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Chapter VIII
Conclusion: Findings And Suggestions
The global pharmaceutical market grew by 7% to US $ 602 billion in 2008.
The 10 major markets continued to dominate and accounted for 81% of the total
global pharmaceutical market. In North America, which accounts for 47% of
global pharmaceutical sales, grew 5.2% to US $ 265 billion, annually. Latin
America grew an exceptional 18.5% to US $ 24 billion per year. The emerging
markets of China, Korea, Mexico, Russia and Turkey, all experienced double-digit
growth, clearly outpacing global performance. Pharmaceutical sales in China grew
20.4% to US $ 15billion in 2008. IMS estimates that China has been the world's
seventh largest pharmaceutical market. The Asia Pacific (excluding Japan) and
Africa market grew 11% to US $ 46.4 billion. Japan, the world's second largest
market, which has historically posted slower growth rates, performed strongly in
2005, growing 6.8% to US $ 60.3 billion, its highest year-over-year growth since
1991. Europe experienced somewhat higher growth of 7.1% to US $ 169.5 billion.
IMS forecasts reveal that the total pharmaceutical market is expected to expand
at a compounded annual growth rate of 5.8 % over the next five years. North
America and Europe are each projected to grow at 5-8%; Asia Pacific/Africa at 9-
12% Latin America at 7-10% and Japan, 3-6%.1 The key factors driving
pharmaceutical growth worldwide have been population growth, increased
longevity of people, changing lifestyle, increasing wealth, innovative new
products, and new applications for existing products. As much as 40% of total
1 Goldman Sachs Research, IMS Health, as cited in LUPIN LIMITED ANNUAL REPORT FROM 2005 to 2010
market growth was fuelled by the introduction of new products, including 30 new
molecular entities launched in key markets.
Sales of generics in the top eight markets (US, Canada, France, Germany, Italy,
Spain, UK and Japan) exceeded US $ 55 billion annually and are expected to
experience double-digit growth over the next five years. According to IMS, the
Generic Drugs markets are expected to be the key growth area for pharmaceutical
manufacturers globally.
Indian Pharmaceutical Market:
Today, the pharmaceutical industry in India is estimated to be over a US $5
billion. 2005 marked the beginning of an era in the Indian pharmaceutical industry
with the introduction of the product patent regime. The knowledge-based Indian
Pharmaceutical industry has acquired capabilities in the complex field of drug
manufacture and technology. It is drug manufacture and technology. It is escalating
up the value chain from being a pure reverse engineering industry focused on the
domestic market, to a research-driven, export-oriented industry.
Indian pharmaceutical companies today offer formulations ranging from simple
paracetamol to sophisticated antibiotic and complex cardiac compounds. Some of
the leading companies including Lupin, can boast of approvals of US FDA and UK
MHRA for their plants. Top therapy group by value contribution are as follows:
Anti-infectives 18%
Gastro-Intestinal 15%
Cardiac 11%
Respiratory 10%
Vitamins/Minerals 9%
Pain/Analgesics 9%
Gynaecologesics 9%
Dermatology 5%
Neuro/CNS 5%
Anti-Diabetic 5%
Others 4%
The pharma industry is fast assimilating latest technologies and its strengths
include strong entrepreneurship, low cost of production, qualitative research at low
cost, competent work force, proper legal framework and world-class
manufacturing capabilities. These strengths would also enable the Indian pharma
industry to enter contract research and manufacturing opportunities in a big way.
ORG IMS forecasts that with buoyant market conditions continuing, the Indian
pharma industry should outperform itself as compared to last year with a double-
digit growth rate.
Lupin's Standing:
Keeping in line with its vision to be an innovation led transnational
Pharmaceutical company, Lupin has created its presence in several markets
through a combination of own supply, subsidiaries, partnerships and alliances. The
Company's basket of products, including APIs, Intermediates, Formulations and
Branded drugs that are offered across various markets, cover many important and
growing therapeutic segments. While making strong inroads into certain life-style
segments, the Company continues to be a well-recognised global leader in the
Anti-TB and Anti-Infective segments.
Lupin's world-class manufacturing capabilities backed by strong research,
backward integration , marketing and distribution strengths and experience in
branded generic space is expected to enable the Company to excel in the Indian
and global Pharma markets.
Growing Therapeutic Segment:
Although urban prescription markets showed stagnation, with a nominal
growth of 0.1%, the Company recorded a strong prescription growth of 8.2%
during the year 2005-2006. According to IMS, the Company has consistently
gained market share in the therapeutic segments that it has forayed into recently.
The new products that have been introduced in the last two years contribute 20%
towards the total branded sales; 8% from the products of the last year alone. In
anti-Asthama, Lupin's market share is 5% and at ranks No.2 in the market.2
Cardiovascular:
Cardiovascular is another key business segment of the Pinnacle division.
Barely five years into this business, has the Company’s ranking vaulted from 27th
in its terms of value, to one of the top ten players in this segment. Growth rate is
37% as compared to market growth rate of only 11%.
Lupin Global Reach:
Lupin continues to maintain its global leadership status in its key APIs
Intermediates. Attaining a global scale of operations has been the underlying
principle governing Lupin's API business model. Today, the Company has
established an enduring presence in the Cephalosporins and anti-TB space. It has
2 ANNUAL REPORT 2005,p.19
also built up a solid position in the CVS space, helping to widen the Company's
product portfolio.
The Company's API business clocked in Rs. 7,138 Mn during 2008-09. The
API business put up a robust operating performance, with ROCE comparable to the
best in the industry at 33%. Today, the Company undoubtedly runs one of the most
profitable APL business in the industry. This has come about from Lupin's
consistent pursuit of operational improvement, and better product and business
mix, which has helped the Company, sustain its profitability despite the adverse
price volatility witnessed on the Pen G front (Pen G is one of the vital inputs into
making the building blocks of several oral Cephalosporins.)
Lupin's Global TB business (GTB) is a part of the API business unit. GTB
performed very well and recorded sales of Rs. 826 Mn during 2008-09, as
compared to Rs. 575Mn, during the previous year.3
With growing captive consumption resulting from the Company's fast
expanding Formulations business, the API division continued to be the bedrock of
its business.
