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IMPACT OF ADVERTISING ON CUSTOMER PURCHASE BEHAVIOUR IN PHARMACEUTICALS

THESIS

SUBMITTED TO THE UNIVERSITY OF LUCKNOW FOR THE AWARD OF THE DEGREE OF

DOCTOR OF PHILOSOPHY IN BUSINESS ADMINISTRATION

SUBMITTED BY:

RAM DHEERAJ

Under the Supervision of

DR S. K. KAUSHAL

BY: RAM DHEERAJ Under the Supervision of DR S. K. KAUSHAL DEPARTMENT OF BUSINESS ADMINISTRATION UNIVERSITY

DEPARTMENT OF BUSINESS ADMINISTRATION UNIVERSITY OF LUCKNOW LUCKNOW

2014

DEPARTMENT OF BUSINESS ADMINISTRATION UNIVERSITY OF LUCKNOW Date: CERTIFICATE This is to certify that Mr.

DEPARTMENT OF BUSINESS ADMINISTRATION

UNIVERSITY OF LUCKNOW

DEPARTMENT OF BUSINESS ADMINISTRATION UNIVERSITY OF LUCKNOW Date: CERTIFICATE This is to certify that Mr. Ram

Date:

CERTIFICATE

This is to certify that Mr. Ram Dheeraj has carried out the research work presented in this

thesis

entitled

“Impact

of

Advertising

on

Customer

Purchase

Behaviour

in

Pharmaceuticals” for the award of Doctor of Philosophy from Lucknow University,

Lucknow under my supervision. The thesis embodies results of original work, and studies

are carried out by the student herself and the contents of the thesis do not form the basis

for the award of other degree to the candidate or to anybody else from this or any other

University/Institution.

Supervisor

Dr. S.K. Kaushal

Assistant Professor

Department of Business Administration

DECLARATION

I hereby affirm that my research work entitled “Impact of Advertising on Customer

Purchase Behaviour in Pharmaceuticals” for the award of Doctor of Philosophy from

Lucknow University, Lucknow is my own original work and has not been submitted for

any assessment or degree/diploma or award at the University of Lucknow or any other

University/Institutions.

Ram Dheeraj

Department of Business Administration

COUNTERSIGNED

This is to certify that the above declaration by the candidate is true to the best of my

knowledge.

Supervisor

Dr. S.K. Kaushal Assistant Professor Department of Business Administration University of Lucknow. Lucknow.

ACKNOWLEDGEMENT

It is with immense gratitude and pleasure that I acknowledge the help and support of my

supervisor Dr. S. K. Kaushal - Goodman in this thesis. He has been an excellent guide,

mentor and friend in this journey. I am so deeply grateful for his help, professionalism,

and valuable guidance throughout this research and through my entire program of study

that I do not have enough words to express my deep and sincere appreciation.

I would like to thank to Prof. Arvind Kumar, Dean of Commerce Faculty, Mr. Sanjay

Medhavi

Prof.

J.

Head

of

K.Sharma,

Department,

Department

of

the

former

Head

of

Department,

Business

Administration,

Department

of

Business

Administration and all the respected

teachers and staff of the Department for their

constant support and encouragement throughout my research work.

This thesis would not have been possible without the love and support of my family and

friends. I especially thank Vijay Shankar Pandey and Robbin Verma for his helpful

insights and for standing by me through good times and bad. I also acknowledge him for

their best suggestions and constant support.

Finally, I must express my very profound gratitude to my parents, wife Sunita, daughter

Advika, brother Rahul and Sister Shilpi for providing me with unfailing support and

continuous encouragement throughout my years of study and through the process of

researching and writing this thesis. This accomplishment would not have been possible

without them. Thank you.

(Ram Dheeraj)

ABSTRACT

This study was conducted to develop a simple framework for finding out the impact of the

different kinds of advertisement and promotional tools offered by pharmaceutical

industry on the Consumer Purchase behavior and prescribing behavior of doctors. The

trend towards self-medication is likely to grow as consumers are becoming familiar with

OTC drugs, due to extensive advertising by companies. The present study intends to

explore

advertising

effectiveness

of

OTC

drugs

and

Prescription

drugs

amongst

consumers and Doctors. Although there are different means of providing the consumers

with drug information, advertising seems to be one of the best way and a powerful

method

of

broadcasting

information.

The

customer

purchase

behavior

study

in

Pharmaceutical advertisement is based on the consumer purchase behavior because

buying the medicine lies in the hand of customer (doctor) rather than final consumer

(patient). So the customer (doctor) acts as an indirect consumer. Due to this there are

two types of customers ear-marked in this study, one is doctor who is indirect consumer

and

the

other

one

is

patient

who

is

direct

consumer.

