Identifying and Analysing Strategies to succeed in a VUCA Environment

(with special reference to Pharma Industry)

Presented By:
(MRIU Research Committee) Mitika Nangia
 List of Contents

 Introduction
VUCA
Indian Pharma Industry
Critical Success Factors vs. Strategy

 Literature Review

 Rationale

 Research Objectives

 Research Methodology

 Significance of Research

 References
 Introduction-VUCA
What is VUCA ?

• Abbreviated as Volatility, Uncertainty, Complexity, Ambiguity. VUCA represents the context in which organisations view
current conditions and how they anticipate operating in their future state.

• The conception of VUCA has been introduced by the United States Army War College to describe the most unfavourable
surroundings of the war field which resulted from Cold War.

VOLATILITY UNCERTAINITY
• It is the nature of change, the frequency and magnitude • It is the lack of predictability of events that could occur in
of change that occurs in the business environment (near) future.

AMBIGUITY
COMPLEXITY
• It is about the vagueness or confusion over reality and
• The situation has many interconnected parts and
the possibility of misreading events or interpretation in
variables. It pushes decision makers into dilemmas.
more than one way
 Introduction – VUCA
How does VUCA impact us ?

• The term VUCA became a popularized acronym in the business circles in the late 1990s. Its nature has aptly suited for describing
the unmanageable situations prevailing in the current business scenario.

• This new normal business environment is quite real, manifesting itself across industry segments and geographic locations
rendering many of the existing business approaches and models redundant.

1. Great Recession of 2000

These are affecting
the business
2. Social Media Explosion
environment posing
challenges which
3. Simultaneous Growing and are disruptive,
Ageing of the World Population
complex, and
4. Shift in balance of Power and
ambiguous leading
Digitization to volatility and
uncertainty.
5. Global Competition and Trade
Liberalization

1.( Dr. Archana Shrivastava & Dr. Asha Naik :Navigating the VUCA Labyrinth through Capacity Building)
2. (Reeves M & Love, C.)
 Introduction – Indian Pharma Industry

Indian Pharma Industry VUCA Factors affecting Pharma Industry

Price Control/Drug
Changing FDI
Price Control
Policies
Order

Compulsory M&A Deals,

Licensing, National Aggressive
• Third largest in terms of volume and thirteenth Pharmaceutical Investments by
largest in terms of value, as per a report by Equity Pricing Policy MNCs
Master.
Compliance Issues
and Good Highly Fragmented
Manufacturing Industry
• Indian Pharma market increased at a CAGR of Practices (GMP)
17.46 per cent during 2005-16 and is expected to
expand at a CAGR of 15.92 per cent through 2016
to 2020. (US$55 market by 2020). Stronger IP
Low investment in
Regulations (GATT-
R&D
TRIPS Agreement)
• Largest provider of generic drugs globally
(accounting for 20% global exports) and one of the
Source: Business Standard and IIPT
biggest producers of Active Pharma Ingredients
(APIs).
 Introduction – Critical Success Factors vs. Strategy
Critical Success Factors
• Helps us to find out areas which are to be
improved so that success is ensured.
• Important for accomplishment of goals and
ambitions of an organization
• Relatively permanent in nature.
• Can be used as a tool to devise strategies
for an organization
Market Position
Product Mix & Development
Geography
Customer Satisfaction
Example of CSFs
Strategy
• Strategy is the action that managers take to
attain one or more of organizations goals.
• Strategy can change as per dynamics of the
organizations.
• Strategies can be deduced from the CSFs.
Create Organisational Agility
Review Product Portfolio
Strengthen operational Capability
Build Customer Centricity
Example of Strategy
 Literature Review

• While there are numerable descriptions of VUCA in the business environment it is most succinctly described
by Sullivan, 2012 January 16 (1).
• “V” stands for volatility. It means the nature, speed, volume, and magnitude of change that is not in a
predictable pattern . “U” stands for uncertainty, or the lack of predictability in issues and events . “C” stand
for Complexity), there are often numerous and difficult-to-understand causes and mitigating factors (both
inside and outside the organization) involved in a problem. “A” stands for Ambiguity which means the lack of
clarity about the meaning of an event .

Dr. John J Sullivan : Making Organizational Learning Work

• Drucker PF (2007) in his research states the world is

changing. This is not something new, but today, due
According to a report (Leadership in a VUCA World) by
to a high global interconnectedness and an ever
the Chairman of HUL, Harsh Manwani (2013) observes
increasing pace of change, it has become more and
that we are living in a new reality of world called VUCA
more difficult for humans to keep pace with the
which is going to stay. Three mega trends viz.
technological, economical and social developments.
digitization, rise of the developing world and
The term VUCA describes some important factors of
sustainability would change the shape of the world.
these developments and has gained popularity
these days.
Source : Leadership in a VUCA World
Drucker PF (2007) Managing in the next society.
Routledge, London
 Literature Review

• A report by Business Standard (2014) states that
Changing FDI policies, Aggressive investments by
MNCS, M&A deals, Declining Global Generic Market
and Compulsory Licensing are major VUCA factors
affecting the Pharma Industry.
A report by IIPTA, Iindian Inst. Of Patent and Trademark
Attorney) the 5 challenges faced by Pharma Industry are
Compliance Issues and Good Manufacturing Practices,
Highly Fragmented Industry, Price Control, Low input for
R&D and Stronger IP Regulations.