Leveraging Tough Market Conditions For Gaining Market Share:
Insightful business planning over the years has resulted in an impressive
performance even in tough times such as these. Leveraging its sturdy, Vertically
integrated business model, the Company enjoys cost, quality as well as market
share leadership in its chosen therapeutic areas, given its leadership credentials in
the areas of AIP's and Intermediates. In fact, the tough market conditions have
assisted consolidation in the competitive make up of the industry and have given
3 Lupin, Annual Report 2008-2009 P. 54
Lupin the opportunity to further garner market share. Further, its presence in the
Chinese market has enabled it to gauge the competitive threats as well as
opportunities and accordingly adjust and align its strategies. Attaining global scale
of operations has been the underlying principle governing Lupin's API business
model. Being a first mover in specialty products and adding the requisite size and
scale into manufacturing new APIs, the Company creates a formidable position for
its products in the highly competitive Advanced Markets.
Today, the Company has established global leadership position for its APIs and
holds a firm grip in the Cephalosporins, Cardiovascular and Anti-TB space.
Despite on-going price volatility on penG, one of the vital inputs for the
building blocks of oral Cephalosporins, the Company protected its margins through
efficient productivity and prudent procurement planning.
The compounding growth in captive consumption form Lupin's fast expansion.
Formulations business has added a continual thrust to the volumes produced by the
API division. Satish Khanna, Group president API recently observed the success of
the visible comes from the invisible. Our proficiency in creating the building
blocks of medicines has allowed as to go places in the global Pharmaceutical
market place"4 There is a great deal of substance in Khanna's Claim.
The Global context of Pharma Market:
According to IMS Health, the world pharmaceutical market grew from US $
334, Bn. in 1999, to US $ 643 Bn, in 2006. North America alone accounts for 48%
of global sales, registering a growth of 8% Europe and Japan, the other major
markets, accounted for 30% and 9% of global sales, respectively. Asia, Africa and
4 Ibid P. 30
Australia grew at around 10% and account for 9% of global sales. The ten major
markets account for 80% of the total market, in terms of revenue.
The economic, structural, political and health dynamics that impact growth are
rebalancing the worldwide pharmaceutical market, driving global growth to 5.6%
for 2007 and it is expected to see global pharmaceutical sales to reach US $ 665-
685 Bn. in 2007. The expanding availability of health care and an increasing need
for treatment associated with chronic disease, more typically found in developed
countries, is driving higher growth rates in the developing countries. It is estimated
that emerging markets, currently representing around 17% of the global market, are
expected to contribute 30% of growth next year.
The top five markets of Europe (France, Germany, U.K., Italy and Spain)
combined are expected to grow by 3.4%. These countries are witnessing increased
demand from an ageing population; cost-containment measures; and an increasing
use of incentives, for encouraging the usage of generics. While the Japanese
market is forecast to grow 5-6% in 2007, emerging markets, including China and
India that had grown more than 10% in 2006, are estimated to maintain their
growth momentum due to their expanding economies and broader access to
medications.
Global Pharma Sales 2006-Leading Therapy Classes
(% of Global Sales)
Lipid Regulators 5.8%
Anti-Psychotics 3%
Anti-Depressants 3.4%
Anti-Diabetics 3.5%
Oncologics 5.7%
Acid Pump Inhibitors 4%
Respiratory Agents 4%
Lupin - An Overview:
Lupin today is the fastest growing among the top 5 Indian pharma companies.
In a short life of 42 years Lupin has developed the requisite manufacturing strength
to support its flight to ever rising levels with consistent investments in augmenting,
manufacturing capacities; it has ensured that its capabilities are commensurate with
its growth aspiration. In view of quality, safety and the environment, most of its
manufacturing facilities have been inspected and approved by the US FDA and UK
MHRA, WHO, Australian TGA and Japan's MHLW. Its rapid rise may be seemed
by a few of its milestones during the last ten years. Lupin's top ten brands are
Tonact. Gluconorm, Rcinex, Rablet, AkT, Ramistar, clopitab, L-cin, odoxil and
Lupenox.
Milestones of Lupin :
* Cefotaxime facility approved by US FDA (2000)
* Lupin Laboratories and Lupin chemicals became Lupin Limited (2001)
* Commenced supply of Cephalosporins to the US (2001)
* R&D Centre at Pune commissioned (2001)
* Rablet and rated by ORG- Marg as the second best launch (2002)
* Anti TB facility commissioned at Auranabad (2002)
* Five ANDAS filed (2002)
* Patent filings crossed 100 (2002)
* Exports to advanced markets crossed Rs. 1,000 Mn (2002)
* Lupin Pharmaceuticals Inc. USA founded for marketing and developmental
activities in the USA (2003)
* Mandideep approved by US FDA (2003)
* Successfully implemented SAPERP (2003)
* WHO approval for Goa and Aurangabad (2004)
* New Lovastatin plant at Tarapur approved by US FDA (2005)
* US FDA and UK MHRA approvals for Goa (2005)
* Maiden Employees Stock Option plan implemented (2005)
* Maiden issue of Foreign Currency Convertible bonds (FCCB) aggregating
US $ 100 Mn, which are listed on Singapore Stock Exchange (2006)
* Maiden Bonus share issued in the ratio of 1:1 (2006)
* A New facility set up at jammu (2006)
* Best New Manufacturer of the year award from Amerisource Bergen (2007)
* New Finished Dosages facility at Jammu (2007)
* Lupin acquired Kyowa Pharmaceutical Industry Company Ltd. Japan (2007)
* Rubamin Laboratories Ltd. Now Novodigm Ltd. (2007)
* New Finished Dosages facility at Indore (2007)
* Won the Wai Mart Supplier Award of excellence (2008)
* New Biotech facility set up at Pune (2008)
* 4 acquisitions. Germany, Australia, South Africa and Philippines (2008,09)
Lupin's Profile in Brief:
Lupin's rising stature is illustrated by some of its highlights.
India Region Formulations:-
Lupin registered a growth of over 20% twice that of the IPM. The company
improved its ranking to No. 5 in the IPM in 2009, up from No. 6in 2007-08. Today
Lupin is the fastest growing company amongst the top 5 in the IPM.
Acquisitions:
In 2008-09 it successfully acquired 4 companies in Germany, Australia, south
Africa and Philippines, and Hormosan pharma Gmbh (Hormosan), a German
Generics company specialised in the supply of pharmaceutical products for the
Central Nervous System (CNS). Lupin acquired a substantial stake in Generic
Health Pty. Ltd in Australia, having a wide range quality Generics prescription and
OTC Products. The Company acquired a majority stake in Pharma Dynamics in
South Africa, with a clear leadership in the Cardiovascular (CVS) segment. In the
same period Lupin acquired a majority stake in Multi care Pharmaceuticals Inc.
(MC), Philippines, a Generics company in the field of women's health and child
care.
Research and Development:
Lupin allocated Rs. 2,669 mn representing 7.1% of the Company's net sales,
represnting an increase of 31% on previous year's spending.
