Summer Training

Project Report

On

PERFORMANCE APPRAISAL IN

RANBAXY LABORATORIES LTD.

Submitted to

Mr. N.K. TRIPATHY

In partial fulfillment of the requirementsfor the degree of

Master of Business Administration (MBA)

(2009-2011)Of

Punjab Technical University

Submitted by

ABHISHEK THAKUR

CENTRE FOR MANAGEMENT TRAINING & RESEARCH

Kharar – 140301, Distt. Mohali (PB.)

ACKNOWLEDGEMENT

“Vital to every operation is co-operation”. We all agree to this quotation put forth by Mr. Frank Tyger. This project was successful due to the co-operation extended by people who have truly contributed towards it.

I thank Almighty for bestowing upon me his choicest blessings and running all the things in the right direction.

My endeavor stands incomplete without dedicating my gratitude to a few people who have contributed a lot towards the successful completion of my project work.

First of all I would like to convey my thanks to Mr. Z.S. Dhaliwal (Internal Guide, Faculty CMTR) for his constant suggestions which have resulted in successful completion of project. It is a great privilege for me to express my sincere gratitude to my reverend project guide Mr. Narendera Kumar Tripathi (Accounts Dpt. & H.R.O.) for his valuable guidance and overall help throughout the training period.

I am immensely thankful to Mr. Inderjeet Singh & Mr. Sanjay Gupta (H.R.O.) for his their support and kind help which I get for the completion of this project.

Words are inadequate to express my indebtedness and gratitude to my parents for their unending supports, blessing and tireless efforts that kept me motivated throughout the completion of this project.

Thanks to all of you!

ABHISHEK THAKUR

PREFACE

For the proper development of an organization Human Resource is must. An organization’s performance and resulting productivity are directly proportional to quality and quantity of its Human Resources.

This project deals with the “PERFORMANCE APPRAISAL PRACTICES” which are followed in RANABXY LABORATORIES LIMITED, Paonta Sahib (H.P.).

In the age of rapid development, globalization and liberalization private sector companies need skilled manpower. Human is the basic requirement for the organization’s development so as to cope with this competitive world. Thus to keep up the esteem of employees Performance Appraisal is needed. This also helps to enhance the capabilities of employees.

So the choice of the Performance Appraisal Practices as my project was obvious for the partial completion of my specialization in “MBA (HR)”.

During the course of my project I have gathered certain information, which has led to some constructive facts in the areas of the company.

Executive Summary

Employee development is the successful function of any company. If the employee are skilled, capable and fit for the job they are expected to do; they will be satisfied there will be minimum number of square pegs in the round hole of any company. Ranbaxy Labs Ltd. is trying to make all the people working in the organization more skilled and capable so that it may improve its products in terms of quality and quantity and can build a mark upon its competitors.

In order to measure the capability of employee Performance Appraisal is done. It aims to measure the ability as well as weaknesses of an employee. A feedback is given to every employee after hi/her performance is measured. This helps him to know about his/her strengths and weaknesses. This also helps the management to provide proper training to employees to upgrade their skills and performance. Performance Appraisal is the base of promotions, increments, training and development etc.

I today’s competitive scenario, effective utilization of human resources has become necessary and the primary task of organization is to measure the efficiency of their employee in order to improve productivity and quality of work as well as products.

Appraisal is a continuous process and done annually as a formal exercise before completion of the financial year. Appraisal has tremendous motivational impact on people through the meaningful feedback and is a powerful tool for recognition. This project explains performance appraisal system and tries to find out how efficiently Performance Appraisal is conducted. And if Performance Appraisal doesn’t meet its objectives, then what are the factors causing failure.

History of Pharmaceuticals

The earliest drugstores date back to the middle Ages. The first known drugstore was opened by Arabian pharmacists in Baghdad in 754, and many more soon began operating throughout the medieval Islamic world and eventually medieval Europe. By the 19th century, many of the drug stores in Europe and North America had eventually developed into larger pharmaceutical companies.

Most of today's major pharmaceutical companies were founded in the late 19th and early 20th centuries. Key discoveries of the 1920s and 1930s, such as insulin and penicillin, became mass-manufactured and distributed. Switzerland, Germany and Italy had particularly strong industries, with the UK, US, Belgium and the Netherlands following suit.

Legislation was enacted to test and approve drugs and to require appropriate labelling. Prescription and non-prescription drugs became legally distinguished from one another as the pharmaceutical industry matured. The industry got underway in earnest from the 1950s, due to the development of systematic scientific approaches, understanding of human biology (including DNA) and sophisticated manufacturing techniques.

Numerous new drugs were developed during the 1950s and mass-produced and marketed through the 1960s. These included the first oral contraceptive, "The Pill", Cortisone, blood-pressure drugs and other heart medications. MAO Inhibitors, chlorpromazine (Thorazine), Haldol (Haloperidol) and the tranquilizers ushered in the age of psychiatric medication. Valium (diazepam), discovered in 1960, was marketed from 1963 and rapidly became the most prescribed drug in history, prior to controversy over dependency and habituation.

Attempts were made to increase regulation and to limit financial links between companies and prescribing physicians, including by the relatively new U.S. Food and Drug Administration (FDA). Such calls increased in the 1960s after the thalidomide tragedy came to light, in which the use of a new tranquilizer in pregnant women caused severe birth defects. In 1964, the World Medical Association issued its Declaration of Helsinki, which set standards for clinical research and demanded that subjects give their informed consent before enrolling in an experiment. Pharmaceutical companies became required to prove efficacy in clinical trials before marketing drugs.

Cancer drugs were a feature of the 1970s. From 1978, India took over as the primary centre of pharmaceutical production without patent protection.

The industry remained relatively small scale until the 1970s when it began to expand at a greater rate. Legislation allowing for strong patents, to cover both the process of manufacture and the specific products came in to force in most countries. By the mid-1980s, small biotechnology firms were struggling for survival, which led to the formation of mutually beneficial partnerships with large pharmaceutical companies and a host of corporate buyouts of the smaller firms. Pharmaceutical manufacturing became concentrated, with a few large companies holding a dominant position

throughout the world and with a few companies producing medicines within each country.

The pharmaceutical industry entered the 1980s pressured by economics and a host of new regulations, both safety and environmental, but also transformed by new DNA chemistries and new technologies for analysis and computation. Drugs for heart disease and for AIDS were a feature of the 1980s, involving challenges to regulatory bodies and a faster approval process.

Managed care and Health maintenance organizations (HMOs) spread during the 1980s as part of an effort to contain rising medical costs, and the development of preventative and maintenance medications became more important. A new business atmosphere became institutionalized in the 1990s, characterized by mergers and takeovers, and by a dramatic increase in the use of contract research organizations for clinical development and even for basic R&D. The pharmaceutical industry confronted a new business climate and new regulations, born in part from dealing with world market forces and protests by activists in developing countries. Animal Rights activism was also a challenge.

Marketing changed dramatically in the 1990s, partly because of a new consumerism. The Internet made possible the direct purchase of medicines by drug consumers and of raw materials by drug producers, transforming the nature of business. In the US, Direct-to-consumer advertising proliferated on radio and TV because of new FDA regulations in 1997 that liberalized requirements for the presentation of risks. The new antidepressants, the SSRIs, notably Fluoxetine (Prozac), rapidly became bestsellers and marketed for additional disorders.

Drug development progressed from a hit-and-miss approach to rational drug discovery in both laboratory design and natural-product surveys. Demand for nutritional supplements and so-called alternative medicines created new opportunities and increased competition in the industry. Controversies emerged around adverse effects, notably regarding Vioxx in the US, and marketing tactics. Pharmaceutical companies became increasingly accused of disease mongering or over-medicalizing personal or social problems.

Indian Pharmaceutical Industry

Corporate Profile

“The Indian pharmaceutical industry is a success story providing employment for millions and ensuring that essential drugs at affordable prices are available to the vast population of this sub-continent.”

Richard Gerster

The Indian Pharmaceutical Industry today is in the front rank of India’s science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology. A highly organized sector, the Indian Pharma Industry is estimated to be worth $ 4.5 billion, growing at about 8 to 9 percent annually. It ranks very high in the third world, in terms of technology, quality and range of medicines manufactured. From simple headache pills to sophisticated antibiotics and complex cardiac compounds, almost every type of medicine is now made indigenously.

Playing a key role in promoting and sustaining development in the vital field of medicines, Indian Pharma Industry boasts of quality producers and many units approved by regulatory authorities in USA and UK. International companies associated with this sector have stimulated, assisted and spearheaded this dynamic development in the past 53 years and helped to put India on the pharmaceutical map of the world.

The Indian Pharmaceutical sector is highly fragmented with more than 20,000 registered units. It has expanded drastically in the last two decades. The leading 250 pharmaceutical companies control 70% of the market with market leader holding nearly 7% of the market share. It is an extremely fragmented market with severe price competition and government price control.

The pharmaceutical industry in India meets around 70% of the country's demand for bulk drugs, drug intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and injectibles. There are about 250 large units and about 8000 Small Scale Units, which form the core of the pharmaceutical industry in India (including 5 Central Public Sector Units). These units produce the complete range of pharmaceutical formulations, i.e., medicines ready for consumption by patients and about 350 bulk drugs, i.e., chemicals having therapeutic value and used for production of pharmaceutical formulations. Following the de-licensing of the pharmaceutical industry, industrial licensing for most of the drugs and pharmaceutical products has been done away with. Manufacturers are free to produce any drug duly approved by the Drug Control Authority. Technologically strong and totally self-reliant, the pharmaceutical industry

in India has low costs of production, low R&D costs, innovative scientific manpower, strength of national laboratories and an increasing balance of trade. The Pharmaceutical Industry, with its rich scientific talents and research capabilities, supported by Intellectual Property Protection regime is well set to take on the international market.

