1.understanding of pharma health care industry

Understanding of Healthcare Industry Healthcare Industry

Mr. Pankaj Kusum Ramdas Khuspe Page 1

Understanding of Health Care Industry

Syllabus

Different components of health care industry/ what constitutes health care industry.

Indian pharmaceutical industry (in today’s scenario and its potential as

your career option)

Details of therapy segment, major companies and major brands.

Elements of pharmaceutical industry in order to understand its

working uniqueness of medical products marketing-C&F agent, stockist & retailer/chemist.

Different working style of acute, chronic and OTC therapy segment.

Objective

Upon completion of this Chapter, you will be able to:

Know the components of health care industry,

Scenario of Indian pharmaceutical industry,

Top Indian Pharmaceutical brands and worlds leading Pharmaceutical

products,

Different therapy segments,

Working style of medical products marketing,

Different elements of medical products marketing.



Mr. Pankaj Kusum Ramdas Khuspe

M. Pharmacy (Pharmaceutics) Health Care Industry:

Health care industry is the industry related to the health of the people in nation.

Different countries having health care industry & Government policies for their nation.

The Healthcare sector, in India, is at an inflection point and is poised for rapid growth in the

medium term. However, Indian healthcare expenditure is still amongst the lowest globally

and there are significant challenges to be addressed both in terms of accessibility of

healthcare service and quality of patient care. While this represents significant opportunity

for the private sector, the Government can also play an important role in facilitating this

evolution.

Components of health care industry

The public health industry included following types of constituents:

1. Providers

2. Suppliers

3. Payers

4. Healthcare Information Technology (IT) and Services.



Health care industry in detail include,

1. Providers

Hospitals

Physicians

Dialysis Services

Retail and workplace clinics

2. Suppliers

Bio/pharma products

Devices

Diagnostics

Durable medical equipment

Consumer health and wellness products and services



3. Payers

Insurance

Employers

Government

Consumers

4. Healthcare Information Technology (IT) and Services

IT solutions for consumers, hospitals, payers, and providers

Technology vendors

Personal genetic information services

Indian Pharmacy industry:

The annual turnover of the Indian pharmaceutical industry is over 11 billion USD.

Globally it ranks 4th in terms of volume with a share of 8% in the world pharmaceutical

market.

In terms of value, it ranks 14th.

Key therapeutic segments of Indian pharmaceutical industry include anti-infective,

gastrointestinal and cardio-vascular.

Acute therapies make up about 60% of the market. However, it is expected that with the

changing lifestyle and aging population, sales of chronic therapies (i.e. diabetes,

cardiovascular) are growing rapidly.

The pharmaceutical industry is also showing good performance in terms of exports. It is

one of the top export items from India accounting for more than 4% of India‘s total

exports in 2006-07.

Exports, which constitute around 50% of the industry‘s total production, have grown at

14% in the last decade.



Major export markets include highly regulated markets such as USA, Germany, UK and

Canada. Europe is the biggest export destination for Indian pharmaceuticals accounting

for more than 30% of the total exports, followed by the Americas region (25%).

Government policies, viz., Drugs and Cosmetics Act (1940), Drugs Policy (1986), Indian

Patents Act (1970), Drug Price Control Order (1995), Pharmaceutical Policy (2002),

Indian Patents (Amendment) Act (2005), have played a major role in the growth of

Indian pharmaceutical Industry. The Government has also formulated a Draft National

Pharmaceutical Policy (2006), which will be finalised after consultation with the

stakeholders.

Besides, the Government has also facilitated the growth of the Indian pharmaceutical

industry through institutional framework and encouraging investments in R&D (EXIM

Bank Report 2007).

India‘s pharmaceutical industry currently comprises about 20,000 licensed companies

employing approximately 5, 00, 000 staff.

Besides many very small firms these also include internationally well-known companies

such as Ranbaxy, Cipla or Dr. Reddy‘s. With sales of roughly EUR 1 bin, Ranbaxy is

currently the world‘s seventh largest generics manufacturer.

Currently the most important segment on the domestic market is anti-infective; they

account for one-quarter of total turnover.

Next in line, and accounting for one-tenth each, are cardio-vascular preparations, cold

remedies and pain-killers.