The

advertisement

of

Pharmaceutical was found to be persuasive. The study has given good insights for

marketers and advertisers of drugs and suggests including elements in the advertisement

that increase believability and trust of the advertisement. Results of factor analysis

revealed the view that the overall mean score of all the 27 items of attitude towards

prescription behavior was 2.96 and standard deviation 0.9091.This indicates that

pharmaceutical

advertisement

makes

an

impact

on

doctor

prescription

behavior.

Moreover the study also focused on whether the perception of physicians towards various

promotional tools is different with respect to demographic variables. This research based

on descriptive research or quantitative research. In this descriptive research Cross-

Sectional study used to compare demographical variables with attitude of the respondent.

Well-structured Questionnaires was developed for direct consumer and doctors to

identify important variables influencing Pharmaceutical advertising effectiveness and

purchase behavior towards medicine. Non probability systematic convenient sampling

technique has been followed. Survey was conducted and data was analyzed on the basis

of responses provided by 329 respondents as consumer and 150 respondents as Doctor.

Researcher has applied factor analysis for data reduction and ANOVA & Chi-Square test

for hypothesis testing. Findings of the study can help the marketing managers of

pharmaceutical companies in designing their promotional strategies especially for

doctors and consumers. Construct validity and reliability of the data were tested using

Cronbach’s

alpha

coefficient.

Descriptive

statistics

and

Chi-Square

Tests

for

Independence were generated to study the relationship between measures for each of the

research questions and the demographics & miscellaneous variables. Results show that

advertisement is effective in affecting the decision process and positive impression of the

consumer towards particular medicines and there is significant association of medium of

advertisement that gets the attention with educational qualification, Occupation and age

of the respondent as the Chi-square value is significant. The Visual presentation of

advertisement creates more attention and makes their impacts in selection of medicine.

Doctor agreed that Medical Representative is a key element for providing information

about medicines and they are important promotional channel used by companies that

makes their long lasting effect on doctor.

TABLE OF CONTENTS

S.No

Description

Page No.

1

Acknowledgment

i

2

Abstract

ii

3

Table of Contents

iv

4

List of Tables

viii

5

List of Figures

xi

6

List of Abbreviation

xiii

7

List of Key words

xv

1

Introduction

1

1.1

Introduction

1

1.2

Classification of Drugs

4

1.2.1

OTC Drugs

4

1.2.2

Ayurvedic Drugs

6

1.3

Drug Promotion and Drug Advertising in India

7

1.3.1

Advertising to the General Public

11

1.3.2

Advertising The Products In Medical Journal

11

1.3.3

Direct mailing of publicity material to doctors

13

1.3.4

Medical conferences, especially for a new product

13

1.3.5

Electronic or Broadcast Media Advertising

13

1.3.6

Outdoor Media

14

1.3.7

Other Media

14

1.4

Pharmaceutical Advertisement for OTC medicine or Direct Consumer Advertising.

14

1.5

Strategies for New And Switched OTC Pharmaceutical Products.

15

1.5.1

Invest in generics

19

1.5.2

Pharmaceutical Companies Business Strategies for Prescription Drugs

19

1.5.2.1

Marketing approaches of Super Core Model.

20

1.5.2.2

Marketing approaches of Core Model

22

1.6

Pharmaceutical marketing process and challenges

24

1.7

Growth Rate of OTC Medicines

25

1.8

Branding in Pharmaceutical Marketing

27

1.9

Understanding Consumer Behavior

28

1.10

Consumer Behavior in Pharma Sector

29

S.No

Description

Page No.

1.11

Consumer Pyramid

30

1.11.1

Factors Influencing Consumer Behavior

31

1.11.1.1

Cultural Factors

31

1.11.1.2

Social Factors

32

1.11.1.2.1

Reference group

33

1.11.1.2.2

Family

34

1.11.1.2.3

Social status and role

34

1.11.1.3

Personal Factors

34

1.11.1.3.1

Age and stage in life cycle

36

1.11.1.3.2

Personality and self concept

36

1.11.1.4

Psychological Factors

36

1.11.1.4.1

Motivation

38

1.11.1.4.2

Perception

38

1.11.1.4.3

Learning

38

1.11.1.4.4

Belief and Attitude

39

1.11.1.5

Psychographic Factor

39

1.12

Buying Preferences of Indian consumers

40

1.13

Brand or Generic

41

1.14

Promotional Spending for Prescription Drugs

41

1.15

Marketing to Physicians and Consumers

42

1.16

Different Marketing Strategies for Different Drugs

44

1.17

Market Characteristics That Influence Promotional Strategies

44

1.18

The purchasing process

45

1.19

The Role of the Consumer (Patient)

47

1.20

The Prescription Decision

47

1.21

Compliance or Post – Purchase Behavior

48

1.22

The Role of Price

49

1.23

Chapterisation Scheme

50

2

Review of Literature

52

3

Research Methodology

72

3.1

Need for this research

72

3.2

Scope of the research

73

3.3

Desk Research

73

3.4

Pilot Study

74

3.5

Research design

75

3.6

Data collection method

75

S.No

Description

Page No.

