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Authors:
Rupish Saldi (EY); Monika Chopra (International Management Institute New Delhi)
Published in:
2020
Revision date:
17-Feb-2021
Length:
13 pages
Data source:
Generalised experience

Abstract

Pharmakon Ltd was a distributor of gelatin, glidants, plasticizers, osmotic salts and capsules. In 2018, the Executive Director of Pharmakon Ltd, Mr Jayesh Gupta, decided to expand the company and set up his own manufacturing facility to produce generic drugs like soft gels, tablets, capsules and oral rehydration syrups. Indian pharmaceutical market accounted for 3% of the global pharmaceutical industry in terms of value and 20% in terms of volume thus, highlighting its contribution towards global volume in the production of generic medicines. Going ahead, the sector was expected to witness a compounded annual growth rate (CAGR) of 9 - 12% between the years 2018 and 2021. Based on the numbers and his understanding of the market and key clients, Gupta was confident that he could establish Pharmakon as one of the leading players in the generic segment of the industry. However, one of the key entry barriers was the high investment needed to start production coupled with supplementary risks, such as long gestation period and sensitivity to the US market. Amid these risks, investors evaluated projects based on detailed feasibility study, knitting demand side of the market with techno-economic and financial viability of the project. Therefore, before presenting the proposal to the investors, Gupta had to conduct a pre-venture feasibility study for the project.

Teaching and learning

This item is suitable for postgraduate and executive education courses.

Topics

Feasibility analysis; Pharma; NPV (net present value); WACC - Weighted Average Cost of Capital; Sensitivity analysis

Setting

Geographical setting

Region:
Asia
Country:
India

Featured company

Company name:

Featured protagonist

  • Jayesh Chaturvedi (male), Founder

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