• Dr. Tamanna Koti Reddy studied foreign companies dominates the Indian pharmaceutical industry due to
availability of cheap labour. The expenditure on Research & development is very low in India and market leaders
at present in the industry spend only 5to 6 per cent of their revenues on R&D. The General Agreement on Tariffs
and Trade (GATT) has an adverse impact on pricing of pharmaceutical products.

Dr. Tamma Koti Reddy : Foreign direct Investments in Indian Pharmaceutical Industry

• Dr.Arvind Sahay and Dr. Saravana Jaikumar studied that Price regulation in the pharmaceutical industry can be
a double – edged sword. While the policymakers typically aim at making the drugs more affordable, price control
on drugs may have adverse effects on availability. Firms may exit a category under regulation due to low profit
prospects. Lesser profits may also act as a barrier to entry for new firms. Further, firms may shift marketing focus
from the drugs under price control, and reduce detailing and promotion efforts for these drugs

Dr. Arvind Sahay and Dr. Saravana Jaikumar : Does Pharmaceutical Price Regulation Result in Greater Access to
Essential Medicines?
 Rationale

• Pharmaceutical industry in
India is one of the largest in
the world. It ranks 4th in the
world, pertaining to the
volume of sales. The market is • On the contrary, Indian
expected to grow to US$ 55 pharmaceutical industry is going
billion by 2020. through a period of significant
volatility and uncertainty with
numerous VUCA factors affecting
the Indian Pharma industry,
requiring companies to re-visit • This draws our attention to
their traditional growth investigate, identify and analyse
strategies to succeed. strategies which can help
Indian Pharma Organisations
(Industry) to sustain their
robust growth.
 Research Objectives

1. To study the Indian Pharma Industry in an already existing VUCA Environment

2. To identify strategies needed by Pharma Organisations (Indian Pharma

Organisations/Non MNCs & MNCs) to succeed in a VUCA Environment

3. To do an industry analysis of the strategy mix identified.

 Research Methodology

• Sample Size
20 Pharma Organisations
10 Indian/Non MNCs and 10 MNCs (Comparable Size-On the basis of Revenue)

• Target Audience

The target audience will be employees at decision making/strategic level and middle level managers.

• Sampling Technique

The technique for data collection will be Convenience Sampling.

• Tools for Data Collection

An unstructured interview will be taken into consideration and a part from the semi-structured
questionnaire.
 Significance of the Research

• Quickly gain understanding about the essence of any situation

• Helpful in Business Risk Assessment- Market Position, Product
Rapid Insights Mix & Development, Operating Management , Marketing and
Distribution Channel etc.

• Make the best possible decisions in the face of uncertainty.

Robust Decisions • Organisations can be sure of the strategies to be followed while
operating in a VUCA Environment

Sustainable Value • Serve as a basis for creating new business avenues/opportunities

Creation for Pharma Organisations

Comparative/Industry • Can be used as a ready to use material for Industry Analysis

which would aid in strategic decision making/strategy
Analysis formulation for stakeholders
 References

• Stiehm, J.H. (2002). The U.S. Army War College: Military education in a democracy.
Philadephia, PA: Temple University Press.
• Sullivan, J. (2012, January 16). VUCA: the new normal for talent management and
workforce planning. [web log comment]. Retrieved from
http://www.ere.net/2012/01/16/vuca-thenew-normal-for-talent-management-and-
workforce-planning/
• Dr. Tamanna Koti Reddy. 2013. Foreign Direct Investments in Pharmaceutical Industry
• https://link.springer.com/content/pdf/bfm%3A978-3-319-16889-0%2F1.pdf
• http://execdev.kenan-flagler.unc.edu/blog/its-a-vuca-world-and-leadership-
development-can-save-it
• http://www.iipta.com/5-challenges-faced-by-the-pharma-industry/
• https://www.worldwidejournals.com/paripex/file.php?val=February_2013_136093072
0_80d34_26.pdf
• https://web.iima.ac.in/assets/snippets/workingpaperpdf/2217512512016-02-01.pdf
• http://www.business-standard.com/content/b2b-chemicals/success-strategies-for-
indian-pharma-industry-in-an-uncertain-world-114021701557_1.html
• https://www.ibef.org/industry/pharmaceutical-india.aspx
• http://www.moneycontrol.com/stocks/marketinfo/netsales/bse/pharmaceuticals.html