In 2008 Lupin filed 28 ANDAs during the year. Cumulative filings rose to 90
ANDAs representing a market size in excess of USS 90 billion. Federal Circuit
Court of Appeals entered a landmark judgement in Lupin's favor which led to the
company winning the Cefdinir litigation against abbot laboratories and Astellas
Pharma Inc.
Finance:
Lupin's consolidated sales rose to Rs. 38,238 Mn, in 2008 registering 38%
increase over the previous year. Its Net profit rose to Rs. 5,015 Mn, registering
50.2% increase over the previous year. The Company's Board recommends
dividend at 125% for 2008-09. During the same period. EBIDTA margins
increased to Rs. 7439 Mn. registering a growth of 41%. Earning per share (basic)
increased from Rs. 50.01 to Rs. 60.84. In 2008-09, the Company channelised Rs.
3.5 billion towards capital expenditure.5 Lupin's FCCB bonds were amongst the
very few that continued to be quoted well above par. These facts are testified by its
annual balance sheets.
Achievements :
In 2010, net sales grew by 26% to INR 47,405 million up from INR 37,759 the
previous year. It scored 49% CAGR in Net profits for the 6 years.
Lupin's Indian and global Business :
5 LUPIN ANNUAL REPORT 2005 -2009
Its business continued to grow and increased by 29% in 2010 to INR 31,966
million from INR 24,701 million in 2009. It is worth noting that Formulations
today contribute 84% of its overall revenues with the rest coming from API's.
Market Expansion:
Us & Europe: Lupin recorded impressive performance in the Advanced
Markets of US & Europe. These markets contributed a healthy 38% of total
revenues at INR 17,893 million, up from INR 12,916 million in 2009. Lupin's
Generic and Brand Business also recorded high growth during the 2009. It has
emerged as the 8th largest and the fastest growing amongst the Top 10 generic
players in the US, the first Indian Company to reach this milestone. The US
branded business amounted to 37% of the overall US revenues with a turnover of
USD 127 million growing by 72% during 2010 as compared to previous years.6
Japan: Valued at US 75 billion Japan is the second largest market in the
world. Lupin hopes to get 30% of this market
Africa: Lupin have an existing presence in the Anti-TB segment and is now
entering in the Anti-Malarial segment as well in this region. The Company is
active here by initiating filings in Nigeria, Ghana and French, West Africa
South East Asia: - During 2008-09, Lupin consolidated its position in the
ASEAN market through the acquisition of a 51% stake in Multicare
Pharmaceuticals Inc (MC) in Philippines. This acquisition opened doors to the US
2.5 Bn pharmaceuticals market in the philippines with the Generic opportunity
valued at around US 850 Mn. During 2008-09, Lupin has enhanced its presence in
then Malaysian market by establishing a partnership with Biocare.
6 LUPIN ANNUAL REPORT 2010, P. 11
Middle East- Lupin successfully gained a foothold in 2008 in the markets of
Yemen, Qatar, Oman, Lebanon, Kuwait and Saudi Arabia. Its sales grew 26% in
this area during 2008-09.
Lupin's Social Responsibility :
Lupin has also shown the way for corporate social responsibility. Lupin
Foundation selected entire Bharatpur distict for holistic Rural Development. In
1988 when it started a program the incidence of poverty was 34%. The
multifaceted activities of economic and social development were undertaken in
close collaboration with District and State Govermment departments. At present,
the incidence of poverty is around 12%. The Company hopes to bring it down to
nearly 6% by 2015 by launching a "holistic" rural development programme in
Bharatpur district of Rajasthan through multi phase activities for economic and
social improvement in rural areas.
In view of the above achievements, Dr. Desh Bandhu Gupta, Chairman of the
Lupin's Board, once claimed that the company was going from a "simple aspiration
to beyond US $ I billion."7 The company may not be on the top of the
pharmaceutical world in India, let alone abroad, but chairman's remark point to a
company on the right path with right strategies in a highly competitive pharma
markets of India, West and Asia.
7 Lupin Annual Report, 2009, P.8
Strategy For Global Market Leadership :
Lupins is the fastest growing among the Top 5 pharmaceutical companies. This
status has been achieved by a well-planned marketing strategy.
The company enjoys global market leadership in Rifampicin, Pyrazinamide,
Ethambutol Cephalosporins Intermediates. Lupin is a key supplier of anti-TB
formulations to the Global Drug Facility (GDF). For rising greater heights
Company has developed a focused marketing strategy for its APLs by establishing
its presence in various regions of the world. To tap into the lucrative Markets
Lupin has established joint ventures. It has planned in selecting the introduction of
new products and concentration on more efficient utilisation of its APL
manufacturing facilities.
In 2010 Lupin recorded a growth of 25% in consolidated revenues to INR
47,678 million. The company also secured INR 6,816 million in net profits, an
increase of 36% overg profit of 2009. The growth in profits resulted from
expanding market share in key markets abroad. This was achieved due to its focus
on achieving cost leadership derived from "vertically integrated business model".8
Global Performance:
Lupin Pharmaceuticals Inc. (LPI), the Company's subsidiary in the US, secured
standing growth in both the brand as well as the Generics business. The Overall
Formulation sales rose to INR 16,542 million recording a growth of 32% over
2009. The Company added two valuable brand assets to its portfolio. Aller Naze
was acquired from Collegium and Antara from Oscients. Lupin's Generic Business
recorded even stronger growth making it largest generic player in India and the 8th
8 Lupin Annual Report, 2009, P.33
largest and fastest pharmaceutical players in the US Market.9 The subsidiaries of
the company contributed to the Company's overall growth raising Company's
overall sales outside India by 29% during 2010. Lupin's India Region Formulations
business accounted for 28% of the Company's total sales in 2010.
Expanding Global Footprint:
The Company grew in all markets of overseas operations. Pharma Dynamics in
South Africa clocked in INR 1,328 million in revenues in 2010. Kyowa in Japan
has been well integrated into the Lupin system. The Japanese subsidiary posted
robust net sales of INR 5.341 million in 2010, and now contributes 11% of Lupin's
total revenues.
Incisive marketing strategies in Chronic Segments:
Recently the IPM has been witnessing a transition from acute to lifestyle
segments and chronic therapies. Lupin has aligned its strides with this transition. It
is now in the driver's seat having built a strategic position in several chronic
therapy areas like Cardiology, Central Nervous System (CNS), Dialectology, Anti-
Asthma, Gastro Intestinal and Oncology segments.10
The company's marketing
strategies are reflected in its success in the domestic market.
