A STUDY ONI] COMPARISON OF PROCESSES AND SYSTEMS OF TOP PHARMACEUTICAL COMPANIES IN INDIA

II]

EMPLOYEE PRACTICES FOLLOWED IN PHARMACEUTICAL COMPANIES OF RUSSIA, UKRAINE & BRAZIL

By RASHMI D. NAIR A project report submitted in partial fulfillment of the requirements for Master of Business Administration of Ahmedabad Education Society Post Graduate Institute of Business Management, Gujarat University July 2006

DECLARATIONI hereby declare that the project report entitled A STUDY ON

I] COMPARISON OF PROCESSES AND SYSTEMS OF TOP PHARMACEUTICAL COMPANIES IN INDIA II] EMPLOYEE PRACTICES FOLLOWED IN PHARMACEUTICAL COMPANIES OF RUSSIA, UKRAINE & BRAZIL Submitted in partial fulfillment of the requirements for the degree of MASTER OF BUSINESS ADMINISTRATION To AESPGIBM, Gujarat University, is my original work and not submitted for the award pf any other degree, diploma, or other similar title of prizes.

Place: Ahmedabad Date: 15/07/06

Rashmi D. Nair MBA-01-27

CERTIFICATE

This is to certify that the project report entitled A STUDY ON I] COMPARISON OF PROCESSES AND SYSTEMS OF TOP PHARMACEUTICAL COMPANIES IN INDIA II] EMPLOYEE PRACTICES FOLLOWED IN PHARMACEUTICAL COMPANIES OF RUSSIA, UKRAINE & BRAZIL Submitted in partial fulfillment of the requirements for the degree of MASTER OF BUSINESS ADMINISTRATION To AESPGIBM, Gujarat University RASHMI D. NAIR

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Has worked under my supervision and guidance and that no part of this report has been submitted for the award of any other degree, diploma or other similar titles or prizes and that the work has not been published in any journal or magazine. Certified by: (Guides name)

ACKNOWLEDGEMENT

It is not because things are difficult that we do not dare; it is because we do not dare that they are difficult. - Seneca When I came to take this project, the first reaction was Oh God! But then gradually when I started working on it, I realized that its not hard as it had seemed, as I had so many people who were ready to guide and help me whenever needed. I take this opportunity to thank: (1) My guide Ms. Neetu Wadhawan, Senior Manager (HR), Zydus Cadila for her guidance and administrative support. Madam, your help and support were pivotal in timely completion of my project. (2) Ms. Poonam Dhat and Mr. Mihir Gohil of Dial for Health, Zydus Cadila for allowing me to use their computer facilities. (3) My Husband, Dr. Dinesh Nair, who helped me in every area. (4) All the respondents, who responded to my questionnaire and at the same time, provided me with crucial information about their companies. (5) The employees of Zydus Cadila, who were helpful and co-operative. (6) My parents.

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INDEXSr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. Content PART I: Comparison of Processes and Systems of Top Pharmaceutical Companies in India Introduction to Human Resource Management Pharmaceutical Sector in India Ranbaxy Laboratories Dr. Reddys Laboratories Cipla Sun Pharmaceuticals Lupin Laboratories Nicholas Piramal Zydus Cadila GlaxoSmithKline Novartis Theoretical Comparisons of HR policies Questionnaire Comparison of HR policies Based on the responses Conclusions PART II: Study of Employee Practices Followed in Pharmaceutical Companies Of Russia, Ukraine and Brazil Russia (a) Introduction (b) Pharmaceutical Sector in Russia ( c) HRM in Pharmaceutical Sector in Russia 1. Recruiting 2.Methods used in selecting new employees 3. Labor Code 4. Employee Development 5. Managerial Appraisals 6. Monetary Benefits 7. Non-Monetary Benefits 8. Work Environment 10. Feedback Systems 11. Employee Retention 12. Expatriate Employee Environment 13. Organizational Culture 14. Exit 4 Page No. 2 3 5 8 13 19 21 22 26 28 33 37 42 44 46 47 49

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51 52 58 63 64 65 65 67 67 68 68 70 70 72 73 75

(d) Conclusion 19. Ukraine (a) Introduction (b) Pharmaceutical Sector in Ukraine (c) HRM in Pharmaceutical Sector of Ukraine 1. Labor Code 2. Expatriate Personnel 3. Social Security 4. Taxation 5. Organizational Culture 6. Employee Ownership (d) Conclusions Brazil (a) Introduction (b) Pharmaceutical Sector in Brazil ( c) Indian Pharmaceutical Companies in Brazil (d) HRM in Pharmaceutical Sector of Brazil 1. Organizational Culture 2. Job Evaluation 3. Remuneration and Retention 4.Salary Increases 5. Long Term Incentives 6. Performance Appraisals 7. Efficiency of Training Programs 8. Internal Communication 9. Benefits Offered (e) Conclusions BIBLIOGRAPHY GLOSSARY ANNEXURE

76 78 80 85 87 87 89 89 91 91 92 93 95 99 103 103 104 104 107 107 108 108 108 109 110 111 113 114

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21. 22. 23.

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PART I

COMPARISON OF PROCESSES AND SYSTEMS OF TOP PHARMACEUTICAL COMPANIES IN INDIA

INTRODUCTION

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Human Resource Management (HRM) is both an academic theory and a business practice. It is based on the notion that employees are firstly human, and secondly should not be treated as a basic business resource. HRM is also seen as an understanding of the human aspect of a company and its strategic importance. HRM is seen as moving on from a simple "personnel" approach (or was supposed to) because it is preventative of potential problems, and secondly it should be a major aspect of the company philosophy, in which all managers and employees are champions of HRM-based policies and philosophy. Contemporary organizations face constant pressure to enhance levels of service and productivity whilst also improving levels of cost efficiency. The volatility of external environment and the rapid pace of technological change increasingly demand innovative means of improving business performance and securing competitive advantage. Human resources are increasingly recognized as the prime source of competitive advantage and the need for effective people management is more important than before. While much has been written about strategic human resource management and its contribution to organizational performance, real life examples of what works and what doesnt remain thin on the ground. Sometimes, HR professionals and senior managers are likely to face overwhelming pressure to follow trends or apply quick fixes to a wide range of people management challenges and it can be difficult to get impartial advice about what to change and how to change it in order to create lasting result. In the past, people working in organizations were given attention merely in administering the necessary conditions of work. The traditional concept of personnel management was based on a very narrow view of human motivation. It was thought that human beings are primarily motivated by comforts and salary and necessary attention may be given to rationalize these so that people do not get dissatisfied. It is now being increasingly realized that people working in organizations are human beings. They have their own needs, motivation and expectations and that their contribution to the organization is much more than that of any other resource that is being used. HRM systems are path dependent since they consist of policies that have evolved over time. A competitor may understand that a particular HRM system is valuable. However, because such systems are unlikely to work the same way if they were removed from the context where they are operating, a competitor cannot simply buy HRM systems in a market. In addition, to copy an HRM system successfully, it is necessary to understand how all relationships inside the system work. Because HRM systems are invisible assets, it is difficult to develop this needed understanding. Also, there it is difficult to think of a good substitute for a well developed HRM system.

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PHARMACEUTICAL SECTOR OF INDIAIn Asia, India and China are seen as the pharmaceutical hubs as they provide major opportunities for drug research and development but for very different reasons. As per the Boston Consulting Group, Indian pharmaceutical companies are growing at a very rapid pace. Indias R&D costs are half those of China. It has well educated English speakers and much shorter administrative delays to approve clinical trials than in China. In India it takes three to nine months to clear a clinical trial compared with nine months to a year in China. In China the R&D is mostly financed by the government, while in India, it is chiefly funded by several pharmaceutical groups. As per Mr. Rajesh Srivastava, President, Fine Chemicals & CRAMS, Jubilant Organosys Ltd., R&D and manufacturing outsourcing activities in India had begun to attract big pharma MNCs and India has the potential to emerge as a global pharma hub. There are several challenges faced by the US and European players like maintaining focus on core activities like IPR and branding, drying up of the R&D pipeline, competition from generics for off-patent products which forces the companies to explore low cost options etc. These challenges are driving the companies to tap the advantages offered by India in terms of cost, availability of skilled chemists, process engineering skills, chemistry knowledge, international regulatory compliance & IPR protection etc. The global pharma firms are seeking to enter into collaborations with Indian players to leverage Indias advantage in discovery chemistry capabilities. Also, Indian companies are seen aggressive on global platform through activities like overseas acquisitions, takeovers, consolidations etc. Saturation in domestic market is being covered by aggressive exports. Top Indian pharmaceutical companies are shifting a major part of their manufacturing bases to major pharmaceutical markets of the world as the export is becoming the key to higher profits. Exploding generic 4

markets in the US and Europe as a result of the patent expiry of a number of blockbuster molecules was the starting point to march towards the developed world for establishing manufacturing facilities. The new patent regime and the consequent pressure to find resources for spending on new molecular research also forced the Indian companies to look overseas markets for support. Indian companies are currently focusing on mergers and acquisitions, filing of DMFs and ANDAs in the regulated markets, partnering with global giants, undertaking contract research and setting up own manufacturing facilities. The top pharmaceutical companies in India are difficult to be designated very accurately as there are several criteria to be matched. Also, it was difficult to obtain the recent survey details since all the data are paid ones and the companies generally would not give the full report to the trainees for various administrative reasons. Hence, the respondent here took several survey data conducted in the years 2004 and 2005 from old issues and the Internet.