3.7

Questionnaires

76

3.8

Study Variables

77

3.9

Sample Selection

78

3.10

Survey Instrument

79

3.11

Data collection

81

3.12

Data analysis

82

3.13

Brief Summary of tools used for Analysis

84

3.14

Objective of the Study

85

3.15

Research Hypothesis

86

3.16

Research Assumptions

87

4.1

Demographic Characteristics of Respondents (Consumers)

88

4.1.1

Age wise classification of respondents

90

4.1.2

Marital Status- wise classification of respondents

91

4.1.3

Family type- wise classification of respondents

92

4.1.4

Income- wise classification of respondents

93

4.1.5

Qualification - wise classification of respondents

95

4.1.6

Occupation - wise classification of respondents

96

4.2

Sensitiveness of consumer towards advertisement

97

4.2.1

Advertisement awareness

98

4.2.2

Advertisement medium and attention

99

4.2.3

Effect of advertising on consumer

112

 

Advertising medium and OTC medicine (Over the counter

 

4.2.4

drug)

113

4.2.5

Suggestive measure for purchase of common use medicines

125

4.2.6

Influencers for purchase of common use medicines

138

4.3

Lasting effect of Advertisement

153

 

Impact of Advertisement to create the need of pharmaceutical

 

4.4

product

154

4.5

Nature of Attention

156

4.6

Attributes observed in advertisement

158

4.7

Extent of influence of Pharmaceutical Advertisement

159

 

Relying on Pharmaceutical Advertisement in purchase

 

4.8

decision

160

4.9

Advertising attributes that impacts in selection of medicines

162

4.10

Demographic Characteristics of Respondents (Doctors)

166

4.10.1

Qualification wise classification of doctors

170

4.10.2

Classification on the basis of Position hold by Doctor

171

 

S.No

Description

Page No.

4.10.3

Classification on the basis of No. of years of practice

172

4.10.4

Classification on the basis of Regional Status of practice

173

4.10.5

Classification on the basis of practice hours by doctors

175

4.10.6

Classification on the basis of O.P.D frequency

176

 

Impact of Pharmaceutical Advertisement on doctor's

 

4.11

Prescription Behavior

178

 

Importance of medium providing information about medicine

 

4.12

available for patient in the market

190

 

Reliability of information provided through different media

 

4.13

about medicines

196

 

Impact of Medical Representative on Doctor Prescription

 

4.14

behavior

201

 

Medical Representative as key element for providing

 

4.15

information about medicines

203

 

Importance of promotional items /other facilities distributed

 

4.16

/provided by companies for doctors

205

 

Effectiveness of information provided through different

 

4.17

media in doctor prescription

209

 

Importance of promotional channels used by companies and

 

4.18

their long lasting effect on the mind of doctors

214

 

Influence of prescription decision of doctor w.r.t Branded

 

4.19

medicine, Generic medicine and patient demand

220

 

Influence of prescription decision of doctor w.r.t specialized promotional channels, creativity in pharmaceutical

 

4.20

advertisement and frequency of pharmaceutical advertisement

221

4.21

Impact and extent of impact of Pharmaceutical advertisement

224

5

Discussions and Conclusion

244

6

Bibliography

253

 

APPENDICES

 
 

Appendix A: - Questionnaire for Consumer.

i

 

Appendix B: - Questionnaire for Doctor.

iv

LIST OF TABLES

S.No

Description

Page No.

Table no.1.1

Showing top ten Indian OTC brands as per their sales and growth

26

Table no. 4.1.1

Age- wise classification of Respondent

90

Table no. 4.1.2

Marital Status - wise classification of Respondent

92

Table no. 4.1.3:

Family type-wise classification of Respondent

93

Table no. 4.1.4

Income-wise classification of Respondent

94

Table no. 4.1.5

Qualification -wise classification of Respondent

95

Table no. 4.1.6

Occupation -wise classification of Respondent

96

Table no. 4.2.1

Advertisement awareness among respondents

99

Table no. 4.2.2

Advertisement medium and attention of respondents

100

Table no. 4.2.2.1

Association of medium of advertisement with type of family

101

Table no. 4.2.2.2

Association of medium of advertisement with educational qualification of consumer.