By contrast, medicines against civilization diseases or so-called lifestyle drugs (anti-

depressants, drugs to help smokers to quit and anti-wrinkle formulations) are of little

significance at present. All in all, the Indian pharmaceutical industry produces about

70,000 different drugs.

The Indian pharmaceutical industry is fragmented with more than 10,000 manufacturers

in the organized and unorganized segments.

Pharmaceutical manufacturing units are largely concentrated in states of Maharashtra,

Gujarat and Andhra Pradesh.

The products manufactured by the Indian pharmaceutical industry can be broadly

classified into bulk drugs (active pharmaceutical ingredients - API) and formulations. Of



the total number of pharmaceutical manufacturers, about 77% produce formulations,

while the remaining 23% manufacture bulk drugs.

Bulk drug is an active constituent with medicinal properties, which acts as basic raw

material for formulations.

Formulations are specific dosage forms of a bulk drug or a combination of bulk drugs.

Drugs are sold as syrups, injections, tablets and capsules.

Structure of Indian pharma industry is given below,

Understanding of Healthcare Industry


Understanding of Healthcare Industry


Details of therapy segment, major companies and major brands:

Therapy can be categorized under various therapeutic groups:

Chronic Therapy Segment:

1. Cardiovascular

2. Neurological

3. Anti-diabetes

4. Oncology

Acute Therapy Segment:

1. Anti-infective

2. Gastro-intestinal

3. Respiratory

4. Analgesics/Pain management

5. Vitamins/Neutraceuticals.

Elements of pharmaceutical industry in order to understand its working uniqueness of

medical products marketing-C&F agent, stockiest & retailer/chemist

Pharmaceutical Supply Chain:



Different working style of acute, chronic and OTC therapy segment

Within this broad approach at least two business models are discernable:

(i) Super Core Model

Super Core Model involving the search for, and distribution of a small number of drugs from

Chronic Threapy Area that achieve substantial global sales. The success of this model depends

on achieving large returns from a small number of drugs in order to pay for the high cost of the

drug discovery and development process for a large number of patients. Total revenues are

highly dependent on sales from a small number of drugs.

In pharmaceutical maket there has been a significant shift from Acute towards Chronic Threapy

area. Chronic segments are driving the growth of the market as leading prescribers in these

segments are specialists as opposed to general practioners.This is evedent from high growth rates

achieved by firms like Sun Pharma, Dr.Reddy laboratories and Dabur Pharma Ltd. Who have

focused on these segments?

During last five years pharma companies have started identifying the hidden potential of

oncological market. A number of drugs have been launched into the oncological market

by pharmaceutical companies, including new biological drugs and drugs that can be used

as a support for patients undergoing cytotoxic chemotherapy. As a matter of fact, pharmaceutical

companies are merging, and, through the merging process, the portfolio of the new companies

changes.

Medical representatives are rearranged throughout the new companies. Some of the sales

representatives are now afraid of losing their job, due to the changing scenario and the possible

lay offs. On the other hand, the new, bigger, pharmaceutical companies are competing more and

more with one another, and, in order to stress their products, might adopt a more aggressive sales

strategy. For example, sometimes in the same geographicalarea there are five representatives for

just one company, or different representatives for the same drug in different settings. As a result

of the new, aggressive strategy, the aggressiveness of representatives has also been increasing,

since the larger stress exerted by their companies might affect their stay in the company.

Therefore, they tend to have more frequent visits to encourage doctors to prescribe drugs and

thus increase sales.

In this model medical representatives are the key actors for example in a small oncology unit

almost 40 sales representatives interacting with doctors, and most of them are coming for a visit



on a regular once-a-month basis as this is the restriction put by doctors of meeting only once in a

month that to on a fix time only, in order to stress the usefulness of their products and push

clinicians towards the use of their drugs. This means that, basically, there are at least two

representatives every day in busy clinic asking for a ‘short’ meeting to support their product.

Pharmaceutical marketing is a specialized field where medical representatives form the backbone

of entire marketing effort. A pharmaceutical company also appoints medical representatives and

assigns them defined territories. Medical representatives meet doctors, chemists and stockiest as

per company norms. Medical representatives try to influence prescription pattern of doctors in

favor of their brands.