The Indian pharmaceutical industry is the world's second-largest by volume and is likely to lead the manufacturing sector of India. India's bio-tech industry clocked a 17 percent growth with revenues of Rs.137 billion ($3 billion) in the 2009-10 financial year over the previous fiscal. Bio-Pharma was the biggest contributor generating 60 percent of the industry's growth at Rs.8,829 crores, followed by bio-services at Rs.2,639 crores and bio-agri at Rs.1,936 crores. The first pharmaceutical company are Bengal Chemicals and Pharmaceutical Works, which still exists today as one of 5 government-owned drug manufacturers, appeared in Calcutta in 1930. For the next 60 years, most of the drugs in India were imported by multinationals either in fully-formulated or bulk form. The government started to encourage the growth of drug manufacturing by Indian companies in the early 1960s, and with the Patents Act in 1970, enabled the industry to become what it is today. This patent act removed composition patents from food and drugs, and though it kept process patents, these were shortened to a period of five to seven years. The lack of patent protection made the Indian market undesirable to the multinational companies that had dominated the market, and while they streamed out, Indian companies started to take their places. They carved a niche in both the Indian and world markets with their expertise in reverse-engineering new processes for manufacturing drugs at low costs. Although some of the larger companies have taken baby steps towards drug innovation, the industry as a whole has been following this business model until the present.

Advantage India

Competent workforce: India has a pool of personnel with high managerial and technical competence as also skilled workforce. It has an educated work force and English is commonly used. Professional services are easily available.

Cost-effective chemical synthesis: Its track record of development, particularly in the area of improved cost-beneficial chemical synthesis for various drug molecules is excellent. It provides a wide variety of bulk drugs and exports sophisticated bulk drugs.

Legal & Financial Framework: India has a 64 year old democracy and hence has a solid legal framework and strong financial markets. There is already an established international industry and business community.

Information & Technology: It has a good network of world-class educational institutions and established strengths in Information Technology.

Globalization: The country is committed to a free market economy and globalization. Above all, it has a 70 million middle class market, which is continuously growing.

Consolidation: For the first time in many years, the international pharmaceutical industry is finding great opportunities in India. The process of consolidation, which has become a generalized phenomenon in the world pharmaceutical industry, has started taking place in India.

PEST Analysis of Industry

The environment under which the Indian pharmaceutical industry is operating is changing very slowly at present, but is likely to change significantly - and significantly faster - in the future.

The Indian pharmaceutical industry grew at a very slow pace from 1947 to 1970, largely due to the lack of incentives and the failure of the government to set-up a concrete regulatory framework.

Today, the industry is characterized by numerous governmental regulations and policy changes, stifling price controls, rigorous controls on formulations, and an absence of international patent protection. During 1970, the Indian Patents Act (IPA) and the Drug Price Control Order (DPCO) were passed. Although the DPCO acted as a buffer against pharmaceutical companies making free pricing illegal, it fulfilled the goal of providing quality drugs to the public at reasonable rates.

The introduction of the IPA - which did not recognize product patents but only process patents - provided a major thrust to the industry and its companies, which, through the process of reverse-engineering, began to produce bulk drugs and formulations at lower costs. This led to high fragmentation in the industry, due to the emergence of a number of small firms.

Key players in Indian Pharmaceutical Industry

There are several national and international pharmaceutical companies that operate in India. Most of the country's requirements for pharmaceutical products are met by these companies. Some of them are briefly described below:

Ranbaxy Laboratories Limited is the biggest pharmaceutical manufacturing company in India. The company is ranked at the 8th position among the global generic pharmaceutical companies and has presence in 48 countries including world class manufacturing facilities in 10 countries and serves to customers from over 125 countries. Ranbaxy Laboratories 2009-2010 Q3 Net Profit Results showed a profit of Rs 116.6 crores as compared to Rs 394.5 crores deficit, recorded during the corresponding period last fiscal.

Dr. Reddy's Laboratories manufactures and markets a wide range of pharmaceuticals both in India and abroad. The company has 60 active pharmaceutical ingredients to manufacture drugs, critical care products, diagnostic kits and biotechnology products. The company has 6 FDA plants that produce active pharma ingredients and 7 FDA inspected and ISO 9001 and ISO 14001 certified plants. Dr. Reddy's Q1 FY10 result shows the revenues of the company at Rs. 18,189 million which is up by 21%. During this quarter the company introduced 24 new generic products, applied for 22 new generic product registrations and filed 4 DMFs.

Cipla is an Indian pharmaceutical company renowned for the manufacture of low cost anti AIDS drugs. The company's product range comprises of anthelmintics, oncology, anti-bacterials, cardiovascular drugs, antibiotics, nutritional supplements, anti-ulcerants, anti-asthmatics and corticosteroids. Cipla also offers other services like quality control, engineering, project appraisal, plant supply, consulting, commissioning and know-how transfer, support. For the financial year 2008-09 the company registered an increase of 22% in sales and other income over the previous year.

Nicholas Piramal is the second largest pharmaceutical healthcare company in India. The brands manufactured by the company include Gardenal, Ismo, Stemetil, Rejoint, Supradyn, Phensedyl and Haemaccel. Nicholas Piramal has entered into join ventures and alliances with several international corporations like Cheissi, Italy; IVAX Corp; UK, F. Hoffmann-La Roche Ltd., Allergan Inc., USA etc.

Glaxo Smithkline (GSK) is a United Kingdom based pharma company; it is the world's second largest pharmaceutical company. The company's portfolio of pharma products consist of central nervous system, respiratory, oncology, vaccines, anti-infectives and gastro-intestinal/metabolic products among others. On November 2009, the FDA had announced that the H1N1 vaccine manufactured by GSK would join the list of the four vaccines approved.

Zydus Cadila also known as Cadila Healthcare is an Indian pharmaceutical company located in Gujarat. The company's 1QFY2010 results show the net sales at Rs880.3cr which is higher than the estimated Rs773cr. The net profit was Rs124.8cr which was increase of 39%; the increase was on account of higher sales and improvement in the OPM.

India's Domestic Pharmaceutical Market (12 Months Ended January 2009)

Company Size ($ Billions) Market Share (%) Growth Rate (%)Total Pharma Market 6.9 100.0 9.9Cipla .36 5.3 13.4Ranbaxy .34 5.0 11.5Glaxo Smithkline .29 4.3 -1.2Piramal Healthcare .27 3.9 11.7Zydus Cadila .24 3.6 6.8Source: ORG IMS

Future Scenario

With several companies slated to make investments in India, the future scenario of the pharmaceutical industry in looks pretty promising. The country's pharmaceutical industry has tremendous potential of growth considering all the projects that are in the pipeline. Some of the future initiatives are:

According to a study by FICCI-Ernst & Young India will open a probable US$ 8 billion market for MNCs selling expensive drugs by 2015.

The study also says that the domestic pharma market is likely to reach US$ 20 billion by 2015.

The Minister of Commerce estimates that US$ 6.31 billion will be invested in the domestic pharmaceutical sector.

Public spending on healthcare is likely to raise from 7 per cent of GDP in 2007 to 13 per cent of GDP by 2015.

Dr Reddy's Laboratories has tied up with GlaxoSmithKline to develop and market generics and formulations in upcoming markets overseas.

Lupin, a Mumbai based pharmaceutical company is looking to tap opportunities of about US$ 200 million in the US oral contraceptives market.

Due to the low cost of R&D, the Indian pharmaceutical off-shoring industry is designated to turn out to be a US$ 2.5 billion opportunity by 2012.

PEST ANALYSIS

To understand the implications of the environment on any industry it is imperative to study the four cardinal influencers on the industry namely Political, Economic, Social and Technological factors. It is rather unfortunate that in India these factors have a rather disproportionate influence on the functioning of a commercial organization. From the days of independence the business environment has been overly regulated by a handful of bureaucrats, middlemen, businessmen and politicians. Its only a decade since the country has seen an emergence of a political thought that encourages free enterprise. A welcome change indeed!

Political Factors

1. Today there is political uncertainty in the air. A combination of diverse political thought have got together to cobble together a rag-tag coalition, that is riddle with ideological contradictions. Therefore, any consistent political or economic policy cannot be expected. This muddies the investment field.

2. The Minister in charge of the industry has been threatening to impose even more stringent Price Control on the industry than before. This is throwing many an investment plan into the doldrums.

3. DPCO which is the bible for the industry has in effect worked contrary to the stated objectives. DPCO nullifies the market forces from encouraging competitive pricing of goods dictated by the market. Now the pricing is determined by the Government based on the approved costs irrespective of the real costs.

4. Effective January, 2005 the country goes in for the IPR (Intellectual Property Rights) regime, popularly known as the Patent Act. This Act will impact the Pharmaceutical Industry the most. Thus far an Indian company could escape paying a patent fee to the inventor of a drug by manufacturing it using a different chemical route. Indian companies exploited this law and used the reverse-engineering route to invent a lot of alternate manufacturing methods. A lot of money was saved this way. This also encouraged competing company to market their versions of the same drug. That meant that the impurities and trace elements found in different brands of the same substance were different both in qualification as well as in quantum.

Therefore different brands of the same medicine were truly different. Here Branding actually meant quality and a purer brand actually had purer active ingredient and lesser or less toxic impurities.

Product patent regime will eliminate all this. Now, a patented drug would be manufactured using the same chemical route and would be manufactured by the inventor or his licentiates using the chemicals with same specifications. Therefore, all the brands of the same active ingredient would not have any difference in purity and impurities. The different brands would have to compete on the basis of non input-related innovations such as packaging, color, flavors, Excipients etc.

This is the biggest change the environment is going to impose on the industry. The marketing effort would be now focused on logistics, communications, and economy of operation, extra-ingredient innovations and of course pricing.

5. In Pharma industry there is a huge PSU segment which is chronically sick and highly inefficient. The Government puts the surpluses generated by efficient units into the price equalization account of inefficient units thereby unduly subsidizing them. On a long term basis this has made practically everybody inefficient.

