Matrix New

MATRIX LABORATORIES LTD.

PHARMACEUTICAL INDUSTRY PROFILE • develops, produces, and markets drugs licensed for use as medications • Pharmaceutical companies can deal in generic and/or brand medications • The main aim of a particular Pharmaceutical Industry is to develop research and distribute drugs in order to provide health care for the people in the society • Since the inauguration of the Pharmaceutical Industry in the 19th century • dependent upon the developments and discoveries that are made to search new types of drugs and also to search for new kind of medicines

TWO ASPECTS • Drug Discovery • Drug Development • In 2006, global spending on prescription drugs topped $643 billion • The United States accounts for almost half of the global pharmaceutical market, with $289 billion in annual sales followed by the EU and Japan. • Emerging markets such as China, Russia, South Korea and Mexico outpaced that market, growing a huge 81 percent.

• In the annual Fortune 500 survey, the pharmaceutical industry topped the list of the most profitable industries, with a return of 17% on revenue.

INDIAN PHARMACEUTICAL INDUSTRY • front runner of India’s science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology. • is estimated to be worth $ 4.5 billion, • growing at about 8 to 9 percent annually • highly fragmented with more than 20,000 registered units • The leading 250 pharmaceutical companies control 70% of the market with market leader holding nearly 7% of the market share.

ADVANTAGE INDIA • • • • •

Competent workforce Cost-effective chemical synthesis Information & Technology Globalization Consolidation

COMPANY PROFILE • Matrix, a subsidiary of the US-based Mylan Laboratories, is a Hyderabad-based manufacturer of active pharmaceutical ingredients(APIs). • Matrix merged with MedicorpTechnologies and Vorin Laboratories with the company in 2002. • In January 2007 ., Mylan Inc. (Mylan), one of the largest US generic drug makers, acquired a 71.5 percent stake in Matrix Laboratories Ltd. (Matrix).

Therapeutic wise Revenue

OPERATIONS: • Matrix Laboratories, a subsidiary of USbased Mylan Inc, has successfully turned the corner during the year ended March 2009 and earned a consolidated net profit of Rs 30 crore as against a huge net loss of Rs 457 crore in the previous year. We attempt to understand the 8 critical business success factors for activities ensuring the company’s success.

1.Cost •

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Cost management: Raw material as a

proportion of the company’s turnover declined from 58.34 per cent in 2001-02 to 40.62per cent in 2002-03, largely due to better negotiation, price decline, intelligent substitution and process improvements.

The company has demonstrated a high proportion of product success 95 per cent in a competitive global environment. R&D investments are recovered through such commercial success as inventory management & negotiations for the price of raw materials.

2.Quality •

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Matrix Labs core competence lies in the development and commercialization of generic Active Pharmaceutical Ingredients They have set up manufacturing facilities and established quality management systems, as per Good Manufacturing Practices guidelines to meet the requirements of drug regulatory agencies worldwide The employees are trained periodically on GMP requirements The plant has been designed in line with advanced international hygiene systems to minimize contamination. One of the company’s facilities is certified as per the ISO 14001.

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3.Speed

4.Dependability

By adopting Lean principles, pharma companies like Matrix have can increased inventory turns and not only achieved significant financial benefits but also have enhanced their competitiveness in the important areas of speed, quality and costs

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Pharma companies can increase inventory turns and not only achieve significant financial benefits but also enhance competitiveness in the all-important areas of speed, quality and costs. Lower levels of inventory directly correlate to improvement in these competitive edge factors. Reduced inventories are beneficial only if the reduction derives from process improvement.

Dependability is a key decision factor in today’s global business environment affecting product cost and process Being a part of the US-based Mylan, Matrix takes special care to enhance user confidence in fitness for use by attaining satisfaction in product performance capability, delivery, service availability upon demand, and minimizing cost.Eg. AIDS drug will be available at cheaper prices in places such as Africa, Latin America, as a part of Clinton Foundation’s initiative.