The pharmaceutical distribution channel is indirect with usually three channel members i.e.

depot/C&F, stockiest and chemist. Pharmaceutical companies appoint one company depot or

C&F agent usually in each state and authorized stockist(s) in each district across the country.

Company depot/C&F sends stocks to authorized stockists as per the requirement. Retail chemists

buy medicines on daily or weekly basis from authorized stockiest as per demand. Patients visit

chemists for buying medicines either prescribed by a doctor or advertised in the media. Here

patient is end customer and doctor is direct customer for any pharmaceutical company. But for

doctor customer is more important so he wants an effective supply chain management from

prescribed company.

And for pharmaceutical companies their customer that is doctor is more important that’s why

they emphasize more on supply chain management. Ultimately end-customer is benefited out of

this.

For marketing of these type of products companies require more and more skilled field force to

develop good rapport with their direct customer (doctor). Moreover field force should have good

product knowledge and USP of their products over other so as to convince doctors and

PULL the demand for their products i.e. from Doctor to Retailer to Stockist to CFA to company.

In this system, doctors are the core customers and the major thrust is given to build and

retain these customer because they are pulling the demand for products hence companies

also give main emphasis in building and retaining these customers.



(ii) Core Model

Core Model in which a larger number of drugs from Acute Threapy Area are marketed to big

diversified markets. The advantage of this model is that its success is notdependant on sales of a

small number of drugs.

In this system, doctors are the core customers and the major thrust is given to build and retain

these customer because they are pulling the demand for products hence companies also give

main emphasis in building and retaining these customers.

For retaining and developing customers, the companies normally provide gifts like sponsorship

for various conferences like RSSDI, FOGSI, APICON, UPCON etc.

For example Dabur having PASS (Professional Acedemic and Scientific Services) activities for

promoting its chronic therapy range.

Also it is interesting to note that since this is a pull system demand is being pulled in to the

market so generally representatives place product orders from their stockist on the basis of

following formula:

Normally there are absolutely no chances of dumping of goods at stockist and retailer level is yet

reported also payment recovery of companies is also very good.

Marketing approaches of Core Model

In present scenario companies are focusing more and more on the availability of products so as

to enjoy good image in their cutomer’s (doctors) chamber. Many companies such as

Glaxo,Pfizer,Dabur,FDC,Aventies,Cipla etc. are known for their availability of products.

For marketing of these type of products companies require more and more field force to remind

their products on daily basis to their direct customer (doctor). Moreover field force should have

good knowledge of product schemes and offers. Also field force is required to have a good

rapport with retailers. Field force also required to ensure good availability of their products to

convince doctors and PUSH their products i.e. from to Stockist to Retailer to Doctor.

It has been observed that sometimes there are more than fifteen or sixteen representatives in a

day are meeting with their customer and requesting for same type of products.

Although field force visits are important for an update on drugs and their use. The doctors are, in

general, sneaking away, trying to hide from sales representatives, since there are too many and



they are too pushy and there is too little time, and the representatives probably have noticed that

the reluctant doctors have always less time for short meetings and less interest and tend to reduce

the time of the visit .

The relationship between clinicians and representatives has always been good and

pharmaceutical companies have provided, and still provide, the major economical support for

customers' continuous medical education. Something needs to be done to find a solution to this

problem that takes into account the needs of both pharmaceutical companies and their

representatives on one side and physicians on the other, for a better professional interaction.

In this system, retailers are the core customers and the major thrust is given to build and retain

these customers. Here retailers are also core customer as most of the times they are substituting

the products based on their own discretion.

For retaining and developing customers, the companies normally provide gifts like sponsorship

for various conferences like small gifts & sponsorship to remind the products on daily basis.

Questions asked:

1. Explain the role of major players in pharmaceutical industry. (4) *

2. What are the different elements of pharmaceutical industry in order to understand its

working uniqueness of medical products marketing? (3)

3. Give examples of major players with brands in pharmaceutical industry. (1)

4. “Retailing” an important part of marketing, Explain. (4)

5. Explain different working style of acute, chronic and OTC segment. (4)

Education

1.understanding of pharma health care industry