Biopharma: Costs and Japan Mexico U.s

1502 Words Sep 2nd, 2013 7 Pages
Case study-- Biopharma Inc.
Presented by:Prateek Mittal 2010PMM111 Yatendra Singh 2010PMM115 Himanshu Bhatt 2010PMM132

Main points
‡ Problems faced in financial performance of biopharma Inc. ‡ Steep decline in profits. ‡ Very high costs at Germany and Japan plants. ‡ Stable demand across the globe. ‡ Company could no longer afford to have surplus capacity. ‡ Aims at having an efficient network. ‡ Cutting the costs is the top priority.

Background
‡ Biopharma Inc. is a global manufacturer of the bulk chemicals used in pharmaceutical industry. ‡ Two patents- - highcal and relax. ‡ Chemicals used by companies internal pharmaceutical divisions and also sold to other drug manufacturers. ‡ Currently all plants are setup to be able to
…show more content…
‡ 64.5 lacs is the cost incurred if : i. 12 Mexico to Europe ii. 5 (India)+ 3 (Mexico) to Japan ‡ 74.5 lacs is the cost incurred if : i. 5(India)+ 7 (Mexico) Europe ii. 8 Mexico to Japan In case of highcal minimum transportation cost is incurred if 5 units are transferred from India to Japan and 9+4 units are transferred to U.S from Mexico and Brazil respectively.

Cont..
Relax
R.M Euro pe Japa n Brazi l 55.2 Prd. 78 Tran s 3.6 Duti es Total R.M 58.5 Prd. 105

Highcal
Tran s 3 Duti es 0 Total 166. 5 44.5 2 62.3 41.5 26.4

4.01 140. 4(mx 9 c) 5.31( 93.9 ind- 6 mxc) 0 0 0 0 79.8 32.1 33.9 190. 4

36.3

49.5

2.85

18

22.5

1.5

2.52 (Indi a) 0 0 0

32.2

46.2 18 19.5 110. 5

1.4 0.6 0.6 3.4

25.2 18 10.8 64.8

37.7 22.5 15 90.4

1.4 1 0.6 5.05

India 13.5 Mexi 13.8 co U.S 76.5

4.65( 164. brz- 9 mxc)

Contd..
‡ Total cost incurred (Rm, Prd, Trans, Duties)= $1077.14 million. ‡ Fixed cost i. Brazil 30 ii. Germany 45+13+2.8 iii. India 26 iv. Japan 5.8 v. Mexico 42 vi. U.S 31 ‡ Total cost incurred = $1272.4 millions.

Question 2.
‡ How should Phil structure his global production network? Assume that the past is the reasonable indicator of the future in terms of exchange rates. Ans: The distribution would probably remain the same if the exchange rates
Open Document