Inventory Turnover Ratio

Mar’08

Mar’07

Mar’06

Mar’05

Mar’04

Matrix pharma

3.31

3.66

3.63

4.02

4.54

Glenmark pharma

5.55

4.18

4.77

5.01

4.83

5.Flexibility •

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For generic drug manufacturers like Matrix Labs, the ability to ramp up quickly to meet surges in market demand confers a significant competitive advantage. The lean manufacturing operations of Matrix labs provide it with the opportunity to counter the volatility in the global demand. On the other hand, US company Mylan Inc has said it will acquire 100% stake in its Indian arm, Matrix Laboratories, for “enhanced flexibility and efficiencies.” in managing their global technical operations platform

6.Services •

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Matrix provides services of Contract Manufacturing. Being a commercial-scale manufacturer of many Active Pharmaceutical Ingredients They bring to your project, diverse chemistry expertise coupled with problem-solving skills. They undertake exclusive manufacturing services for APIs without compromising their customer's intellectual property.

7.Innovations •

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The Research and Development team of company successfully developed, patented and commercialized noninfringing process for Citalopram, an anti depressant during the year 2001-02. It was responsible for 50% of the company sales. Other example like Quinolones (anti bacterial drugs)containsmoleculeslikeCiprofloxacin ,Gatifloxacin. The AIDS drugs will include the first-ever heat-stable version of Ritonavir that does not require continuous refrigeration for its transport and distribution — an advantage in poor countries. Matrix received the National Award in 2005 for its R&D efforts in Pharma Sector from the Department of Scientific & Industrial Research, Govt of India

8.Intangibles •

They offer Contract Research & Development for Chemical Development of new molecular entities (NMEs) from Lead Optimization through Pre-Clinical Development and into manufacturing of API for Clinical Development phases

SUCCESS Infringing processes • Much of Matrix technology competence has been derived from its ability to manage complex, hazardous and explosive reactions across a range of pressures and temperatures. • Its non infringing routes have also created attractive patentable opportunities that can translate into stronger margins across the foreseeable future.

SUCCESS CONTINUED Strategic Mergers • They facilitated a timely transfer of assignments from one facility to another to accelerate product development. • They enabled Matrix to access new API technologies at a lower development cost. • They empowered Matrix to leverage the knowledge from diverse plants for organizational benefit. • They enabled Matrix to enter new markets and leverage years of experience immediately. • They encouraged Matrix to capitalize on tax benefits and maximize the retention of profits from 2002-03 onwards.

SUCCESS CONTINUED Patent Tracking • Matrix tracks products scheduled to go off patent. Thereafter, the company selects to make complex molecules with low competition, based on the size of the postpatent market and the therapeutic spread.

SUCCESS CONTINUED

• R&D An R&D investment of up to 4 per cent of turnover supported by skilled team of professionals.

High Product Success rate Company maintains a high proportion of product success i.e, 95 per cent in a competitive global environment

Failure • Matrix was issued a notice by the World Health Organization (WHO) on the grounds of major deviations from WHO`s good manufacturing practices (GMP) in relation to the anti-retroviral (ARV) drugs that Matrix supplies to WHO for its HIV/AIDS programmed. • SOURCE: 29TH JULY 2009, ECONOMIC TIMES

Recommendations • Matrix Labs needs to strengthen its R&D initiative to develop and commercialize more value-added products through non-infringing processes. • India will have 100 million patients or 60 per cent of the world’s cardiovascular patients over the coming decade (WHO). Matrix must focus on the lipid lowering, cholesterol lowering products. • Matrix Labs need to attain the right product-mix for sustained future growth. • Core competencies will play an important role in determining the future of Matrix Labs in the post productpatent regime after 2005.

Recommendations • Matrix Labs, in an effort to consolidate their position, will have to increasingly look at merger and acquisition options of either companies or products. This would help them to offset loss of new product options, improve their R&D efforts and improve distribution to penetrate markets. • Matrix Labs also needs to take advantage of the recent advances in biotechnology and information technology.

CONCLUSION • The future of Matrix Labs will be determined by • how well it markets its products to several regions and distributes risks, • its forward and backward integration capabilities, • its R&D, • its consolidation through mergers and acquisitions, • co-marketing and licensing agreements.