TITLE – A REVIEW OF MARKETINGSTRATEGIES WORK BYDIFFERENT PHARMACEUTICAL COMPANIES

TITLE – A REVIEW OF MARKETINGSTRATEGIES WORK BYDIFFERENT PHARMACEUTICAL COMPANIES

1.INTRODUCTION:

Background

A brief history of Indian pharmaceutical sector and the present situation

The pharmaceutical industry is the world’s largest industry due to worldwide revenues of

approximately US$2.8 trillion. Pharma industry has seeb 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.

Indian Pharmaceutical Industry is poised for high consistent growth over the next few

years, driven by a multitude of factors. Top Indian Companies like Ranbaxy, DRL

CIPLA and Dabur have already established their presence.

The pharmaceutical industry is a knowledge driven industry and is heavily dependent on

Research and Development for new products and growth. However, basic research

(discovering new molecules) is a time consuming and expensive process and is thus,

dominated by large global multinationals.

Indian companies have only recently entered the area. The Indian pharmaceutical

industry came into existence in 1901, when Bengal Chemical & Pharmaceutical

Company started its maiden operation in Calcutta. The next few decades saw the

pharmaceutical industry moving through several phases, largely in accordance with

government policies. Commencing with repackaging and preparation of formulations

from imported bulk drugs, the Indian industry has moved on to become a net foreign

exchange earner, and has been able to underline its presence in the global pharmaceutical

arena as one of the top 35 drug producers worldwide. Currently, there are more than

2,400 registered pharmaceutical producers in India. There are 24,000 licensed

pharmaceutical companies. Of the 465 bulk drugs used in India, approximately 425 are

manufactured here. India has more drug-manufacturing facilities that have been approved

by the U.S. Food and Drug Administration than any country other than the US. Indian

generics companies supply 84% of the AIDS drugs that Doctors without Borders uses to

treat 60,000 patients in more than 30 countries . However total pharmaceutical market is

as follows:

2.Marketing problem facing the organization

While many pharmaceutical companies have successfully deployed a plethora of

strategies to target the various customer types, recent business and customer trends are

creating new challenges and opportunities for increasing profitability. In the

pharmaceutical and healthcare industries, a complex web of decision-makers determines

the nature of the transaction (prescription) for which direct customer of pharma industry

(doctor) is responsible . Essentially, the end-user (patient) consumes a product and pays

the cost .

Use of medical representatives for marketing products to physicians and to exert some

influence over others in the hierarchy of decision makers has been a time-tested tradition.

Typically, sales force expense comprises an estimated 15 percent to 20 percent of annual

product revenues, the largest line item on the balance sheet. Despite this other expense,

the industry is still plagued with some very serious strategic and operational level issues.

3. Pharmaceutical Company Business Strategies

What’s the secret behind these successes? For one, the company operates in niche

formulations (chronic) segments such as psychiatry, cardiovascular, gastroentology and

neurology. While most of the top Indian companies have focused on antibiotics and anti–

infectives (acute), Cipla Pharma focused on therapeutic areas such as depression,

hypertension and cancer. The company has introduced the entire range of products and

has gained leadership position in each of these areas. Being a specialty company insulates

Cipla Pharma from the industry growth. The first quarter results for FY02 explain this to

some extent. While the industry was affected to a large extent by a slowdown in the

domestic formulations market, Cipla Pharma logged a growth of 26% in revenues. Over

the years Cipla has also used the strategy of acquisitions and mergers to grow quickly. It

acquired Knoll Pharma’s bulk drug facility, Gujarat Lyka Organics, 51.5% in M. J.

Pharma, merged TamilNadu Dadha Pharma & Milmet Labs and acquired Natco’s brands.

Post Merger with TamilNadu Dadha Pharma the company gained presence in gynecology

and oncology segments.

One of the constants of pharmaceutical company strategy over the past decade has

beenincreasing scale. Only by growing larger are companies able to afford the

considerable costs of drug development and distribution.

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

(i) 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 dependant on sales from a small number of drugs.

(ii) 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 not

dependant on sales of a small number of drugs.

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