6. Effective the January, 2005 the Government has shifted from charging the Excise Duty on the cost of manufacturing to the MRP thereby making the finished products more costly. Just for a few extra bucks the current government has made many a life saving drugs unaffordable to the poor.

7. The Government provides extra drawbacks to some units located in specified area, providing them with subsidies that are unfair to the rest of the industry, bringing in a skewed development of the industry. As a results Pharma units have come up at place unsuitable for a best cost manufacturing activity.

Government Initiatives

The government of India has undertaken several including policy initiatives and tax breaks for the growth of the pharmaceutical business in India. Some of the measures adopted are:

Pharmaceutical units are eligible for weighted tax reduction at 150% for the research and development expenditure obtained.

Two new schemes namely, New Millennium Indian Technology Leadership Initiative and the Drugs and Pharmaceuticals Research Program have been launched by the Government.

The Government is contemplating the creation of SRV or special purpose vehicles with an insurance cover to be used for funding new drug research.

The Department of Pharmaceuticals is mulling the creation of drug research facilities which can be used by private companies for research work on rent.

Economic Factors

India spends a very small proportion of its GDP on healthcare (A mere 1%). This has stunted the demand and therefore the growth of the industry.

Per capita income of an average Indian is low (Rs. 12,890 ), therefore, spending on the healthcare takes a low priority. An Indian would visit a doctor only when there is an emergency. This has led to a mushrooming of unqualified doctors and spread of non-standardized medication.

The incidences of Taxes are very high. There is Excise Duty (State & Central), Custom Duty, Service Tax, Profession Tax, License Fees, Royalty, Pollution Clearance Tax, Hazardous substance (Storage & Handling) license, income tax, Stamp Duty and a host of other levies and charges to be paid. On an average it amounts to no less than 40-45% of the costs.

The number of Registered Medical practitioners is low. As a result the reach of Pharmaceuticals is affected adversely.

There are only 50, 00,000 Medical shops. Again this affects adversely the distribution of medicines and also adds to the distribution costs.

India is a high interest rate regime. Therefore the cost of funds is double that in America. This adds to the cost of goods.

Adequate storage and transportation facilities for special drugs are lacking. A study had indicated that nearly 60% of the Retail Chemists do not have adequate refrigeration facilities and store drugs under sub-optimal conditions. This affects the quality of the drugs administered and of course adds to the costs.

India has poor roads and rail network. Therefore, the transportation time is higher. This calls for higher inventory carrying costs and longer delivery time. All this adds to the invisible costs. It’s only during the last couple of years that good quality highways have been constructed.

The Growth Scenario

India's US$ 3.1 billion pharmaceutical industry is growing at the rate of 14 percent per year. It is one of the largest and most advanced among the developing countries.

Over 20,000 registered pharmaceutical manufacturers exist in the country. The domestic pharmaceuticals industry output is expected to exceed Rs260 billion in the financial year 2002, which accounts for merely 1.3% of the global pharmaceutical sector. Of this, bulk drugs will account for Rs 54 bn (21%) and formulations, the remaining Rs 210 bn (79%). In financial year 2001, imports were Rs 20 bn while exports were Rs87 bn.

Contribution in GDP

The pharmaceutical industry in India is among the most highly organized sectors. This industry plays an important role in promoting and sustaining development in the field of global medicine. Due to the presence of low cost manufacturing facilities, educated and skilled manpower and cheap labor force among others, the industry is set to scale new heights in the fields of production, development, manufacturing and research. In 2008, the domestic pharma market in India was expected to be US$ 10.76 billion and this is likely to increase at a compound annual growth rate of 9.9 per cent until 2010 and subsequently at 9.5 per cent till the year 2015.

Pharma Exports

In the recent years, despite the slowdown witnessed in the global economy, exports from the pharmaceutical industry in India have shown good buoyancy in growth. Export has become an important driving force for growth in this industry with more than 50 % revenue coming from the overseas markets. For the financial year 2008-09 the export of drugs is estimated to be $8.25 billion as per the Pharmaceutical Export Council of India, which is an organization, set up by the Government of India. A survey undertaken by FICCI, the oldest industry chamber in India has predicted 16% growth in the export of India's pharmaceutical growth during 2009-2010

Socio-cultural Factors

1. Poverty and associated malnutrition dramatically exacerbate the incidence of Malaria and TB, preventable diseases that continue to play havoc in India decades after they were eradicated in other countries.

2. Poor Sanitation and polluted water sources prematurely end the life of about 1 million children under the age of five every year.

3. In India people prefer using household treatments handed down for generations for common ailments.

4. The use of magic/tantrics/ozhas/hakims is prevalent in India.

5. Increasing pollution is adding to the healthcare problem.

6. Smoking, gutka, drinking and poor oral hygiene is adding to the healthcare problem.

7. Large joint families transmit communicable diseases amongst the members.

8. Cattle-rearing encourage diseases communicated by animals.

9. Early child bearing affects the health standards of women and children.

10. Ignorance of inoculation and vaccination has prevented the eradication of diseases like polio, chicken-pox, small-pox, mumps and measles.

11. People don’t go in for vaccination due superstitious beliefs and any sort of ailment is considered as a curse from God for sins committed.

Technological Factors

1. Advanced automated machines have increased the output and reduced the cost.

2. Computerization has increased the efficiency of the Pharma Industry.

3. Newer medication, molecules and active ingredients are being discovered. As of January 2005, the Government of India has more than 10,000 substances for patenting.

4. Ayurveda is a well recognized science and it is providing the industry with a cutting edge.

5. Advances in Bio-technology, Stem-cell research have given India a step forward.

6. Humano-Insulin, Hepatitis B vaccines, AIDS drugs and many such molecules have given the industry a pioneering status.

7. Newer drug delivery systems are the innovations of the day.

8. The huge unemployment in India prevents industries from going fully automatic as the Government as well as the Labor Unions voice complains against such establishments.

Steps to Strengthen the Industry

Indian companies need to attain the right product-mix for sustained future growth. Core competencies will play an important role in determining the future of many Indian pharmaceutical companies in the post product-patent regime after 2005. Indian companies, in an effort to consolidate their position, will have to increasingly look at merger and acquisition options of either companies or products. This would help them to offset loss of new product options, improve their R&D efforts and improve distribution to penetrate markets.

Research and development has always taken the back seat amongst Indian pharmaceutical companies. In order to stay competitive in the future, Indian companies will have to refocus and invest heavily in R&D.

The Indian pharmaceutical industry also needs to take advantage of the recent advances in biotechnology and information technology. The future of the industry will be determined by how well it markets its products to several regions and distributes risks, its forward and backward integration capabilities, its R&D, its consolidation through mergers and acquisitions, co-marketing and licensing agreements.

Industry Trends

The pharma industry generally grows at about 1.5-1.6 times the Gross Domestic Product growth.

Globally, India ranks third in terms of manufacturing pharma products by volume.

The Indian pharmaceutical industry is expected to grow at a rate of 9.9 % till 2010 and after that 9.5 % till 2015.

In 2007-08, India exported drugs worth US$7.2 billion in to the US and Europe followed by Central and Eastern Europe, Africa and Latin America.

The Indian vaccine market which was worth US$665 million in 2007-08 is growing at a rate of more than 20%.

The retail pharmaceutical market in India is expected to cross US$ 12-13 billion by 2012.

The Indian drug and pharmaceuticals segment received foreign direct investment to the tune of US$ 1.43 billion from April 2000 to December 2008.

Challenges

Every industry has its own sets of advantages and disadvantages under which they have to work; the pharmaceutical industry is no exception to this. Some of the challenges the industry faces are:

Regulatory obstacles Lack of proper infrastructure Lack of qualified professionals Expensive research equipments Lack of academic collaboration Underdeveloped molecular discovery program Divide between the industry and study curriculum

Industry Strengths

Capital Investment in Technology: Owing to the availability of advanced technology at low costs, the companies can produce drugs at lower costs.

Cost Effective: The filing cost of ANDAS and DMFs is comparatively low for the Indian companies.

Manpower: There is a large pool of technical experts available at modest salaries.

Contract Research & Contract Manufacturing: There is a good scope for contract research and contract manufacturing.

Infrastructure: There is a well-developed infrastructure for the pharmaceutical industry.

Generic Drugs: In the last few years, the generic drug-manufacturing segment has received huge investments, in the process making it more competitive and efficient.

HISTORY AND EVOLUTION OF RANBAXY LABORATORIES LTD.

“To create something of values, the imagination must sour, unfettered; it must fly like a bird in search of new horizons”.

Ranbaxy Laboratories Ltd. is one of the world’s largest pharmaceutical manufacturing companies. Ranbaxy headquartered in INDIA, is an integrated, research based, international pharmaceutical company producing a wide range of quality, affordable generic medicines, trusted by the healthcare professionals and patients across geographies.

The company was founded in Amritsar in year 1937, when Ranjit Singh and Gurbux Singh fused their names together to form Ranbaxy, accompany formed to distribute medicine supplies by Japanese company Shionogi. It started as a distributor of vitamins and anti-tuberculosis drugs. Bhai Mohan Singh joined the company as a partner in 1952. “DIAZEPAM” was the first product manufactured by Ranbaxy and was most effective at that time to hit the Indian market and was vastly accepted. Ranbaxy was established in June 16, 1961. In year 1973 Ranbaxy went public. After the government’s liberalization policy in year 1995, Ranbaxy was the 1st Indian company to become a MNC. Over the years, Ranbaxy has invested heavily and built up considerable strength in manufacturing and marketing. Currently it has 14,000 strong team over 50 nationalities with sales over a 125 countries and manufacturing in 7 countries.