Lupin continues to expand its product portfolio with the introduction of a mix
of branded Generics and value added Generics. Lupin claims that its growth rates
in some of the major therapeutic segments "remain the best in the industry". In the
Anti-Asthma segment, Lupin increased its market share from 10% to 12% The
company's diabetics business scored an impressive growth of 53% in 2009. The
9 Lupin Annual Report, 2009, P.45
10 Lupin Annual Report, 2009, P.28
Company outperformed the market in this segment. The Company's marketing
efforts and therapies focus has helped Lupin build brands that are market toppers.
During 2008-09, Lupin build brands that are market toppers. During 2008-09,
Lupin recorded growth across all key business divisions and therapy segments.
Lupin Respira:
Lupin Respira has spearheaded company's foray into Anti-Asthma, Allergy and
Respiratory Tract infections and COPD medicine. In the Anti- Asthma market, it
registered a growth of 48.8% in 2000 outperforming market which grew bygg
13.1%. The company is currently positioned at No.2 in the Anti-Asthma market,
with an overall market share of 11.9%. Lupin's pinnacle division that focuses on
the Cardiac market posted strong results, growing at 25.5% as compared to the
market growth rate of 13.2% The company's Diabetes business grew at 53% as
against the industry growth rate of 16.7% in 2008-09, posting an exemplary
growth.
In 2010, Lupin's India Region Formulations business showed an outstanding
growth enhancing its market shares across multiple therapy segments. Lupin's
domestic formulations business outpaced and outperformed the Indian
Pharmaceutical Market (IPM). It recorded sales of INR 13,502 million a growth of
18%. As a result Lupin has today emerged as the fastest growing among the top 8
in the IPM, with an overall market share of 2.75%. This is illustrated by ranking of
its top ten brands.
Top Ten Lupin Brands
Products Therapeutic Segent Ranking
Tonact CVS 3
Gluconorm Anti Diabetic 2
Rablet Gastro Intestinal 2
Rcinex Anti TB 1
AKt Anti TB 1
Ramistar CVS 2
Clopitab CVS 3
L-Cin Levofloxacin 1
Odoxil Anti-Infective 1
Doxcef Cefpodoxime Solids 7
Chronic Therapy Segments are growth drives. Over the years, Lupin has
transitioned its therapy focus from primarily acute treatment to lifestyle segments
and chronic therapies.
The Company is a formidable player in important chronic therapies like
Cardiology, Central Nervous System Dialectology, Anti-Asthama, Anti-Infective,
Gastro Intestinal and Oncology11
Lupin's business model and sharp marketing
strategies are seen by its success in the chronic therapy segment of the domestic
market. In 2010, Lupin expanded its product portfolio with the introduction of a
mix of branded and value added generics into the market place.12
The Company's
growth rate in some of the major therapeutic segments is very impressive. The
11
Lupin Annual Report, 2009, P.45
12 Lupin Annual Report, 2009, P.21
Company's diabetic has shown an impressive growth of over 44%. In this way it
has outperformed the market growth rate which is 24 %.
Consistently outperforming the industry growth, it continues to grow from
strength to strength on the domestic front. It secured 6th rank in the marketplace as
per IMS ORG, up from the 10th
in 2006.
Marching Fast Through Strategic Acquisitions:
The strategic acquisition of Kyowa, during 2007-08 has propelled Lupin
directly into the second largest pharma market of the world. Kyowa has brought
with it a rich product portfolio, extensive market reach, and state of the art
manufacturing capabilities. Lupin has been exploring meaningful acquisitions in
the emerging markets of South East Asia, Middle East, South Africa and Europe. It
is also working towards the acquisition of strategic brands in the US, across
various therapy segments.
The acquisition of Rumbaing laboratories Ltd. (rechristened as Novodigm)
marks Lupin's foray in the Contract Research and Manufacturing Services
(CRAMS) space/ Novodigam brings technological expertise and manufacturing
capacity which are catalysts to its success in this segment.
Lupin is sufficiently broad in terms of its spectrum of product offerings and
geographical reach. It is now focussing on leveraging its existing technological
capabilities to develop value added differentiated products that will further
strengthen Lupin's position in the plasma world.
Lupin has recognized that biologicals form are important component of
business. It has put in place a detailed blue-print for establishing it in this space.
Recently its biotechnology initiative gathered significant momentum. It has in-
licensed five biologicals. Besides in house product development Lupin has entered
into strategic arrangements for co-development. It is now in the process of
establishing a GMP certified manufacturing facility at Pune.
The above achievements prove that Lupin's plans for creating a global footprint
have succeeding extremely well. 55% of its revenues are contributed by
international business. Lupin has forged its presence in several markets across the
world. In 2010, it has entered Europe through Cefopodoxime through Proxetil in
France, followed by lisinopril in the UK. Lupin is one of the few Indian companies
to have a presence in Australia and Gulf countries. All these markets contribute
greatly to Lupin's global stature. Ms. Vinita Gupta Group president and CEO of
Lupin USA once rightly declared: "Lupin has clearly broken away from the rest to
emerge as the 8th largest and the fastest growing Top Ten generic business in the
U.S. (in Rxs )- the only Indian pharma major to ever achieve this feat."13
The Rest of the Indian pharma Industry:
Indian pharmaceutical industry has a stable growth rate of 15% in formulations
and 20% in bulk drugs. Though the industry appears to be stable, there is lot of
hype which can disturb such stability. Until and unless the captains of industry
develop suitable functional strategies it is difficult for them to succeed in the
competitive world.
After the liberalisation process in India, industry stability has been achieved
mainly due to de-licensing permitting joint ventures, collaborations and to develop
R&D centres by expertise.
13
Lupin Annual Report, 2009, p.14
The competition in pharma Industry is very high. It can be seen from secondary
data that nearly 20,000 companies are operating in India but only 250 companies
enjoy the top position with 60% of the market share of which 75% are controlled
by Indian companies. The growth of Indian companies is phenomenal during 90s
when compared to 80s The main reason for the growth rate is the market friendly
environment and a strategic competitive and reactive principles adopted by the
companies. Since market is highly competitive it is difficult to manage the growth
only through the functional strategies, but an integration of corporate strategies to
functional strategies and to adopt themselves to market friendly environment is the
key to success in Indian pharma industry.
The functional strategies like product profiling, pricing strategies, channel
managements and direct selling efforts need to be synchronised with corporate
strategies like mergers, brand acquisitions take-overs as these play a vital role. This
synchronisation leads to strong marketing abilities, product engineering, strong
capabilities for basic research, corporate guarantee of quality, technological
leadership, strong co-operation from channels and obtaining highly skilled human
resource. This differentiates a successful company from the unsuccessful
companies. The patent laws may reduce the competition but that is only for new
R&D products, but looking into the market size and the type of customer profile
the companies need to develop functional strategies through competitive
advantages as mentioned above to synchronise with corporate strategies.
