: https://www.dolcera.com/wiki/index.php?title=Indian_Pharma_Industry_-_Distribution_
%26_Sales_Force_Structure)

The Manufacturers first supplies goods to the Carry & Forwarding Agent, Super Stockist or
its own depot. This comprises the first tier.
Tier 2 comprises of Super-Stockists who receive goods from Tier I members.
Tier 3 comprises of Stockists/sub-stockists who receive goods from Tier 2 members.
Finally in the Tier 4, the goods reach the pharmacy shop institutors (private/Govt.) and
hospitals or any other retailer.
The product is now at the customers disposal.
Such a hierarchical structure offers higher return for the multiple stock point of
intermediaries, yet opens up loopholes for counter fit drugs entry into the market. Usually, in
this structure, change of Stockist is 8.10% of MRP of the product. Approx. current count of
Stockist in India is 60,000 and retailers is 550,000[3].

[3] - https://www.dolcera.com/wiki/index.php?title=Indian_Pharma_Industry_-_Distribution_%26_Sales_Force_Structure

GENERIC DRUG DISTRIBUTION IN INDIA:

In the structure, the contract-manufacturer gets to know how the good and patents are
associated with the licensor.
The licensor also supplies the copyright of patent and the technical ideology to the principal
who in turn pays a form of predetermined royalty.
The principal gets finished goods from contract manufactures and stocks up his inventory
only to sale the finished goods to the distributors in the market.
Selling of finished goods is not legalized either by contract manufacturer or licensor to
distributor or any third party agent.

Figure: 2. Lupin basic pharmacy drug distribution model

(Source: http://www.clarkstonconsulting.com/wp-content/uploads/2015/07/Generics_WD_Insights.pdf)

The model revolves around operations improvement, branding, outsourcing with vertical
integration.

LUPINS LOGISTIC FLOW:

Figure: 3. Four Gs of Lupin

(Source: http://www.worldcourier.com )
The logistics flow of Lupin is a confluence of Good Manufacturing Practices[4], Good Storage
Practices[5], Good Distribution Practices[6], declared by World Health Organization and
Lupins own GSCO(Global Supplier Chain Organization).
Good clinical practice (GCP)[7] is an international quality standard that is provided by ICH.
It is an international body that sets benchmarks, in which governments following such
standards can transpose regulations for clinical trials that involves human subjects.
It is always followed at Lupin prior to drug mass manufacturing.
The good storage practices are employed to store first the supplied raw materials and
packaging.
Raw materials logistics decide production in accordance to demand forecasts.
Production (primary) and packaging (secondary) in accordance to GMP of WHO Guidelines.
The finished goods logistics again involve storing into inventories following GSP.
Finally employing GDP, the finished goods are distributed to the market for wholesale or
direct client/customer sale.

[4] - http://www.who.int/medicines/areas/quality_safety/quality_assurance/TRS986annex2.pdf
[5] - http://apps.who.int/prequal/info_general/documents/TRS908/WHO_TRS_908-Annex9.pdf
[6] - http://www.who.int/medicines/areas/quality_safety/quality_assurance/GoodDistributionPracticesTRS957Annex5.pdf
[7] - http://www.fda.gov/downloads/Drugs/.../Guidances/ucm073122.pdf

INVENTORY MANAGEMENT:

With an inventory turnover ratio of approximately 5[7], for the last 5years, Lupin has
employed successful inventory management strategies by better sourcing (choosing new
suppliers that offer lesser lead time or reducing lead times of existing ones) and having
service level-acceptable close to zero frequency of stock-outs. Forecasting of market demand
for both existing and new product line (generic drugs API) was done.
Lupins demand driven production and distribution is coordinated, as pharma products are
dynamic and delayed drug costs million in losses per day.
A smaller inventory reduces overhead or holding costs. In accordance to forecasts made or
specific orders - little inventory is held - reducing inventory operational cost for the
manufacturers and retailers.
Buffer inventory or safety stock held both by Carry and Forwarding Agent and Stockist in
small quantities to combat uncertainty and market volatility. Lead time is automatically
reduced with ready availability of inventory and decrease of transportation time.
Just in time principal followed inventory management with integrated end-to-end
procurement is handled by automated system solutions - guarantying automated stock
replenishments. This enables Lupin to be agile enough in meeting up market demand
fluctuation by being more responsive.
Collaboration across different supply chain partners ensures a well-oiled performance of
Lupins global supply chain.

