Planet HealthEssay Preview: Planet HealthReport this essayPlanet HealthAfter significant success of the Sagar group of industries (SGI) which mainly dealt in exports of Dyes, Dye intermediaries, Bulk Pharmaceuticals, Fine Chemicals etc. Rohit Patel who was heading SGI wanted to diversify into a new sector. This decision was influenced by change in the current competitive situation and new patent laws which changed from process patents to product patents. Though initially he considered Software and Retailing, due to various reasons like rapid technological changes, high attrition rate and huge investment required, software was dropped and the focus shifted towards retailing which presented it with huge opportunities. Since SGI had been involved with pharmaceuticals since some time, pharmaceutical retailing seemed to be the ideal option.
SGI in 2015 changed its policies and policies to be more business focused. This is how the first phase of the change came together. The company started by introducing a minimum of a 50% corporate tax bracket for the sales of all products sold in 2016. It now has a minimum of 25% corporate tax bracket, making it easier for the company to avoid taxes for every product sold on and beyond the initial threshold. Furthermore in the new policies, they set a lower minimum personal rate of 10% and allowed companies to be able to spend up to 2% of their annual profits on sales on each of the products covered by the tax bracket, while companies that used to be able to make such a large profit with a single product would be eligible to invest up to 20% of their earnings on their business. All of the products were also sold by SGI through its own retail stores and there was also an increase of 3.5% in retail value for all products, and the final product cost was 1.49 lakh rupees. With the changes in the sales tax, it is now possible to earn Rs.12,600 per month (Rs.35,000) by selling in retail on the same day, on an average day per month, at a lower price bracket, and to earn Rs.37,000 per month (Rs.33,000) from sales during the first quarter. During the third year of SGI, the minimum profit of Rs.25 lakh per month was raised, although the total profits of the third year were reduced accordingly. All of the products had been tested by other laboratories on the site during the third or second quarter of this 2014 SGI. The next step of the change was to give the company the opportunity to establish a presence in India. With the creation of a new Indian department headed by Anil Jain with whom the company is already close, SGI will now be able to offer premium products including a wide range of products in all categories. It could be argued that the company has much potential in the Indian market today, especially among the large auto sales sectors. This may also be seen in the increased efforts to promote its Indian and foreign clients as a large number of Indian business groups in the same markets tend to be able to come to the country. Given that it was already established in 2012, it becomes difficult to see how the company will ever compete with the big players in China or India. This may help it to become one of the most successful Chinese firms but in any event it is possible that the Chinese conglomerate will move on from SGI and will eventually look to the American parent company.
In the context of the change in the international industry development process and the growing need to diversify into new and more efficient areas like health and wellness, many industries in the US have already decided to take steps to get foreign investments there. In 2010, the Chinese government announced a policy of establishing a high level inter-bank global trading centre to help China improve its global trading position. There have been numerous discussions over the various options to invest in investment in these areas as China has been in financial crisis for a number of years now, and the Chinese government is attempting to diversify its investment portfolio more easily than the US and Europe combined (the US invested over £1 trillion in the financial crisis, and the EU invested over £4 trillion). This should be the first step towards developing
The retail sector showed strong signs of modernization. It was worth around 90,000 crores in the year 2000. The organized sector had a very poor share among the entire retail market. In pharmaceutical retailing, prescription drugs accounted for around 14 crore, which over the counter drugs accounted for about 2 crore. Hence an independent consultant was hired to help out with this decision. In the initial assessment of pharma there were many positive signs. Margins as high as 40%, no change even after the implementation of the WTO agreement, only traditional retailers majorly present, organized retailing starting to develop with the advent of H&G, Apollo and many others, consumers becoming more health conscious, change from curative to preventive and no effect of recession. Among the traditional pharma retail practices some of the prevalent features were family run businesses, lack of proper equipment and air conditioning, irregularities and malpractices, no progress in retailing when compared to other healthcare disciplines and retailers being united and resistant to change. But customers wanted change and this is where SGI found the opportunity to decide to enter the market.
When the pharmaceutical retail markets of US and Europe were studied and compared to India, lots of differences were found, but one of the major observations were that Pharma reps were acting as intermediaries between doctors and medicines giving opinions and counselling to the ones seeking them. This concept was lacking in India as most of the times there were qualified professionals missing in the stores. SGI also was recommended to utilize this opportunity. Around 6 existing pharma retail chains were also studied to get a better understanding. Franchising was considered to be an option which could be adopted later on but initially the management of the chain would be by SGI itself to understand the market first hand.
To operationalize this concept there was a shift from current practices to modern and ethical practices, huge investment in human resources and material, state of the art equipment and ambience, international name