103

Table no. 4.2.2.3

Association of medium of advertisement with occupation of consumer.

105

Table no. 4.2.2.4

Association of medium of advertisement with marital status of respondent.

108

Table no. 4.2.2.5

Association of medium of advertisement with age of respondent.

110

Table no. 4.2.3

Effect of advertising on respondent

112

Table no. 4.2.4

Effective medium of advertisement for common use medicines.

114

Table no. 4.2.4.1

Association of effective medium of advertisement with family type of respondent

116

Table no. 4.2.4.2

Association of effective medium of advertisement with educational qualification of respondent

118

Table no. 4.2.4.3

Association of effective medium of advertisement with occupation of respondent

121

Table no. 4.2.4.4

Association of effective medium of advertisement with marital status of respondent

124

Table no. 4.2.5

Suggestion by which consumer purchase common use medicines

126

Table no. 4.2.5.1

Association of suggestion by which common use medicine are purchased with family type

128

S.no

Description

Page No.

Table no. 4.2.5.2

Association of suggestion by which common use medicine are purchased with Educational qualification

130

Table no.4.2.5.3

Association of suggestion by which common use medicine are purchased with occupation

133

Table no. 4.2.5.4

Association of suggestion by which consumer can purchase common use medicine with Marital Status.

136

Table no. 4.2.6

Influencer in selecting medicine for common diseases

139

Table no. 4.2.6.1

Association of factor influencing most in selecting medicine for common disease with family type

141

Table no. 4.2.6.2

Association of factor influencing most in selecting medicine for common disease with Educational Qualification.

143

Table no. 4.2.6.3

Association between Occupation and factor influence most in selecting medicine for common diseases

145

Table no. 4.2.6.4

Association between Marital Status and factor influence most in selecting medicine for common diseases

149

Table no. 4.2.6.5

Association between Age and factor influence most in selecting medicine for common diseases.

151

Table no.4.3

Lasting effect of Advertisement

153

Table no.4.4

Impact advertisement to create need among consumer.

155

Table no. 4.5

Nature of attention paid by consumer in pharmaceutical advertisement

157

Table no. 4.6

Attributes observed in advertisement

158

Table no. 4.7

Extent of influence of Pharmaceutical Advertisement

159

Table no.4.8

Relying on advertisement in purchase decision

161

Table no.4.9

Advertising attributes that impacts in selection of medicines

163

Table no. 4.10

Doctor-directed promotion methods

168

Table no.4.10.1

Qualification wise classification of Doctor

170

Table no.4.10.2

Classification on the basis of Position hold by respondents

171

Table no.4.10.3

Classification on the basis of No. of years of practice

173

Table no.4.10.4

Classification on the basis of Regional Status of Practice Place

174

Table no.4.10.5

Classification on the basis of Practice Hours

175

Table no. 4.10.6

Classification on the basis of O.P.D Frequency

177

S. No

Description

Page No.

Table no.4.11.1

Mean and standard deviation of all 27 items

178

Table no.4.11.2

KMO and Bartlett's Test

181

Table no.4.11.3

Principal component analysis: Varimax rotation Matrix

182

Table no.4.11.4

Total variance explained (Rotation)

183

Table.no.4.11.5

Naming of factors

185

Table.no.4.12

Importance of medium providing information about medicines

191

Table.no.4.13

Reliability of information provided through different medium

197

Table.no.4.14

Visit of Medical Representative in practice hours.

202

Table.no.4.14.1

Frequency of MR Visited per day

203

Table.no.4.15

Medical Representative as key element

204

Table.no.4.16

Importance of promotional items

205

Table.no.4.17

Effectiveness of information provided through different media

210

Table no. 4.18

Importance of promotional channels used by companies and their long lasting effect on the mind of doctors

215

Table no. 4.19

Influence of prescription decision of doctor

221

Table no. 4.20

Influence of prescription decision of doctor w.r.t specialized promotional channels

223

Table no. 4.21

ANOVA by Doctor Educational Qualification

224

Table no. 4.22

ANOVA by Regional Status of Practice Place

233

ANOVA by Doctor Educational Qualification 224 Table no. 4.22 ANOVA by Regional Status of Practice Place

LIST OF FIGURES

S.No

Description

Page No.