Earlier in June 2008, Ranbaxy entered into an alliance with one of the largest Japanese innovator companies, “DAIICHI SANKYO”. And the combined entity will be catapulted to the no. 15th position in the global pharmaceutical space. The company is steadily moving towards its vision of becoming a 5 billion dollar company by the year 2012. ‘Dr. Tsutomu Une’ and ‘Mr. Arun Sawhney’ are the “Chairman and C.E.O” of Ranbaxy respectively.

Acquisition

On June 11 2008, “DAIICHI SANKYO” acquired a 34.8% stake in Ranbaxy, for a value $2.4 billion. In November 2008, “DAIICHI SANKYO” completed the takeover of the company from the founding Singh family in a deal worth $4.6 billion by acquiring a 63.92% stake in Ranbaxy.

The addition of Ranbaxy Laboratories extends Daiichi-Sankyo's operations - already comprising businesses in 21 countries. For Ranbaxy, the deal frees up its debt and imparts more flexibility into its growth plans. The combined company is worth about $30 billion.

BOARD OF DIRECTORS

 

Dr.   Tsutomu Une Chairman

Non Executive & Non Independent

Director

Mr.   Arun Sawhney Managing Director

Mr.   Takashi Shoda Non Executive &Non Independent

Director

Dr.   Anthony H. Wild Independent Director

Mr.   Rajesh V. Shah Independent Director

Mr.   Akihiro Watanabe Independent Director

Mr.   Percy K. Shroff Independent Director

           Mission & Vision

Ranbaxy's mission is ‘To become a Research-based International Pharmaceutical Company’. The Company is driven by its vision to ‘Achieve significant business in proprietary prescription products by 2012 with a strong presence in developed markets’.

BELIEFS

Employees are not just the resources, they are the very purpose. Company hires the total men with body, mind and intellect, not just the hand. Aim is to utilize the full potential of all employees.

VALUES

Achieving customer satisfaction is fundamental of business.

Provide products and services of the highest quality.

Practice dignity and equity in relationship and provide opportunities for our people to realize their full potential.

Ensure profitable growth and enhance wealth of the shareholders.

Foster mutually beneficial relations with all our business partners.

Manage our operations with high concern for safety and environment.

Be a responsible corporate citizen.

Financials

Ranbaxy was incorporated in 1961 and went public in 1973. For the year 2009, the Company recorded Global Sales of Rs.73,441 Mn. ( US $ 1519 Mn). The Company has a balanced mix of revenues from emerging and developed markets that contribute 54% and 39% respectively. In 2009, North America, the Company's largest market contributed sales of US $ 397 Mn, followed by Europe garnering US $ 269 Mn and Asia clocking sales of around US $ 441 Mn. Earnings before tax were at Rs.10,098 Mn. (US $ 209 Mn.) and earnings before tax were at Rs.3,107 Mn. (US $ 64 Mn.), representing 4% margin to sales.

Ranbaxy achieves USD 1 billion revenue and USD 282 MN PAT for H1’2010. After record Q1 sales, Q2 growth at 22%.

Key Financial Highlights

Financial Performance for the quarter ended June 30, 2010 (Q2’10)

Consolidated sales were at USD 458 Mn (Rs 21,029 Mn), a growth of 22% over Q2’09. [Q2’09: USD 368 Mn (Rs. 17,953 Mn)].

Earnings before Interest, Tax, Depreciation & Amortization (EBITDA) was at USD 90 Mn (Rs. 4,168 Mn), a margin of 20% to sales. [Q2’09: USD 11 Mn (Rs. 568 Mn)].

Profit after tax was USD 72 Mn (Rs. 3,320 Mn), a margin of 16%. [Q2’09: USD 139 Mn, (Rs. 6,931 Mn)]. Operational PAT, i.e. PAT excluding forex and exceptional items was USD 100 Mn (Rs. 4,574 Mn). [Q2’09: USD 2 Mn (Rs. 93 Mn)].

Financial Performance for the half year ended June 30, 2010 (H1’10)

Consolidated sales were at USD 999 Mn (Rs 45,931 Mn), a growth of 42% over H1’09. [H1’09: USD 682 Mn (Rs. 33,537 Mn)].

Earnings before Interest, Tax, Depreciation & Amortization (EBITDA) was USD 313 Mn (Rs. 14,410 Mn), a margin of 31% to sales. [H1’09: USD 2 Mn (Rs. 106 Mn)].

Profit after tax was USD 282 Mn (Rs. 12,951 Mn), a margin of 28%. [H1’09: loss of USD (14) Mn, (Rs. (679) Mn)]. Operational PAT, i.e. PAT excluding forex and exceptional items was USD 205 Mn (Rs. 9,442 Mn). [H1’09: USD (13) Mn (Rs. (639) Mn)].

Key Highlights/Developments

The Company’s operating margins improved during the Quarter vis-à-vis corresponding previous quarter, on account of sales of First-to-File (FTF) products in the USA, and balanced growth across markets.

Most markets/businesses grew during the Quarter with robust growth across some of the Company’s key markets/ businesses, including USA; Europe, led by Romania; CIS led by Russia, and India.

To sharpen its focus on generics, the Company reached an agreement to transfer its New Drug Discovery Research assets, to Daiichi Sankyo India Pharma Pvt. Ltd (DSIN).

Ranbaxy launched Atorvastatin in Canada and South Africa. The launch in Canada was under the Company’s global settlement with Pfizer. In South Africa, Ranbaxy was the first to launch a generic version in the market.

Valacyclovir, an FTF product in the USA, achieved a peak market share of 74% before the end of exclusivity during the Quarter.

The Company introduced Daiichi Sankyo’s innovative anti-platelet drug Prasita™ (Prasugrel), in India. During the Quarter, Ranbaxy launched 31 new products in India, including 3 in-licensed products.

The Company made 32 filings and received 35 approvals for dosage forms during the Quarter. For APIs, a total of 19 (15 APIs) filings were made, and 32 (15 APIs) approvals were received.

The Company continues to co-operate with the US FDA and the Department of Justice, for early resolution of all outstanding issues. The Company’s facilities underwent inspections by other regulators, and Ranbaxy remains compliant for supply.

During the Quarter, emerging markets recorded sales of USD 230 Mn, a growth of 6%, and contributed about 50% to global sales. Sales in developed markets amounted to USD 203 Mn, a growth of 63%.

North America region recorded sales of USD 160 Mn (Rs. 7,376 Mn) for the Quarter, a growth of 100%. For H1’10, revenues amounted to USD 424 Mn (Rs. 19,482 Mn), a growth of 162% over the previous year, on the back of a successful launch of Valacyclovir.

Europe recorded sales of USD 69 Mn (Rs. 3,195 Mn), a growth of 15% during the Quarter. For H1, sales were at USD 137 Mn (Rs. 6,295 Mn), up 13% from the previous year.  In Romania, the growth momentum continued during the Quarter, and the Company posted a strong increase of 27%, in revenue, during Q2’10.

India sales were at Rs. 4,487 Mn (USD 98 Mn), almost at the same level as previous corresponding quarter. Excluding tenders, sales grew by 11% during the same period. For H1’10, sales were at Rs. 8,375 Mn (USD 183 Mn). Continuing its healthy performance, the Consumer Healthcare business recorded a growth of 24% during H1’10 and attained No. 1 rank in its represented market during the Quarter.

The CIS region recorded sales of USD 20 Mn (Rs. 927 Mn), a growth of 33%. For H1’10, sales were at USD 44 Mn (Rs. 2,024 Mn), up by 29% from previous year.

The Africa region achieved sales of USD 39 Mn (Rs. 1,774 Mn), a growth of 6% during the Quarter. For H1’10, sales were at USD 77 Mn (Rs. 3,544 Mn), up 16% from the previous year.

The API business recorded sales of USD 26 Mn (Rs. 1,197 Mn), and USD 51 Mn (Rs. 2,362 Mn) for H1’10.

Rest of the World sales were at USD 45 Mn (Rs. 2,072), a de-growth of 11%. For H1’10, sales were at USD 83 Mn (Rs. 3,849 Mn), a de-growth of 10%. This was largely on account of divestment of certain businesses in China and Japan. Growth, excluding divested businesses, was 8% for the Quarter.

Strategy

Ranbaxy is focused on increasing the momentum in the generics business in its key markets through organic and inorganic growth routes. Growth is well spread across geographies with focus on developed and emerging markets. It is the Company’s

constant endeavor to provide a wide basket of generic and innovator products, leveraging the unique Hybrid Business Model with Daiichi Sankyo. The Company will also increasingly focus in high growth potential segments like Vaccines and Biogenerics. These new areas will add significant depth to the existing product pipeline.

R&D

Ranbaxy views its R&D capabilities as a vital component of its business strategy that will provide a sustainable, long-term competitive advantage. The Company has a pool of over 1,200 R&D personnel engaged in path-breaking research.

Ranbaxy is among the few Indian pharmaceutical companies in India to have started its research program in the late 70's, in support of its global ambitions. A first-of-its-kind world class R&D centre was commissioned in 1994. Today, the Company has multi-disciplinary R&D centers at Gurgaon, in India, with dedicated facilities for generics research and innovative research. The R&D environment reflects its commitment to be a leader in the generics space offering value added formulations and development of NDA/ANDAs, based on its Novel Drug Delivery System (NDDS) research capability.

The NDDS research at Ranbaxy focuses on maximizing the overall therapeutic and commercial value of commonly prescribed pharmaceutical formulations by enhancing their performance and reducing their adverse event profile. Such innovation also helps to improve the overall patient convenience and compliance.

The company's NDDS focus is mainly on the development of New Drug Applications (NDA) / Abbreviated New Drug Applications (ANDAs) of oral controlled- release products for the regulated markets. The Company's first significant international success using the NDDS technology platform came in September 1999, when Ranbaxy licensed its once-a-day Ciprofloxacin formulation on a worldwide basis to a multinational Company.

Ranbaxy's in-house NDDS programs are primarily focused on the oral segment. Inhalation (patented devices) and trans-dermal (patented adhesive polymers) programs are also being pursued through collaborations.

