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Examination Paper of Pharmaceuticals Management
IIBM Institute of Business Management 1
IIBM Institute of Business Management
Examination Paper MM.100
Pharmaceuticals Industrial Management
Section A: Objective Type (30 marks)
This section consists of Multiple Choices/Fill in the blanks & short notes type questions.
Answer all the questions.
Part one questions carry 1 mark each & Part Two questions carry 5 marks each.
Part One:
Multiple Choices:
1. Which of the following not the principle of co-‘ordination?
a. Principle of early beginning
b. Principle of continuity
c. Principle of time
d. Principle of reciprocity
2. Oral communication includes-.
a. Lecture
b. Poster
c. Union publication
d. Complaint procedure
3. Enthusiasm, co-operation, tact and skillful handling come under-.
a. Intellectual quality
b. Character quality
c. Psychological quality
d. Physical quality
4. Which of the following is the demerit of formal communication?.
a) Decay in accuracy
b) Time consuming
c) It is temporary
d) Fairly unsuitable
5. Arrange the following into decision making process
i. Conception
ii. Investigation
iii. Perception
iv. Selection
a) iv,i,iii, ii
b) ii,iv iii,i
c) iv,i,iii,ii
d) iii,i,ii, iv
Examination Paper of Pharmaceuticals Management
IIBM Institute of Business Management 2
6. FIFO stands for ______________________.
7. Record of all item of material and good in the store is recorded in which document?
a) Store ledger
b) Bin card
c) Both a & b
d) None of these
8. VED stands for ______________________.
9. In the EOQ formula ‘C’ is stand for-
a) Annual consumption
b) Cost of per unit of material
c) Cost per order
d) Storage
10. WTO stands for ______________________.
Part Two:
1. What is questionnaire? Explain rules or guidelines for designing a good questionnaire?
2. Define drug store management? ‘Discuss the arrangements of drugs in drug store?
3. Name the various steps in the selection of a pharmacist?
4. What are the purposes of training given to a pharmacist?
Section B: Caselets (40 Marks)
This section consists of Caselets.
Answer all the questions.
Each case let carries 20 marks.
Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
For the Indian Pharmaceutical Industry which has been presenting a robust performance during the last few years, the internet is a powerful tool. Web-enabling leverages the pharmaceutical firm’s existing investment in IT. Customer Relationship Management (CRM) and Sales Force Automation (SFA) systems can be web-enabled to cost of operations, and on being effectively used, they establish immense customer goodwill.
END OF SECTION A
Examination Paper of Pharmaceuticals Management
IIBM Institute of Business Management 3
The speed, efficiency and accuracy of a pharmaceutical company’s response to customer queries determine the extent of customer satisfaction. About 200,000 doctors will be contacted by a typical mid-sized pharmaceutical company, on a regular basis. It is crucial that these doctors are kept abreast of product profiles, new introductions etc. also, during the sales calls made by the field force queries are raised by the doctors, which need to be addressed quickly. By possessing a comprehensive medical information system, pharmaceutical companies are able to fulfill their obligations, and, at the same time, lend support to their sales and business partnerships. A good CRM system incorporates features that enable information sharing and identification of trends in the market; at the same time, to accommodate growth, it runs on a scalable platform.
A good CRM system is characterized by two key functions:
Tracking, organizing, prioritizing and responding to callers; and
Automating quick responses through letter, fax or e-mail, using a comprehensive data base.
The CRM system can help make urgent responses. It will also have a system of archiving call sheets.
The benefits of a good CRM system include a facility to handle a large number of medical queries efficiently; tracking customer correspondence/exchanges; retrieval and dissemination of the latest medical information; providing statistical reports for the re-assessment of product profiles. A good CRM system arms the company with tools to implement measures for continuous improvement of its business practices; it can be an invaluable aid to the sales force in understanding the interests and concerns of medical practitioners.
Sales Force Automation (SFA) is a system related to the CRM system. This tool enables a company to manage a vast field force. The system provides up-tp-date information to the field force while they are on the field; it provides the managers with a facility to keep a tab on field force’s activities and ensure they are going according to plan.
A good SFA system incorporates features as under:
Customer Profiles: by maintain up-to-date, detailed profiles of customers, the system facilitates tailoring of the profile base for different needs; a comprehensive view on important business opportunities and important customer is generated.