Fig.1.1

Pull System Working In Chronic Therapy Segment

21

Fig 1.2

Push System Working In Acute Therapy Segment

23

Fig. 1.3

Relationship between the key players of pharmaceutical industry

24

Fig.1. 4

Showing the growth of Indian OTC sales in US $ from 2006-07 to 2009-2010

25

Fig1. 5

Showing the segment wise Indian OTC market percentage in 2013

26

Fig. 1.6

Showing the percentage of OTC and prescription drugs used by Indians

27

Fig 1.7

The Distribution Chain

29

Fig 1.8

New Product Adoption Process

31

Fig 4.1

Age - wise classification of Respondents

91

Fig 4.2

Marital Status wise classification of Respondents

92

Fig 4.3

Family type- wise classification of Respondents

93

Fig 4.4

Income- wise classification of Respondents

94

Fig 4.5

Qualification- wise classification of Respondents

95

Fig 4.6

Occupation -wise classification of Respondent

97

Fig 4.7

Advertisement awareness among respondents

99

Fig 4.8

Advertisement medium and attention of respondents

100

Fig 4. 9

Effect of advertising on respondent

113

Fig 4.10

Conceptual framework of consumer persuasion to purchase

114

Fig 4.11

Effective medium of advertisement for common use medicines

115

Fig 4.12

Suggestion by which consumer purchase common use medicines

127

Fig 4.13

Influencing factor in selecting common use medicine

139

Fig 4.14

Lasting effect of Advertisement

154

Fig. 4.15

Impact advertisement to create need among consumer

156

Fig. 4.16

Nature of attention paid by consumer in pharmaceutical advertisement

157

Fig. 4.17

Attributes observed in advertisement

159

Fig 4.18

Extent of influence of Pharmaceutical Advertisement

160

Fig 4.19.

Relying on advertisement in purchase decision

161

Fig 4.20

Advertising attributes that impacts in selection of medicines

163

Fig 4.21

Qualification - wise classification of Doctor

170

Fig 4.22

Classification on the basis of Position hold by respondents

172

Fig 4.23

Classification on the basis of No. of years of practice

173

S.No

Description

Page No.

Fig 4.24

Classification on the basis of Regional Status of Practice Place

174

Fig 4.25

Classification on the basis of Practice Hours

176

Fig 4.26

Classification on the basis of O.P.D Frequency

177

Fig 4.27

Scree plot

182

Fig 4.28

Importance of medium providing information about medicines

191

Fig 4.29

Reliability of information provided through different medium

197

Fig 4.30

Visit of Medical Representative in practice hours

202

Fig 4.31

Frequency of MR Visited per day

203

Fig 4.32

Importance of promotional items

206

Fig 4.33

Effectiveness of information provided through different media

210

Fig 4.34

Importance of promotional channels used by companies and their long lasting effect on the mind of doctors

216

 

LIST OF ABBREVIATION

DCA : Drugs and Cosmetics Act,1940

DCR: Drugs and Cosmetics Rules,1945

OTC: Over the Counter

DPCO: Drug Price Control Order 1995.

WHO: World Health Organization

OPPI: Organization of Pharmaceutical Producers of India.

IFMPA: International Federation of Pharmaceutical Manufacturers &Associations

INN: International Nonproprietary Name

POP: Point of Purchase

USP: Unique selling Point.

C&FA: Clearing and Forwarding agent

R&D: Research and Development.

NDA: New Drug Approval.

FDA: Food and Drug Administration.

DCGI: Drugs Controller General of India

CDSCO: Central Drugs Standard Control Organization.

MRP: Maximum Retail Price.

ISM: Indian System of medicines.

GATT: General Agreement on Tariffs & Trade

FMCG: Fast Moving Consumer Goods.

KOL: Key Opinion Leader.

CME: Continuing Medical Education.

DTCA: Direct to Consumer Advertising

LIST OF KEY WORDS

Analgesic: are those drugs that mainly provide pain relief.

Antacids:

are

medicines

that

neutralize

stomach

acid

or

used

to

relieve

acid

indigestion, upset stomach, sour stomach, and heartburn.

Antiflatulents: is a drug used for the alleviation or prevention of excessive intestinal

gas.

Antiseptic:

is

a

microorganisms.

substance

which

inhibits

the

growth

and

development

of

Dermatological: medicine dealing with the skin, its structure, functions, and diseases.

Detailing: Interacting with doctors in their clinics and promoting the product.

Digestives: medicine that aids or promotes the digestion of food.

Drug Therapy: is the treatment of disease through the administration of drugs.

Generic

drug:

is

a drug

defined as

"a drug product

that

is

comparable

to

a

brand/reference listed drug product in dosage form, strength, quality and performance

characteristics, and intended use.

International

Nonproprietary

Name:

is

an

official nonproprietary or

generic name given to a pharmaceutical drug, as designated by the World Health

Organization.

Medical Representative: Medical representative has to sell products of pharma

companies or drug manufacturers by approaching doctors and detailing products to

them.