In the oral NDDS space, Ranbaxy has already developed four platform technologies namely Gastro Retentive, Modified Matrix, Multiparticulate and Aero Gel. Several products leveraging these technologies have been successfully developed.

In July 2010, Ranbaxy’s New Drug Discovery Research (NDDR) was transferred to Daiichi Sankyo India Pharma Private Limited as part of the strategy to strengthen the global Research and Development structure of the Daiichi Sankyo Group. While NDDR will now become an integral part of Daiichi Sankyo Life Science Research Center in India, based in Gurgaon, Ranbaxy will continue to independently develop and later commercialize the anti-malarial new drug, Arterolane + PQP, which is

currently in Phase III trials, and will also explore the further development of late stage programs developed by NDDR in the last few years, including the development programs in the GSK collaboration.

Within Ranbaxy, R&D of Generics will now get a sharper focus, as the Company is increasingly working on more complex and specialist areas.

People

The Company’s business philosophy based on delivering value to its stakeholders constantly inspires its people to innovate, achieve excellence and set new global benchmarks. Driven by the passion of it’s around 14,000 strong multicultural workforce comprising of over 50 nationalities, Ranbaxy continues to aggressively pursue its mission ‘To become a Research-based International Pharmaceutical Company’.

SOCIO – CULTURAL ENVIRONMENT

Corporate Social Responsibility (CSR)

Corporate Social Commitment and Public Service is deeply embedded into the cultural fabric of Ranbaxy. Over the years serious efforts have been directed towards making a meaningful contribution to uplifting and transforming the lives of the underprivileged. The Company is also extremely conscious of its duty and responsibility towards the environment. We continue to make sincere efforts to promote good health, social development and better environment, through various Company programs that contribute to sustainable, all round growth.

In 1978, in the wake of the grim health scenario in India, Ranbaxy realized the urgency to reach out to the underprivileged sections of society that had little or no access to basic healthcare. The Company took a conscious decision to contribute towards the national objective “Health for All”. Towards this end, the “Ranbaxy Rural Development Trust” was set up and the first well equipped mobile healthcare van was introduced, in certain underserved areas of Punjab. As the programme grew, the Ranbaxy Community Healthcare Society (RCHS), an independent body, was created, that is devoted to the health of the disadvantaged. Today, multiple well equipped mobile healthcare vans and an urban family welfare centre, run by Ranbaxy, benefit over 2 lakh people, in certain identified areas in the states of Punjab, Haryana, Himachal Pradesh, Madhya Pradesh and Delhi. The programme is based on an integrated approach of preventive, promotive and curative services, covering areas of maternal child health, family planning, reproductive health, adolescent health, health education including AIDS awareness.

During 2009, maternal and infant mortality were the focus of particular attention and efforts in these areas were intensified in RCHS serviced areas. The results of these interventions have been most encouraging and the general health profile of the local community has shown further improvement in terms of coverage for immunization, vitamin A deficiency and family planning. The problem of malnutrition has been addressed to a large extent and birth rates and infant mortality rates have declined substantially. Amongst women, the risk of mortality due to pregnancy or child birth has also been reduced when compared with the prevailing level of risk, in India and other developing countries.

Ranbaxy has also dovetailed its CSR efforts in a manner that is synchronous with the larger health goals of the State and Central Government. RCHS continued to work actively on critical issues related to HIV/AIDS, tuberculosis, malaria, polio, no communicable chronic diseases and female foeticide. RCHS also continued its partnership with the Voluntary Health Association of Punjab for the project on Reproductive Child Health (RCH), in the districts of Nawanshahar and Fatehgarh Sahib, in Punjab and achieved the targets set under the RCH-II plan, of the Government of India. Ranbaxy has entered into a Public Private Partnership (PPP) with the Punjab State Government, to deliver healthcare services in identified districts of Punjab.

Services Provided

Maternal &Child health

o Antenatal Care

o Immunization – (Tuberculosis, Diphtheria, Polio, Whooping Cough, Tetanus & Measles)

o Growth Monitoringo Safe Motherhoodo Post natal care o Family Planningo Sterilization (Referral and follow up)o Provision of Family Planning Methods (Copper T, Oral Pills, Condoms)

Prevention and Treatment of Sexually Transmitted Diseases & Reproductive Tract Infections.

Health Education including AIDS awareness.

MANUFACTURING

Manufacturing in India

Ranbaxy established their plants in India at following locations:

1) Paonta Sahib (Himachal Pradesh)2) Gurgaon (Haryana)3) Devas (Madhya Pradesh)4) Mohali (Punjab)5) Tosana (Punjab)6) Jejury (Maharashtra)7) Goa8) Baddi (Himachal Pradesh)

Manufacturing in Overseas

Some of the Ranbaxy plants are established in other countries:

1) U.S.A.

2) Ireland3) Nigeria4) China5) Thailand6) Malaysia

Ranbaxy has an expanding international portfolio of affiliates, joint ventures and representative offices across the globe with a presence in top 10 Pharma markets of the world such as USA, Japan, Germany, France, UK, Italy, Spain, Canada, China and Mexico along with strong operations in India, Brazil and South Africa. Additionally, it has presence in 21 of the 25 European countries.

The efforts towards internationalization and expansion backed Ranbaxy’s that sustainable growth in the industry can be achieved only through continuous pursuit of innovation. The company had successfully created a culture and infrastructure for cutting-edge discovery, research with continued emphasis on invention research and focused initiatives in New Drug Discovery (NDD) and Novel Drug Delivery System (NDDS). This has reinforced the company’s image as a research driven international organization.

REGIONAL HEADQUARTERS

GURGAON [INDIA]

JOHANNESBURG [SOUTH AFRICA]

LONDON [UK]

NEW JERSEY (USA)

RIO DE JANERIO [BRAZIL]

MARKETING

MARKETING OFFICES

DOULA (CAMEROON)

KIEV (UKRAINE)

HO CHI MINH CITY (VIETNAM)

MOSCOW [RUSSIA]

KAUNAS [LITHUANIA]

NAIROBI [KENYA]

ABIDJAN [IVORY COAST]

YANGON [MYANMAR]

ALMATY [KAZAKHSTAN]

DUBAI [UAE]

HARARE [ZIMBAVE]

CASABLANCA [MOROCCO]

SOFIA [BULGARIA]

PRODUCTS

Using the finest R&D and Manufacturing facilities, Ranbaxy Laboratories Limited manufacture and markets generic pharmaceuticals, value added generic pharmaceuticals, branded generics, active Pharmaceuticals (API) and intermediates.

The Company remains focused on ascending the value chain in the marketing of pharmaceutical substances and is determined to bring in increased revenues from dosage forms sales.

Ranbaxy's diverse product basket of over 5,000 SKUs available in over 125 countries worldwide encompasses a wide therapeutic mix covering a majority of the chronic and acute segments. Healthcare trends project that the chronic treatment segments will outpace the acute treatment segments, primarily driven by a growing aging population and dominance of lifestyle diseases. Our robust performance in Cardiovasculars, Central Nervous System, Respiratory, Dermatology, Orthopaedics, Nutritionals and Urology segments, clearly indicates that the Company has strengthened its presence in the fast-growing chronic and lifestyle disease segments.

TOP 10 PRODUCTS GLOBALY

Val acyclovir Simvastatin Co-Amoxyclav Ciprofloxacin and Combinations Amoxicillin and Combinations Isotretinion Ketorolac Tromethamine Loratadine and Combinations Ginseng + Vitamins Atorvastatin and Combinations

SALES

Project “VIRAAT” was launched to achieve top slot in the market.

Sales for the year 2009 in domestic market were US $ 1.52 Bn (Rs 7,344 crores); PBT was US $ (Mn (over RS 1000 crores); PAT was US $64 Mn (Rs 311crores).

Ranbaxy delivers global sales for the year 2009 was US $ 1519 Mn (Rs

73,441 Mn) which reflects a modest growth over 2008 sales of RS. 72,555

Mn. There was a turnaround in the profitability of the company with Earnings

before Interest Tax Depreciation and Amortisation (EBITDA) for the year 2009

at Rs. 11,991 Mn against a loss of Rs. 2,626 Mn for the year 2008. Where

emerging markets contributed 54% of sales, while developed markets

accounted for 39% and API was 7%.

Market Share

Ranbaxy is one of the leading pharmaceutical Companies in India commanding a market share of around 5%. The Company has clocked sales of USD 293 Mn in 2009 in India. Growing ahead of the market, the Company has enhanced its competitive position in the domestic market through its focused approach. The Company’s business has been realigned to its customer groups and investments have been made in high growth segments. These efforts have resulted in strengthening its Chronic franchise (Life Style led) as well as has reinforced its leading position in the Acute segment.

Ranbaxy is a strong player in the Novel Drug Delivery System (NDDS) segment. Its product portfolio spans across Acute & Chronic Business covering Anti-infectives, Nutritionals, Gastro-intestinal, Pain Management (Acute) Cardiovasculars, Dermatological, Central Nervous Systems (Chronic) segments.

Company’s India operations are a dominant force in a number of participating therapeutic segments, for example Anti-infectives, Statins, Dermatology and Pain Management. A publicly listed company, Ranbaxy India is also a member of IPA (Indian Pharmaceutical Alliance) & OPPI (Organization of Pharmaceutical Producers of India).

 

   

Global Consumer Healthcare

An introduction to RGCH

Moving up the value chain, Ranbaxy identified Consumer Healthcare as its

new business area in the year 2001. Subsequently, Ranbaxy Global Consumer Healthcare (RGCH) business was initiated with the launch of 4 brands: Revital, Pepfiz, Gesdyp and Garlic Pearls.

 

 

These brands had a strong equity with consumers and represented the leading common ailment categories like VMS (Vitamins & Minerals Supplement), this portfolio was carefully crafted for the introduction of Ranbaxy's consumer healthcare business in India.

