Biopharma: Costs and Japan Mexico U.s
Case study-- Biopharma Inc.
Presented by:Prateek Mittal 2010PMM111 Yatendra Singh 2010PMM115 Himanshu Bhatt 2010PMM132
Main points
Problems faced in financial performance of biopharma Inc. Steep decline in profits. Very high costs at Germany and Japan plants. Stable demand across the globe. Company could no longer afford to have surplus capacity. Aims at having an efficient network. Cutting the costs is the top priority.
Background
Biopharma Inc. is a global manufacturer of the bulk chemicals used in pharmaceutical industry. Two patents- - highcal and relax. Chemicals used by companies internal pharmaceutical divisions and also sold to other drug manufacturers. Currently all plants are setup to be able to produce both chemicals.
Plantwise Sales, Production, Capacity(2005)
Highcal
Region Latin America Europe Asia w/o Japan Japan Mexico U.S Plant Brazil Germany India Japan Mexico U.S Capacity 18 45 18 10 30 22 Sales 7 15 5 7 3 18 Productio n 11 15 10 2 12 5 Sales 7 12 3 8 3 17
Relax productio n 7 0 8 0 18 17
Main points continued
Japanese plant is best in terms of its ability to handle regulatory and environmental issues. Germany has got the best production ability. German plant has routinely had the highest yields.
Fixed and variable production costs at each Biopharma plant(2005)
Plant Plant F.C ($ million) Highcal F.C Relax F.C ($ million) ($ million) 5 13 4 6 6 5 5 14 4 6 6 5 Highcal R.M ($/kg) 3.6 3.9 3.6 3.9 3.6 3.6 Highcal prd. ($/kg) 5.1 7 4.5 7.5 5 5 Relax R.M ($/kg) 4.6 5 4.5 5.1 4.6 4.5 Relax prd. ($/kg) 6.6 8.5 6 9 6.5 6.5
Brazil
20
Germa 45 ny India Japan Mexic o U.S 18 17 30 21
Transportation costs from plant to markets($/kg)
From/to Brazil Germany India Japan Mexico U.S Latin America 0.2 0.45 0.5 0.5 0.4 0.45 Europe 0.45 0.2 0.35 0.4 0.3 0.3 Asia w/o Japan 0.5 0.35 0.2 0.3 0.5 0.45 Japan 0.5 0.4 0.3 0.1 0.45 0.45 Mexico 0.4 0.3 0.5 0.45 0.2 0.25 U.S 0.45 0.3 0.45 0.45 0.25 0.2
Presented by:Prateek Mittal 2010PMM111 Yatendra Singh 2010PMM115 Himanshu Bhatt 2010PMM132
Main points
Problems faced in financial performance of biopharma Inc. Steep decline in profits. Very high costs at Germany and Japan plants. Stable demand across the globe. Company could no longer afford to have surplus capacity. Aims at having an efficient network. Cutting the costs is the top priority.
Background
Biopharma Inc. is a global manufacturer of the bulk chemicals used in pharmaceutical industry. Two patents- - highcal and relax. Chemicals used by companies internal pharmaceutical divisions and also sold to other drug manufacturers. Currently all plants are setup to be able to produce both chemicals.
Plantwise Sales, Production, Capacity(2005)
Highcal
Region Latin America Europe Asia w/o Japan Japan Mexico U.S Plant Brazil Germany India Japan Mexico U.S Capacity 18 45 18 10 30 22 Sales 7 15 5 7 3 18 Productio n 11 15 10 2 12 5 Sales 7 12 3 8 3 17
Relax productio n 7 0 8 0 18 17
Main points continued
Japanese plant is best in terms of its ability to handle regulatory and environmental issues. Germany has got the best production ability. German plant has routinely had the highest yields.
Fixed and variable production costs at each Biopharma plant(2005)
Plant Plant F.C ($ million) Highcal F.C Relax F.C ($ million) ($ million) 5 13 4 6 6 5 5 14 4 6 6 5 Highcal R.M ($/kg) 3.6 3.9 3.6 3.9 3.6 3.6 Highcal prd. ($/kg) 5.1 7 4.5 7.5 5 5 Relax R.M ($/kg) 4.6 5 4.5 5.1 4.6 4.5 Relax prd. ($/kg) 6.6 8.5 6 9 6.5 6.5
Brazil
20
Germa 45 ny India Japan Mexic o U.S 18 17 30 21
Transportation costs from plant to markets($/kg)
From/to Brazil Germany India Japan Mexico U.S Latin America 0.2 0.45 0.5 0.5 0.4 0.45 Europe 0.45 0.2 0.35 0.4 0.3 0.3 Asia w/o Japan 0.5 0.35 0.2 0.3 0.5 0.45 Japan 0.5 0.4 0.3 0.1 0.45 0.45 Mexico 0.4 0.3 0.5 0.45 0.2 0.25 U.S 0.45 0.3 0.45 0.45 0.25 0.2