Bayer Diabetes Care being a portion of Bayer Health Care provides interventions and nosologies for a assortment of diseases, it is based in UK. The Chief executive officer of the company has made a squad to look into and fix a study for either investing or spread outing the concern in India. Bayer Diabetes Care has been successful in bettering diabetes wellness and testing by developing the first convenient trial for glucose in piss in 1941.

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This study aims at understanding the state of affairs to either prosecute their concern in enlargement through export or through foreign direct investing, including the information on Indian national concern system, environment and civilization.

In this study we will understand the nature of the rivals in the domestic market of India and besides the large international participants who are already holding their evidences in India. We get to cognize about Indian pharmaceutical industries, the population and geographic countries.

An overview will be given on the International Institutions, Corporate Social Responsibilities, and Business Ethics to cognize the necessity for enlargement every bit good as for any sort of foreign direct investings.



State A ( United Kingdom ) :

The UK is forecast to hold the strongest concern environment of all major European economic systems. UK provides the best environment for companies to turn and win in international markets, offering a planetary gateway of connexions. It is a accepted leader in the field of invention and creativeness and is the 5th largest economic system in the universe. UKs overall import-export in last twelvemonth was $ 310 and $ 219 US billion severally which was highest after US and Germany.

State B ( India ) :

India is a ‘rapid globalize ‘ while others still see it as a ‘highly protectionist ‘ economic system because it has steadily opened up in its economic system but its duties and investing norms are still restrictive. Since 1990 ‘s to 2005 India ‘s GDP has increased from 15 % to 35 % and it was all because of transforming ( LPG ) liberalisation, denationalization and globalisation.

The Industry:

Invention is going more and more of import in modern society. The advanced attempts of the pharmaceutical sector have provided society with legion new redresss and medical specialties. In today ‘s society invention is progressively of import for a developed, every bit good as a development, state and it is a important subscriber to economic growing and the development of society. Below we will see few of the cardinal factors of both the states pharmaceutical industries.


The Pharmaceutical industry in India meets about 70 % of the state ‘s demand for bulk drugs, with more than 20,000 registered units.

The Indian Pharma Industry is estimated to be selling $ 743 billion in 2008, turning at approximately 5 to 6 per centum yearly.

In fiscal twelvemonth 2001, imports were Rs 20 billion while exports were Rs87 billion.

The taking 250 pharmaceutical companies control 70 % of the market with market leader keeping about 7 % .


It takes about 10 to12 old ages and ?550 million to contrive new medical specialties and therefore 20 % of the universe ‘s top medical specialties are developed and discovered in UK.

UK is the 3rd largest exporter of medical specialties in the universe.

Pharmaceutical industry in UK has 72,000 employs and produces 250,000 occupations per twelvemonth.

Its exports in 2007 were ?14.6billion, making a trade excess of ?4.3 billion.

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2. National Business System:

“ It is good known that theoretical work in academe every bit good as advanced attempts in houses frequently follow parallel paths and that rather similar new thoughts, constructs, and merchandises emerge about at the same time, without much direct communicating taking topographic point among the parallel attempts. This may besides happen in the societal scientific disciplines in periods when certain thoughts are “ in the air ” and certain new phenomena and penetrations become more obvious to analysts. ” ( Bengt-Ake Lundvall, 1999 )

National Business System is been effected by 5 chief factors:

Economic System

Political System

Legal System

Technology Conditionss

Cultural Conditionss

2.1 Economic System:

The British Economy is one of the most globalised ( or globalized ) economic systems in the universe, it was the first to industrialise. UK is Anglo-saxon capitalist economy state with broad economic system where authorities intercession is minimum. UK in 19th century possessed a dominant function in the planetary economic system.

India is a democratic state, holding a major function played by the authorities every bit good as the private sector in the economic system. Before 1991 Indian economic system was really much restricted nevertheless the economic system has been propelled by the liberalisation policies that have been instrumental in hiking demand every bit good as trade volume after 1991. Due to the debut of LPG India ‘s economic system has become the 2nd largest in today ‘s universe. In footings of buying power para, the Indian economic system ranks the 4th largest in the universe. Due to immense population the labour resort is really inexpensive and besides India is blessed with infinite, land and natural resorts as such to put any sort of industry hence all these things need to be taken into consideration before Bayer ‘s puts up any investing in India.

2.2 Political system:

The most of import fact is the nature of the British political system that was non under anyone ‘s regulation since 1000yrs. The last successful invasion was in 1066 by the Normans. Therefore: There is no revolution.

