An Overview of Pharmaceutical Marketing Practices in India

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Pharmaceutical Marketing Practices in India

PHARMACEUTICAL MARKETING PRACTICES IN INDIA

Introduction:

Marketing always starts with the customer and ends with the customer as they are the valuable assets for the country. Marketing is a business activity by which it means the flow of goods and products from the manufacturer to the customer (End user). According to Philip Kotler who is known as the" Father of Marketing" defines marketing as "A social and Management process by which individuals and groups obtain what they need and want through creating, offering and exchanging products of value with others" is known as marketing[7]. Pharmaceutical marketing is a well organized information system. It helps the physicians to update about accessibility safety, effectiveness and techniques of consuming the medicine. The Indian pharmaceutical industry has been gaining momentum in the recent years and is expected to move towards an upward trend. According to Mckinsey & Company report, the Indian pharmaceutical market will reach greater heights by the year 2015. Pharmaceutical marketing costs are phenomenal. The end users must have awareness about these high technology industries. Complex information must be communicated properly. Proper use of medicines will enable the companies to cut down their costs which in turn help to increase their profits. This paper gives an insight about the evolution of Indian pharmaceutical markets, its need and characteristics. It also highlights the present scenario, future prospects, challenges and the strategies to be adopted by the Indian pharmaceutical companies.

How the Indian Pharmaceuticals originated? [4]

In 1901, Bengal Chemical & Pharmaceutical Company started its operation in Calcutta which is the first Indian Pharmaceutical Industry came into existence. The next few decades will enable the pharmaceutical industry moving through several phases, largely in accordance with government policies. Indian Pharmaceuticals evolution can be classified into four stages

Before 1970: The foreign companies dominated the market with little domestic participation

1970-1990: Indian patent Act Passed in 1970, several domestic companies start operations, Development of production infrastructure, Export initiatives taken

1990-2010: Liberalized market, Indian companies started its operations in foreign countries, India a major destination for generic drug manufacture. Approval of Patents Act 2005 which led to adoption of product patents in India

2010 and Beyond: Likely adoption of newer sales model like channel management and KAM (Key Account Management)

What are the needs for Pharmaceutical Marketing? [2]

India is emerging as the global hub for contract research and manufacturing services due to its low cost advantage and world class quality standards. The introduction of product patent in India has brought some fundamental changes in strategies of Indian pharmaceutical companies, with focus shifting more towards Research and Development. The major revenue to the Indian pharmaceutical industry has been gained through exports. India pharmaceutical products are exporting to more than 200 countries around the world. Therefore Pharmaceutical marketing helps:

To have a healthy competition

To increase the customer knowledge

To have a better customer relationship

To reduce the initial development costs.

What are the key characteristics of Indian Pharmaceutical Industry? [4]

* Low cost of production

* Low Research and Development Costs

* Self-reliance by the production of 70% of bulk drugs and the entire requirement of formulations within the country

* Innovative scientific manpower

* Increasing balance of trade in pharma sector

* Excellent centre for clinical trials in view of the diversity in population

What is the current scenario of Indian Pharmaceutical Market? [3]

The Indian Pharmaceutical industry has been witnessing phenomenal growth in recent years, driven by rising consumption levels in the country and strong demand from export markets. The Indian pharmaceutical industry is the most progressive and advanced among all the developed and developing countries. Today, India is among the top five pharmaceutical emerging markets in the world. The market is expected to grow at a compound annual growth rate (CAGR) of 14-17% over 2012-2016. The total revenues of the market stood at US$ 11 billion and by 2020 the revenues of the market are estimated to reach US$ 74 billion. Demand from the exports market has been growing rapidly due to the capability of Indian players to produce cost-effective drugs with world class manufacturing facilities. At the projected scale, this market will be comparable to all developed markets other than the US, Japan and China. The growth in Indian domestic market will be boosted by increasing consumer spending, rapid urbanization and increasing healthcare insurance. Indian pharma companies have a large chunk of their revenues coming from exports. While some are focusing on the generics market in the US, Europe and semi-regulated markets, others are focusing on custom manufacturing for innovator companies.

Indian Pharmaceuticals - Highlights [1]

* Leading Pharma producer: In terms of value the country's pharma industry accounts for 1.4% and 10% in terms of volume of the global pharma industry.

* Among fastest growing Industries: The IPI (Indian Pharmaceutical Industry) revenue is expected to expand at a CAGR of 17.8 % during 2008-16 and reach USD36 billion

* Rapid growing healthcare sector: By 2015, the healthcare sector is expected to reach USD 100 billion from the current USD65 billion.