As per the ORG-MARG ratings in March 2006 based on the quarterly sales in India, the ratings are as follows: Table 1: Top Ten Pharmaceutical Manufacturers in I Quarter of 2006 Sr. No. % of the Market In March 2006 Total Market 100 GlaxoSmithKline 5.58 Cipla 5.11 Sun Pharmaceuticals 3.03 Nicholas Piramal 2.62 Ranbaxy 2.55 Alkem 2.54 Dr. Reddys 2.37 Laboratories Zydus Cadila 2.28 Lupin Labs 2.26 Aventis Pharma 2.12 Manufacturers % change in Net Profit 0.5 0.6 1.1 0.8 0.8 1.5 1.6 0.3 2.1 -

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

The following companies were selected for studying the HR practices as the possible closest competitors of Zydus Cadila. The Indian companies are: (1) Ranbaxy Laboratories (2) Dr. Reddys Laboratories (3) Cipla (4) Sun Pharmaceuticals (5) Lupin (6) Nicholas Piramal 5

The Multi-Nationals selected are: (1) GlaxoSmithKline (2) Novartis The procedure followed by the respondent for conducting the study is given below in steps: (1)Finding out the annual reports 2004-2005 of the companies from the Internet and personal contacts in the pharmaceutical industry (2) Studying the HR practices as mentioned in the Annual reports as well as reported on the companys websites (3) Making theoretical notes of the HR policies followed by these companies (4) Formulating HR questionnaire on Microsoft Excel Worksheet (5) E-mailing of the questionnaire to personal contacts as well as official contacts of the selected companies. Universe selected comprises of 5 employees in each company ranging from executive level to the managerial level and mostly from Marketing area and Research & Development area (6) Collection of the primary data (7) Comparison of the primary and secondary data and tallying them (8) Results and Discussions (9) Conclusions Given below are the details of the companies selected and the HR policies as reported on their company website and annual report of 2004-2005.

RANBAXY LABORATORIES LIMITEDRanbaxy Laboratories Limited (RLL), Indias largest pharmaceutical company, headquartered in India, is an integrated research based, international pharmaceutical company, producing a wide range of quality, affordable generic medicines, trusted by healthcare professionals and patients across geographies. It is ranked amongst the top ten generic companies worldwide. RLL, is a public limited company which was incorporated in India on June 16, 1961 and went public in 1973. The Company and its subsidiaries (collectively referred to as the Group) operate as an integrated international pharmaceutical organization with businesses encompassing the entire value chain in the marketing, production and distribution of dosage forms and active pharmaceutical ingredients. The members of the Board of Directors are Mr. Tejendra Khanna (Chairman), Mr. Vivek Bharat Ram, Mr. Gurcharan Das, Dr. P.S.Joshi, Mr. Nimesh N.Kampani, Mr. V.K.Kaul, Mr. Vivek Mehra, Mr. Ravi Mehrotra, Mr. Harpal Singh, Mr. Shivinder Mohan Singh & Mr. Surendra Daulet Singh. CEO & Managing Director of the Group is Mr. Malvinder Mohan Singh. 6

Dr. Brian W Tempest is the Chief Mentor and Executive Vice-Chairman. The Regional Headquarters of the Group are situated in Gurgaon(India), London (U.K), New Jersey (USA),Sao Paulo (Brazil) and Singapore. The Group presently has manufacturing facilities in seven countries India, the USA, Ireland, China, Malaysia, Nigeria and Vietnam. The Groups major markets are India, the USA, Europe, Russia/CIS and South Africa. The R&D activities of the Group are carried out at its facilities in Gurgaon, near New Delhi, India.

There are nearly 22 100% shareholding entities of the Group located in India, The Netherlands, South Africa, the USA, UK, France Ireland and Hong Kong. The Companys shares are listed for trading on the BSE and NSE and its Global Depository Receipts are listed on the Luxembourg Stock Exchange. The Groups head office is located in Delhi whereas its corporate office is located in Gurgaon. The top 10 molecules of the company are Co-amoxlclav, Amoxicillin, Ciprofloxacin, Cephalexin, Simvastatin, Isotretinion, Cefacior, Clarithromycin, Cefpodoxime Proxetill and Ketorolac Tromethamine. Since the Group operated in regulated, semi-regulated and unregulated markets, its products are checked and approved by regulatory authorities like USFDA (United Stated Food & Drug Administration), MHRA -UK(Medicines & Healthcare Products Regulatory Agency), ANVISA Brazil, the WHO Geneva (World Health Organization), Cologne Regional Administration Germany, China (Provincial Drug Authorities & the State Food & Drug Administration) etc. The manufacturing units located all over the world comply with GMP (Good Manufacturing Practices) norms. The total number of patents filed reached 338 at the end of 2004. The Company was the first from India to file Para IV ANDAs in the USA. The Company filed 36 ANDAs (Abbreviated New Drug Application) with the USFDA and received 16 approvals at the end of 2004. Overall global regulatory filings stood at 852 during 2004-2005. There are 9 marketing arms of RLL through which they market their basket of products. These are Pharma, Stancare, Croslands, Rexcel, Solus, Rextar, Blue R, Ranbaxy Cardio-Vascular and Super speciality.

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HUMAN RESOURCE MANAGEMENT Ranbaxy was ranked amongst the Top Ten Companies to work for based on the metrics for HR effectiveness, in a survey conducted by Business Today, a renowned weekly in India in November 2005. There are more than 10,000 multi-cultural employees spread across 49 countries, working concurrently across time zones. * Organization values: Values are to the organization what character is to an individual. The values that are held so closely by the employees at Ranbaxy are as follows: * Uphold the highest ethical integrity in all business transactions * Achieving customer satisfaction is fundamental to our business * Provide products and services of the highest quality * Practice dignity and equity in relationships and provide opportunities for our people to realize our full potential. * Ensure profitable growth and enhance the wealth of the shareholders. * Foster mutually beneficial relations with all business partners * Manage operations with high concern for safety and environment * Be a responsible corporate citizen These values have been translated in Values in Action (VIA) which drive the Companys recruitment, development and appraisal process. These VIA are * Performance Focus * Customer Responsiveness * Entrepreneurial Drive * Trustworthiness * People Development * Organizational Culture: In order to build a seamless organization, Ranbaxy has invested in robust systems and processes that knit people together, encouraging them to pursue a common goal. At Ranbaxy, the management believes in creating an environment that builds a committed workforce pursuing a shared vision of excellence. There is a commonly understood and shared vision that knits the organization together. There is a Code of Conduct that clearly defines ethics for performance, behavior at work and relationships. This code was communicated to all the employees across the globe in several languages. * Employee Retention: Several employee engagement programmes through town hall meetings and other team activities with a view to better understand employee expectations are conducted by the Company.

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The Company has mentoring and coaching processes at each level which are interactive and feedback based. This helps the employees in understanding their career needs. To institutionalize and facilitate the process of career and succession planning, the management is building an inventory of human resources. This involves the mapping of people skill sets and marrying them with the requirements of the organizations. Also, the management is building an on-line database of employees and has put in an e-HR system that uses SAP as the platform. As a result, a large number of employee information is readily available on the intranet. This also makes the employee services more responsive and robust. In Ranbaxy, the employees are provided autonomy in taking decisions. Individuals are given responsibility quite early in their careers and their actions impact the business. This helps in fostering a culture of entrepreneurship within the organization. Creativity is promoted in every part of the organization. Genuine mistakes are considered as a part of learning and evaluated risk taking is encouraged. The global spread of Ranbaxy and the blazing growth in business provides ample opportunities for the employees to build careers in various fields. The managers generally have the opportunity to live and work in different countries. Such international experience helps them to better understand the complex business and grow both personally and professionally. There is a Ranbaxy Leadership Model that focuses on strengthening the leadership qualities across the organization. The model first prepares the individuals to deal with the self and then with others. As the manager matures, the model facilitates the individual to become a business leader by understanding and appreciating the multiple facets of business. Finally, the managers become ready to lead and drive change an ultimate test of a persons leadership skills. The Strategic Learning Partners support the development initiatives. At Ranbaxy, managing and shaping the careers of the employees are viewed as high priority. * Training: The Management Trainee Programme was developed to develop and nurture young talent. A committee specially constituted for the development evaluates the work of the management trainees. The committee members coach and mentor them during the training period and prepare them for the regular challenges of a regular job. Each of the management trainee, irrespective of his/her discipline, gets an opportunity to work and get exposed to sales, R&D, manufacturing. They also work on live business projects in their own area of specialization. Projects are also undertaken in cross functional area to build a holistic understanding of business. To prepare the trainees for global challenges each has to undertake an extensive ten week assignment away from their home country. This helps in developing a global mindset in the trainees. * Employee Benefits: In Ranbaxy, along with the salary, the employee also receives a wide range of benefits that one expects from a big company combined 9

with the local working conditions and legislations in the country the employee is working in. Some the benefits include Group Life Insurance, Health Insurance, Stock Ownerships, Pension Plans etc. The Company ensures that the employees and their dependents get adequate financial protection on solid and long term care basis.