There is no written fundamental law.

The political system is non logical.

There are really gradual and matter-of-fact alterations.

India is a Sovereign, Secular, Democratic Republic with a Parliamentary signifier of Government. Different sorts of revenue enhancement interruptions and policy enterprises are taken into consideration for the growing of pharmaceutical concern in India. Some of them are:

Leaden revenue enhancement decrease of 150 % for the research and development outgo done by any pharmaceutical company.

New Millennium Indian Technology Leadership Initiative and the Drugs and Pharmaceuticals Research Program were initiated by the Indian Government.

The Government back uping the creative activity of SRV or particular purpose vehicles with an insurance screen to be used for funding new drug research

The private companies can utilize the drug research installations made by the Department of Pharmaceuticals.

Therefore all the above political effects seem to be good for Bayer ‘s to make investing in India maintaining in concern the rivals.

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2.3 Legal System:

The legislative assembly of UK is a bicameral Parliament. The United Kingdom does non hold a individual legal system since it was created by the political brotherhood of antecedently independent states

A alone characteristic of the India Constitution is the judicial system. A individual incorporate system of tribunals administers both brotherhood and province Torahs. Indian tribunals provide equal precautions for the enforcement of belongings and contractual rights. The New Industrial Policy of 1991 ( “ NIP ” ) which lays down the policy and process for foreign investing has liberalized and simplified the investing processs. The major alterations introduced by NIP are as follow:

Deregulation and de-licensing, gap policy towards foreign investing and engineering.

Freedom of investing for Foreign Institutional Investors.

Monopoly and restrictive trade pattern restraints

Customss responsibilities are been slashed ; responsibility free imports are been allowed.

The rupee is wholly exchangeable.

Export policies have been liberalized.

A revenue enhancement vacation is available for a period of 5 uninterrupted old ages in the first 8 old ages of set uping exporting units.

A revenue enhancement vacation for up to 5 to 8 old ages is available.

Concessions in revenue enhancement government are available for foreign investors in hi-tech countries.

Keeping in head all these benefits Bayer ‘s should make up one’s mind decently what has to be done.

2.4 Technological system:

Technologically both the states compete each other. The technological development in both the states are traveling on a fast infinite, therefore any sort of exchange of concern would non impact each other.


UK is a diverse and a homogeneous society due to the big sum of immigrant population. The British are really formal.

Prefer networking and relation edifice for long term concern.

Ranks are preferred.

Communication manner is more reserved and formal.

Punctuality is really of import.

Well managed concern meetings.

Business garb is really conservative.

Greetings as such shaking manus and oculus contact are appreciated.

Giving a rubric is as such ( Mr. , Mrs. , DR. etc. )

Business cards and gifts are besides appreciated.

Bringing about generic decision in a richly diverse complex state like India is really hard. However there are some comment civilization applied to all they are:

Hierarchy has a really good impact on Indian concern system.

Greeting a individual with both custodies folded and bowed caput is the formal every bit good as tradition here.

Constructing a good concern relationship is once more appreciable.

Meetings are arranged good in progress.

Punctuality is respected nevertheless being 10mins tardily does n’t count much.

Seniors are to be respected more as a portion of civilization Indians respects their seniors.

Never haste with the meetings they are normally slow to understand each other.

Feelingss and religions are really of import ; hence emotional bounding is more of import.

Due to a high influence of Ayurvedas in India it can be hard to do a measure in front therefore all the above conditions should be meet before puting up a concern in India.

Hence Bayer needs to agitate manus with the Indian tradition and so travel in front with the concluding program.

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India is a underdeveloped state but still there is a immense no. of poorness, illiteracy and corruptness, which ends up making serious wellness jobs. Hence Bayer ‘s can happen a house land to put a concern here.

Trade form in India:

India ‘s domestic pharmaceutical industry has seen a growing of 12 % in the last 5years. About 67million Indians are expected to make the age of 67 but with the aid of medical specialties, therefore the dependence of people on medical specialty is turning more and more. Patented drug are expected to hold a 10 % market portion of pharmaceutical industry in 2010.since the patent Act 1970 permitted India to lend in pharmaceutical market worldwide, it has emerged as a universe leader in fiction of standard generic drugs.

The growing rate of Indian pharmaceutical industry has been from US $ 0.32billion turnover in 1980 to about US $ 21.26 billion in 2009-10.