* Growing Generic Market: The generic market is expected to grow to USD26.1 Billion by 2016 from current USD11.3 billion in 2011; India generics Market has immense potential for growth

* Ranked 5th in terms of attracting FDI: Attracted 5% of the total FDIs into India from April 2000 to March 2013.

How pharmaceutical marketing differs from Other (FMCG) marketing?

Pharmaceutical Marketing

Other Marketing

It is the field of science which links the health sciences to ensure safe and effective medicinal products to the patients.

Other kind of marketing deals with consumer day to day routines (eg: Toothpaste, home appliances etc)

It is highly regulated market. Regulated by national regulatory laws and authority in order to ensure specified quality & standards of particular products (eg: FDA, GMP etc)

These are not regulated. There are no regulation apply in manufacturing, supply or use of the products

Pharmaceutical goods are sold only on retail drug stores (Pharmacy ) by a qualified registered pharmacist as prescribed by the Doctor

Available on the every general stores and shops can be sold purchased by any consumer without any interference of any authority

The concept of Consumer and customer is different, In case of Prescription drugs the doctors are the actual customer and the patient is consumer as the sale of drug is affected only by the prescription of doctors. In OTC (Non prescription) drug the patient is the customer as there is no prescription from the doctor

The buyer has freedom to purchase and to consume the product. There is no difference between customer and consumer.

Price of the Pharmaceutical products are regulated by NPPA(National Pharmaceutical Pricing Authority) and DPCO (Drug Price Control Order)

No Price regulation

The promotion cannot be done on social media like TV, Radio and public places. It is carried through Direct marketing by the medical Reps to the Doctors. But OTC products can be advertised on social media.

No regulation of advertisement, But some basic guidelines should be followed as per the National Advertisement Act.

What are the challenges being faced by Indian Pharmaceutical companies? [2]

Despite challenges, leading Indian players continue to exhibit strong profitability indicators (excluding one-time instances like exclusivity-related aberrations or impact of foreign exchange fluctuations) and credit metrics. These strengths are also reflected in their strong credit profile. Many Pharmaceutical companies have deployed strategies to target the various customer types, recent business and customer trends are creating new challenges and opportunities for increasing profitability. In order to avoid the economic decline being faced by the companies, the shareholders, markets and regulators should create a significant pressure for change within the industry. Leaders of the largest global pharmaceutical companies recognize the need for transformational change in their organizations, but will need to move swiftly to ensure sustained growth. The challenges faced by the Indian Pharma industry are:

SS The effects in new product patent

SS Price control in the drugs

SS Reformation in the regulatory

SS Developments in the infrastructure

SS Quality Management concept

SS Conforming the global standards

The other challenges include:

* Decline in the production

* Reducer in Drug Approvals

* Stringent regulations

* Government regulations in price controls

* High Development costs

* Expensive research and development practices

List out the most prominent performance related issues? [4]

From the organizational perspective, the following are the most prominent performance related issues:

* The number and quality of Medical Representatives

* Busy doctors giving less time for sales calls

* Poor territory knowledge in terms of business value at medical representative level.

* Unclear value of prescription from each doctors in the list of each sales person

* No mechanism of sales forecasting from field sales level, leading to huge deviations

What are the future growth prospects of Indian Pharmaceuticals? [6]

Over the past few years, the Indian pharmaceutical Industry has grown at nearly 12 to 15 per cent which is a tremendous pace of growth. It is clear that the growth of the industry will continue to be in double digits. India may rank among the top five global pharma markets by 2030. Over the next decade, the Indian market will proliferate, presenting a variety of opportunities. Most leading multinational companies have set bold aspirations for their businesses in India. India has seen the largest number of merger and acquisitions in the pharmaceutical and healthcare sector. The Indian pharmaceutical market is expected to grow at a CAGR (Compound Annual Growth Rate) of 15.3% during 2011-12 to 2013-14, according to a Barclays Capital Equity research report on India Healthcare and Pharmaceuticals. The growth of Indian Pharma companies will also be driven by the fastest growing molecules in the diabetes, skincare, and eye care segment. In addition, the pharmaceutical companies such as Cipla, Dr. Reddy's Labs and Lupin might soon be part of the government's ambitious ''Jan Aushadi" project. In an attempt to commercialize the project, the government is likely to rope in the private sector to bulk procure generic drugs from them. There are 117 Jan Aushadi stores across the country and the plan is to expand to at least 600 in the next two years and 3,000 by 2016.