 

 

Subsequently in 2004, RGCH launched its first herbal range of products through New Age Herbals (NAH), with products offering remedies in categories of Cough & Cold (Olesan Oil & Cough Syrups) and Appetite Stimulant (Eat Ease).

 

  In 2005, another popular brand, Chericof – The complete cough formula was introduced.  

  During 2009, the business registered sales of US $ 44 Mn registering a growth of 12%.  

 

Revital, the flagship brand continues to maintain leadership in its segment.

 

The Rainbow Coalition

 RGCH has chosen a unique Business Communication platform 'The Rainbow Coalition' which is an integrated communication program targeted at doctors at one end and consumers at the other.

 

 

In line with this approach, the business continues to reach out to the Doctors to generate prescriptions flow and enhance doctor endorsements for RGCH brands. Simultaneously consumer communication and widespread availability of the product has helped in enhanced coverage

 

  This Rainbow Coalition effort has resulted in sales and prescription growth.  

Sales and Distribution

RGCH pursued a differentiated sales & distribution Strategy of engaging, FMCG distributors for its products, a first of its kind attempt at Ranbaxy.

The distribution infrastructure of RGCH continues to grow with about 600

Distributors and Distributor Sales Representatives (DSRs) representing RGCH in the Indian market.

The Road ahead – future plans

Organic and inorganic growth is planned through strategic alliances and/or acquisitions in the large and exciting OTC and Herbal markets. These expansions will serve the consumer and enhance value for its stakeholders

In its first phase of geographical expansion, RGCH continues to focus on ‘growth countries’ which include Russia, Ukraine, Romania, Vietnam, Myanmar and Malaysia. The next stage of expansion is planned in Central and East European countries.

RGCH Product List

 S

NoBrand name Generic name Therapeutic segment

  1CHERICOF COUGH SYRUP

Complete Cough Syrup for family

CCA - Cough, Cold & Allergy

  2CHERICOF SOFTGEL

Cough remedy capsules

CCA - Cough, Cold & Allergy

  3 EATEASEAppetite enhancer-Children (Herbal)

GI - Gastro-intestinals

  4 GARLIC PEARLSGarlic oil for all round health

GI - Gastro-intestinal

  5 GESDYP Digestive Enzymes GI - Gastro-intestinal

  6 OLESAN GEL Cold rub (Herbal)CCA - Cough, Cold & Allergy

  7OLESAN LOZENGES

Cough & sore throat cure ( Herbal)

CCA - Cough, Cold & Allergy

  8 OLESAN OILNasal decongestant oil (Herbal)

CCA - Cough, Cold & Allergy

  9 PEPFIZEffervescent digestive enzymes

GI - Gastro-intestinal

  10REVITAL SOFTGELS

Ginseng, vitamins & minerals

VMS-Vitamins, Minerals & Supplements

  11 REVITAL LIQUIDGinseng, vitamins & minerals

VMS-Vitamins, Minerals & Supplements

  12 REVITALITESoy Protein Supplement

VMS – Vitamins, Minerals & Supplements

  13 VOLINI GELComplete Pain relief Gel

ANALGESIC-Topical

  14 VOLINI SPRAYComplete Pain relief Spray

ANALGESIC-Topical

  15 VOLINI TABSComplete Pain relief tabs

ANALGESIC-Oral

SWOT ANALYSIS

Strengths

Low cost of production.

Large pool of installed capacities

Efficient technologies for large number of Generics.

Large pool of skilled technical manpower.

Increasing liberalization of government policies.

Weakness

Low technology level of Capital Goods of this section.

Non-availability of major intermediaries for bulk drugs.

Lack of experience to exploit efficiently the new patent regime.

Very low key R&D.

Low share of India in World Pharmaceutical Production

Very low level of Biotechnology in India and also for New Drug Discovery Systems.

Lack of experience in International Trade.

Low level of strategic planning for future and also for technology forecasting.

Opportunity

Aging of the world population

Growing incomes.

Growing attention for health.

New diagnoses and new social diseases.

Spreading prophylactic approaches.

Saturation point of market is far away.

New therapy approaches.

New delivery systems.

Spreading attitude for soft medication (OTC drugs).

Spreading use of Generic Drugs.

Globalization

Easier international trading.

New markets are opening.

Threats

Containment of rising health-care cost.

High Cost of discovering new products and fewer discoveries.

Stricter registration procedures.

High entry cost in newer markets.

High cost of sales and marketing.

Competition, particularly from generic products.

More potential new drugs and more efficient therapies.

Switching over form process patent to product patent.

Ranbaxy Laboratories Ltd. at Paonta Sahib

I. Ranbaxy Plant at Vill. Ganguwala

The plant of Ranbaxy Laboratories Ltd. (RLL) at Paonta Sahib was established in year 1992. The location of the plant is spread over an area of 46 acres and is situated at village Ganguwala, near town Paonta Sahib. It is surrounded by agricultural land on three side and river Yamuna on fourth side.

The plant consists of two divisions :a) Pharma Manufacturing Division b) Fermentation Division

The Pharma division is further divided into Administrative Block, Quality Control Lab., Tablet and Capsule Block, Maintenance Department, Warehouse, Packaging Lab., Soft Gel Block and Water Purification Plant.

The Fermentation division is divided into Quality Control, Production Department and Warehouse.

Block ‘A’ is used exclusively for manufacturing tablet products with an installed capacity of 240 million capsules per annum.

Access to warehouse from both the blocks is through the separating corridors and air locks.

The persons working in various departments can be immediately identified by the colour of uniform they wear.

The access to warehouse from both the blocks is through the separating corridors and air locks.

The ranges of products which are manufactured in this plant are Quinolines, Anti-Bacterial and Anti-Histamines.

90% of products which are manufactured in this plant are exported to various countries like USA, U.K., Spain and Canada.

Manufacturing License

This plant is licensed by the Department of Health and Family Welfare, Government of Himachal Pradesh, the official licensing authority to manufacture and pack various formulations (tablet and capsule dosage forms).

Products

The tablet products manufactured include a range of products like Quenelle Antibacterial, Anti-Histaminic and Anti-Ulcerative. The brand names and the generic names of the products are as under:-

Tablet Form

CIFRAN (CIPROFLOXACIN) HISTAC (RANITIDINE) NORBACTINE (NORFLOXACIN) TREXYL (TEREFENADIE) CLAMPOSE (DIAZEPAM) REXPAR PYLOBACT OPLOXACIN (OFLOXACIN) CIPRO – OD (HISINOPREL MONOHYDRATE)

S.G.C. Block

REVITAL CAPSULES CHERRICOF SOFTGEL CAPSULES TARAXOCIN CAPSULES ISOTRETINOIN CAPSULES GARLIC PEARLS CAPSULES GINSENA CAPSULES

Revital’ is the 7th largest product in Indian Pharmaceutical Market in year 2009.

II. Ranbaxy Plant at Vill. Batamandi

The second plant of Ranbaxy Laboratories Ltd. (RLL) is situated in village Batamandi, city Paonta Sahib. RLL Batamandi was established in year 2005 and started manufacturing in year 2008. It is surrounded by agricultural land on three side and river ‘Bata’ on fourth side.

The plant is further divided into Administrative Block, Quality Control Lab., Tablet and Capsule Block, Maintenance Department, Warehouse, Packaging Lab. And Effluents Treatment Plant (ETP).

Access to warehouse from both the blocks is through the separating corridors and air locks.

The persons working in various departments can also be immediately identified by the colour of uniform they wear.

All the products manufactured in this plant are exported to the foreign markets like USA, FRANCE, JAPAN and CANADA.

Products

The tablets and Capsules products manufactured there include a range of products which are very costly in terms of money. As the API (Active Pharmaceutical Ingredients) costs from Rs 80 lakhs to Rs 1.5 crores per kg. All the products are manufactured for the foreign markets. The products manufactured are for the treatment of ‘Cancer’ and for ‘Lungs & Liver Transplant’ the brand names and the markets of the products are as under:-

S.no.

Name of the Product Marketed

1 Sirolimus Tablets (0.5 mg) U.S.A. 2 Mycophenolate Mofetil Tablets (500 mg) Canada 3 Tacrolimus Capsules (0.5, 1, 5 mg) U.S.A. 4 Bicalutamide Tablets (50 mg) U.S.A., Japan 5 LetrozoleTablets (0.5 mg) France

(Immunosuppressant which is used for ‘Transplantation’ is under trail).

INTRODUCTION

An organization’s goals can be achieved only when people put in their efforts. How to ascertain whether an employee has shown his or her best performance on a given job?

The answer is Performance Appraisal. Employee assessment is one of the fundamental jobs of HRM, but an easy one though.

Meaning and Definition:

A formal definition of Performance Appraisal is:

It is the systematic evaluation of the individual with respect to his or her performance on his or her potential for the development.

A comprehensive definition is:Performance appraisal is formal, structured system of measuring and evaluating an employee’s job.Related behavior and outcome to discover how and why employee is presently performing on the job and how the employee can perform more effectively in the future so that the employee, organization, and society all benefits.

The second definition includes employees behavior as part of the assessment. Behavior can be active or passive. – do something or do nothing. Either way behavior affects the job result.

The other terms used for the performance appraisal are:

Performing rating Employees assessment Employees performance review Personnel appraisal Performance evaluation Employees evaluation Merits rating

Background

1. The concept of Performance Appraisal dates back to the First World War and was

then called “Merit Rating Programme”. Over a period of time, this concept has been

through an ocean of change. The areas of evaluation have also changed.

2. According to Carl Heyel, author/editor on management, philosopher and teacher,

“performance appraisal is the process of evaluating the performance and

qualifications of the employees in terms of job requirements, for administrative

purposes such as placement, selection and promotion, to provide financial rewards

and other actions which require differential treatment among the members of a group

as distinguished from actions affecting all members equally”.