Following are the summary of findings and conclusions which are drawn on
the basis of the analysis and inference drawn for each variable.
The Structure of Pharma Industry:
India is the eleventh largest manufacturer of drugs and pharmaceuticals in the
world. The investment in this industry is around Rs. 1,500 crore and there are
around 20,000 units manufacturing pharmaceutical products of these units. 250
units are in the organised sector and account for over 40% of the total drug
production and exports. The organised sector contributes about 80% of bulk drug
production and 60% of formulation production. Of the 250 units in the organised
sector, about 155 units produce basic bulk drugs for subsequent processing into
pharmaceutical preparations and market both classes of products. but the study is
confined only to the marketing of formulation products.
As per the latest CMIE report the market size for formulations in India is Rs.
9,125 crore. This market is growing at the rate of 15% per annum This growth rate
is being experienced from almost a decade and will continue to maintain the same
pace for years to come. But the main hitch faced by the pharmaceutical companies
is the squeeze in profitability. During 1970s the industry used to enjoy 16%
profitability but now it is reduced to just 4% This is mainly due to the
government's control on pricing and due to high competition.
India does not practice patent laws as far as pharma products are concerned.
Only process patent is implemented and hence there is a scope for easy copying of
the products by the manufacturers. This has resulted in a large number of
companies operating in the market place. In view of this a pharmaceutical
company can survive only with sales volume increase and improving market share.
Pharmaceutical marketing is a highly specialised form of direct marketing i.e.
personal selling is the core of promotional strategy. In addition marketing efforts
are not directed towards the customer but towards intermediaries like medical
professionals, distributors and chemists.
The industry for its marketing success depends on the doctors (medical
professionals) who are the social guardians of patients. They advise, diagnose and
provide medications to the suffering society. The distributors and chemists are the
channels who make the products available nearer to the customers.
Most of the product profile being sold in the market are antibiotics,
antibacterials, vitamin preparations, cough and cold preparations anti-parasites,
anti-inflammatories, analgesics, anti-pyretics, antacids, anti-diarrhoeals,
cardiovascular drugs, speciality drugs, anti-asthamtics, tuberculostatics, anti-
histamines, nutritional supplements and neurotic drugs.
With such a wide product portfolio available in the market, the society is
definitely getting the health benefit however; there are few causes for concern,
both to the Industry and to society.
The existing drugs are finding more and more resistance with the disease
pattern with the high degree of urbanisation and pollution creating new diseases.
These two factors are responsible for greater demand on health front and need for
developing new drugs to combat such problems. This calls for investment in R&D
by pharma companies.
But, due to patent laws not being implemented in our country, product copying
is relatively easy. Hence, investment in R&D is just 1.5% of the total sales
revenue. This is grossly inadequate.
As per the 1995 GATT agreements and W.T.O.'s direction India will have to
amend the patent law whereby a company can enjoy the patent for 20 years on
their research product. In such situation it is better that pharma companies should
invest more on R&D.
After the patent law is introduced it is difficult for others to sustain the market
as they are unable to copy the products. The existing products do not provide good
profitability, existing products may decline in its demand all leading to operational
crisis and the very survival becomes very difficult to companies. In such
circumstances how does the company develop the strategies is the main crux of the
problem.
Hence, the structure of the pharmaceutical companies should be built in such a
way that it supports the functions on a continuous basis. The functions of
marketing mix strategies requires a continuous support of corporate strategies like
mergers, take overs and brand acquisitions. This will enhance the operating base
for a company. It is understood that only wealth driven companies can indulge in
such strategy and survive and it can further be presumed that there will be a
tremendous elimination of small companies leaving the field to the few big
conglomerates.
Product profile Integration:
In analysing the strategic positions of the companies in the pharma industry
various new marketing phenomena were observed. One such phenomena is the
product profile of various companies.
In the early 60s and upto early 70s most of the Indian pharma companies had
more than 60% of the contributions to sales obtained from core products. But with
the advent of competition and drug price control order from Government of India
coupled with lack of protection (i.e. no patent laws were practiced in India). The
core products of the companies were easily copied and competition increased
substantially. Since the hallmark of marketing success in pharma industry in India
is the sales volume and market share, the companies started augmenting their
product profile. In addition to that mee too products were also added to the product
profile. This has resulted in the reduction of contribution from core products to
sales.
As the market became more and more competitive the bigger companies
started introducing the OTC products to gain sales volume and improved market
share and also got their image built-up.
The companies which had financial and research capabilities invested in
research and developed some specialised products.
Hence, now -a-days when we look into a successful company's product profile
we can arrive at five groups of products they are:
1. Core products
2. Augmenting products
3. Mee too products
4. OTC products
5. Speciality products.
The product portfolios mentioned above will give a company a continuous
voluminous growth and help in improving the market share of the company.
Generic Product and Branded products:
A drug's generic name is the pharmacological name of the compound assigned
under WHO's international non-proprietary names committee. Drugs whose patents
have expired are also included in the category of generics. Generic name helps
prescribers to think clearly about the therapeutic classification of drugs and are
logical and scientific. They are used throughout doctors training.
Generic drugs are broadly classified into commodity generics and branded
generics. Commodity generics, which have been on the market since the 1950s are
simply generic name products marketed by a wide variety of companies.
Branded generics- which are either unpatented drugs sold under a brand name
or patented or patent expired products sold under a generic name prefixed by the
companies initials- a practice which helps differentiation from other generics
manufacturer and is supposed to provide an assurance of quality. Branded generics
are usually sold at a higher price than commodity generics.
The brand name of a drug is the trade marked name, an integral part of the
patent system. Together, brand names and patents insulate drug companies from
price competition.
Branded pharma products are higher priced than the generics due to various
reasons. The many reasons are the extra promotional expenses required for
branded products. In addition to that branded products attract excise duty which
again spirals the price of the product whereas generic products can save these two
costs and can be offered at a much lesser price.
In the Western countries the increasing cost of health care is reducing the
purchasing capacity of consumers towards the pharma products. Added to this is
the fact that so many products are getting released by the patents which would
give competition to the existing companies. This will definitely lead to market
saturation and hence as a survival strategy Western markets are adopting generic
marketing-both branded generic and commodity generic.
However, in India the situation is totally different, First of all there is no patent
law in India. In addition India is a growing market and not a saturation market.
