The pharmaceuticals business has experienced a learning curve in the marketing and selling practices. World over the change in the pharmaceutical industry is being driven primarily by three forces: rapid advances in science and technology, growing importance of marketing power and emergence of patients as consumers. Today, a doctor is subject to a lot of questioning and reasoning by the patients - both about the disease and disease management. Driven by an increasing awareness in health issues and the products available to treat disease, patients are becoming more involved in healthcare decisions. The availability of information on the internet and other media help individuals to become much better informed about pharmaceutical products. The internet is also leading to a greater understanding of the needs of consumers and patients and how products and services may meet those needs. Consumer-oriented marketing strategies are thus assuming new importance for pharmaceutical companies.
It is brand management, which brings success to the pharmaceutical companies, because when a brand succeeds there is a huge fight for ownership. Whereas, when a brand fails it is orphaned. Most often, why a brand has succeeded may go unanswered and unexplored. Some of the contributing factors for the success of the brand could be outside the purview of marketing. For instance, aggressive sales push at the doctor and retailer level and consistent repeat visits can drive a brand ahead.
The Indian pharmaceutical industry has got an energetic facelift since 1990s. By this time, there were more than 20,000 pharma companies operating in India. Indian producers were then able to produce drugs and their components for a fraction of the cost of their Western counterparts. They elegantly found an enormous demand throughout the developing world. Yet, the highly competitive domestic market as well as the slender margins available, forced the Indian companies to develop highly cost-effective manufacturing and marketing models.
Introduction of product patents on January 2005 has brought about sea change in the business strategies of the Indian pharma firms. Under the new patent regime, many multinationals are making a comeback on the Indian centre stage. The attractions are India's traditional strengths in contract manufacturing and as an outsourcing location for R&D, particularly for clinical trials and other services. Some of the leading domestic pharmaceutical companies are acquiring companies in Europe, US and other countries. Many more are getting into marketing and technological tie-ups.
Pharmaceutical business models are changing. The world is now discovering India as a preferred place for clinical research. Marketing is the most vital function of the pharma business. Competition is forcing pharmaceutical companies to look at marketing as a key differentiator. Pharma companies are working at maintaining a vigorous field force that targets doctors one at a time as the most cost-effective means for creating awareness. While most companies have a scientific approach to this activity, some who have automated it to a large extent have found that their IT systems have brought considerable returns to them.
A report on pharmaceutical marketing suggests that by 2015 big pharmaceutical companies will focus more on its core competencies of marketing and sales supported by networked R&D organizations.
Sun Pharma
SPIL has always chosen niche therapeutic segments such as psychiatry, neurology, cardiology, ophthalmic, orthopaedic and oncology as key therapeutic segments. The company has introduced the entire range of products for these therapies and has gained leadership position in each of these areas. Sun's brands have most often seen high growth rates and they do not face key rivalry from other brands because the segments chosen by the company are truly niche. This has led to rapid growth of Sun Pharma in specialty segments.
These therapies are low volume, high margin products and have contributed about 35 per cent to the company's sales in the early millennium. New products are the only remedy for the survival of major pharma companies in the highly competitive domestic market. Moreover, the increase in new product contribution reduces the overall drug price control order (DPCO) effect. The company introduces at least 4 new products in each division every year. This ensures the product portfolio getting upgraded with the latest therapy advances. Obviously, the large product portfolio improves the market share of the company since most of the products can be claimed as new generation drugs.
Acquiring brands: According to one of the reports of ORG in May 2001, SPIL grows at 22.6 per cent against the industry growth rate of 8.1 per cent. On the acquisition side, SPIL is very active in acquiring brands and companies and has a successful track record. The company acquired M J Pharma, Tamilnadu Dadha Pharma (TDPL) and Gujarat-based Lyka Organics (GLOL) to achieve rapid inorganic growth. Both TNDL and GLOL have been merged with the company. SPIL purchased all the brands of the Hyderabad-based Natco Pharma and Ahmedabad-based Milmet Labs. The merger of companies and brand acquisitions have put SPIL in commanding position and the company is poised for rapid growth.
SPIL holds 47 per cent equity in Detroit-based Caraco Pharma Laboratories (CPL). CPL has received permission to market clonazepam tablets (neuropsychiatric) and flurbiprofen tablets (NSAIDs) in US market. The US market for these products is estimated at $ 140 million and $13 million, respectively. SPIL will export bulk drugs for the manufacture of these products. CPL's plant was cleared in April 2001 by US FDA after attaining cGMP compliance. CPL has plans to file 6 ANDA annually to increase the US market share. SPIL has agreed to supply technology for the manufacture of 25 formulations to CPL. In international markets; SPIL intends to build product baskets based on disease management in developing markets.
