Marketing of Prescription Drugs in India

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CAPSTONE PROJECT(2008-10)

ITM BUSINESS SCHOOL

Marketing of Prescription

Drugs in India

Guided by: Submitted by:Dr. V. V. Sople Ankit Porwal

Deputy Director, (KH2008PGDMF036)

ITM Business School PGDM - Marketing


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Marketing of Prescription Drugs inIndia

ITM Business School 2

Objective:

To study the guidelines for marketing of prescription drugs in India.

To study the customer behavior towards the major marketing techniques utilized by

the pharmaceutical companies.


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Marketing of Prescription Drugs in IndiaITM Business School 3

History of Pharmaceutical Industry

The first known drugstore was opened in Baghdad in 754 and many

more soon began operating in Islamic world and Europe.

By the 19th century, many of the drug stores in Europe and North

America, eventually developed into larger pharmaceutical companies.

Most of today's major pharmaceutical companies were founded in the

late 19th and early 20th centuries.

Valium (diazepam), discovered in 1960, was marketed from 1963 and

rapidly became the most prescribed drug in history.

Cancer drugs were a feature of the 1970s. Drugs for heart disease and for AIDS were a feature of the 1980s.

There are now more than 200 major pharmaceutical companies.


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Indian Pharmaceutical Industry

Highly organized sector.

Ranked 4thin terms of volume (8% of worlds production).

Ranked 13th in terms of value.

Estimated to be worth $ 4.5 Billion, and growing at about 89 % annually.

Highly fragmented with 30,000 registered units. Out of which 330 are large

units and 8000 are small scale units.

These form the core of pharmaceutical industry.

Also include 7 Central public sector units (Eg. Indian Drugs &

Pharmaceuticals Ltd., Hindustan Antibiotics Ltd.). These units produce ready to use medicines & almost 350 bulk drugs.

Leading 330 companies control 70 % of the market.

Ranbaxy leads with 7 % of the market share.


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Major Players in IndianPharmaceutical Industry

Rank Company Revenue 2007 (Rs crore)1 Ranbaxy 4,198.962 Dr.ReddysLaboratories 4,162.253 Cipla 3,763.724 Sun Pharmaceutical Industries 2,463.595 Lupin Laboratories 2,215.526 Aurobindo Pharma 2,080.197 GlaxoSmithKline 1,773.418 Cadila Healthcare 1,613.009 Aventis 983.80

10 Ipca Laboratories 980.44Source: Rediff - June 2008


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Power of Suppliers Volume benefits occur. Inputs standard available locally. Numerous suppliers- Switching cost low. Suppliers can go for forward integration.

Raw material cost constitute more than 50% of a totalexpenses.

Barriers to Entry Govt. Policies supportive

for entry but priceregulations exists.

Economies of scale exist.

Industry Competition

Highly Competitive. Top five players have mere 18 % of

market share. Lower fixed cost and high

working capital.

Threat of Substitute No substitute for the

medicines. Biotechnology is a

threat to syntheticpharmaceuticalproducts.

Power of Buyers End consumers do not have bargaining power. Brand identity exists but is in the hands of influencer. Price sensitivity is less. Highly fragmented market so buyer concentration v/s

industry is low.


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Strengths Low cost. Strong technical skills. Huge potential

market. Competent workforce. Globalization.

Weakness Poor R&D

Expenditure. Highly fragmented. Price regulations. Labor laws.

Opportunities

Off patent drugs. Expansion of

healthcare industry. Outsourcing of the

products. Innovations.

Threats

Transition fromprocess to productpatents.

Other low cost

countries. Counterfeit drugs.


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Marketing ofPrescription Drugs

OPPI Guidelines


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Standards of promotional information

Consistency of Product Information.Accurate and not misleading.

Substantiation.

Printed Promotional MaterialAll Printed Promotion materials other than those used for reminders must

include:

The brand name of the product.

The active ingredients, using the approved name where they exist.

The name and the address of pharmaceutical company or its agent

responsible for marketing the product.

Date of production of the advertisement.

Abbreviated prescribing information.


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Electronic Materials including audio visuals

The indication of pharmaceutical company and of the intended audience

should be readily apparent.

The content should be appropriate for intended audience.

The presentation ( content, links etc. ) should be appropriate and apparent

to the intended audience.

India- specific information should be complied with Drugs and Magic

Remedies Act.

Interactions with Healthcare Professionals

Events

Hospitality

Gifts and Items of Medical Utility

Samples


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Events

Scientific and educational objective

Events Involving Foreign Travel

Promotional Information at Events

Sponsorship

GuestsPayment for Speakers and Presenters

Hospitality

Appropriate Venue

Limits of Hospitality


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Gifts and Items of Medical Utility

Cash

Personal Gifts

Promotional Aids

Items of Medical Utility

Cultural courtesy Gifts

Samples

Sample permitted

Control and Accountability


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Survey


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Objective : To study the customer behavior towards the major

marketing techniques utilized by the pharmaceutical companies.

Sample :Constitutes of Physicians from Mumbai and Delhi.

Sample Size :50


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Quality of the product

Price of the product

Company associated with the product

Trials and studies

Samples of the product

Gifts and Sponsorships

Relationship with Sales Representative (Due to regular visits.)

Factors, which drive a customer to prescribe the product are:

Factors which are important for the brand recall of a product are:

Name related to company/ molecule/ disease

Name easy to pronounce

Short name of the product

Constant reminders by the company

Tent Cards, Printed Reminders


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Do customer shift from one brand to another:

84%

16%

Yes

No

Introduction of a newer molecule

Price

Trail of a new product

Promotional effort of the company

Persistence of the sales representative

Factors responsible for shifting:


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28%

72%

Yes

No

Is there any impact of relationship marketing on the business:


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FUTURE OF THE PHARMACEUTICAL INDUSTRY

Clinical trials in India cost US$ 25 million each, whereas in US they cost

between US$ 300-350 million each.

With market value of about US$ 45billion in 2005, the generic sector is

expected to grow to US$ 100billion in the next few years.

Clinical Research Outsourcing (CRO), a budding industry valued over US$ 118

million per year in India, is estimated to grow to US$ 380 million by 2010

In India investigational new drug stage costs around US$ 10-15 million, which is

almost 1/10th of its cost in US (US$ 100-150million)

For the first time, the seven largest markets will contribute to just 50 percent of

growth, while seven emerging marketsBrazil, China, India, Mexico, Russia,

Indonesia, and Turkeywill contribute to nearly 25 percent of growth

worldwide.


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LEARNINGS

This project provided an immense knowledge and overview of thepharmaceutical industry and the marketing practices utilized by the

pharmaceutical industry.

It helped me to understand the way a customer behave towards any promotional

tool.

It helped me in learning about the various factors that are responsible to make

any marketing strategy successful in pharmaceutical industry.


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Marketing of Prescription Drugs in India

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