India being a developing country and with a huge population and with many
people living below the poverty line, the government has liberalised pharma
business in terms of licensing and controls. This has helped in setting up a number
of units. If each unit survives. then only the markets can be flooded with pharma
products which helps in maintaining a low price, providing affordability to the
large poor population.
To achieve such a situation only a brand name can help the companies to
survive than branded generics.
In case of branded generics or commodity generics, the competition has to be
minimal so that prescriptions can be generated by making use of company's name.
But in India the number of companies are nearly 23,000 and for 300 products we
have 75,000 brands.
In a growing market, the brand name is needed to help the company to survive.
Hence the generic market for India is still a premature concept. The survey
indicated that branded products are more acceptable to the target group and it is
better to have brand name for pharma products in India.
Pricing:
Pricing of pharma products during 60s and 70s used to be perceived value
pricing method. Companies had the liberty to charge substantial mark-up on the
cost. Profitability was very good due to this factor. Only MNCs and very few
Indian companies including public sector companies were operating. With the
introduction of competition, the strategy was changed to competitive which are
normal cells. Hence, improper use of these chemicals will damage the regular
normal cells of the body leading to some other complications. Hence, it is
advisable that only qualified persons in the subject should suggest the medication
after duly diagnosing the disease. There is also the statutory legislation that only
qualified medical professionals should give advice on the type of drug, the dosage,
dosage period etc. to a patient, hence, the Pharma industry should promote the
product through qualified medical professionals. Here the doctor will prescribe the
medication required by each patient according to the need for treatment. To
promote the company's product, it is the doctor who should prescribe that
company's product. Hence, the doctor is the most important target audience to a
Pharma company.
Normally, a doctor belongs to a better social class because of his qualifications
and financial position. He commands a better position and esteem in the society. It
is also obvious that he serves the society by providing solutions to the problems of
patients. He also belongs to the Class of intellectuals in society.
In his service to the society he finds little time for relaxation for personal
purposes. His mind is always analysing, trying to understand the patient's problems
and providing solutions to such problems.
Since doctors are the target audience of pharma industry (the doctors are
visited by), the company representatives regularly meet the doctors to promote
their products. But the competition in India is too high, each product has a lot of
brands and for same diseases there are a lot of products to provide solutions. At
such a time the decision of the doctor in prescribing a product depends solely on
the information that he has in his mind, and his ability to recall that he has in his
mind, and his ability to recall that information for the purpose of prescribing is
called the concept of 'share of mind'.
Most of the companies aiming are to get this share of mind, and design many
strategies. One such strategy is the development of prescription habit.
A human mind is subjected to conditioning to the continuous external stimulus,
i.e., if a particular stimulus is continuously given to a mind, that mind gets
conditioned to such stimuli and responds with behaviour as guided by the stimulus.
The doctor being a human being is also subjected to such conditioning. The
company representatives continuously visit the doctor to provide stimulus to
prescribe their company's brand. Once they achieve this conditioning it becomes
prescription habit. This is one of the reasons why old companies have better sales
compared to new companies.
Doctors have esteem in society and to maintain their professional esteem the
treatment they provide to patient will aim at reducing the problem of patients. The
most important variable here to achieve this is the type of medication he provides
to the patient. Hence, doctors look for a quality product possessing very good
efficacy. This is the single most motivation a doctor can get from a pharma
company. The other motivational factors that a company can desing to motivate the
doctor to prescribe their company's products are developing convenient dosage
packs, availability of the product in the market, palatability of drugs, brand recall
materials and gifts which are useful to them in their profession. Above all the
company's image also plays a greater role in motivating a doctor as he trust with
the established companies.
Image factor in Pharma Business:
While deriving competitive advantages, Michael Porter emphasised that one of
the competitive advantages that a company can enjoy is the positive corporate
image. While proposing the differentiation strategy Philip Kotler insisted that
corporate image helps a company to achieve through differentiation in the market
place. The Image factor is an intangible factor but very helpful for tangible growth
of the business and development of the company. It helps to have positive
perception from general public, target group, government, etc. This image factor is
more pronounced in the pharma industry.
Pharma products are mainly concerned with the health of human beings.
Human beings are concerned more about their health than anything else in their
lives. But they are exposed to various health problems in their lifetime. These
health problems will hinder their normal activity. Hence they need solutions to the
health problems as fast as possible.
Pharma products offer specific solutions to specific problems. But this offering
has to be routed through medical professionals who are the guardians of society's
health; doctors in turn will provide the patient medications to solve the problems of
his health. Here a doctor will rely on those medications which are sure to provide
solutions and, hence, the quality of product becomes the focal point. A company
which has consistently provided the quality products to the professional
practitioners becomes successful. These companies have given quality products
mainly through their professional approaches and grown in the market place. These
companies are providing quality and value to the profession and customers through
which they have built up a positive perceptible image. Doctors perceive that the
top companies have given corporate assurance of quality. This is one of the major
competitive advantage discussed by Porter.
Due to the factor mentioned above the older companies have given this quality
assurance on a continuous basis and, hence, a positive perceptible image is built up
in the society for older companies. This point was proved in the age analysis of the
company. The older the company, the better is the sale.
When differentiation strategy is adopted, any product line extention and brand
line extention by such established companies are patronised by medical
professionals and the society in general due to its corporate image. Society believes
that the companies give the best quality products and provide value to society.
Hence building corporate image in Pharma industry is one of the corporate
strategies.
Over the Counter Products help in Building Image:
We have found that the image of a company is a competitive advantage in
pharma business. This image building is targeted mainly towards the customer
group like distributors, stockists, chemists and doctors. The image building is also
targeted towards government and related agencies. Normally, the image building is
not focussed towards general public. Mainly because in times of problems to a
patient they are advised by the doctors, and medicines are dispensed by the
chemists. His focus at that time is to get relief from pain and hence the chance of
his getting exposed to image of companies are very limited.
But in the emerging market scenario the companies are trying to build the
image with general public also through concerted efforts. One such effort is the
introduction of over the counter (OTC) products.
OTC products are normally the pharma products which are not promoted
through ethical channel but can be purchased by a customer directly from a
chemist by demanding it. Products for normal headache, body pain, simple cough,
cold, acidity, etc. are the products which constitute the OTC segment.
These products are aimed at providing immediate relief to the patients
(consumers) at a very affordable price. The promotion adopted by companies to
develop the market for these products are branding the products and advertising in
mass media. The most important media is the electronic media and print media.
Because of the invasions of electronic media like Tvs and radios, the
advertisement in such media have helped the companies to reach a larger
population. This has definitely helped companies to build their image with the
general public. It has also helped them to increase their sales and market presence.