Change

1. A few decades ago, the employee used to be appraised by his department head.

The department head used to communicate his feedback and comments only to the

immediate superior of the employee. Thus the feedback was kept confidential in

nature. As time passed by, the immediate superior started appraising his

subordinate’s performance and sending his confidential report to the department

head. These were the periods when the employee was not included in his appraisal

process. The decisions used to be taken by his superiors relating to his pay hike,

promotion etc. Thus the system was non-transparent.

2. The current process of performance appraisal is much more open and gives some

scope for self-appraisal by the employee. The self-appraisal is followed by a joint

discussion with superior and then a decision is taken by the department head on his

promotion, pay hike etc. The feedback relating to his performance is directly given to

the employee. Thus performance appraisal process has gone through the phase of

non-transparency to transparency.

Process of Performance Appraisal

Criteria of Performance Appraisal

Performance Appraisal is usually the last element of a three-part sequence:

SETTING PERFORMANCE

STANDARDS

COMMUNICATING STANDARDS

MEASURING STANDARDS

COMPARING STANDARS

DISCUSIING RESULTS

TAKING CORRECTIVE MEASURES

Why Performance Appraisal is Necessary?

Purpose of Performance Appraisal

1. Career Development

This provides an opportunity for discussion of career objectives, and creation of a strategy designed to maximize career potential.

To provide an opportunity for career counselling To help in succession planning. To assess training needs To plan for career development To assess and develop individual abilities To provide an objective basis on which to base decisions about training and

promotions.

2. Feedback

As well, feedback is encouraged in both directions: as such, employees are encouraged to prepare ratings of their supervisors.

To provide constructive feedback to the individual regarding how their performance is seen.

This provides a structured format for the discussion of performance issues on a regular basis.

Feedback either reinforces performance strengths, or provides the opportunity to discuss resolution of performance deficiencies.

3. Administrative Uses of Performance appraisal

Salary Promotion Retention/termination Recognition of performance Layoffs Identification of poor performers

4. Performance History

This provides a performance history which is not dependent upon human memory, and which may be useful in the full range of personnel decisions, including compensation decision-making.

To review past and present performance, identifying strengths and weaknesses.

5. Organizational Goals

To clarify, for the individual, organizational expectations This provides an opportunity to view one’s performance in the context of

broader organizational goals. To assess future promotion prospects and potential To set objectives for the next period

6. Job Standards

This provides an opportunity for clearer articulation and definition of performance expectations.

7. Documentation use of Performance appraisal

Documentation for HR decisions Helping to meet legal requirements

Objectives of Performance Appraisal

Data relating to performance assessment of employees are recorded, stored, and used for several purposes .The main purposes of employee assessment are:

1. To effect promotions based on competence and performance.

2. To confirm the services of probationary employees upon their completing the probationary period satisfactorily.

3. To assess the training and development needs of employees.

4. To decide upon a pay raise where (as in the unorganized sector) regular pay scales have not been fixed.

5. To let the employees know where they stand insofar as their performance is concerned and to assist them with constructive criticism and guidance for the purpose of their development.

6. To improve communication, Performance appraisal provides a format for dialogue between the superior and the subordinate, and improves understanding of personal goals and concerns. This can also have the effect of increasing the trust between the rater and the ratee.

7. Finally, performance appraisal can be used to determine whether HR programmes such as selection, training, and the transfers have been effective or not.

Broadly, performance appraisal serves four objectives –

i. Developmental uses.ii. Administrative decisions.iii. Organizational objectives.iv. Documentation purposes.

Table outlines these and specific uses more clear:

S.no. General Applications

Specific Purpose

1 Developmental Issues Identification of individual needs, feedback, transfers and job assignments. Identification of individual strengths and developmental needs.

2 Administrative Decisions Salary, Promotions, Retentions or Terminations, Lay-offs etc.

3 Organizational Objectives

HR Planning, Evaluation of Organizational Goal achievement, Information for Goal identification etc.

4 Documentation Purposes

Criteria for validation research documentation for HR decisions helping to meet legal requirements.

Performance Appraisal and Competitive Advantage

The objectives of performance appraisal, listed above, point out the purposes which such an exercise seeks to meet. What needs emphasis is that performance evaluation contributes to firm’s competitive strength. Besides encouraging high levels of performance, the evaluation systems helps identify employees with potential, reward performance equitably and determine employee’s need for training.

Specifically, performance appraisal helps an organization gain competitive edge in the following way:

1. Improving Performance: An effective appraisal system can contribute to competitive advantage by improving employee job performance in two ways- by directing employee behaviour towards organizational goals, as was done by the second beekeeper and by monitoring that behaviour to ensure that the goals are met.

2. Making Correct Decisions: As stated above, appraisal is a critical input in making decisions on such issues as pay raise, promotion, transfer, discharges and completion of probationary periods. Right decision on each of these can contribute to competitive strength of a firm. If promotion, for example, is made on performance, the promotee feels motivate to enhance his or her performance.

3. Minimising Job Dissatisfaction and Turnover: Employees tend to become emotional and frustrated if they perceive that the ratings they get are unfair and inaccurate. Such employees find that the efforts they had put in became futile and obviously get demotivated.

Dissatisfaction in the job sets in and one of the outcomes of job dissatisfaction is increased turnover. Fair and accurate results appraisal results in high motivation and increased job satisfaction. An organization having satisfied and motivated employees will have an edge over its competitors.

4. Organizational Strategy and Performance Appraisal: Although Performance appraisal activities which are clearly instrumental in achieving corporate plans and long-term growth, typical appraisal systems in most organizations have been focused on short-term goals.

From the strategic management point of view, organizations can be grouped into three categories- defenders, prospectors, and analysers. Performance appraisal has definite roles in all the three strategies.

Typically, defenders have a narrow and relatively stable product-market domain. Because of this narrow focus, these organizations seldom need to make major adjustments in their technology, structure or methods of operations. They devote primary attention to improving the efficiency of their existing operations. Because of the emphasis on building skills within the organization, successful defenders use performance appraisal for identifying training needs. Performance appraisal is usually more behaviour oriented.

Organizations with a prospector strategy continuously search for different product and market opportunities. In addition, these organizations regularly experiment with potential reasons to new and emerging environmental trends. Prospectors are often the harbingers of change. Because of the emphasis on skills identification and acquisition of human resources from external sources, as opposed to skills building with the organization, prospectors often use the performance appraisal as a means of identifying staffing needs. The emphasis is on results. Finally, the focus is on division and corporate performance evaluation as they compare with other companies during the same evaluation period.

Organizations with an analyser strategy operate in two types of product-market domains. One domain is stable while the other is changing. In their more innovative areas, managers watch their competitors closely and rapidly adopt the idea that appears promising. In general, analysers use cost-

effective technologies for stable products and project or matrix technologies training programmes. Thus, these organizations attempt to identify both training as well as staffing needs. The appraisal systems are considered at the individual, group and divisional levels. Finally, successful analysers have a tendency to examine current performance with past performance within the organization. Cross-sectional comparisons (comparisons among companies) may also occur.

5. CONSISTENCY BETWEEN ORGANISATIONAL STRATEGY AND BEHAVIOUR: An organization needs a strategy consistent with the behaviour of its employees if it were to realize its goals. A truism of organizational life is that people engage themselves in behaviour that they perceive will be rewarded. As employees want to be rewarded, they tend to occupy themselves more with those activities on which the organization emphasizes. For example, if the focus is on service, employees will behave in ways that will help them in gaining rewards associated with service delivery. If the focus is on rewarding productivity, employees will strive for productivity. The performance appraisal becomes not only a means of knowing if the employee’s behaviour is consistent with the overall strategic focus, but also a way of bringing to the fore any negative consequences of the strategy- behaviour fit. Thus, the performance appraisal system is an important organizational mechanism to elicit feedback on the consistency of the strategy-behaviour link.

Whatever the category, a performance appraisal system has strategic importance to a firm in three ways:

Feedback mechanism, Consistency between organizational strategy and job behaviour, and Consistency between organizational values and job behaviour.

Steps for Developing Systematic Performance Appraisal

A five-step approach to conducting Performance Appraisal is recommended:

A. Identify key performance criteria:

Development of key performance criteria should be based on a comprehensive job

description and undertaken in consultation with workers. Four dimensions of performance can be considered:

Competencies: Knowledge, skills, and abilities relevant to performance. Behaviours: Specific actions conducted and / or tasks performed. Results / outcomes: Outputs, quantifiable results, measurable outcomes and

achievements, objectives attained. Organisational citizenship behaviours: Actions that are over and above usual

job responsibilities.

B. Develop appraisal measures:

In order to obtain accurate and valid performance appraisals, appraisal measures should be tailored to the specific job or “job family” (i.e., groups of similar jobs). An evaluation of factors in the work environment which help or hinder performance is also recommended. This ensures that realistic expectations are set for workers’ performance, and is also likely to increase the perceived fairness and acceptability of performance appraisals.

C. Collect performance information from different sources:

Traditionally, it has been the sole responsibility of managers / supervisors to assess performance. However, other organizational members (e.g., clients, coworkers, subordinates) can be a valuable source of information as they are likely to have exposure to different aspects of a worker’s performance. Collecting information from multiple sources can increase the accuracy of performance evaluation (i.e., reduce bias), and increase workers’ perceptions of fairness.

D. Conduct an appraisal interview:

The two central purposes of the appraisal interview are to:

Reflect on past performances to identify major achievements, areas for further improvement, and barriers / facilitators to effective performance.

Identify goals and strategies for future work practice. The appraisal interview should be a constructive, two-way exchange between the supervisor and worker, with preparation for the interview done by both parties beforehand.

E. Evaluate the appraisal:

The performance appraisal process should undergo regular review and improvement. For example, focus groups or surveys could be conducted to gauge workers’ perceptions of the appraisal process. A successful performance appraisal process should demonstrate a change in both the ratings of workers’ performance and aspects of the work environment that

impact upon work performance.