Dr. REDDYS LABORATORIESDr. Reddys Laboratories was established by Dr. Anji Reddy in Hyderabad in 1984. Dr. Reddys Laboratories (DRL) was the first Asia-Pacific pharmaceutical outside Japan and the sixth Indian company to be listed on the New York Stock Exchange. The company is into API and intermediates, Branded finished dosages, Generic finished dosages, Specialty and Discovery Research. The main markets are India, the U.S.A, Europe, Russia and China. The company has 6 API plants and 7 Formulation plants i.e. total 13 manufacturing units. DRL has joint ventures and subsidiaries in South Africa, Brazil, China, France, the Netherlands, Russia, Singapore, U.K. and the U.S.A. It has representative offices in Kazakhstan, Romania, Sri Lanka, Ukraine and Vietnam. Head office is in Hyderabad. Board of directors are as follows: Whole time directors are- (1.) Dr. Anji Reddy (Chairman), (2.) Mr. G.V. Prasad (Vice Chairman and CEO) (3.) Satish Reddy (Managing Director and CEO) Independent Directors are : Dr. Omkar Goswami, Mr. P.N. Devarajan, Mr. Ravi Bhoothalongam, Dr. V.Mohan, Dr. Krishna Palepu and Mr. Anupam Puri. DRL has filed over 65 US DMFs and 45 ANDAs till 2005-06. DRL has filed over 306 international dossiers in branded finished dosages segment. . It had increased its R&D budget by 14% of its total revenue at Rs. 2803 million. DRL is listed on the BSE, NSE and the New York Stock Exchange (NYSE). Chart 1: Revenue from Key Markets (US $ million) 10

Source: Dr. Reddys Annual Report 2004-2005120 100 80 60 40 20 0 Russia Europe North America

Although around 58% of DRLs revenues come from generic drugs, the company was committed to the WTO-compliance long before the 2005 bill took effect, and most of these products were already off-patent. DRL has long been a research oriented firm, preceeding many of its peers in setting up a New Drug Development Research (NDDR) in 1993 and out licensing its first compound just four years later. The Company enjoys a front-end commercial infrastructure in the U.S, China, Europe and Russia representing individually and cumulatively a large market for Companys generic and innovative products (as and when they mature). HUMAN RESOURCE MANAGEMENT Today, DRL is widely recognized as an employer of choice, reflected in the prestigious accolades for their people practices and their employee brand. The company was ranked seventh- the only pharmaceutical company to make it to top 10-in The Best Companies to Work for in India, a survey conducted by Business India, Mercer and TNS. It was also ranked 11th among The Top 25 Best Employers in India in a survey conducted by Hewitt associates and CNBC India. The company was also ranked as the 6th Most Respected Company in a survey conducted among all companies in India by BusinessWorld. There are more than 6000 employees of nearly 35 nationalities employed by DRL all over the world. The org itself is divided into 8 SBUs. Each SBU has its own HR team. While the unit HR reports to the respective heads there is also a professional linkage between corporate HR and the unit HR. *Organizational Development: At DRL as a part of the Companys drive to embed excellence into all key processes, it had adopted Dr. Reddys Execution Excellence Model, which is built around the companys core values and integrating its core purpose and vision. This model provides a framework of how people, processes and strategy can be interlinked for sustainable improvement. The company has identified processes and organization-wide practices which it needs to excel in for 11

sustainable business results. The various initiatives adopted across the organization as a part of this pursuit comprise of: * A globalized matrix structure vertically segmented across geographies and businesses * The integration of product development in APIs, generics and branded finished dosages with accelerated new product rollouts derived through a combination of technical powers and process excellence. * Shared Services Organization (EST. In 1994): To leverage people, process and technology to attain a process excellence in the areas of finance, human resource management and other enabling processes. The Six Sigma Efficiency was rolled out and it is reported that already an efficiency of 4 sigma (99.3 % transaction accuracy) was achieved enabling high savings. A 3S Excellence Model was also anchored wherein the objective was to leverage SOX (Sarbanes Oxley Act) as an opportunity, SAP as a platform and Shared Services as a model to achieve an all-round excellence in business processes. * Project Pragati This was initiated to drive cost improvements to retain cost competitiveness in order to compete effectively. An implementation in 3 phases helped the company to generate savings of Rs.448 million in last three years. * Project Rachna Initiated for the internalization for the project management framework and a greater alignment of the R&D teams to costs and timelines. As a result the company has achieved a reduction in the cycle time for the development of new products. * Project Disha For gearing up its supply chain to build up a cost effective global supply chain that is highly responsive and driven by customer needs. * Project Suraksha for the compliance of the Section 404 relating to corporate governance of the Sarbanes Oxley Act (SOX). *Core Purpose: To help people lead healthier lives. *Vision: To become a discovery led global pharmaceutical company. *Core Values : * * * * * Quality Respect for individual Innovation & Continuous Learning Collaboration & Teamwork Harmony & Social Responsibility

The companys HR philosophy, pivoted around innovation, entrepreneurship and globalization, seeks to continually enhance these qualities. As the company absorbs from its success and setbacks, it enhances its agility, speed and execution intelligence. Hence this culture with a difference would definitely ensure that it would successfully leverage its rich people resources to address to the challenge of the future. The HRM strategy of the company derived from its business strategy is rooted in its three elements of Talent, Commitment and Relationship. The company had 12

strengthened its people capability management through a number of initiatives which are given below: * Development of process-obsessed and metric-tracked talent acquisition practice It is an innovative selection methodology to ensure that the company attracts and retains the best talent in the market. This focused and selective acquisition ensured an offer-to-acceptance ratio of around 96%. It launched Parichay, a referral plan aimed at encouraging the existing employees to introduce prospective new employees within the companys guidelines. It also introduced a Project Internship Program rolled out across top management campuses across India and the U.S.A. This would enable to company to track down the prospective talented candidates as soon as possible. * Career Development: The Company gives great importance to providing a work culture that allows its members the space to learn, innovate, experiment and grow. It puts a premium on innovation, freedom to think differently and individual responsibility. The company provides platforms that help in multi-directional growth of its employees. It also routinely sponsors employees for training in external institutions to help them to increase their skill bandwidth. The company has over the years, created a culture that empowers, values that inspire and a career proposition that encourages meritocracy. Its differentiated career management approach builds employability and competence rather than mere vertical mobility. Career Centre is an e-recruitment portal that ensures internal career mobility and makes all job positions available to anyone with an attitude and aptitude within the organization. Unique Career Design Workshops are frequently held for middle to senior level managers to help them recognize and match their latent strengths with their career preferences. The Management Development Program (MDP) is also part of the talent management initiative. An annual program, it helps identify leaders. MDP creates a pool of talented employees who are high performers in their present position and also have the potential to handle challenges and greater responsibility. MDP creates a career path for promising executives by offering options for growth and development, besides opportunities for moving up the corporate ladder. * Ankur DRLs virtual Corporate University: The thrust area here is Leadership Development at all Areas and Functions. The following initiatives are offered to the employees and their family members 1. Leadership Development Programs (Basic and Advanced) 2. Long Term Education Programs (MSc in Pharm.Chem and MBA in Executive Pharm Management) 3. Certification programs in Intellectual Property Management and Project Management. 4. Training programs 5. Organizational Development Initiatives like Values Week, 360 degree feedback, Organizational Climate Survey, Code of Business and Ethics Rollouts etc. 6. Family programs 7. Learning resources like Library and e-Campus 13

8. Knowledge sharing platform like Technical Conclave, Cutting Edge, Pragya Forum in API, Gurukul etc. * Performance Enhancement: To manage individual performance the company had developed a thorough in house performance enhancement and coaching tool also called PerfECT. This is focused on employee development and performance enhancement through mentoring, coaching and performance appraisals. This also is a good platform for the employees to share ideas, dreams and expectations amongst themselves. *Employee Motivation: Employees are constantly motivated by the company in form of awards like Excellence Awards, Best Team Award, Best Managed Workplace Award, Best Team Contribution in Social Environment Award, Best Quality Driving Team Award etc. * Internal Communication: The Company implemented the SAP-HR module in 2004-2005 and also created an Employee Services Team that would provide a single window response to all HR transaction processing. The company shares news, successes, challenges and developments with its associates in the form of electronic communication from the CEO and an in-house magazine called Elixir. *Organizational Culture: At DRL a culture is fostered that is * Customer focused and high performance driven * Entrepreneurial & Innovative * Egalitarian & Trusting * Flexible & Adaptive

CIPLACipla was founded in 1935 in Mumbai by Khwaja Abdul Hamied. Full form of Cipla is The Chemical, Industrial & Pharmaceutical Laboratories. Cipla is the second largest pharma company in India. It deals in raw materials, intermediates, prescription drugs, Over The Counter products and Animal Health Care products. It is managing its entire manufacturing business from India and exporting more than 45 per cent of its total income to various countries. Cipla has received approvals from major regulatory bodies like USFDA, MHRA, PIC Germany, the WHO, ANVISA, SIDC Slovak Republic and Department of Health, Canada. It is reported that the spendings on the R&D are around 4 % of its total income. Dr. Yusuf K.Hamied is the Chairman and the Managing Director. Joint Managing Directors are Mr.M.K.Hamied and Mr. AMar Lulla. 14

Non-executive Directors are Dr. M.K.Gurjar, Mr. V.C.Kotwal, Dr. H.R.Manchanda, Mr. S.A.Pinto, Mr.M.R.Raghavan and Mr.Ramesh Shroff. It is a privately held company. % of shares for Indian promoters is around 40.94% and there are nil foreign promoters. Cipla now distributes its 800 odd products in over 140 countries like the USA, a number of countries in Europe, Africa, Australia, Latin America and the Middle East. Cipla burst into the international scene in 2000 with Triomune, an AIDS treatment between $300 and $800 per year that infringed upon patents held by several companies who were selling the cocktail for $12,000 per year. Cipla did not report having a research program.