Omeprazole: Medicine belongs to group of drugs called proton pump inhibitors. It

decreases the amount of acid produced in the stomach. Omeprazole is used to treat

symptoms of gastro esophageal reflux disease (GERD) and other conditions caused by

excess stomach acid.

 

Prescription Drug:

A prescription is a health-care program implemented

by

a

physician or other medical practitioner in the form of instructions that govern the plan

of care for an individual patient.

 

Schedule G drugs: Schedule G drug is a prescription drug that can be sold purely

under medical prescription alone.

 

Schedule H drugs: These are drugs which cannot be purchased over the counter

without the prescription of a qualified doctor.

 

Schedule K drugs: drug is not sold for medicinal use or for use in the manufacture of

medicines and that each container is labeled conspicuously with the words “NOT FOR

MEDICINAL USE”.

 

Schedule X drugs: A drug with a very high teratogenic risk to a fetus, based on

controlled animal studies, which is contraindicated for use during pregnancy.

 

Steroid: A type of drug used to relieve swelling and inflammation.

Throat Lozenges : is a small, medicated tablet intended to be dissolved slowly in the

mouth

to

temporarily stop

coughs

and

lubricate

and

soothe irritated

tissues

of

the throat (usually due to a sore throat), possibly from the common cold or influenza.

Topical drug: A topical medication is a medication that is applied to body surfaces

such as the skin or mucous membranes to treat ailments.

 
 

CHAPTER- 1

INTRODUCTION

1.1 INTRODUCTION

Advertising is used for communicating, exchanging/delivering business information

to the present and prospective customers. It usually provides information about the

advertising firm, its product qualities, place of availability of its products, etc.

Advertisement is indispensable for both the sellers and the buyers. However, it is

more important for the sellers. In the modern age of large scale production, producers

cannot

think

of

pushing

sale

of

their

products

without

advertising

them.

Advertisement supplements personal

selling

to

a

great

extent. Advertising has

acquired great importance in the modern world where tough competition in the market

and fast changes in technology.

This research delineates that the customer purchase behavior in Pharmaceutical

advertisement is based on the consumer purchase behavior because buying the

medicine lies in the hand of customer (doctor) rather than final consumer

(patient). So the customer (doctor) acts as an indirect consumer. Due to this

there are two types of customers ear-marked in this study, one is doctor who is

indirect consumer and the other one is patient who is direct consumer. In context

to the pharmaceutical industry in India advertisements make an impact on the

prescription behavior of the customer (doctor), along with the direct consumer

who purchase the OTC drug (Over the Counter Drug) 1 which doesn’t requires

the prescription of the doctors. The Pharmaceutical marketing differs from other

OTC drug are medicines sold directly to a consumer without a prescription from a healthcare professional

- 1

-

types of marketing because the consumer i.e. the patients are not the target audience,

whereas the physicians prescribing the medicines are the target audience of the

pharmaceutical companies. It is the doctor who makes the decision on behalf of the

patient. Physicians are privileged with the right of recognizing the need of their

patients and recommend medications for the well-being of their patients. Hence, the

relation between the physician and pharmaceutical companies may create a conflict

between the ethical professional interest of a doctor and his financial self-interest. The

increase in incentives to attract the doctor’s prescription behavior reflects as a rise in

the price of prescription medicines 2 . The pharmaceuticals resort to many ways in

marketing their product. Giving away gifts, free lunches, sponsoring education and

holidays have all been criticized as inducements which compel a doctor to prescribe

without scientific basis (Gonul FF et. al 2001).

A study from Canada showed that the association with pharmaceuticals leads to less

than

appropriate

prescribing

behavior

by

the

doctor

(Lexchin

J

1997).Many

physicians, however, do not feel that their prescriptions are influenced by gifts and

other incentives provided by pharmaceuticals (Liu SS 1995). Advertising facilitates

consumer choice and it also enables consumers to purchase goods as per their budget

requirement and right choice which makes consumer happy and satisfied. A good

advertising campaign involves lots of creativity and imagination. When the message

of the advertiser matches the expectations of consumers, such creativity makes the

way for successful campaign. The advertiser expects to create a favourable attitude

which leads to a favourable action. Any advertising process attempts at converting the

prospects into customers.

Thus it is an indirect salesmanship and essentially a

persuasion technique and it does not attempt at maximizing profits by increasing the

Prescription medicine is those medicines which are referred by doctors.

- 2 -

cost but by promoting the sales so in this way it won’t lead to increase the price of the

product. Thus, it has a higher sales approach rather than the higher-cost approach.