Strength of a Company Vs. Corporate Strategic Options:
Based on the strengths and weaknesses of companies. All the companies can be
classified into 4 categories:
1. Volume companies
2. Stalemated companies
3. Fragmented companies and
4. Specialised companies.
Each of the company will have its own competitive advantages. Based on this
we can develop a corporate strategy to get advantage in the market place in pharma
industry.
1. Volume companies:
are those which have large advantages due to their sales volumes. Here
profitability is correlated with market share and company size . Here the corporate
strategy to achieve better advantage is to have mergers of two volume companies.
Example: Glaxo's merger with Wellcome. The better advantages generated are:
- Cost sharing
- Elimination of common cost
- Greater market access
- Broader product lines
-` Sharing or R&D Knowledge
- Increased ROI on R&D spending
- Synergy in distribution.
2. A Stalemated company:
is the one in which there are few advantages and each potential advantage is
small. The profitability is unrelated to market share. This type of companies should
offer themselves for takeover by other companies. The advantage derived by such
corporate strategy is that, after the takeover by a good company both can aim to
become volume companies by synergising the advantages each has.
3. Fragmented Companies:
Fragmented companies will have many opportunities but the competitive
advantage is very small. Hence they are unable to concentrate on any
opportunities. These companies need financial resources, Hence, the corporate
strategy is to sell off the brand and raise the resources to develop other
opportunities as advantages.
4. Specialized Companies:
Specialized companies are those which have a great deal of opportunities and
advantages and these can have a high pay-off. The corporate strategies for such
companies are to invest in research and development, broadbase the market to take
the advantage.
Branding Pharma products - is it a Competitive Advantage:
Most of the pharmaceutical products available in the market are branded. From
the research conducted we have got various advantages in brand selling than
generic selling, Though branded products are costlier due to packaging cost and
excise duty, the pharma market is brand specific in India. The various competitive
advantage enjoyed by the branded products are:
1. Brands are easily targeted to obtain the share of mind of doctors and help in
generating prescriptions.
2. Brands help the companies to develop the prescription habits of the doctors.
3. Branding creates products awareness.
4. Brands help in the development of perceived value pricing to the products.
5. Brand name has accountability and credibility
6. Brand name assure the corporate quality guarantee.
Competition with multinational companies:
In the past it was mainly MNCs that used to dominate the scene. Today Indian
companies are giving a tough fight to MNCs and even succeeding in many
segments. This is a very positive environment for pharma industry as market force
will decide many activities including pricing policy. This was recently observed in
Norfloxacin+Tinidazole segment, where market force is putting pressure on
leading brands to raduce the price. Similarly the recent anti-TB marketing war
game saw Glaxo being humbled by Lupin by its market driven Strategy which
really proved that Indian scenario has changed and the launching of a new product
does not mean easy success but it has to be worked upon a planned manner.
Distribution management too has undergone changes. C&F agent and
consignee agents are taking over distributor and depot system. Today, availability
of drugs is a problem which many companies are trying to solve through C&F
agent system. No doubt cost of distribution is going up too in the process. A
Company like Cipla too had only 84.5 percent dealer purchase compared to
Glaxo's 97.7 per cent. A company like Torrent with good field coverage has only
51.3 percent dealer purchase. Hence, company should evole a strategy to make the
products available either through special booking by field force or special booking
through representatives of distributors. Productivity of the medical representatives
will be the key factor for the survival of many companies. The first half of 1996
saw the consolidation of sales and improving productivity so that companies can
face competition better. Introduction of decontrolled products in the first half also
signifies a determined effort by pharma companies to improve the profitability of
the company.
The present situation is as follows:
1. MNCs and Indians are becoming equal in the market and Indian companies
are doing better than MNCs.
2. Anti-inflammatory and vitamins segments are becoming stagnant and their
growth rate is even lower than overall pharma growth.
3. CNS and cardiovascular segment today may not be prominent segment in
India but in the next ten years they will be as prominent as they are in other parts
of the world. This could be the side effects of progress and modernisation.
4. Product mix among top 10 too has made a dramatic change which signifies
change in prescription behaviour of doctors. A marketing alertness is required
specially in these segments. There should not be too much reliance on a product if
the product is on decline or reached a lower part of saturation level.
5. Distribution management has changed C&F and consignee agents are most
favoured system. But still, for many companies it is a problem and dealers
purchase is not over 76 per cent.
6. Productivity of medical representatives will be the key to success in a
competitive environment.
Pharmaceutical industry is passing through one of its most dynamic times, due
to the ever changing demands of the markets and the enormous changes taking
place in the shape, size and constituents of the industry. This intense period of
'change' is a result of the industry's race to continuously excel itself in technology
development and the nature of social, economical and political change across the
world in developed and developing nations.
Since it satisfies a basic human need of health, the demand for pharmaceutical
products is on the increase. However, while the demand continues to steadily
increase the world over, cost escalations have cut margins earned by
Pharmaceutical companies. This has, in turn, triggered several reactions in the
global industry ranging from consolidation of core competencies, especially the
R&D competencies, to mergers and takeovers based on financial strategies.
The Indian Pharmaceutical Market (IPM):
The IPM is estimated to be worth Rs. 270 Bn. in Value, with 18% value growth
in the year 2006. It is estimated that the IPM, which has been growing between 7-
15% over the last five years, is expected to grow at a CAGR of about 11-13% over
the next five years. It is forecasted to reach a market size of around US $ 9.5Bn. in
2010, from its present level of about US $ 5.7Bn.
Volume growth of older products, price led growth and new introductions have
been some of the key drivers of market expansion. ORG data reveals that as much
as 40% of the value contribution of the IPM still comes from established brands,
launched prior to 1995. The current performance of the market reflects a transition
phase, moving slowly towards the products patent regime. While the market will
continue to expand rapidly, competition is expected to intensify with the desire to
bring their own patented products. Brand and company acquisitions are expected to
gain momentum, while in-licensing and the right alliances would be critical for
success.
Lupin and other pharmaceutical companies for survival and success have to
pay due regard to suggestions given below.
Suggestions:
The suggestions for the individual variables of the marketing mix strategy and
corporate decision strategies have been given separately as follows:
1. Development of Product Type in Pharma Industry:
It has been observed that the Pharma marketing in India is highly competitive
and, hence, companies cannot concentrate on their core products only to stay in the
market. As a matter of fact the competition is so intense that the status of the core
product is also threatened. Survival in the industry is mainly due to higher sales
volume and improved market share. From the research conducted it can be inferred
that the companies should profile their products on the following types with the
associated benefits:
1. Core products - to give identity to company and maintain the identity.
2. Augmenting products- to provide sales volume.
3. Mee too products- to give better profitability.
4. OTC products-to build corporate image.
5. Specialty products-to have a separate niche for the company.
This entire product type strategy will give competitive advantages to the
company.