Hospital Profiles: detailed hospital profiles maintained helps in implementing focused strategies.
Activity Planning: planning of activities by each member of the team is made possible by the SFA system.
Promotion/Call Reporting: detailed information about a particular promotion, and each sales call are made available; this enables planning of future activities that focus on specific needs.
Online Submission: daily call reports can be submitted online; call coverage reports and record of monthly target achievement can be maintained.
Analysis and Reports: to facilitate better planning and strategy formulation, the SFA system provides detailed statistics.
If the traditional applications and expertise of pharmaceuticals companies can be leveraged by web-enabling them, then major benefits are in store for them. The companies can cut down costs, manage their markets with more effectiveness and also enter into new markets.
The following are some of the CRM/SFA systems available in the market for the pharmaceutical industry.
Examination Paper of Pharmaceuticals Management
IIBM Institute of Business Management 4
FFReporting of Sarjen Systems Pvt. Limited.
CrissSmart SFA/CRM of Oasis Infotech.
Online MR Reporting Software of Marg Compusoft Pvt. Limited.
Siebel-based Pharma CRM Implementation Kit of Infosys Technologies Limited.
Pharma Pulse of TVS-electronics.
Talisma of Talisma Corporation.
Questions:
1. Briefly explain the concept of CRM & SFA systems.
2. State the features of a Good SFA system.
3. Write down some CRM/SFA systems which are available in the market for Pharmaceutical Industry.
4. What are the benefits of CRM system?
Caselet 2
Glenmark Pharmaceuticals uses a web-based tool for sales force automation. The tool helps the sales force in adding new contacts/accounts, deciding upon the appointments, planning their tour, planning joint working, submitting their daily call reports, submitting request for samples, promotional articles etc. based on the actual travel, the tool also calculates te necessary expenses to be paid to the field sales officer. The sample management and promo management modules in the software keep a complete track of samples and promo items. Te entire leave management system for the field sales staff runs on this software. A part from this , the software has multiple reports such as missed call report; call average report etc, which helps the entire sales force hierarchy to be aware of the developments and act accordingly.
Majority of the above features and functionalities are available on the mobile interface of the application as well. The software also allows the field force to capture certain important remarks made by the customers. The CRM team/medical support team can make the best utilization of this data gathered. These systems are upgraded on need basis. A part from the pure technical upgrades, the enrichment of features and functionalities happen through the new version release of the software. The sales force automation tool is in the form of portal. The portal has two components in terms of content- static Content and Dynamic content. The transactions happen on the dynamic content side, where as any circulars, information to the field force, product related FAQs, Manuals etc. are posted on the static content side. This section really helps to keep in touch with the field force. Any product information which would help the field force to upgrade the product knowledge can be posted here. Going forward, Glenmark also plans to have CBT (computer based training) programs to be made online on this portal. These types of interactive programs will really boost the process of learning for the field sales force.
Questions:
1. Explain the working of a Glenmark Pharmaceuticals.
2. State the features of a Glenmark Pharmaceuticals.
END OF SECTION B
Examination Paper of Pharmaceuticals Management
IIBM Institute of Business Management 5
Section C: Applied Theory (30 Marks)
This section consists of Applied Theory Questions.
Answer all the questions.
Each question carries 15 marks.
Detailed information should from the part of your answer (Word limit 200 to 250 words).
1. Define ‘Pharmaceutical marketing? Explain objectives and importance of pharmaceutical marketing.
2. Define ‘Advertising’? What are the advantages and disadvantages of advertising in pharmaceutical marketing?
END OF SECTION C
Examination Paper of Pharmaceuticals Management
IIBM Institute of Business Management 6
IIBM Institute of Business Management
Examination Paper MM.100
Pharmaceutical Marketing
Section A: Objective Type (30 marks)
This section consists of Multiple Choice questions & short notes type questions.
Answer all the questions.
Part one questions carry 1 mark each & Part Two questions carry 5 marks each.