Advertisement as a non-personal presentation is different from salesmanship as latter

is personal selling whereas advertising is non-personal in character and it does not

meant for individuals but for all. There is absence of personal appeal in advertising.

There is an Identified Sponsor who may be an individual or a firm, pays for the

advertisement and the name of a reputed company may increase sales of products. In

Pharmaceutical advertising online, in print, television or radio broadcast, direct to

consumer, or direct to physician are all variations of pharmaceutical advertising.

Advertising Campaigns can be strategic and include direct marketing, billboard

design, brochure design and development, video production, medical animations and

more, to circulate information on a new drug. Promotion in one form or another is

employed by every business irrespective of the commodity it produces. However, the

pharmaceutical industry which is regulated by drug rules and medical ethics to

communicate sophisticated information on drug usage to a critical and highly

qualified audience. As a matter of fact, pharmaceutical promotion is a vital source of

technical information and makes an important contribution towards educating the

profession also towards the right usage of the drugs. It is relevant to note at this

juncture that there are three fundamental elements in product costs in any modern

industry or business, and pharmaceutical industry is no exception. These are high

technology

manufacturing

costs,

selling/promotion

costs

and

research

and

development costs. In drug industry particularly, the products are rather numerous and

diverse, indicated for a host of disease conditions, and each product has its own

promotional requirements to suit the needs of various specialties in medical practice

which further adds to the costs which becomes more important when the industry has

- 3 -

to serve doctors in rural areas who are not highly qualified and yet are called upon to

treat a wide variety of diseases prevalent in the rural community.

As said before, the unique aspect of pharmaceutical promotion is the communication

of completely prescribing information on the drugs to highly qualified medical men.

In view of the advances in drug therapy witnessed during the post independence

period, it is only natural that the members of the medical profession wish to stay

abreast of the new discoveries and developments taking place in the medical world

from time to time. For such a target audience, communication about the vital

information on drugs is

more than mere promotion is

a service. The job

of

communicating

information

and

promoting

the

pharmaceutical

products

to

the

professionals is done through Medical Representatives who plays an important role in

that. It is he who details a product thoroughly to a practicing doctor and discusses the

composition, mode of action of each ingredient, indications, dosage, side effects,

precautions, contraindications, pack and price of the product. Doctor raises several

queries concerning the use of the product in the types of patients he sees in his day-to-

day practice, and thus collects complete information on the product and its relative

advantages over similar other products in the market.

1.2 Classification of Drugs: - In India, the import, manufacture, distribution and

sale of drugs and cosmetics are regulated by the Drugs and Cosmetics Act, 1940

(DCA), the Drugs and Cosmetics Rules, 1945 (DCR) OTC Drugs.

1.2.1

OTC Drugs: - In India OTC drugs has no legal recognition, the phrase ‘OTC’

has

no

legal

recognition

in

India,

all

the

drugs

not

included

in

the

list

of

‘prescription’ only OTC drugs are considered to be non-prescription drugs. Hence

‘OTC Drugs’ means drugs legally allowed to be sold ‘Over the Counter’ by

- 4 -

pharmacists, i.e. without the prescription of a Registered Medical Practitioner. All

those medicines which are listed in Schedules H and X of the Drug and Cosmetics

Rules

are

prescription

only

drugs.

Drugs

listed

in

Schedule

G

(mostly

antihistamines) 3 do not need prescription to purchase but require the following

mandatory text on the label: “Caution: It is dangerous to take this preparation except

under

medical

supervision”.

Currently,

non-drug-licensed

stores

(e.g.

non-

pharmacists) can sell a few medicines classified as “Household Remedies” listed in

Schedule K of the Drugs and Cosmetic Act 4 in villages whose population is below

1000 subject to certain other conditions.

There are different categories comes under OTC, out of which there are few

categories which have spent maximum in brand building through on TV are as

follows:

1. Rubs/ Balm - Moov, Iodex, Emami Mentho Plus, Himani Fast Relief, Amrujanjan

Joint Ache Cream

2. Analgesic/ Cold Tablet - Dcold, Disprin, Stopache, Crocin.

3. Digestives - Eno, Hajmola, Dabur Hingoli, Pudin Hara.

4. Medicated Skin Treatment - Itch Guard, Krack, Ring guard.

5. Cough Lozenges - Strepsils, Halls

6. Vitamin/ Tonic/ Heath Supplements - Horlicks, Chawanprash– Dabur, Complan,

Boost, Sona Chandi, Calcium Sandoz.

7. Antiseptic Cream/ Liquids - Borosoft, Boroplus, Dettol.

Antihistamines are mainly used to help control symptoms caused by health conditions associated with allergic reactions. An Act to regulate the import, manufacture, distribution and sale of drugs.