Cipla continues to grow at a very healthy pace with an overall growth of more than 57% in income from operations for the quarter ended March 2006. During the I quarter of 2006, the international business as well as the domestic business have recorded a remarkable growth of more than 56% and 63% respectively. Exports in 2005-2006 was reported to be Rs.10,500 million. The major segments include anti-asthamatics, cardiovasculars, antibiotics, anti depressants,anti-retrovirals,etc. Ciplas manufacturing facilities have been approved by the following regulatory authorities: USFDA, UKMHRA, TGA(Australia), MCC(South Africa), NIP(Hungary), PIC(Germany), WHO, Department of Health (Canada), State Institute for Control of Drugs (Slovak Republic) and ANVISA (Brazil). HUMAN RESOURCE MANAGEMENT No data about the HR policies and practices being followed are available on the Internet and the annual reports.

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SUN PHARMACEUTICALSSun Pharmaceuticals was started in 1993. Mr.Dilip Sanghvi is the Chairman and Managing Director. Mr. Sudhir Valia abd Sailesh Desai are the whole time Directors. Mr. S.M.Dadha, Mr. Hasmukh Shah,Mr. Keki Mistry and Mr. Ashwin Dani are the non-executive Directors. The Company is a listed company on the BSE and the NSE. The manufacturing facilities have approvals from several regulatory bodies like USFDA, UKMHRA, ANVISA, INVIMA, South Africa MCC, OHSAS 18001:1999 etc. There are 14 product divisions offering a wide range of products. These are Synergy, Symbiosis, Ortus, Sirius, Sun, Sun Oncology, Inca, Solares, Azura, Arian, Milmet, Avesta, Spectra and Radiant. The company has subsidiaries in Russia, USA, Bangladesh, Brazil and Mexico. The company has global operations in India, Mexico, Russia, British Virgin Islands, Bangladesh, Brazil and the USA. The company exports to around 26 countries around the globe. contributes more than 80% of its total revenue. HUMAN RESOURCE MANAGEMENT There is data available on the Internet and the annual report except an online company magazine called Sunwaad that carries several articles by the employees. Mission statement is Innovation Inspired. Domestic Market

LUPIN LABORATORIESLupin Laboratories was commenced in 1968 by Lupin Group. It has its manufacturing bases in India and Thailand. finished dosages. It is mainly into APIs and

It markets in India, CIS comprising of Ukraine, Russia, Belarus, Kazakhstan, Uzbekistan and Azerbaijan, countries in Latin America, Africa and Middle East; i.e. operating in 50countries. It has subsidiaries in the USA, Thailand, Hong-Kong and South-Africa. 16

The gross sales as reported in the Annual report of 2005-2006 comprised of 54% from domestic market, 23% from exports to semi-regulated markets and 23% from exports to regulated markets. The different product divisions are Pinnacle, Endeavour, Lupin and Herbal. The companys main office is in Mumbai. Dr. D.B.Gupta is the Chairman. Dr. Kamal Sharma is the Managing Director. Mr. M.D.Gupta is the Executive Director. Rest of the Board of Directors consist of Ms.Vinita Gupta, Mr. P.K.Kaul, Dr.K.U.Mada, Mr. D.K. Contractor, Mr. Marc Desaedeleier, Mr. Sunil Nair, Dr. Vijay Kelkar and Mr. R.A.Shah The company has filed 14 ANDAs, 15 DMFs, 2e-DMFs, 4 COS, 294 dossiers and 2 INDs. The manufacturing facilities has got approvals from regulatory bodies like USFDA, TGA(Australia), ANVISA etc.

HUMAN RESOURCE MANAGEMENT *Vision: Innovation Led Transnational Pharmaceutical Company. *Core Values: * High performance * Integrity * Enhancing happiness *Customer orientation *Entrepreneurship * Team building * Commitment

As on March 31, 2005, the company had 4259 employees. *Recruiting: In 2004-2005, in order to infuse freshness and to foster the intellectual capital base, the company initiated Young Leaders Programme to address the rapid and growing need for R&D talent. *Organizational Culture: One of the key drivers that have been reported which retains talent and even motivates the homecoming of senior executives who had departed earlier is the work environment which is seen as being fair, consistent and humane. The work environment at Lupin is collegial, challenging and rewarding. Mentoring is a tradition here. Several top management executives have been groomed and they have grown professionally along with the company. 17

*Training: Innumerable training programmes were conducted in 2004-2005 across the organization covering subjects like soft skills, communications, leadership, time management, TQM, team building, creating and managing brands, problem solving skills etc. *Career Opportunity Programme: The Company has an internal talent promotion scheme. This enables employees to have the first opportunity at all new positions that get created either due to resignation, expansions or new setups. The company also acquaints talented employees in diverse multifunctional skills and competencies so that the employees can actualize their career aspirations. The company believes that it is ready to lose an employee to another job in the company itself than to another company. *Employee Benefits and Initiatives: Apart from the remunerations and bonuses. The company had implemented ESOPS branded as Partners in Progress, in 20042005. Under the plan, 174 employees in the grade of Managers and above were offered 377150 options. The coverage covers 25 % of the managerial population. Initiatives taken by the company to attract, nurture and retain best talents include: *Young Leaders Program * Career Opportunity Program * Grooming of high potential high performance employee * Instituting awards for scientific excellence in research * Motivate through ESOPs. * Capability Development: An Organization Capability Development Cell has been developed at Lupin Labs. This is an organization building process that entails envision the future talent pipeline in line with the current growth plans. The slogan of this cell is, Create, enhance and sustain people capabilities in our quest to outwit, outplay and outlast our competitors. An Organization Capability Matrix has been developed which is structured around building technical, behavioral and functional skills. The entire framework is built on competencies which form the base of capability development. These are further divided into (a) Think (Cognitive Competency Cluster), (b) Act (Enterprise Cognitive Cluster) and (c) Interact ( Interpersonal Cognitive Cluster)

*Peoples Initiatives: Young @ LRP was launched as a subcommittee of Parivartan, the group which works towards making Lupin Labs a great place to work. The activity areas comprise of Literary, Sports and Entertainment.

18

*Talent Management: Figure 1: Talent Management Framework adopted at Lupin.

CAREER LADDER

TALENT BAND

TALENT MANAGEM E-NT

TALENT SEGMENTATION

COMPETENCE CLUSTER

Talent Pool developed at Lupin is actually the inventory of skills of the employees. This lays the foundation between a strategy and successful execution of the strategy. The entire process of determining a persons skills is performance driven.

NICHOLAS PIRAMALNicholas Piramal India Limited (NPIL) was formed in 1988 when Pirmal Goup of India acquired Nicholas Labs from Sara Lee. NPIL is part of the Rs. 2500 crore (US $ 500 million) Piramal Enterprises (PEL), one of India's largest diversified business houses with interests in Retailing, Textiles, Auto-components and Engineering. NPIL head office is situated in Mumbai. Consolidated sales turnover in 2005-2006 was US$ 313million.

19

The company deals in 9 theraupatic areas cardiovasculars, neuropsychiatry, oncology, diabetes management, NSAIDS, anti-infectives, respiratory, dermatology and G.I.s. The company has approvals from USFDA, Korean FDA, Irish Medicine Board, SAMCC, etc. Mr. Ajay Piramal is the Chairman. Apart from Mr. Piramal, the Board of Directors consists of Dr.Swati Piramal, Mr. Praneet Singh, Mr. Michael Fernandes, Mr. Rajesh Khanna, Mr. Y.H.Malegam, Mr.S.Ramadorai, Mr. Deepak Satwalekar, Mr. R.A.Shah, Mr. N.Vaghul and Mr. Keki Dadiseth. The company is listed on the BSE and the NSE. HUMAN RESOURCE MANAGMENT *Mission: Making a difference to Quality of Life by reducing the burden of disease. *Vision: To become the most admired pharmaceutical company in India with leadership in market share, research and profits by:* Building distinctive sales and marketing capabilities * Evolving from Licensing to global launch of own patented products * Inculcating a high performance culture * Being a partner of choice * Always adhering to own values * Encouraging innovation and nurturing intellectual capital * To seek quantum growth to lead in the domestic market and enhance international presence Value Proposition of the company is NPIL Pharma aspires to be the trusted partner for phrama companies offering world class services across product life cycles. The total standalone manpower increased from 5989 to 6590 in 2005-2006. *Organization Development: In keeping with the Merger & Acquisition ethos, the company has built a culture where diversity thrives, thanks to its skill of integrating acquisitions quickly and efficiently, contrary to most practices in industry. NPIL has set up a culture wherein talent at all levels with leadership potential can be spotted quickly and potential leaders presented with an opportunity to grow. The company aims to recruit and retain quality professionals. It provides them with a high performance oriented and challenging work culture. The work culture is focused on high performance, innovation, entrepreneurship and empowerment. The company has recently delayered management to create growth and entrepreneurial 20

opportunity. Entrepreneurial spirit among middle and senior management is encouraged with high levels of empowerment. *Employee Development: The Company follows detailed performance management system. The employees are rewarded with performance linked variable pay and stock options. *Internal Communication: Communication is a priority for top management. The company's Chairman regularly shares successes and triumphs with the company as a whole through personalized meetings and digital house-journals, which reach to more than 3,000 employees.