Growth of Indian Pharmaceutical Industry from 2002-03 to 2008-09 are given in table below:

Figures in Rs Crore








Domestic Market





















Entire Market Size







Trade between UK and India:

India exports about 8.5 % of pharmaceutical merchandises to UK which counts up to ? 19516 million and in return UK exports about ? 38million which is about 1.31 % of the entire export to India. Pharmaceutical sector being one of the fastest turning sectors in India is a good market to aim with its billion plus population and resilient economic system.

Growth factors and chance in Indian pharmaceutical industry:

Indian pharmaceutical market witnessed a growing of 4.0 % over 2007 that is about $ 7,743m which has increased to 13.2 % during the twelvemonth 2009-14 which comes up to $ 15490m.

India has besides appeared as the best location for pharmaceutical industry because of the aged population who is largely disease prone and is dependent on medical specialties.

There is a really fierce competition within the bing top 10 pharmaceutical company geting 36.1 % of the gross revenues in the twelvemonth 2008. After the partnership understanding with WTO ( TRIPS ) India revised its patent Act in Jan 2005.

Indian houses are puting out schemes to profit from the Nipponese authorities proposal to back generic drugs to minimise health care charges.

The Indian vaccinum market is turning at the rate of 20 % doing about US $ 665milliom.

The Pharmaceutical market in India is expected to traverse US $ 12-13 billion by 2012.

The pharmaceutical industry received about US $ 1.43billion from April 2000 to December 2008.

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Future Scenario of pharmaceutical industry:

With so many companies puting in India the hereafter of it seems to be rather promising.

It has a immense potency to turn as there is a immense market for wellness attention.

Healthcare budget of an mean Indian family is expected to turn from 7 % in 2005 to 13 % in 2025.

Harmonizing to FICCI-Ernst India recognized the drug company market which reached US $ 20billion by 2015.

The Minister of Commerce invests approx. US $ 6.31 billion on the pharmaceutical industry.

Due to low cost of R & A ; D Indian pharmaceutical industry is off shoring about US $ 2.5 billion by 2012.

The branded generics market will go on to rule the Indian pharmaceutical industry. Sixty one drugs deserving US $ 80 billion will travel off patent at the US Patent and Trademark Office between 2011 and 2013.

By 2015, the forte and super-specialty therapies will account for 45 % of the drug company market.

However the existent potency of the Indian pharmaceuticals can be seen merely when there will be sustained, progressive and collaborative attempts by the authorities and the pharmaceutical industry as a whole.

Some of the major issues faced by the pharmaceutical industry in India:

High competition due to low borders and restricted capital for R & A ; D the pricing has become intense.

Rising of due meticulosity and conformance with merchandise criterions leads to high costs and break in the launch of new merchandises

Due to less capital the authorities might non concentrate on pharmaceutical industry.

Less of proper substructure.

Less of qualified professionals.

Obstacles made. up of ordinances.

Developing find plan.

Less of academic coaction

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Trade barriers:

As per the proclamation made by the authorities sing the relaxation of equity retentions from 40 % to 51 % the conditions were non good, as there were no inducements given to increase the equity retentions in India.

The local share-holding governed by the authorities ordinance and processs for drug company companies are still really rigorous and non-transparent.

Companies faced troubles to posses 100 % owned subordinate due to the ill-defined determinations made by the Foreign Investment Promotion Board


Multinational pharmaceutical companies had lobbied for a five-year information protection term.

TRIPS, under WTO understanding in which India is a signatory makes informations protection/exclusivity mandatary for all member states along with merchandise patents.

For the production of drugs and pharmaceutical a FDI of 100 per cent is allowed, capable to the fact that the venture does non pull mandatory licensing.

However there are still some duty barriers made by Pacific Bridge Medical Inc such as high excise, monetary value related barriers, monetary value control etc. to protect the domestic industry. Hence Bayer needs to be concerned about this.

The International Institutions:

WTO and India:

India being a closed economic system opened itself since 1990 after accepting the LPG policy. There were so many limitations at that clip which got resolved after India joined custodies with WTO. Hence with the aid of it India went into subscribing GATT, GATS, TRIPS, and TRIMS etc.

Due to WTO India had to:

Widen the Product Patent Protection to Products in sectors of drugs, nutrients and chemical.

Protection of merchandise patent shall be for 20 old ages.

A compulsory licence was enabled for exporting medical specialties to states which have deficient fabrication capacity.

TRIPS and India:

Has a significant impact on rational belongings governments in developing states. Some of the steps taken by it are:

Compulsory Licensing.

