Peter Kronschnabl, President, BMW India

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Your India plans?

We will sell 1,000-1,200 units in nine months, between March and end of this year. This comes to a 60% increase if the full year is considered. We have sold 424 units of 3 series and 7 series till now. We have started selling the 5 series July 2007 onwards. Localisation content is 10% at this time, but we want to increase it to 30%.

Are you threatened by the entry of your competitors?

I don’t think the competition has an edge over us. Only Mercedes Benz is present with a manufacturing plant. Audi has barely started its marketing here in India.

Being a late entrant, what’s your branding strategy? We are not late. For BMW, it is important to enter with a 100% subsidiary and that was only possible after 2001. Now since we have done that we are here. BMW has a streaming strategy and not a penetrating one. We do product differentiation between our top and entry level models.

The luxury car mart is tiny. How much feasible is it to operate?

We are not competing in the mass market as we are a premium brand. If a consumer wants a premium brand, he must pay a premium price. These cars are very advanced and employ technology, which is very expensive. From a car of this class, a consumer expects high technology. In our branding, Indian buyers can expect the same experience as a consumer in any other BMW market.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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The day of reckoning for health insurance!

When IIPM comes to education, never compromise

De-tarrification will not only bring premiums, but practices as well, to internationally accepted levels

The fun is coming to an end. This year, the insurance regulator has announced that deregulation of pricing will be effected from January 2007. It is widely expected that free pricing will reduce the fire insurance premiums substantially and will bring them in line with international prices. This will wipe out the extra profitability that was being used to subsidise corporate mediclaim insurance.

Four years of high losses in corporate health insurance business and the imminent price deregulation has knocked some sense in the insurers. Corporate health insurance prices have been hardening, insurers have refused unprofitable business and have cancelled high claim policies in mid term. A bare bones health insurance plan for the organisation will have to be drafted in consultation with a competent insurance broker. Add on benefits on this minimum plan will have to rigorously evaluated in terms of additional cost and perceived benefit by the employees and the actual benefit to the employees.

A bigger question that the insurance buyers will have to address is that if the insurers will charge on an expected claims plus management expenses and profit basis, should a health insurance plan be taken at all? Internationally, health insurers own and/or manage service provider networks which include physicians, consultants, pharmacies and hospitals. Insured persons enjoy considerable cost benefits and standard costs by availing of services and buying medicines from these network members. Insurance companies also control cost by ensuring strictly that over medication and over stay is not indulged in by the network members. Indian insurers have yet to graduate to this level. The insurance regulator had introduced Third Party Administrators (TPA) four years back, as vendors to insurers, to achieve these very objectives. The experience has not been encouraging till now. After four years of chaos, TPAs have just about graduated to become mere claims processors. TPAs have yet to work out cost plus rates with hospitals, grade hospitals, standardise charges across grades and plug leakages in the systems. In a scenario where insurers will charge on cost plus basis, are not in position to provide reduced rates, do not have a mechanism to provide standardised charges at hospitals and do not have control over leakages; will a self funded scheme with a self appointed Third Party Administrator to manage the scheme be more cost effective? Indian companies have yet to evaluate this option rigorously. Finance managers should start this exercise to avoid a rude shock next year.

HR managers will not only have to define, evaluate, choose and manage benefits in a health insurance plan, but will also have to manage wellness to avoid over-use of these benefits. In mature markets wellness management is as important as health insurance benefits planning. Internationally, insurers place a lot of emphasis on wellness management. Higher levels of wellness lead to lower medical costs. This not only increases profitability but also increases customer retention as insurers are able to give more competitive prices.

Health insurance is moving from a ‘send employee data – get good quotes’ mode to ‘analyse-discuss-monitor-manage’ mode that a large ticket size purchase deserves. Are HR & finance managers ready?

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM, GURGAON
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Side effects of admiration

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Dr. Reddy’s presence across the value-chain is set to reap benefits

While walking through the corridors of one of the most effective research labs in India, one might miss out on the boring blue and grey colours of the walls. But one can’t ignore the people working in white attires and hiding behind a cluster of hi-tech apparatus to evolve a range of molecules to cure diseases.

The description might sound dreary to that whole bunch of forgiven scientists, who in their school days were more interested in testing acids on their classmates uniforms rather than mixing them with other chemicals. But, for Rajeev Kumar, a scientist working in this drug discovery unit of Dr. Reddy’s Laboratories, it is “an excellent place to work in.” He has his own reasons but he is reluctant to share them. However, that doesn’t affect the reputation of this pharma company. In fact, it only drives it strong with over 350 dedicated Rajeevs, who work at the two research facilities in Hyderabad and Atlanta (US). Moreover, a wide presence across the value chain, including APIs, branded formulations, generics, biologics, speciality products and new chemical entities (NCEs) makes it one of the most admired companies.

No doubt, while FY 2005-06 was characterised by a rebound in profitability and value-creating partnerships and acquisitions, the last fiscal (FY 2006-07) saw the drug maker acquiring a new growth trajectory and momentum across its businesses and markets. The company reported over two and a half times growth in its topline with consolidated revenues of Rs.65,095 million against Rs.24,267 million in FY 2005-06. Profit after tax increased almost five-fold to Rs.9,327 million in FY 2006-07.