ZYDUS CADILAIn 1995, Cadila Laboratories bifurcated into two different groups one led by Mr. Indravadan Modi and another by Mr. Ramanbhai Patel. The name Cadila is shared by both the groups. Cadila Pharmaceuticals is under the Modi Group whereas Cadila Healthcare/ Zydus Cadila is under Mr. Pankaj Patel (Son of Mr.Ramanbhai Patel). Mr. Pankaj Patel is the Chairman and Managing Director. The Board of Directors consist of Mr. Mukesh Patel, Mr. Pranlal Bhogilal, Mr. Sharvil Patel, Mr. H.K.Bilpodiwala, Mr. H. Dhanrajgir and Mr. A.S.Diwanji. Main office is in Ahmedabad. Core domestic divisions of the company are: 1. Zydus Cadila 2. Zydus Alidac 3. Zydus Medica 4. Zydus Biogen 5. Zydus Neurosciences 6. Consumer Product Divisions 7. Zydus Pathline 8. Phytosurge 9. Zydus CND 10. Indon Healthcare 11. German Remedies 12. Recon Healthcare Ltd

As per ORG-MARG (Feb 2005), the company is the 5th largest player in the domestic phama market with a market share of 3.9%.

21

The company had filed 12 ANDAs with the USFDA in 2003-04, that made it the first Indian company with the largest number of filings in the very first year. The total number of ANDAs filed with the USFDA are24. The company had filed 16 DMFs in 2004-2005 taking the total upto 28 DMFs. It is said that the company has the largest DMF filings by any Indian Company in the JanMarch 2005 quarter. The company had also filed in 2004-2005 5 COS taking the cumulative filings to 6. The manufacturing facilities have got approvals from regulatory bodies such as USFDA, ANVISA, UKMHRA, DCGI, etc. The company is into producing branded finished dosages for domestic formulations, APIs, Generics both in regulated and semi regulated markets, contract manufacturing, clinical research, Biotechnology research, Novel Drug Delivery Research, and New Molecular Entity research. Total revenue in 2004-2005 was Rs.11, 253 million out of which Rs.1818 million were contributed by exports of APIs and intermediates. Net profits for the year were Rs.1314 million. Following are the subsidiaries and Joint Ventures of the company: 1. Zydus France SAS (by acquisition of Alpharma France in 2003) 2. Zydus Healthcare LLC (USA Subsidiary) 3. Zydus Pharmaceuticals (U.S.A) Inc.(JV to market generics in USA) 4. Zydus Healthcare Brasil Limitada (Subsidiary in Brazil) 5. Zydus International Pvt. Ltd.(Subsidiary in Ireland) 6. Zydus Atlanta Healthcare Pvt. Ltd. (JV with Atlanta Pharma AG of Germany) 7. Sarabhai Zydus Animal Health Ltd. (JV with Sarabhai Enterprises, India) 8. SCI Immopharm 9. Zydus Healthcare SA (Pty) Ltd. (Subsidiary in South Africa) 10. MoU for 50:50 JV between Zydus Cadila and M/s Mayne Pharma (Pty)Ltd (Australia)

HUMAN RESOURCE MANAGEMENT *Core Belief: We build People to build our Business. *Mission statement: We are dedicated to life in all its dimensions. Our world is shaped by a passion for innovation, commitment to partners and concern for people in an effort to create a healthier community globally.

22

*Vision statement: One of Indias leading healthcare players, we aim to be a global research driven company by 2020. We shall achieve sales of $400 million by 2006 and We shall be a top 10 global generic company with strong R&D pipeline and sales in excess of $ 1 billion by 2010. *Capability Development: The Company had launched the Organizational Development Program In 2003-2004 in order to achieve peak performance. There were three critical areas that were identified 1. Delivery of 100% performance by keeping a tight check on the fitness parameters such as costs, timelines etc. 2. Developing leaders who can drive performance and take the organization onto a new sphere of excellence i.e. delivering 100% Q-onQ (Quarter on Quarter) performance 3. Focusing on business health that can drive top-line and bottom-line growth and improve operating margins To achieve these goals, a dedicated Organization Development Cell has been set up. *Training: In 2004-2005, around 2539 employees were enrolled in various training programs. The company routinely also sends its employees for further training and specialization in various areas like operations, marketing, OB/OD and HR. In 2004-2005, the company organized over 15 GMP(Good Manufacturing Practices) programs for all the members of the manufacturing plants to make GMP an inherent part of the work culture. * Employee Development: Apart from training and sponsoring education programs, the company is interested in building leaders. For this The Zydus Leadership Competency Model was developed.

Figure 2: Zydus Leadership Competency Model

23

ENTREPRENEURSHIP

PEOPLE DEVELOPMENT ZYDUS LEADER

NETWORKING

BUSINESS PLANNING

RESULT FOCUS

STRATEGIC THINKING

*Internal Communication: Internal Communication is done through intranet. ZEMS is Zydus Employee Management System. This is one kind of employee inventory system in which the details of employees are kept. Internal communication between the management and employees is kept through internal magazine called ZYDAN NEWS. Employees are referred to as Zydans.

GLAXOSMITHKLINEGlaxoSmithKline (GSK) is a research based company with a wide portfolio of pharmaceutical products. Headquartered in the UK and presence in nearly 70 24

countries, (GSK) is one of the industry leaders, with an estimated seven per cent of the world's pharmaceutical market. It can also be said to be one of the oldest MNCs in India. The establishment of GSK can be traced back to 1919 A.D. when trading links with India for the supply of medicines were established. The company is now in its 82nd year of its operations in India In India, the Company has a formidable presence in the domestic pharmaceuticals market with a market share of above 6.5% (as per ORG IMS Stockist Audit, December MAT 2005). GSK India markets a wide range of ethical formulations and is the leader in therapeutic areas of respiratory, dermatology and vaccines, besides having a significant presence in areas of gastroenterology, dietary supplements, gynecology, neurology, cardiovascular and intensive care. GSK India is also the undisputed leader in the animal health and fine chemicals businesses. Total sales of the company in 2005-2006 were Rs.1485 crores. Net sales of the pharmaceutical business segment of the company was Rs.1257 crores constituting 85% of the total company sales. The company has four manufacturing units in India at Thane,Nasik, Mysore and Bangalore. Mr. D.S. Parekh is the Chairman of GSK-India. Chairman. Mr. S.Kalyansundaram is the Managing Director. Executive Directors are Dr.A.Banerjee and Mr.M.B.Kapadia. Non-Executive Directors are Dr.M.Reilly, Mr.P.Parsonson, Mr.P.V.Nayak and Mr. P.Bains Independent Directors are Mr.V.Narayanan , Mr. R.R.Bajaj, and Mr. N.Kaviratne. HUMAN RESOURCE MANAGEMENT GSK employs 100,000 people in 116 countries. In 2003, GSK was named as Indias most respected pharmaceutical company conducted by the BusinessWorld and the Indian Market Research Bureau. *Spirit of GSK: We undertake our quest with the enthusiasm of entrepreneurs, excited by the constant search for innovation. We value performance achieved with integrity. We will attain success as a world class global leader with each and every one of our people contributing with passion and an unmatched sense of urgency. * Mission: GSKs mission is to improve the quality of human life by enabling people to do more, feel better and live longer. *Vision: Our vision for the future is powered by our business drivers. It finds purpose and direction with our strategic intent. It is guided by our corporate culture 25 Mr. V. Thyagarajan is the Vice

that places people and capabilities as the pivot that changes and transforms situations. *Business Drivers: The Company intends to beat competition by achieving excellence in areas that are considered as the primary drivers for the business: 1. New Product Portfolio 2. Intellectual property 3. Product Commercialization 4. Global Competitor 5. Operational Excellence *Culture and values: the GSK spirit: GSK places great emphasis not only on what the employees achieve, but also on how they deliver their achievements. Integrity is critical and given high importance. The culture and values are summed up in the GSK spirit that defines the qualities the company expects all its employees to embrace: performance with integrity entrepreneurial spirit focus on innovation a sense of urgency passion for achievement

The company believes that its mission and spirit would help its employees deal with new challenges and maintain a clear focus. Each of businesses worldwide is raising awareness of the GSK spirit, helping employees to understand and adopt its principles through workshops, team meetings, presentations and awards. *Career development: The Company is committed to rewarding, developing and retaining talent. Given below are a few of the initiatives that the company undertakes (a) The GSK Experience- An interactive induction program is planned right from the day the employee joins the organization. (b)Performance and Development Planning -The company has a global Performance and Development Planning process (PDP) to help the employee at all stages of his/her career. PDP is a powerful tool for matching employees personal success to the success of the business. (c) Career Innovation Zone- Career Innovation Zone is an online resource that an employee can access freely at any time from work or home. It offers a wealth of interactive tools and tips to help the employees work out the potential career directions and choices. (d) myLearning It is an online course catalogue. myLearning allows the employee to work with his/her manager to create a customized learning plan and to take advantage of the wide variety of instructor-led and eLearning courses, including a number of customized Leadership Development offerings. (e)Coaching and feedback- The Company believes in fostering a culture of ongoing coaching and feedback for all employees. A variety of formal and informal 26

resources are available including a 360-degree feedback process and external coaching. Mentoring is encouraged either formally or informally. (f)On-the-job development - On-the-job development means opportunities for "stretch" assignments, secondments, and access to the companys cross business job posting databases that help in recognizing the internal talents. *Talent review and succession planning: The Company places a high priority on its ability to develop talent and enthusiasm in its employees. Through succession planning high-potential employees are identified and encouraged and it is ensured that they have a career path that meets their and the companys needs. *Employment practices: The company, by creating a positive working environment, offering competitive reward packages that emphasize performance, providing opportunities for training and advancement, and by listening and responding to employees feedback, ensures that the employees remain motivated and talent is retained in the company.