Parallel imports.

Limits on informations protection.

Exceptions from patentability.

Public, non-commercial usage of patents.

Now Bayer ‘s can be relaxed sing any right of first publication or any advanced technological right in India. Government of India has put necessary control on trade and concern hence Bayer ‘s can increase its research and concern here.

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India is in the fifth rank in bring forthing drugs ( 7.5 billion dollar ) . It is besides among the top 20 pharmaceutical exporters. But now Indian drug exporters are disquieted that any possible growing for their concern overseas is bound to vanish, hence India is looking frontward to hold with EU negotiations as such Anti-Counterfeit Trade Agreement ( ACTA ) , the World Customs Organization ‘s Standards to be Employed by Customs for Uniform Rights Enforcement ( SECURE ) , and the World Health Organization ‘s ( WHO ) International Medical Products Anti-Counterfeiting Task Force ( IMPACT ) .

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Export or FDI:

As we know Bayer ‘s is a UK based company hence its merchandises manufactured in UK will go really expensive in India to be sold out, due to currency rate and besides the import responsibility on it. Hence it is advisable for Bayer ‘s non to export its merchandises to India instead happen out another manner to perforate in the Indian market.

In the other manus Bayer ‘s can make precisely what ( Glaxo Smithkline ( GSK ) ) has done to acquire into Indian market that is through:


Amalgamations and Acquisitions ( M & A ; A ) involvement in India is presently really high in the drug company industry. India ‘s altering curative demands and patent Torahs will supply new chances for large drug company for establishing their patents. Hence Bayer ‘s should besides take the same way of concern. Second low cost of educated and efficient labours. Third there will be low cost of production. This non merely can capture the local market but besides the foreign market. Through M & A ; A, Bayer may besides additions benefits of local house ‘s distribution web and market portion which will do its constitution cost and hazard lower.

However maintaining into consideration all the above affairs Bayer ‘s besides need to maintain a ticker on its rivals such as Ranbaxy, DR.Reddys lab, Cipla etc.

Corporate Social Responsibility in India:

For many companies in the research-based pharmaceutical industry, CSR is a to the full incorporate component of their schemes and operations. Business theoretical accounts making excess attempt for the society for developing it, is known as CSR. Some of the activities based on CSR are:

Bettering entree to medical specialties in developing states

Investing in wellness related instruction and bar programmes and set uping planetary safety and ethical criterions into day-to-day concern pattern.

Donation programmes.

Research and development for diseases prevalent in developing states.

There are legion enterprises where the industry provides instruction, substructure and proficient aid to developing states.

India being a rapid turning state and with a huge population demands to hold CSR as one of the really of import thing. Ethical motives is related to codification of behavior and moral judgement while CSR is a wide subject which covers societal, environmental, economical, human right, ethical and legal facets.

Some of the of import points to be remembered by Bayer ‘s:

No environmental aid.

Diverseness in workplace but by giving equal chances.

Avoid any sort of illegal pattern, child labour or graft.

Suitable working status for workers with safety steps.

Donating money to the needy.

Promote instruction and local substructure.


India being a rapid turning economic system has started pulling MNC ‘s from all over the universe. The enterprise taken by the Indian authorities as LPG has lead India to a new epoch, by increasing FDI and get rid ofing trade barriers. Hence pharmaceutical industry has made and still doing a immense net income with this.

UK has a great history related to India hence these two states are ever into some or the other trade dealingss. Since 1990 ‘s many UK companies have tried to put in India by some or the other manner. In the pharmaceutical sector India is dining therefore many UK companies are seeking to take the advantages through it by FDI ‘s or Merger ‘s and Accusation ‘s or Joint ventures.

Same as above Bayer ‘s has a really good and first-class chance to set up its concern in the Indian market and derive an international portion. Bayer ‘s has a broad pick of set uping its concern in India in any of its well developed metropoliss, because with the addition in population in India it is besides increasing in people prone of diseases. Hence wellness attention is going really of import in India. And besides because of more aged people in their diabetes is really common in them hence Bayer ‘s should boom in its field in India.

Bayer ‘s has no local agent support in India hence instead than set uping its ain works there it can foremost travel for Merger ‘s and Accusations which will hike up its good will and concern in the Indian market. There are already really large participants bing in the market hence to both vie it and to do a good will it has to take some other support as a back Born. Hence to bask successful concern in India Bayer ‘s has to travel through M & A ; A process.


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