Dr.Reddy's
Dr. Reddy's Laboratories is a global, vertically integrated pharmaceutical company with a presence across the value chain, producing and delivering safe, innovative and high quality finished dosage forms, active pharmaceutical ingredients and biotechnology products, which are marketed in more than 100 countries.
Strategic business units: Dr. Reddy's is one of India's leading pharmaceutical companies with global ambitions. The company is pursuing a share of the rewarding, but highly competitive, U.S. generics market, including the higher-margin 'branded generic' market. Dr. Reddy's operates through several strategic business units (SBU), including branded finished dosages, generic finished dosages, bulk actives, custom chemicals, biotechnology, diagnostics, critical care and discovery research. A leader in the domestic market, the company is also active in the international scene, which accounted for 64 per cent of the company's total sales of Rs 18 billion ($392 million) in 2003. North America contributed 32 per cent of sales, while Russia added 28 per cent. The rest of the company's international revenues were generated from the Asian, African and South American markets. Dr. Reddy's was the first Asian pharmaceutical company, excluding Japan, to be listed on the New York Stock Exchange.
The company's principal subsidiaries are:
● Aurantis Farmaceutica Ltda (Brazil; 50%)
● Aurigene Discovery Technologies Inc. (U.S.A.)
● Aurigene Discovery Technologies Limited
● Cheminor Drugs Limited
● Compact Electric Limited
● Dr. Reddy's Exports Limited (22%)
● Dr. Reddy's Farmaceutica Do Brazil Ltda
● Dr. Reddy's Laboratories (EU) Limited (U.K.)
● Dr. Reddy's Laboratories (Proprietary) (South Africa)
● Dr. Reddy's Laboratories (UK) Limited
● Dr. Reddy's Laboratories Inc. (U.S.A.)
● DRL Investments Limited India
● Kunshan Rotam Reddy Pharmaceutical Co. Limited (China; 51%)
● OOO JV Reddy Biomed Limited (Russia)
● Pathnet India Private Limited (49%)
● Reddy Antilles N.V. (Antilles)
● Reddy Cheminor S.A. (France)
● Reddy Netherlands B.V
● Reddy Pharmaceuticals Hong Kong Limited
● Reddy Pharmaceuticals Singapore
● Reddy US Therapeutics Inc
● Zenovus Biotech Limited.
Pfizer India
This company has always believed in practicing professional customer relationship management. In 2001, the IT team at Pfizer designed 'optima' an IT package to fulfil this need. Over the past four years, the system has been overhauled considerably, and today it is a full-scale CRM solution coded on the Microsoft .NET platform. The CRM application runs on Windows 2003 and SQL server that is primarily accessed over the internet and is hosted at a third-party IDC.
Basic information captured in the Pfizer CRM includes profiles of doctors and chemists. Optima has become a one-stop-shop for its field colleagues who are spread across the country. In the case of doctors, based on the data entered into the system, the sales team can determine what kind of prescriptions the doctor generates, the profiles of the patients he treats, whether or not he is price-sensitive, and how quickly he prescribes new drugs. In addition, the system captures data with regard to the associations or societies the doctor is a part of and the events he attends. If the doctor participates in public forums the Pfizer CRM captures whether or not the doctor is an opinion leader. The information in the system is reviewed on a regular basis to check for new entrants as well as pattern changes in different areas, similarly for the chemists. The CRM captures the profile and buying power of a chemist's customers. The system has two advantages since it is based on the combined information on the doctors and chemists in a particular locality. It is easy to identify markets that will have good returns.
The second benefit is that the CRM helps predict the stock requirement pattern. The company can therefore manufacture, stock and transfer the right amount of drugs to the market just-in-time so as to minimise storage space and lessen the chances of wastage from damaged or expired products. This has increased customer response to the queries. Different people have different requirements from the system, so the information the CRM returns is based on need. The CRM system also helps provide market intelligence on competitors. For example, if a Pfizer representative pays a visit to the doctor, while waiting he may meet his counterpart from another company and can feed the information he collects. Or, if sales personnel come across schemes being run by Pfizer's competition, the information is keyed into the system. The product management team can then start using the information to provide business intelligence. The system is regularly updated. Thus, Pfizer has used automation to the best usage for its CRM model.
Branding is a key issue in the pharmaceutical industry. Product managers have evolved into brand managers and are beginning to understand the dynamics of brand equity that lie at the heart of product development and marketing. The industry is still grappling to establish the norms for 'best practices' in brand management. Some of the steering brands, which have crossed various hurdles and challenges, present examples for new and practicing brand managers about how to go about treating their brands. These and some global examples and cases should be established, presented and must be made available for learning brand managers to help build the brands of the future.
(The author is director and professor of marketing management at Allana Institute of Management Studies, Mumbai.)