CIPLA

EXECUTIVE SUMMARY
Dr. Yusuf Hamied, the CEO of Cipla Ltd, was facing a tense situation after India
signed the agreement on Trade-Related Aspects of Intellectual Aspects (TRIPS) when it
joined the World Trade Organization (WTO) in 1995 which called India to recognize 20-year
product patents on most of the invention, with only two years left Dr Hamied had ensure that
Cipla survives in the future because most of the products of Cipla might become unsaleable.
As of now Cipla used reverse engineering methods to reproduce drugs which were existing in
the market at a price lower than its competitors which enabled it to earn huge profits. After
AIDS was identified in 1982 pharmaceuticals companies in U.S. started developing medicine
for the treatment of the same but the price of the medication turned out to be $10,000 for a
year’s dosage, there was a similar situation in India where AIDS cases increased and Cipla
took the initiatives to manufacture the medicine but unfortunately it didn’t do any good to
them even though the medicine cost around $2 per day it didn’t find its way to sustain in the
Indian market, as AIDS found its way in Africa there was a more bad situation as it was a
more poor country and people couldn’t afford the medication and Cipla tried to sale its
medicine in Africa but it failed to do so because International Pharmaceuticals Industry filed
a suit due to which Cipla was not able to penetrate into Africa. After these situations he needs
to take a decision on how to tackle the challenge which would be imposed by the
implementation on TRIPS. For solving this issue he should break into regular market which
will solve the issue for sustaining in the market also he should start investing more in R&D
activities such that he can develop his own drugs and he must not be dependent on other
companies to develop first and then he can reverse engineer it to make it cheap and then
come in the market. By doing these activities he can ensure the sustainability as well as his
ability to stay in the market and provide stiff competition to his competitors and in this way
he can solve the vast spread issues

SITUATIONAL ANALYSIS
Cipla was a $325 million Indian pharmaceutical company which was founded in 1935
to produce high quality affordable medicines. It used reverse engineering process to
reproduce drugs. Its primary market was India but it sold products outside India as well and
its success was due to production of generic medicine. After AIDS was first identified in
1982 pharmaceuticals companies in U.S. started to develop medicines to cure the same but
the cost of medication turned out to be $10,000 for a year’s dosage, which was way too
expensive and it won’t be possible for everyone to incur the treatment and then there was a
similar situation in India where AIDS cases got to increase and Cipla took the initiative to
manufacture the medicine but unfortunately it didn’t do any good to them because despite
being so cheap it didn’t find Indian Customers attention but as AIDS found its way in Africa
there was a more bad situation as it was a more poor country and people couldn’t afford the
medication and International Agencies like UN, WHO had to intervene to force and influence
the patent holders to reduce the price so that it becomes affordable to everyone. This was the

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time when Cipla entered with its 3 tier model where its plan to charge $1200 annually to
wholesalers, $600 to governments and $350 to Medicines Sans Frontiers so that the drug is
cheap and can be made available to Africa at an affordable price, it was very less when
compared to the current treatment cost which was $6000 and it was the time when Cipla
received worldwide Recognition overnight. But it was a threat for other pharmaceutical
companies in U.S. and Europe because if companies like Cipla would get a chance to enter
their market they won’t be able to make profits because people would go for these cheap
medicines. Also, Dr Hamied was worried how Cipla would sustain in market two years later
when India enforces TRIPS and he was also worried that how these people who are having
minimal source of Income would be able to afford such costly medicines if in future Cipla
shuts down.

PROBLEM STATEMENT
Dr. Yusuf Hamid struggled to comprehend the upcoming challenges arising due to the
implementation of TRIPS in the forthcoming years on the sales of patented products.
CRITERIA FOR DECISION MAKING

1) Compliance to the new patent rules enforced by TRIPS implementation.

2) Balancing intellectual property protection with access to medicine.
3) Increasing good marketing practice.
4) Improvement of Public Health.
GENERATING ALTERNATIVES

1) Increasing R&D expenditure

This will enable to introduce innovation of drugs in the market which will lead to
sustainable growth for Cipla.
2) Reducing consumption for medicine
Introducing delivery system’s like NDDR (Novel Drug Delivery System) which can
reduce the consumption by ways of transmission like inducing the drug ones in a day within
the body instead of consuming drug twice in a day for example vaccine.
3) Non-infringement
Development of non-infringement policies like drug master files (DMFs) and
abbreviated new drug application (ANDAs). This kind of policies will help to increase its
presence in the regulated market of Europe and US. Regulated market is more lucrative then
the domestic market and unregulated market because their prices are high.
4) Waiting for patented products to get expire
This will enable production of patented products by reverse Engineering in long run
for Cipla

5) Importing patented products from parent companies by the government to overcome

AIDS related disease and other diseases.

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SOLUTION:

All the alternatives are lucrative but for the short run alternative 2&3 seems to be
more feasible. From alternative 3 the company will break into regulated markets thus the
sustainability of the company will be preserved complimented with alternative 2 and 5 it will
enable to help public struggling with epidemic disease.

For long run alternative 1and 4 seems to be more feasible. Alternative 1 will help in
sustainable growth for sustainable growth of Cipla due to innovative drugs also after the
patented drugs get their licence expired it will be available for production of patented drugs.

IMPLEMENTATION

In short run, Government has the knowledge about the pharmaceutical industries in
India it can promote non-infringement policies for countries economic growth. Also, it can
import drugs from parent companies to deal with the crisis related to diseases.
For long run in can promote R&D industries for renovation of drugs in its long run.

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