The degree of each variable in product type may be decided as per the need of
the company's capabilities with the market from time to time. Each time a blend of
variable degrees will form the product strategy. Overall success of the company
depends upon the proper blend of the product type variables.
Within the product type a product line extension strategy will help the
company for the complete coverage of the need based market. For example; a
doctor may prescribe erythromycin for upper respiratory tract infection.
Amphicillin for lower respiratory tract infection, Cotrimoxozoles for urinary tract
infection, Norfloxein for gastrointestinal tract infection.
Here the target audience is the same, hence a company which can have the line
to satisfy all the prescription habits aimed at different disease patterns can achieve
the line strategy. The line extension is basically consumer focussed in pharma
market and it is also target focussed.
2. Development of Product Portfolio Matrix :
In the present category test from the primary research it was discovered that
various product categories were being marketed by different companies. It is
further observed that different companies. have included different product
categories in their product portfolio. The Primary research also gave an indication
to the effect of demand for each product category. From secondary data we could
obtain the different cost of each product category.
The demand of the product is equated to market attractiveness and cost to
business strength (the lower the cost, the higher the cost advantage and better the
strength.)
A Portfolio Matrix is developed making use to these two variable similar to
that of General Electric model for developing strategic product decisions.
The product portfolio matrix is developed with the similar principles of general
electric model where market attractiveness is related to the business strengths.
Here in the study the market attractiveness is equated to demand and growth and
business strength is equated to the cost advantages.
In the high demand, high cost segment speciality drugs are located. The
strategic decisions that are recommended are, (1) try to reduce cost, because of the
high demand in the market which may attract the competitor, (2) design special
promotional campaign so that the products have good market.
In the medium cost and high demand segment we have antibiotics. The
strategic decisions recommended are;
1. Invest in R&D. because of the resistance being developed by bacteria for the
existing molecules.
2. Increase the doctor's contacts to generate more prescriptions
3. Brand positioning to have better advantage than the competitors.
In high demand and low cost segments we have nutritional supplements. The
strategic decisions recommended are;
1. Invest in research and development to develop new products.
2. Because of high demand increase the promotion of the products to gain in
sales volume.
3. Control the expenditure so that productivity ratio can be better.
In the medium and medium cost segment we have the product portfolio as anti-
parasitics and anti-histamines. The strategic decisions recommended are.
Since the demand is uniform and growth is average it is advisable to maintain
the product portfolio and promote the products as routine and see that the current
business is protected.
In the medium demand low cost segment we have analgesics, anti-
inflammatory products antacids and anti- diarrhoeals as product portfolio. The
strategic decisions recommended are:
1. The products can be tried in the OTC channel.
2. Development of brand image is a good strategy as it will also help to build-up
the corporate image.
In the low demand high cost we have neurotic drugs as the product portfolio.
The strategic decisions recommended are:
1. Maintain the current market
2. Try for cost reduction.
In the medium cost and low demand we have obtained anti-asthamatics as
the product profile. The strategic decisions recommended are:
1. Trying for varying compositions and strengths so that wider segments can be
covered.
2. Maintaining the customer marketing positions.
3. Investing more on promotion.
In the low cost low demand segment we have vitamin preparations and cough
and cold preparations as the product portfolio. The recommended strategic
decisions are.
1. Increase the sales volume to maximise the profit.
2. Reduce the fixed cost to increase the profitability.
The above recommendations are made from the data obtained from primary
source. The recommendations were corroborated with the conceptual. G.E. Model.
3. Recommendation to a New Company:
A new company should have the following product profiles to be a model
starter in the Indian market.
Antibiotics and antibacterials, cough and cold preparations, vitamin
preparations, antacids and anti-flatulence preparations, anti-diarrhoeals,
cardiovascular Products, analgesics, anti-inflammatory and anti rheumatics and
finally nutritional supplements.
Antibiotics and antibacterials as core products, cough and cold preparations
and analgesics in OTC segments, cardiovascular products as speciality products
antacids and antiflatulence preparations, antidiarrhoeals and nutritional
supplements as augmenting products and vitamin preparations as mee too products.
4. Recommendations for current challenges:
The Indian Pharma industry should pass attention to following
recommendations.
1. Companies should explore the possibility of developing export markets as
some are already doing this.
2. Companies should build up the image with the target group, i.e. doctors,
chemists, distributors. In addition to that they need to build up image with general
public mainly by introducing OTC products through advertisement to promote
OTC products and resorting to suitable publicity.
3. Blending the functional strategies to corporate strategies will give better
leverage to companies in terms of more products, increased market share, bigger
markets and above all overall increase in profitability.
4. Brand line extension strategies can be adopted for the established brands.
5. Some of the big Indian companies can plan to become a conglomerate. The
conglomerate status can be developed by acquiring a popular consumer product
brand and, making use of media they can develop this consumer brand along with
developing the corporate image. This added image facilitates the achievement of a
greater success in pharma marketing by them.
6. Pharmaceutical companies need to think of capacity in a different way. In
Pharmaceuticals, the menufacturing is rarely the function that determines how
much can be produced and sold. By using a more creative and expanded definition
of capacity that is more applicable to pharmaceuticals it is possible to start to
identify where there is excess capacity. Since all capacity incurs a cost, removing
excess capacity can translate directly into cost savings and value creations. Hence
it is suggested that the industry should redefine their capacity and create value.
7. The Nine ps in marketing Mix should be adopted. The conventional
marketing mix of 4ps. i.e. product. price, product distribution and product
promotions are per se present in the marketing of pharma products This should be
expanded to nine ps.
Branding:
Branding of pharma products is a marketing Phenomena. However, as per data
obtained from western markets the trend will be for generic marketing of pharma
products. Generic marketing will considerably reduce the cost of the product as
duty it enjoys exemption. Pharma manufacturers may concentrate on this generic
strategy as a social responsibility and provide the product at a lower price.
The Western markets are going for generic pharma marketing as the markets
have reached the saturation stage. The stagnation in the cost of health care and
release of many drugs from patents will lead to higher competition and need for
lower cost medications, hence Western markets will go for generic marketing for
their survival.
However, India being a growing market, needs brand name for the survival of
the companies and hence brand name is a must in Indian pharma marketing. Only
after the saturation point is reached in India and with the new phenomena of
mergers, takeovers and acquisitions will reduce the competition and that will lead
to generic marketing. These suggestions are useful to Indian pharma companies,
particulary Lupin.