Part One:
Multiple Choices:
1. What is the full form of ‘IPR’?
a. Intellectual property rights
b. Intellectual patent rights
c. Intellectual process rights
d. International patent rights
2. The environment that poses tremendous opportunities for new products and services to alert marketer is an _________ environment.
a. Ecological
b. Social
c. Technological
d. Competitive
3. Arrange these market opportunities analysis step by step:
i. Evaluate new opportunities in new segments
ii. Build on your strengths
iii. Explore new market opportunities
iv. Analyze your existing markets
a. i, ii,iii,iv
b. ii,iv,i,iii
c. iv,ii,iii,i
d. i,iii,iv,ii
4. Marketing virtually the same product with two or more brand names is a strategy of:
a. Family brand strategy
b. Multiple brand strategy
c. Individual brand
d. Private brand
5. The pricing that deals with the judgmental or subjective elements of pricing is a:
a. Cost-based pricing
b. Petition based pricing
c. Market based pricing
d. Demand based pricing
Examination Paper of Pharmaceuticals Management
IIBM Institute of Business Management 7
6. Which of the following is not a member of distribution channel?
a. The Physician
b. Manufacturer
c. The consumer
d. The transporter
7. Arrange the communication process in order:
i. Medium
ii. Feedback
iii. Sender
iv. Receiver
v. Message
a) ii,iv,v,i,iii
b) iii,v,i,iv,ii
c) iv,i,iii,v,ii
d) iii,ii,iv,i,v
8. The strategy used to create a demand for a product within a channel of distribution by appealing directly to the consumer is a:
a. Pull strategy
b. Push strategy
c. Combination strategy
d. Competitive strategy
9. Toward off a competitive threat or to create an entry barrier, some companies from different power blocks may temporarily form a cartel it is termed as:
a. Franchise power
b. Integration power
c. Niche power
d. Coalition power
10. Which of the following ‘R’ is not a part of good management principle?
a. Resources
b. Recognition
c. Responsibility
d. Reward
Part Two:
1. Define the term “Marketing Communication”.
2. Differentiate between ‘Product Item’ and ‘Product Mix’.
3. Differentiate between ‘Cost Based Pricing’ and ‘Demand Based Pricing’.
4. Describe “Boston Matrix”.
END OF SECTION A
Examination Paper of Pharmaceuticals Management
IIBM Institute of Business Management 8
Section B: Caselets (40 Marks)
This section consists of Caselets.
Answer all the questions.
Each Caselet carries 20 marks.
Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselet 1
Apex Pharma was one of the Leading pharmaceutical companies with manufacturing plants spread all over India. Initially, the company produced bulk drugs as the activities expanded, the company started manufacturing formulation. The first formulation plant was commissioned at Mandideep, Bhopal in 1983. This plant was exclusively catering to the overseas demand in various countries including the US, South Africa, Australia and the UK.
The demand in pharmaceutical industry is not evenly spread throughout the year. There were months when the company operated at 50%-60% of its capacity, and there were months, when the company operated at more than the installed capacity, by working in three shifts. As a general policy, the company used to operate in two shifts. Third shift operations were only resorted to during the peak season. Apex, during the period of increased demand, outsourced medicines from other companies. However, the medicines which were outsourced were sold only in the domestic market. The company applied high quality standards so as to fulfill the requirements of the export market.
Apex’s Bhopal plant was run as a cost center and hence, it was not supposed to report any profits or losses. The plant had three different blocks manufacturing different sets of medicines (capsules, tablets, dry syrups and injectibles).
Semi Synthetic Penicillin Block (SSP): This block produced antibiotics and drugs based on amoxicillin and ampicillin.
General Block: This block produced non-antibiotic drugs.
C Block: this block produced third generation drugs based on cephalosporins.
Apex had a policy to invest in a new plant and machinery only when the company foresaw a sustainable long-term demand for a particular product. For its cephalosporin’s range of drugs, the company was experiencing an increased demand from the US markets for the past 2-3 years.
The total investment in C-block was Rs. 130 million with the existing capacity of 396 million capsules per year. The demand had increased to 590 million capsules per year. To meet the increased demand, the management decided to purchase a new machine. The finance manager, Ramesh Swami, had two options (Refer Table 1)
Table 1
Particulars
Machinery I
Machinery II
Brand
Zenhasi (USA)
Zentacs (Second hand machinery from Russia)
Capacity
300 million capsules per annum
200 million capsules per annum
Cost of Machine
Life of Machine
Rs. 11.70 million
5 years
Rs. 9.50 million
3 years
Residual Value
Nil
Nil
Examination Paper of Pharmaceuticals Management
IIBM Institute of Business Management 9
Sales revenue (for 18 tones material equivalent to 194 million capsules per annum)
Rs. 575.4 million
Rs. 575.4 million
Material Cost
90.68% of sales price
90.68% of sales price
Cost of repair and overhauling before commissioning
Nil
1.30 million
Total indirect costs (65% fixed, 35% variable)
Rs. 26.91 million
Rs. 30.00 million
Depreciation as per income tax provisions
Rs. 0.87 million
Rs. 0.80 million
Total Interest (Non cash)
Rs. 7.86 million
Rs. 7.79 million
Income Tax rate (company is paying only MAT @ 11.5% of EBT)
Rs. 2.08 million
Rs. 1.74 million
Investment requirement in working capital for operations of the machine (assumed to be released at the end of life of the machine)
Rs. 63.39 million
Rs. 63.39 million
The interest was calculated on the aggregate of receivables, investment and the working capital. The details for the proportion of different components of total interest are given in Table.