INNOVATI ON INNOVATI ON

COST

SERVICE

QUALITY / REGULATORY ASSURANCE OF SUPPLY27

NOVARTISNovartis AG, headquartered in Basel, Switzerland, is Swiss holding company. It owns, directly or indirectly, 100% of all significant operating companies. Each affiliated Novartis Group Company is operated as a separate legal entity. Novartis was created in 1996 through the merger of Ciba-Geigy and Sandoz. It comprises of three divisions: Pharmaceuticals, which comprises our activities in innovation-driven prescription medicines Sandoz, which comprises our activities in generic prescription drugs Consumer Health, which comprises activities in OTC, Animal Health, Medical Nutrition, Gerber (formerly Infant & Baby) and CIBA Vision. Novartis derived from the Latin novae artes, means new skills. It is a Fortune 500 company. With an employee strength of over 80,000, Novartis has 360 independent affiliates across 140 countries. The Pharmaceutical Division consists of the following therapeutic areas: General Medicines, cardiovascular & metabolism, ABGHI (Arthritis, bone, gastrointestinal, hormone replacement therapies, urinary incontinence), neuroscience, respiratory, dermatology, infectious diseases, specialty Medicines (oncology & Hematology), transplantation, immunology and ophthalmics. Novartis India Limited is a 51% subsidiary of Novartis AG. It has revenues of about US$ 109 million and around 1000 employees. Novartis Indias business operations comprise of pharmaceuticals, generics, OTC and animal health. Novartis was the first pharma company to be awarded the first prize for Corporate Social Responsibility in the mid-size company category in February 2004 by The Energy and Resources Institute (TERI). The factors for success of Novartis in India are as follows: * Strong Parental Support in terms of introduction of its new research based products. * Focusing on few brands * Improving sales force and promotions * Expanding business to new territories (covers 500 territories and plans to cover more than 90 in 2006-2007) * Commitment to corporate social responsibility Main office is located in Mumbai. There are no manufacturing units as of now. The subsidiary is involved in marketing Novartis products in India.

HUMAN RESOURCE MANAGEMENT 28

*Mission: We want to discover, develop and successfully market innovative products to cure diseases, to ease suffering, and to enhance the quality of life. We also want to provide a shareholder return that reflects outstanding performance and to adequately reward those who invest ideas and work in our company. *Vision: Medicines for Unmet Medical Needs. *Aspirations: We want to be recognized for having a positive impact on people's lives with our products, meeting needs and even surpassing external expectations. We strive to create sustainable earnings growth, ranking in the top quartile of the industry and securing long-term business success. We want to build a reputation for an exciting workplace in which people can realize their professional ambitions. We strive for a motivating environment where creativity and effectiveness are encouraged and where cutting-edge technologies are applied. In addition, we want to contribute to society through our economic contribution, through the positive environmental and social benefits of our products, and through open dialogue with our stakeholders. *HR Mission Statement: We are committed to building sustainable competitive advantage for Novartis through the quality, the capability, and ultimately the performance of our people. We aspire to be a world class HR function recognized for its business focus and its support to Novartis management and associates. *Organizational Capabilities: The Company believes in building organizational Capabilities in 4 areas: 1. External Focus: on customers, markets, competitors, and technologies. 2. Innovation: result of professional competence, creativity, motivation, and the right to make mistakes and take calculated risks 3. People: invest to attract and retain leaders, professionals, and to develop associates. The company values competence, professionalism, and a positive attitude. It recognizes and rewards high performance at every level in the organization. By fostering teamwork and collaboration the management enhances learning throughout the organization. Thus, interaction is promoted across functions, geographies, and hierarchies. Candour, trust and integrity are encouraged, and the importance of open, continuous communication is recognized. *Values & Behaviors: The Company strives at being: results driven customer and quality focused innovative and creative 29

competent dedicated to best-practice leadership fast, clear, action oriented, taking initiative expecting empowerment and accountability committed to our work and self-disciplined living a culture of mutual respect, candor, trust, integrity, and loyalty open in communication, to partnership and collaboration, and be compassionate

*Leadership Standards: Within Novartis leadership standards are the criteria that are applied in order to select and develop leaders setting clear directions and aligning people and teams around common objectives energizing people and teams showing passion for the 3 C's (consumers, customers, competition) exercising good judgement and driving change to our competitive advantage striving for superior results and generating a passion to win constantly building our talent pipeline inspiring continuous pursuit of improvements and breakthrough thinking displaying analytical and conceptual thinking

*GO!: is a structured orientation process created to effectively integrate new associates into Novartis during the critical first six months of employment. The GO! process provides tools, standards and accountabilities that work together to help ensure that new associates experience a positive and productive orientation. Additionally, the GO! process provides the support, tools and resources needed to fast-track new associate transition into Novartis and manage development expectations that lead to solid performance and career success. It is an online learning portal through which employees can contact each other through geographies. *Employee Motivation: Field force productivity is improved through training and productivity oriented incentives. Unique learning methods encourage participants to discuss their own real business issues. In November 2004, Novartis Corporate Learning Institution was accredited by the European Foundation for Management Development. Novartis is the first pharmaceutical company to receive efmd accreditation and was awarded the quality label because it has demonstrated that it meets international standards in the provision of learning programs for managers. Personal and business targets are set in line with global Division and Business Unit objectives. A primary goal of Novartis' total compensation structure is that total 30

compensation should directly reflect both individual and Novartis performance. This pay for performance approach leads to total compensation at superior levels for high performers. The company holds workshops on High Performance Organization. HR toolkits are provided to the managers. There is a Novartis Call Centre & Role Excellence which is focused on raising organization productivity. Since the company does marketing in India, a Management Power House has been established. The objective is to ensure that state of art marketing execution is followed by introducing vigorous fact-based, decision making at the HQ, region and country level. The F A R projects introduced the concept of resolving business issues using pooled talents and skills across functions and units. HR initiatives such as the Assessment & Development centre and concepts such as Pay for Performance and other reward and recognition systems are done to motivate the employees. *Employee Benefits: The Novartis benefits programs are an integral part of the total compensation policy and strategy and designed to meet the challenges of an evolving competition for talent on a global scale. Benefits are aligned with local legislation and practices in each country and generally include pension plans, group life insurance, and medical plans. Some programs offer flexible mechanisms to tailor appropriate coverage for current and future needs and are established to provide a sound framework of security for Novartis associates.

THEORETICAL COMPARISON OF HR POLICIESThe HR policies of the 7 Indian companies and 2 Multinational companies are compared theoretically. Theoretically means that comparison of the HR policies 31

mentioned in the annual reports and on the internet i.e. those policies that the company has disclosed to the public.Sr. No 1. 2. 3. 4.

Practices

Ranbaxy

Dr.Reddy s

Cipla

Sun Pharma

Lupi n Labs

Nicholas Piramal

Zydus Cadila

GSK

Novartis

Vision Statement Mission Statement Org. Values Org. capability Development programs Induction/ Orientation Programs Performance appraisals Training programs Career Development Programs Employee Motivation through awards Mentoring & coaching Encouragement Of internal Talent Succession Planning Exposure to International Experiences Internal communication through intranets and magazines

Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes

Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes

N.A N.A N.A N.A N.A N.A N.A N.A N.A N.A N.A N.A N.A N.A

N.A Yes N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. Yes

Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No Yes

Yes Yes Yes Yes No Yes No No Yes No Yes No No Yes

Yes Yes Yes Yes No Yes Yes Yes Yes No No No No Yes

Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

5.

6. 7. 8.

9.

10. 11.

12. 13.

14.

N.A. Yes

Note:

Yes means that the topic has been mentioned either in the annual reports or on the website. No means that the topic has not been mentioned in the annual reports and on the website. N.A. means that the information pertaining to the topic is not at all available anywhere, neither in the annual report, website nor any literature. 32

QUESTIONAIRETo compare that whether the policies mentioned were actually followed, an HR questionnaire was made. This questionnaire was formatted in such a manner that it looked unobtrusive yet at the same time would be able to get the details out. The student here had to contact minimum 5 people from each of the companies mentioned and in a time span of around 4-6 weeks using both personal and official contacts. And since the contacted personnel were in different cities in India-Baroda, Ahmedabad, Mumbai, Hyderabad, Gurgaon and Delhi, e-mails were sent. The contacted personnel were from the R&D and Marketing divisions of the companies. The questionnaire had been made on an MS excel worksheet. This was so that the person could fill it in 5 to 10 minutes by just clicking on the option boxes and also so that this could be send through e-mail. A word document or adobe document did not have the facility of option boxes and since people do not take much interest in getting the questionnaires filled up, it had to be short consisting of 23 questions. 11 questions were of the options ranging from false to true and rest 12 questions were of Yes/No kind.