TOP LEADING PLAYERS OF INDIAN PHARMACEUTICALS

S. No

Company Name

Revenue (USD in Millions)

Market Cap (Rs in millions)

Total Income (Rs in millions)

Net Profit(Rs in Millions)

1

Dr.Reddy's

1566.86

465877.15

85757(Year ending Mar 2013)

12655 (Year ending Mar 2013

2

Lupin

1323.45

438927.25

71458.2 (Year ending Mar 2013)

12604.3 (Year ending Mar 2013)

3

Sun

463.934

1293856.09

27028.9 (Year ending Mar 2013)

5165.5 (Year ending Mar 2013)

4

Ranbaxy

1151.28

198976.827

65607.07 (Year ending Mar 2012)

1623.39 (Year ending Mar 2012)

5

Cipla

1527.95

312456.84

84315.5 (Year ending Mar 2013)

15071.1(Year ending Mar 2013

Source: Business Today, Shine.com

What are the strategies to be adopted by the Indian pharmaceutical companies for a successful Market? [5]

Pharmaceutical companies have taken note of new opportunities. It is estimated that by 2020, India will emerge as one of the world's leading destination in drug discovery and innovation. As the opportunities are galore, the Indian pharmaceutical industry has the potential to serve the length and breadth across the world. The following opportunities are expected to emerge and play a significant role in the Indian Pharmaceutical Market. These includes

(1) Patented product

(2) Public Health

(3) Consumer Healthcare

(4) Biologics

(5) Vaccines

Some of the Pharmaceutical companies are adopting new criteria of strategy called "Limited Competition drugs" and differentiated products. Limited competition drugs are generic drugs that are not easy to manufacture or unable to made by several competitors. Differential products are the products with different dosage or administration in the existing molecules. Indian companies such as Dr. Reddy's, Sun pharmaceuticals, Lupin pharmaceuticals and Zydus cadila have already started adopting this strategy. Because of this many Indian Pharmaceutical companies showed better growth and profit in US Market during 2013 and branded generics markets in Russia and South Africa. This strategy has helped Dr Reddy's, where they launched Limited Competition Drugs like Azacitidine, Decitabine, Donepezil and Divalproex. The company's sales and profit for the quarter ended Sep 30, 2013 were the highest, In spite of its bulk drugs division not doing well. During the quarter it recorded a consolidated net profit of more than Rs 690 crore.

Due to new pricing policy and other regulatory challenges the industry is experiencing a slow growth. However, making a slight change in the way they are doing business today can negate the impact in the long run. Henceforth, both the Indian and foreign companies operating in India will have to device suitable strategies in order to be in the top 10 global markets by 2020.

Portfolio optimization

|

Expansion into newer markets

|

Improving Sales force productivity

|

Including newer technology

|

Building a robust internal compliance programme

Strategies for success in Uncertain and volatile environment:

(1) Build customer centricity:

(2) Review product portfolio:

(3) Strengthen operational capability:

(4) Value creation by JV(Joint Venture) /M&A(Merger & Acquisition):

Conclusion:

Pharma industry has seen major changes in the recent years that place new demands on payers, providers and manufacturers. Customers now demand the same choice and convenience from pharma industry that they find in other segment. Pharmaceutical Marketing helps to raise awareness about treatments for Chronic Diseases, the leading driver of health care spending. India is also expected to become a pharmaceutical research and development (R&D) hub in the next decade with the Department of Pharmaceuticals planning a road map for India to be a global player in the industry by 2020. A recent survey indicates that the Indian Pharmaceutical sector has given employment to approximately 2.86 million people, through 20, 053 units. It is estimated that by the year 2020, India's potential in Research & Development will reach between US$ 8 billion to US$ 10 billion. In order to combat the growth slowdown, Pharmaceutical companies need to join hands with Governmental agencies and other stakeholders to redness the challenges and grievances. In order to have an ethical and internal code of conduct, Indian companies should adopt a 360 degree feedback for better compliance. It is an undisputed fact that the companies should strictly follow the compliance procedure in order to maintain their brand name and stake.

REFERNCES:

1. The Indian Pharmaceutical Industry, Feb 2005, ICRA

2. Corporate catalyst India

3. SME Times

4. Drugs and Pharmaceuticals: International pharmaceutical Industry- A snapshot Jan 2004, ICRA

5. Pharma financial Express

6. Pharmabiz frost and Sullivan report on Indian Pharmaceutical Market

7. Marketing Management by Philip Kotler

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