SCM TAKEWAYS:
Lupins culture of past and continuous excellence and innovation fosters their success stories.
Their commitment to quality of products helped them earn reputation and reliability.
A continuous expansion of manufacturing capacity especially for generic drugs and API
(Active Pharmaceutical Ingredients).
Continuous lead time management using just in time and agile methodologies.
State-of-the-art Research & Development facility with proper talent base ensures product line
success.
Collaboration with Carry and Forwarding Agents and Stockists along the supply chain stream
resulted in streamlined distribution system with scope for vendor managed inventory (VMI).
Very high accuracy of model for forecast of market demand.
Deep vertical integration of committed management ensures growing culture, talent
acquisition, talent retention, and talent fostering and trust development among employees.

[7] http://www.moneycontrol.com/financials/Lupin/ratios/L#L

LUPIN TARGET MARKET:

Figure: 4. Lupins Pie of Drugs

(Source: Lupin Annual Report 2014)

The above figure is a depiction of major therapeutic contribution of Lupin in various fields.
Other measures of interest include:
IPMG- Intellectual Property Management Group of Lupin secured high-value patents,
research pipeline.[8]
BDP- Biotechnology development program including delivery of high quality, affordable
biosimiliars diversely distributed across different therapeutic indicators like oncology, antiinflammatory, anti-virals, endocrinology, ophthalmic, diabetes.
Strategic associations along with various global bodies and institutions, eg - American
College of Chest Physician(ACCP), European Society of Cardiology(ESC) etc have helped
Lupin make advances in the medical community.[9]

FUTURE SCOPE:
Lupins affiliate company, Lupin Inc., has announced plans to develop a new 30,000 squarefoot, state-of-the-art R&D facility in Coral Springs.[10] At this R&D site, Lupin Inc. for
production of both branded and generic oral and nasal inhalation products, announced plans
for setting up a state-of-the-art facility.
They are also investing in the development of new branded and generic products in diverse
therapeutic areas and variable forms of dosage.[11]
Global affiliates brain-power and market winning core capabilities of manufacturing will
drive Lupin to be a global leader in pharma. A new facility in Goa, India, is also under
planning by Lupin for tablet/capsule manufacturing capability along with API and oral/
injectable finished products.

[8] - http://www.industry.gov.au/science/PMSEI
[9] - http://www.lupinworld.com/pdf/15/june/Business-AR_2015.pdf

Innovation and patents have been their primary business driver in the past and it shall
continue to be so in the near future as they seek to diversify into unexplored blue ocean
markets.

Bibliography:
https://www.imshealth.com/files/web/IMSH%20Institute/NSP_Data_Brief-.pdf.
https://www.dolcera.com/wiki/index.php?title=Indian_Pharma_Industry_-_Distribution_
%26_Sales_Force_Structure
http://www.clarkstonconsulting.com/wp-content/uploads/2015/07/Generics_WD_Insights.pdf
http://www.worldcourier.com
http://www.who.int/medicines/areas/quality_safety/quality_assurance/TRS986annex2.pdf
http://apps.who.int/prequal/info_general/documents/TRS908/WHO_TRS_908-Annex9.pdf
http://www.who.int/medicines/areas/quality_safety/quality_assurance/GoodDistributionPracti
cesTRS957Annex5.pdf
http://www.fda.gov/downloads/Drugs/.../Guidances/ucm073122.pdf
http://www.moneycontrol.com/financials/Lupin/ratios/L#L
http://www.industry.gov.au/science/PMSEI
http://www.lupinworld.com/pdf/15/june/Business-AR_2015.pdf
http://drugtopics.modernmedicine.com/dru
https://investor.lilly.com/secfiling.cfm
Designing and Managing the Supply Chain by David Simchi-Levi
Supply Chain Logistics Management by Donald Bowersox
Fundamentals of Supply Chain Management - Dr. Dawei Lu
Supply Chain Management by Sunil Chopra and Peter Meindl
Supply Chain Management: A Global Perspective - Nada R. Sanders
Lupin Annual Report 2014.

[10] - http://drugtopics.modernmedicine.com/dru
[11] - https://investor.lilly.com/secfiling.cfm