33

The contacted person had to download the questionnaire, fill it up by selecting the option boxes and then send it back to the respondent as an attachment with the email. Annexure: Questionnaire Analysis of the Questionnaire: The first 10 questions were of 0 (Not at all true), 1 (somewhat true), 2 (partially true), 3(likely true) OR 4 (absolutely true) type. If the respondent selected 0 or 1 it meant that he/she is not agreeing with the topic. If he/she selected 3 or 4 it meant that he/she agreed. And, if the respondent selected 2, it meant that he/she is not sure whether the topic is in agreement or not. The next 11 questions were of Yes/No type. The respondent had to select either Yes or No and this gave a clearer picture than the previous set of questions. The questions were formatted but had the same overall content as in the previous set of questions. This set was formulated to verify whether the respondent is clear in what he/she is selecting the option. There are certain questions in both the sets which were not repeated as the answer would be directly understood, whereas some questions were repeated in another format to get a clear picture. Since only 5 respondents were selected or could be contacted, each response carried weightage. The questions were based on 11 criteria that were being checked. Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Criteria Question Nos. in the Questionnaire Entrepreneurship A(a), A(j) Employee Development A(b), B(e),B(f) Training A( c) Performance Appraisals A(d) Mentoring and Coaching A(e), B( c) Clear internal communication A(f), A(i), B(j), B(k) Organizational Development A(k), B(k), A(g), A(h) Succession Planning A(l), B(i) Employee benefits and B(b), B(h) incentives Career Planning B(d) Employee Motivation B(a), B(g)

For e.g: If out of 5 respondents agreed that Creativity is encouraged here (Ques A(a)) by selecting option 3 or 4, it meant that they are agreeing. Each positive response carries 1 point and each negative 0 point. Now in certain criteria, we can 34

see that there are some common questions. If the respondent gave a positive answer to all the questions of that criterion, it is considered as one point. Whereas, if for certain questions they are agreeing and for certain they are not, in the same criteria, then such a response would be considered as nil. Based on the above discussion, the responses were hence calculated. The responses are given as below:

COMPARISON OF HR POLICIES ON THE BASIS OF RESPONSESOn the basis of the responses from the employees of the companies the following data has been obtained: Sr. NoNo. of responden ts

Practices

Ranbax y

Dr. Reddys

Cipl a

Sun Pharm a

Lupi n Labs

Nichola s Piramal

Zydu s Cadil a

GSK

Novarti s

5Clear internal Communication Training Performance Appraisals Employee Development Organization Development Entrepreneurshi p Mentoring & Coaching Succession Planning Employee benefits & incentives Career planning Employee motivation

5 4 5 5 3 3 3 5 3 3 4 4 42

5 2 0 2 2 0 2 0 0 3 0 2 13

5 2 4 5 3 1 2 4 0 4 2 4 31

5 3 5 5 3 2 3 4 1 5 2 4 37

5 2 0 4 2 1 1 4 0 4 0 3 21

5 3 1 5 2 3 3 3 2 3 3 4 32

5 4 5 5 3 3 3 2 2 4 3 4 38

5 4 5 5 4 2 4 4 0 3 0 3 34

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Total Points

3 4 5 5 3 4 5 0 5 3 3 40

55

CONCLUSIONSFrom this study, it was possible to find out both theoretical and practical comparisons of the HR policies being followed in the top pharmaceutical companies in India. It also gave an insight whether whatever was being mentioned by the Company were indeed true or not. 35

It can be seen from the total points of each company from the analysis of the responses to the questionnaire, that Dr.Reddys Laboratories scored the maximum points, followed by Ranbaxy Group. Cipla scored the least. The results can be summarized as follows: H.R. policies can be ranked as Dr.Reddys Labs > Ranbaxy > GSK > Lupin Labs > Novartis > Zydus Cadila >Sun Pharma > Nicholas Piramal >Cipla. Indian pharmaceutical companies, which include subsidiaries of the MNCs, have a bit of disregard towards the development of the human resources. In India, labor is still considered as a Cost and not as an Asset. This mentality is changing due to international exposure, stiff competition and globalization. However, this study, as having the limitation of studying a very small universe, can not be extrapolated to the entire company. But the benefits are present only up to the top management level. Many people, with whom I had informal talks in companies that scored less like Sun Pharma, Zydus Cadila and Cipla, were more or less doing their jobs for the sake of doing so as to earn. They were not genuinely interested in the growth of the organization. Many of them had even confided that they were working in a particular company so that they could JUMP from there to a better job offering elsewhere. They also had confusions regarding their personnel policies, incentives etc. This clearly reflects the apathy of the HR systems of these companies. Even in companies, that scored high like Ranbaxy, people did complain of getting saturated with their daily job activities. This means that the job no longer holds any challenge for them. It has been found that in Indian organizations the HR departments do not have well differentiated structures appropriate for HRD. They have well differentiated roles in personnel but not in HRD. When it comes to HRD it seems that they structure the role in such a way that it is even mixed up with other personnel functions. As the structures are mixed and convenience based, the HRD activities also get mixed attention and convenience based. As a result, various subsystems of HRD do not get attention they deserve. As per research, even those designated as HRD managers are unable to devote full time to HRD as they are involved with other personnel functions and administrative activities. It has been reported that many organizations in India do not even have a full time dedicated HRD facilitator. Where there is one, he/she is loaded with recruitment, salary administration and such roles which are mostly conventional welfare and administration functions.

36

PART IISTUDY OF EMPLOYEE PRACTICES FOLLOWED IN PHARMACEUTICAL COMPANIES OF RUSSIA, UKRAINE & BRAZIL

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Despite the ubiquity of HRM theories, HRM priorities and main practices carry significant local flavors. It can be said that in each nation, there is a unique and particular HRM ensemble into which that countrys political, social and economic peculiarities have been factored. The selection of these three countries Russia, Ukraine and Brazil was done so as to study the HR policies practiced by the local and the MNCs there. These three countries are predicted to have booming and growing economies. Also, since these countries are the members of the trading blocks like Brazil of MERCOSUR and Russia and Ukraine of CIS, they offer large markets covering billions of customers easily. The reason is that these trading blocks offer easy trading, economic free zones for setting up facilities, cheap manpower etc.

RUSSIA* Introduction: The Commonwealth of Independent States (CIS)--Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan--are emerging economies struggling with the transition from the centralized economic planning of the Soviet era to the practice of free market economics. These economies have made varying levels of commitment to loosening state control and embracing the practice of free market philosophy since the collapse of the Soviet Union in 1991, and they have followed different timetables in doing so. Economic stabilization, development of market institutions such as legal infrastructures, and overcoming shortages of skilled labor are key problems shared by the CIS countries (Hoskisson, Eden, Lau & Wright, 2000). 38

Russia currently enjoys free-trade agreements with all CIS countries, and is a member of the four-state Common Economic Space (CES) agreement being forged with Ukraine, Belarus and Kazakhstan. These states, with a total population of some 217 million, are negotiating to form a single market area. Thus a company locating its manufacturing operations in Russia will enjoy a domestic market of 150 million and relatively easy access to a larger market of almost 670 million consumers. With 150 million inhabitants, an inexpensive well-educated labor supply, vast natural resources, and limited competition in many industries, Russia is attracting the attention of foreign firms. The Russian economy has been growing rapidly. In 2004, the gross domestic product (GDP) rose 7.2%. This remarkable performance has been fuelled primarily by energy exports. Russia possesses huge coal and natural gas reserves. It is also rich in non fuel minerals like iron, manganese, chromium, nickel, platinum and titanium. If Russia is able to overcome difficulties such as a weak infrastructure, higher marginal tax rates, beauracracy, etc. then Russias long term economic potential may be even higher. U.S. investment bank Goldman Sachs has identified it as one of the four biggest developing economies (together with China, India and Brazil). Figure 1: Forecasted GDP growth (%) Source: PwC Macro Consulting

9 8 7 6 5 4 3 2 1 0 China India Russia Brazil 2006 2007

PHARMACEUTICAL SECTOR IN RUSSIA39

Russias economic strength has already boosted living standards. According to the Forbes magazine, Russia has more billionaires than any other country except the U.S. Although the living standards have improved, the health of the nation has deteriorated significantly since the breakup of the Soviet Union in 1991. Life expectancy at birth is now just 65 years. Russia ranks 11th on the WHOs list of 22 countries with a high incidence of tuberculosis, Hepatitis C, HIV/AIDS etc. The healthcare system is under huge strain. Government financing of the state run, free-for-all system has shrunk by more than a third since Soviet times. The vast majority of Russian patients have to dip into their own pockets to cover the medical costs since the government reimburses less than 30% of expenditure on pharmaceuticals. The weaknesses of the state healthcare have driven an increasing number of people into the private sector. The value of the Russian Pharmaceutical Market was estimated at nearly $6b in 2005 by Rye, Man & Gor Securities. The forecast for the year 2006 by them is $7.9bn. The Russia pharmaceuticals market has been growing steadily for the past six years. According to IMS Health, sales were touching nearly 3500 ($m) in 2004-2005. Demand is being driven by strong macroeconomic fundamentals and also by a new drug reimbursement scheme introduced in the start of 2005. Russia imported in 2004, more than 60% of all the pharmaceuticals that it used nearly two thirds from companies of Western Europe, Canada, the U.S. and Japan. Unlike China, India and Latin America, Russia does not have a history of using competing alternative therapies. The market for branded drugs is quite strong and the majority of those drugs are imported. Generics currently account for the lions share of the market. 78% of the 13,000 odd drugs that are registered in Russia are generics. During the Soviet era, Russias pharmaceutical industry was under federal control and supplied nearly 70% of the countrys needs. Today, most of the 700 odd domestic drug manufacturers focus exclusively on the manufacturing of generics. Though the market share of the Russian pharmaceutical producers is currently dwarfed by imports, the multinationals are keen to expand their Russian operations by placing orders with the local factories and creating joint ventures with local players. According to Remedium magazine of March 2002, the top ten Russian pharmaceutical distributors included: Protek Innovation Center, CIA International, Shreya Corporation, Biotek, Invacorp Pharma, Intermedpharm, Pharmacy Warehouse #1, Vector-media, Pharm Tamda 77, Rossib Pharmacia.