A superlative performance that not only made Dr. Reddy’s the largest and most profitable pharma company, leaving behind Ranbaxy, but also one that’s well entrenched to get into the list of top 10 global generic players. But the one aspect that transformed Dr. Reddy’s over the last two years is its growing focus on R&D. With seven molecules or NCEs, of which five are in clinical development and two at pre-clinical stages, Dr. Reddy’s will be the envy of any pharma company.


Moreover, the company’s unrelenting focus on access and affordability while finding treatment options for un-met and poorly-met medical needs has placed it in a different league. These twin objectives have been further enhanced through a business model that prioritises the manufacture of affordable generic medicines on one hand and a growing investment in discovery of new molecules on the other, both translating into a positive impact on patient lives.

Going a step forward, the company promoted India’s first integrated drug development firm, Perlecan Pharma, which is engaged in clinical development and out-licensing of NCE assets. It was primarily a derisking strategy but the move was appreciated by several critics. “The formation of Perlecan pharma was an innovative agreement, which brought to table the strengths of the three firms (Dr. Reddy’s & 2 private equity firms). It provided Dr. Reddy’s with a model to rapidly advance its existing as well as future NCE assets through Phase II trials and seek out-licensing, co-development or joint commercialisation opportunities thereby enhancing the value of the pipeline,” says a Dr. Reddy’s spokesperson.

The company seeks to diversify into new markets, especially the low penetrated and regulated ones. To achieve this objective, it has acquired firms in Germany and Mexico. There is no doubt that Dr Reddy’s, like other pharma firms, has been an under-performer in the recent past, but industry experts believe that the company can elevate these concerns through enhanced presence in other regulated markets, and outsourcing its larger requirements through India. “While the concerns persist, the profitability of the company should be on an uptrend from here on. We believe that the risk-reward ratio is highly favourable,” says Sarabjit Kour Nangra, VP (Research), Angel Broking. This expectation is due to an interplay of several factors, which has made Dr. Reddy’s the most admirable pharma company. A clear focus on basic research along with an evolving growth strategy has placed this one on the elite list.


Edit Bureau: Manish K. Pandey

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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GODREJ

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Godrej may not be called a brand savvy organisation, but its word-of-mouth popularity is tremendous

Godrej – this century-old brand is almost a household name in India. No surprises there, right? After all this brand has years of toil, integrity and quality delivery to its credit? What’s more, over the last year the brand has latched on to a new style, while carrying forward the same legacy. Godrej roped in Priety Zinta as brand ambassador to add chutzpah to its consumer appliances and portray itself as a contemporary and trendy brand against competitors like LG (that has junior Bachchan endorsing its products) and Whirlpool (with Devgans as ambassadors). What’s more, Godrej also acquired Keyline Brands (UK) and Rapidol (South Africa) over the last year, putting to rest any remaining speculation about the future brand equity of this swadeshi brand. A valuation by UK-based brand consultancy, Brand Finance, estimates the net worth of just Godrej’s top five brands, at an astounding Rs.26.50 billion. In categories like cupboards and locks, brand Godrej is almost a generic name. “We believe in living up to our values of honesty, integrity and quality and that’s what feeds the equity of our brand,” says HK Press, President, Godrej Consumer Products Limited. And for those who thought that Godrej was not branding itself enough, chew on this. The company estimates a 30% rise in ad-spends for the year 2007-08. And that’s after shelling out a whopping Rs.720 million during 2006 alone for the same. This one sure wants to rise above the waters!

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Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Flipping Through fat facts

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And you thought that fat would bulge out!

A dangerous flaw that mostly goes unnoticed is fat; not on a stout body but the fat that lies hidden underneath the beanstalk figures. Those who always believed that devouring all the delicacies of the world without worrying about the calories was their birth right, weren’t being very considerate to themselves. Research clarifies that looking thin isn’t proof enough that you aren’t that fat, for it slowly accumulates around the body organs and doesn’t always show om the outside, in the form of huge love handles. “Many a times, different body symptoms, genetic compositions, heredity factors are responsible for the body type, but that doesn’t exempt thin people from the perils of a heart attack,” affirms Dr. S. M. Sachdeva, Sr. Consultant, VIMHANS.

A chubby one who fights fat each day and toils day and night to shed the extra pounds, becomes much healthier than the inactive yet skinny, who guiltlessly relish the most succulent snacks. A lifestyle, high on physical exercise, is crucial for strengthening the cardiovascular and respiratory system. “Eating the required calories and moderate exercise are essential for a healthy living. There are several factors at play and it is difficult to pinpoint only one thing. So even a small internal fat deposition can become serious if the person gets stressed out,” warns Dr. Sachdeva.

Once again, Murphy’s law comes to one’s mind, ‘If something can go wrong, it will. If anything simply can’t go wrong, it will not, anyway.’ For a change, the slim ones could do themselves good by exercising and eating right – are the lanky ones listening?!

Edit Bureau: Swati Hora

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Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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