Table 2
Particulars
Machinery I
Machinery II
Receivables
Rs. 0.06 million
Rs. 0.06 million
Investment (10.4% of the cost of Machine)
Rs. 1.21 million
Rs. 1.12 million
Working Capital (10.4% of the investment required in working capital)
Rs. 6.59 million
Rs. 6.59 million
Total interest
Rs. 7.86 million
Rs. 7.79 million
After calculating the cash flows for the alternatives available, Swami decided to buy the first machinery. The policy of the company was to discount the cash flows at the rate of 16.59%. the order for the machine was placed in March 2000, with a delivery period of four months, and the machine was to be made operational in July, 2000. The payment was released in April, 2000. The machine was received in July, 2000 but it could not be made operational due to damage in the transit. The machine was finally made operational in October, 2000. The company was not able to generate revenues from that machine for the same period. Apex finalized its balance sheet on June, 30 every year.
Questions:
1. If you were in the position of Swami, what would have been your decision? Justify keeping qualitative aspects in mind.
Examination Paper of Pharmaceuticals Management
IIBM Institute of Business Management 10
2. Discuss the various other factors, which should be considered while making capital investment decision.
Caselet 2
Geetha Laboratories Pvt. Ltd. Was established by Mohan Ramnath in 1985 at Chennai. He was a PhD in Chemistry, a soft spoken gentleman who did not believe in working under pressure. The company was a small scale unit manufacturing non-patented anti-malarial medicines. The company worked 6 days per week and was running smoothly. In 1978, CITU supported union came into existence. Industrial relations started deteriorating making it difficult for the company to service. In 1983, Ramnath decide to enter into partnership with three other partners, Chandan Keshav, Bharat Pathak and Veenu Ramachandan to overcome the difficulties faced by him. The company came to be known as Geetha Laboratories Ltd. Even after this, industrial relations did not improve till 1990 and it was during this period that 14 workers were sacked. In 1990, Ramnath decided to sell his shares to Emission Pharmaceuticals, a multinational, though other partners continued. Now, the company was called German Drug House (GDH) Pharmaceuticals. During this period CITU withdrew support to the union and BMS (Bhartiya Mazdoor Sangh) came into the picture. An average increment of Rs. 225/- was given to all workers and industrial relations improved to some extent.
IMPLA Pharmaceuticals Limited was another non-patented anti-malarial bulk drug manufacturing giant having units at Poona, Mysore, Hyderabad, and Coimbatore and having corporate office at Baroda. It wanted to have monopoly in anti-malarial drug manufacturing by taking over GDH, but before taking such step, they wanted to assess the internal condition of the company. Therefore, in January 1994 Vishal Shrivastav, a qualified Chartered Accountant, was inducted as Director by purchasing a requisite number of shares of the company. In September 1994, after IMPLA was convinced about the favorable conditions of GDH it formally took over the company. At that time the manpower strength of the plant was 210 in which 130 were workers and 80 were executives and staff members. After taking over, IMPLA made many changes and the major ones were:
1. They increased the salaries of executives and staff of the unit to reduce the gap in the pay structure of the executives and staff of this unit and their other units.
2. They invested 3-4 crores for up gradation of the plant.
3. They shifted from 6 days working per week to 7 days working per week to improve the productivity and enhance cost-effectiveness of the unit.