Table 1: The top 10 anatomical therapeutic chemicals by sales value Source: AIPM-RMBC Market Bulletin, February 2005 40

ATC GROUP

1. Anti - bacterial 2. Analgesics 3. Vitamins 4. Agents acting on the Rhenin-Anginotensin system 5. Psychoamaleptics 6. Cough & cold preparations 7. Sex hormones and modulators Of the genital system 8. Anti-inflammatory and antirheumatic Products 9. Immunomodulating agents 10. Cardiac therapy

Sales in 2003 (%) 6.4 5.7 4.9 3.9 3.6 3.4 3.2 3.0 2.9 2.5

Sales in 2004 (%) 6.9 6.5 5.2 4.0 3.7 3.5 2.9 2.7 2.5 2.6

Table 2: The top 15 Multi-national Pharmaceutical companies of 2005 in Russia by drug sales Source: DSM Group monthly retail audit, RMG Securities Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. Name of Company the Sales in $ mn 90.04 77.44 67.44 52.74 46.108 44.95 44.49 41.17

Sanofi-Aventis BerlinChemie/A.Menarini Pharmstandart Gedeon Richter Nycomed Novartis Pharma KRKA Pfizer International Inc. 41

9. 10. 11. 12. 13. 14. 15.

Servier Lek DD Solvay Pharma Hoffman-La Roche Ltd. Egis Schering AG Dr. Reddys Laboratories

39.89 37.711 29.36 28.04 27.175 27.05 26.708

Now, the question arises that why in spite of having an upbeat economy, is Russia importing drugs in larger quantities? The reasons are as follows: * Limited local production * Variable quality of domestic drug production as companies economize on raw materials * Erosion of the countrys formerly strong scientific base due to chronic underfunding (though the country retains a strong position in therapeutic areas such as immunology and virology). * Highly fragmented distribution and retailing * Though Russia possesses one of the largest rail networks in the world, the transport infrastructure is also lacking in a number of respects. * Counterfeiting is another major problem as fake drugs currently account for 12% of the pharmaceuticals market in Russia and domestic manufacturers are thought to be amongst the main culprits. In 2003, the Health Ministry suspended the licenses of 321 pharmaceutical companies for manufacturing and trading in counterfeit medicines. * Poor enforcement of intellectual property rights is another reason that why the foreign firms are hesitating to invest in Russia. Russia does not provide protection for test data for pharmaceuticals. The enforcement regime is also weak; judicial corruption is endemic and the legal system is ill-prepared to handle sophisticated patent cases. * Corruption, red tapism and political interference as well as numerous official and unofficial barriers to overseas investments. The main Russian pharmaceutical companies as per their sales in 2004 are shown below:

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Table 3: Top-15 Russian Pharmaceutical Companies by sales, 2004, in wholesale prices Source: Pharmexpert & RMG estimates Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. Company Pharmstandart* Pharm-Center** Microgen# Veropharm*** Nizhpharm**** Otechestvennie Lekarstva***** Akrikhin****** MHFP im.Semashko# Feraine## Sotex Masterlek Evalar Altaivitamini Vector Krasnogorleksredstva Location Moscow Moscow Moscow Moscow Nizhniy region Moscow Sale s $m 113. 4 64.1 55.9 50.2 Novgrod 55.8 44.8 38.3 36.6 34.8 28.7 21.4 21.0 20.4 20.0 19.3

Moscow region Moscow Moscow Moscow Moscow Altai region Altai region Novosibirsk region Moscow region

*Pharmstandart is a holding company that consolidates the assets of five Russian pharmaceutical factories; Pharmstandart-October, PharmstandartLeksredstva, Pharmstandart-Tomskkhimpharm, Pharmstandart-Ufavita and Pharmstandart-NN. **Pharm-Centre sold its main assets to the Russian drug distributor, CIA Holding in 2005. ***Veropharm is a subsidiary of the Pharmacy Chain 36.6 and this chain is believed to further reduce its stake in Veropharm. ****The German generic company Stada AG, brought 97.5% of Nizhpharm for $108m in the first half of 2005 *****Otechestvennie Lekarstva was set up in 1999 and is a holding that consolidates Shelkovo Vitamin Plant, Novosibkhimpharm and Kraspharma. ******Akrikhin is the largest stand alone pharmaceutical producer in Russia. The company has high operating efficiency. #Microgen and MHFP im.Semashko are state-owned companies. ## Feraine is a private company producing a wide range of generics. 43

Running a business enterprise in Russia offers many advantages. The country is evolving as a principal magnet for foreign investment with a burgeoning foreign business community. The country has a highly educated workforce with relatively low labor costs. There is a massive growth potential, plentiful natural resources, and a rich cultural traditionart, literature, music, ballet, history, and science. The disadvantages, however, are just as abundant. The archaic and complex bureaucracy harbors an ambivalent-to-hostile attitude to foreign companies. Then theres the tax system, corruption, the harsh climate and pollution, and a wealth gulf as wide as any developing nations with a tiny, emerging middle class. The highly educated workforce is nevertheless short on western business skills or service ethics.

HUMAN RESOURCE MANAGEMENT IN Pharmaceutical SECTOR IN RUSSIA*Introduction: Traditionally, Russian firms have viewed employees as a cost rather than as a resource. In addition, while Russia has had a well-developed and demanding educational system that Russians went through prior to beginning work, relatively little attention was paid to skill development once a Russian was employed in a firm. The Russian labor market has also historically been inefficient. Artificial constraints (e.g., poor labor mobility due to needing a permit to live in each town) have limited career progression and thereby decreased incentives for people to work hard. Further, salary differentials were very small in Russia during Communist times; even if you could obtain extra money, it had limited value since there were few goods available to purchase. In Russia, it was products and contacts, not money that had the greatest value. All adults were expected to have a job in Russia, and many jobs were created to ensure full employment. Since there was limited focus on the enterprise making money, less attention was given to finding ways to motivate employees to work hard 44

than is the case in the West. It is also important to note that employment security has also been a hallmark of Russian labor policy. Western experience proved long ago that effective human resource management influences the overall profitability of a company. The last couple of years have seen a rapid increase in the number of Russian companies paying serious attention to the development and implementation of HR strategies. And they are absolutely right to make this a priority, as the right people will create the right policy, according to HR directors. The role and functions of HR managers in Russia often depends on the size of the company and the scale of its business. As per the view of PwC (Pricewater Coopers) Human Resource consultant Yulia Kullanda, in bigger companies, HR directors are closer to strategic decision making as they actively engage in the development of a whole set of HR policies. In the smaller representative offices of Western companies in Russia, HR managers perform the more technical functions of adjusting existing practices and codes to the new realities. The work of the HR manager in any multinational company consists of two major tasks. One is to make all the paperwork and regulations correspond to the existing Labor Code. The other is to educate and develop employees skills and leadership potential. Thus, the first part of the HR managers duties differs from country to country. However, the second task is almost universal and is based on the companys corporate culture. But it is found that a HR managers duties in Russia can sometimes be more complicated than for their Western counter parts. It is found that administrative duties and paperwork take up almost one-third of the HR managers time, especially in Russia, where there are strict archive and paper signature regulations. In other countries, rules are more liberal, and they allow the storage of electronic copies and even electronic signatures. In general, active HR development in Russia started about three years ago. Historically HR departments in Russia were just units for administrative management of personnel. The issues of compensation and development were decided by the leadership. Favorable economic conditions acted as stimuli for HR development in Russia. Surveys have found out that it has become more difficult to retain personnel; people want to have better-paid and interesting jobs. Big energy and mining companies, major industrial players and banks take leading positions in this field. They have accumulated enough assets and consolidated their capital, now they are striving to achieve international standards in corporate governance and general management practices. Thus they have to invest in the effective management of their human capital. Russian HR managers have to build the system of personnel management from top to bottom.

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Although Russian companies, unlike Western ones, still have to prove that they can be stable and reliable employers and the tasks facing Russian HR managers are more daunting, the position continues to arouse interest. HR managers and HR directors who had previous studied or gained experience in the West are now willing to give up their positions for a more dynamic environment in Russian outlets. The following data shows the salaries for HR personnel in multinational subsidiaries of Russia as well as the comparison of salaries of HR personnel in multinational companies and Russian companies. It can be seen that there exists quite a big difference between the salary offered in a multi-national company and a Russian company. Table 4: Salary Growth for HR positions in foreign companies per month Source: Position Ancor, June 2003 (US dollars before tax). Summer 2002 2850 1000 1150 Summer % Increase on 2003 one year 3700 1275 1425 30 28 24

HR Director HR Specialist Compensation and Privileges Specialist Training Specialist Hiring Specialist Assistant to HR Departme nt

1575 1000 540

2000 875 750

27 13 39

Table 5: Salaries comparison for HR positions among Russian and foreign companies Source: Ancor, June 2003 (US dollars before tax).

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Market of foreign Position companies in Moscow, before tax Director HR Specialist Training Specialist Hiring Specialist Secretary/Assistant in HR Dept. 3700 1275 2000 875 750

Market of Russian % Difference in companies in salaries

Moscow, before between Russian tax and foreign companies 2643 82