Page 216 - DECO303_INDIAN_ECONOMY_ENGLISH

Unit 12: Privatisation and Economic Reforms

Notes

Case Study Dealing with Globalisation

ith the Cup of Coffee in his hand and fear in his eyes Mr Choksy was listening
to the budget speech of Mr Manmohan Singh, the Finance Minister of the then
WCongress Government. He was afraid that will happen in this Globalized and
Liberalized economy. He has only heard of cutthroat competition in USA and Europe and
has never witnessed the same. He was worried about the future of his company.

Mr Mohan Choksy is a son of Gujarati Trader. In 1976, after finishing his Graduation in
Pharmaceuticals he decided to establish a pharmaceutical company. His father lent him
money and land.
That was the era of License and Permit. The Mantra of successful business is to acquire a
permit and license. Patent law was very liberal in India. Companies do not get the patent
for the product rather they get the patent for the process. Thus, same drug can be
manufactured and marketed by many companies if they just change their manufacturing
process. Internationally, Pharmaceutical industry is research-intensive industry but in
India, it was a Marketing intensive industry as company can manufacture any drug of
their choice by altering the process. In off- patent drugs even that is not required.
Because of License and Permit, there is always a scarcity of drugs. Economy is closed and
thus, there is no fear from MNCs.
Thus, environment is very conducive for pharmaceutical industry. The critical success
factors are product knowledge, Money, Marketing and above all, political contacts and
Mr Mohan Choksy has inherited all of the above except one which he has acquired.
Mr Mohan Choksy launched the firm in 1978 named “Morphene” in Vadodara. After
studying the market, Mr Mohan launched few general Antibiotics, Pain Killers, and drugs
for seasonal diseases like Paracetamol, etc. He also launched a full range of products for
Respiratory disease as he found it a more lucrative market.
Mr Mohan Choksy appointed a very aggressive National Sales Manager Mr Mohit Dalal.
Mr Mohit started his career as a Medical Representative (MR) in a Rival firm and within a
span of 10 years, he became GM sales. He knows all the tits and bits of the pharmaceutical
sales. He knew very well how to allure doctors and find a place in the “Prescription”.
By 1985, Morphene acquired 15% share in Respiratory Diseases and have a more than 10%
share in all the drugs it was selling.

By 1985, competition became very stiff. New companies emerged. Because of process
patent, any new company could launch any drug. Mr Mohan Choksy thought of investing
in fundamental research but it was very expensive and because of Process Patent.
Mr Mohan couldn’t get the Patent so he dropped the idea. In 1987, he was going to France
with his wife on a holiday. In the flight he met Mr Becker who was a CEO of MNC pharma
company named “Novamin”. In a discussion Mr Becker told him that his company is in
search of Pharmaceutical manufacturer who can manufacture the off patent drugs for
Novamin at low cost. Mr Becker told him that in Europe they had limited manufacturing
capacity and they wanted to use it only for patented drug. He further told that in Europe,
the production cost is high and in off patent drug, the margins are very low so they are
looking for low manufacturing base. Mr Mohan saw an opportunity in it. After returning
from holiday, Mr Mohan contacted Mr Beceker. Mr Mohan increased the capacity of his
plant. He started producing on economies of scale as now he was selling the same molecule
Contd...

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