The shift from 6 days to 7 days working without any financial gains, made workers resists the change. At this junction Sumeet Joshi, Corporate Manager, (IR) intervened and promised the workers that they would be paid for 30 days instead of 26 days, but Ravi Shriman, Director (Personnel) and Vishal Shrivastav; GM (operations) refused to agree to this since they were not involved when Sumeet Joshi made the commitment. The promise was not fulfilled, further complicated problems. The issues kept on lingering for 6 months. No decision could be taken because of the difference of opinion among senior executives. In June 1995, the workers gheraoed Vishal Shrivastav to pressurize the management to take the decision. They were successful to some extent as it led to the agreement of management with workers that financial benefits would be given with retrospective effects of 4 years making it one additional year over and above 3 years of normal agreement. They were asked to give a notice of change which the Workers couldn’t give till December 1995 because of disagreement among themselves. It was felt at this point of time by Shrivastav that the plant should have an Assistant Manager (Personnel) instead of having a Personnel Officer. Ajit Dubey, Assistant Manager (Personnel) was appointed in October 1995 but even this appointment took 3-4 months because of difference of opinion between shrivastav and Shriman.
In December 1995, the workers gave a notice of change demanding an increase of Rs. 2200/- per month. In January 1996, a notice of change was given by management. In February 1996, the negotiations started and continued till July 1996. Shrivastav, Rajkumar, the new Corporate Manager (IR), Ajit Dubey and
Examination Paper of Pharmaceuticals Management
IIBM Institute of Business Management 11
Kishore were to represent the management and nine members of the union were to represent the workers, besides V.D. Agarwal, the General Secretary of BMS. The first two rounds of meeting did not lead to any outcome as none of the parties were ready to budge. This made V.D. Agarwal withdraw as he was fed up with the rigid stand of the union leaders.
The third meeting was held without Agarwal, wherein the union leaders came down to Rs. 1,200/- from Rs. 2,200/- p.m. The minutes of the meeting were jotted down but the union leaders refused to sign. Taking advantage of the occasion, Dubey and Shrivastav had a secret meeting with Agarwal in a hotel. Agarwal advised the representatives of the management to maintain a low profile for a few months to crack down the workers’ aspirations who had very high expectations. It was observed by Dubey that there were perceptual differences between senior and junior union leaders. Taking clue from this, Dubey adopted a policy of divide and rule and took into confidence Devilal, the senior union leader and had secret meeting with him to explore the last settlement amount and apprised him that the management could go only upto Rs 450/- . He also took Janak Singh, the junior union leader into confidence and convinced him that the management was not going to bend before their demands and as such the workers were going to be the ultimate sufferers. Besides this, Dubey spread the message that no wages would be given retrospectively.
The next day the meeting resumed in which union representatives demanded Rs. 750/- (because of the pressure from the workers) beyond which they were not ready to come down. It was decided that instead of having a meeting with all the members, only two members, one senior union leader, Devilal and one junior union leader, Janak Singh would sit in the negotiations. Immediately a meeting between Shrivastav, Rajkumar, Devilal and Janak Singh was held and it was resolved that Rs. 575/- average per month would be given for 4 years retrospectively. A MOU was drafted by the legal consultant at the corporate office and was duly signed by Shrivastav, Rajkumar, Dubey and all the union representatives. In the evening a dinner was hosted in which all the negotiators were invited. When the papers were sent to R. Shriman, he objected to the MOU on the following points. First, the other plants were having 30 days pay system leading to less average per day and in Chennai plant it was to be given for 26 days leading to higher average per day. Second, the milk allowance given for overtime at Chennai unit was higher than other units. it took Shrivastav and Rajkumar two months to convince Shriman about the agreement, thereafter implementing the same. Rs. 14 to 15 lakhs were given to all the 160 workers within a week as arrears and the issue was settled.
Questions:
1. Was it right for V.D. Agarwal to withdraw half way during negotiations?
2. In view of the information given in the case, suggest the strategies for making IMPLA Pharmaceuticals a more progressive organization.
END OF SECTION B
Examination Paper of Pharmaceuticals Management
IIBM Institute of Business Management 12
Section C: Applied Theory (30 Marks)
This section consists of Applied Theory Questions.
Answer all the questions.
Each question carries 15 marks.
Detailed information should from the part of your answer (Word limit 200 to 250 words).
1. Explain the terms in the context of the “Pharmaceutical Marketing” :
a. Brand
b. Trademarks
c. Product line
2. Explain the important point that should be considered, while packaging pharmaceutical product? Also list the various dimensions of pharmaceutical market.
S-2-301012
END OF SECTION C
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