Best Practice in Performance Appraisal

In essence, best practice in performance appraisals involves:

Integrating performance appraisal into a formal goal setting system.

Basing appraisals on accurate and current job descriptions.

Offering adequate support and assistance to workers to improve their performance (e.g., professional development opportunities).

Ensuring that appraisers have adequate knowledge and direct experience of the workers’ performance.

Conducting appraisals on a regular basis.

Methods/Types

Traditional Method

Essay Appraisal Method: This traditional form of appraisal, also known as "Free Form method" involves a description of the performance of an employee by his superior. The description is an evaluation of the performance of any individual based on the facts and often includes examples and

evidences to support the information. A major drawback of the method is the inseparability of the bias of the evaluator.

Straight Ranking Method: This is one of the oldest and simplest techniques of performance appraisal. In this method, the appraiser ranks the employees from the best to the poorest on the basis of their overall performance. It is quite useful for a comparative evaluation.

Paired Comparison: A better technique of comparison than the straight

ranking method, this method compares each employee with all others in the group, one at a time. After all the comparisons on the basis of the overall comparisons, the employees are given the final rankings.

Critical Incidents Methods: In this method of Performance appraisal, the evaluator rates the employee on the basis of critical events and how the employee behaved during those incidents. It includes both negative and positive points. The drawback of this method is that the supervisor has to note down the critical incidents and the employee behaviour as and when they occur.

Field Review: In this method, a senior member of the HR department or a training officer discusses and interviews the supervisors to evaluate and rate their respective subordinates. A major drawback of this method is that it is a very time consuming method. But this method helps to reduce the superiors’ personal bias.

Checklist Method: The rater is given a checklist of the descriptions of the behaviour of the employees on job. The checklist contains a list of statements on the basis of which the rater describes the on the job performance of the employees.

Graphic Rating Scale: In this method, an employee’s quality and quantity of work is assessed in a graphic scale indicating different degrees of a particular trait. The factors taken into consideration include both the personal characteristics and characteristics related to the on the job performance of the employees. For example a trait like Job Knowledge may be judged on the range of average, above average, outstanding or unsatisfactory.

Forced Distribution: To eliminate the element of bias from the ratter’s ratings, the evaluator is asked to distribute the employees in some fixed

categories of ratings like on a normal distribution curve. The rater chooses the appropriate fit for the categories on his own discretion.

Modern Method

Assessment Centres: An assessment centre typically involves the use of methods like social/informal events, tests and exercises, assignments being given to a group of employees to assess their competencies to take higher responsibilities in the future. Generally, employees are given an assignment similar to the job they would be expected to perform if promoted. The trained evaluators observe and evaluate employees as they perform the assigned jobs and are evaluated on job related characteristics.

The major competencies that are judged in assessment centers are interpersonal skills, intellectual capability, planning and organizing capabilities, motivation, career orientation etc. Assessment centres are also an effective way to determine the training and development needs of the targeted employees.

Behaviourally Anchored Rating Scales: Behaviourally Anchored Rating Scales (BARS) is a relatively new technique which combines the graphic rating scale and critical incidents method. It consists of predetermined critical areas of job performance or sets of behavioural statements describing important job performance qualities as good or bad (for e.g. the qualities like inter personal relationships, adaptability and reliability, job knowledge etc). These statements are developed from critical incidents.

In this method, an employee’s actual job behaviour is judged against the desired behaviour by recording and comparing the behaviour with BARS. Developing and practicing BARS requires expert knowledge.

Human Resource Accounting Method: Human resources are valuable assets for every organization. Human resource accounting method tries to find the relative worth of these assets in the terms of money. In this method the Performance appraisal of the employees is judged in terms of cost and contribution of the employees. The cost of employees include all the expenses incurred on them like their compensation, recruitment and selection costs, induction and training costs etc whereas their contribution includes the total value added (in monetary terms). The difference between the cost and

the contribution will be the performance of the employees. Ideally, the contribution of the employees should be greater than the cost incurred on them.

360 Degree Appraisal Method: 360 degree feedback, also known as 'multi-rater feedback', is the most comprehensive appraisal where the feedback about the employees’ performance comes from all the sources that come in contact with the employee on his job.

360 degree respondents for an employee can be his/her peers, managers (i.e. superior), subordinates, team members, customers, suppliers/ vendors - anyone who comes into contact with the employee and can provide valuable insights and information or feedback regarding the "on-the-job" performance of the employee.

360 degree appraisal has four integral components:

1. Self appraisal2. Superior’s appraisal3. Subordinate’s appraisal4. Peer appraisal.

360 degree performance appraisal is also a powerful developmental tool because when conducted at regular intervals (say yearly) it helps to keep a track of the changes others’ perceptions about the employees. A 360 degree appraisal is generally found more suitable for the managers as it helps to assess their leadership and managing styles. This technique is being effectively used across the globe for performance appraisals. Some of the organizations following it are Wipro, Infosys, and Reliance Industries etc.

Management by Objectives (MBO’s): The concept of ‘Management by Objectives’ (MBO) was first given by Peter Ducker in 1954. It can be defined as a process whereby the employees and the superiors come together to identify common goals, the employees set their goals to be achieved, the standards to be taken as the criteria for measurement of their performance and contribution and deciding the course of action to be followed.

The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and the choosing the course of action to be followed by them, they are more likely to fulfil their responsibilities.

Disadvantages of performance appraisal:

One Sided Input: Traditional performance appraisals involve a supervisor and supervisee, both of which have limited perspectives. As with any situation, limited perspectives lead to a limited amount of information by which to judge performance.

If a manager is busy supervising several people, as well as tasks and other projects, then there will be limited time to take in the full scope and practice of the performance of the supervisee. As an alternative, many industries today are utilizing 360-degree feedback, which takes into account the relationships that an employee has with peers, customers, clients, supervisors and those whom the supervisee is responsible for overseeing.

Forms Only Give Quantitative or Qualitative Data: Many times, feedback forms that are utilized in performance appraisals only use quantitative or qualitative measures, but not both. Quantitative appraisals mainly measure numbers, such as how many projects, how many were on time. While this is important, there are other things to take into consideration.Qualitative benchmarks involve the completion of personal or professional goals and the stories of how the supervisee utilized opportunities to lead by example and proactively implement the values and mission of the organization. Listening to the stories of what has happened over the past year and looking at numbers and outcomes will result in a clearer picture of what the value of the employee is to the organization.

Time Consuming: It is recommended that a manager spend about an hour per employee writing performance appraisals and depending on the number of people being evaluated it can take hours to write the a department’s PA but also hours meeting with staff to review the P.A. I’ve know managers who had 100 plus people to write PAs on.

Once-a-Year Raises: Performance appraisals are usually done once a year and are connected to an increase in salary. This is a disadvantage in that supervisees generally live in fear and experience anxiety when their review time comes up. Having more consistent interaction when it comes to feedback between management and supervisees can help reduce the fear, anxiety and wondering about a raise.

Furthermore, the employee naturally will want to bargain for more money focusing on their strengths and the management will want to emphasize the constructive areas of performance evaluation in order to keep from giving raises, since money is a limited resource in any organization. This adds to the stress of the review.

Inconsistent Message: If a manager does not keep notes and accurate records of employee behaviour they may not be successful sending a consistent message to the employee. We all struggle with memory with as busy as we all are so it is critical to document issues (both positive and negative) when it is fresh in our minds.

Guidelines for Effective Appraisal Interview

Select a good time

Minimise interruption

Welcome, at ease

Start with something positive

Ask open-ended question to encourage discussion

Listen

Manage eye contact and body language

Be specific

Rate behaviour not personality

Layout development plan

Encourage subordinate participation

Complete form

Set mutual agreeable goals for improvements

End in a positive, encouraging note

Set time for any follow-up meetings

Performance Appraisal at Ranbaxy Labs. Ltd.

Performance Appraisal for managers is known as performance management system. Managers have to set certain “Key Result Areas (KRA’s)”, which serves as the base of performance measurement.

KRA’s mentions the critical tasks/performance areas that the appraisee needs to focus on in the coming year. The appraiser and appraisee need to participate in setting the KRA’s. There can be maximum of 5 and minimum of 3 KRA’s. The importance of each KRA is designated in terms of percentage (%) and is written in the percentage weightage column. The total in the percentage weightage column of all KRA’s should be equal to 100. The KRA’s are set at the beginning of the year. Then they are evaluated in the midterm (in June).

The KRA form is used to share the appraiser’s expectations with the appraisee. Appraiser have to clarify major areas of planned effort that are to be initiated during the performance period and also how the appraiser expect the planned results to be achieved.

Values in Actions (VIA’S)

VIA’s defines attributes desirable of a member of Ranbaxy. These are the factors upon which tasks are performed. These are further divided into two parts:

a) Mandatory VIA’S (MVIA’s): This part shares VIA’s with the appraisee-

Performance Focus Trustworthiness People Development Customer Responsiveness Quality Orientation Entrepreneurial Drive

b) Optional VIA’s (OVIA’s): Here the appraiser decides with the appraisee not less than 2 and not more than 5 VIA’s which are considered more important for his/her specific role. Behavioural descriptions should also be used which help to reach an agreement on the relevance of the VIA’s to the appraisee’s role.These can be:

Strategic Thinking

Problem Solving and Decision Making Relationship Management Communication Business Acumen Learning Creativity and Innovation Concern for Safety Environment

They also work on training plans. Where the appraiser and appraisee will mutually decide on immediate training needs. Like new updations in SAP.

Then KRA score can be calculated as:

KRA Score = (Weight of each factor) 20

= (Score1 + Score2 + Score3 + Score4 + Score5) 20KRA Scores:

Score5 – Exceptional Score 4 – Exceeds Expectations Score3 – Meets Expectations Score2 – Needs Improvement Score1 – Below Expectation

VIA Score = total score of all VIA’s 5+X

Where x is for additional KRA’s