- 5 -

1.2.2 Ayurvedic Medicines: - OTC drugs registered as ‘Ayurvedic Medicines’ (i.e.

traditional Indian system of medicines containing natural/herbal ingredients) are also

regulated by the DCA

and DCR. Ayurvedic drugs

are manufactured under a

manufacturing license issued by the Ayurvedic State Licensing Authorities. However,

they do not require a drug sale license and can be sold freely by non-chemists.

Some of the largest OTC brands in India are registered as ‘Ayurvedic Medicines’

because of their plant-based

natural

active ingredients

(e.g.

Vicks

Vapo

Rub,

Amrutanjan Pain Balm, Zandu Pain Balm, Iodex Pain Balm, Moov Pain Cream, Itch

Guard Cream, Eno Fruit Salt antacid, Vicks Cough Drops, Halls Lozenges, Dabur

Pudina Hara, Calcium Sandoz etc.). Considering the above framework, key categories

with OTC potential in India would be: vitamins and minerals, health tonics, cough

and cold, gastrointestinal, analgesics, dermatological, herbal/ayurvedic medicines,

among others, which do not contain any substance listed in Schedules G, H or X.

There is also a provision under schedule G and H which exempts Topical or external

use (except ophthalmic and ear/nose preparations containing antibiotics and / or

steroids) applications of the ingredients from these schedules. For Example: while

Diclofenac 5 is listed in Schedule H but Topical form of the same is excluded. Some of

the vitamin supplements come under price control, which can be addressed by making

dosage/formulation combination modification. Some of the non-scheduled drugs like

Aspirin also come under price control, through Drug Price Control Order (DPCO).

Additionally,

there

is

also

The

Drugs

and

Magic

Remedies

(Objectionable

Advertisements) Act, 1954 and Rules, 1955. This Act controls the advertisements for

certain category of drugs with a view to prevent people from self medication under

the influence of misleading and exaggerated advertisements.

drug used to treat pain and inflammation.

- 6 -

1.3

Drug Promotion and Drug Advertising in India: - Drug promotion in India

or elsewhere has always attracted controversies as it is inherently unethical. (Thawani.

V 2002). Unlike other commodities where consumers are choosers, prescription

practices in the drugs category is driven by drug promotion. The very nature of

prescription drugs market is ethically driven hence it is also called as the “ethical

drug” market. In 1998, the World Health Organization (WHO), in an attempt to

support and encourage the improvement of health care through the rational use of

drugs and to curb unethical marketing practices, came out with a landmark “Ethical

criteria for medicinal drug promotion”. It is an outline document which defines drug

promotion

as

“as

informative

and

persuasive

activity

by

manufacturers

and

distributors in order to induce the prescription, supply, purchase and/or use of

medicinal drugs”. However, as per the WHO this criterion does not constitute legal

obligations; governments may adopt legislation or other measures based on them as

they seem fit. It also advises that other groups may adopt self-regulatory measures

based on them. Drug promotion also includes the activities of medical representatives,

drug advertisements to physicians, provision of gifts and samples, drug package

inserts, direct-to-consumer advertisements, periodicals, telemarketing, holding of

conferences, symposiums and scientific meetings, sponsoring of medical education

and conduct of promotional trials. It is well understood that the pharmaceutical

companies do have trade interests in promoting their products for disseminating

information about the drug it produces, but it should do so in a fair, accurate, and

ethical manner. The blurring boundaries of what constitutes fair practices are of

intense debate in issues involving drugs promotion. Many studies have noted that

drug companies are involved extensively in promoting their brands by paying huge

kickbacks and the relationship between actors in the distribution network is almost

- 7 -

always based on perverse set of incentives (Angell M. 2005). Studies have also

identified the variety of ways and means in which the drug industry influences doctors

and the doctor’s in turn due to their fiduciary position are susceptible to perverse

incentives. In the year 2008, the pharmaceutical industry in India spent a total of Rs

4941.15

crore, in which advertising expenses were 823.57 crore and drug marketing

2470.44

crore. 6 The Indian Medical Council Act 1956, and the Code of Medical

Ethics 2002, governs the conduct of physicians in India. There are voluntary

resolutions of various industry associations providing necessary guidance on drug

promotion, but they have not been effective. In fact, there seems to be no logical

reason that the voluntary codes which aim at restricting or regulating drug promotion

is in direct conflict with the interests of drug industry. In totality, all measures

currently available under law have largely remained ineffective to deal with the

collusion crises in the prescription drug markets. An editorial in one of India’s reputed

medical

journal

quotes

that

“The

International

Federation

of

Pharmaceutical

Manufacturer's Association which had first suggested a self regulatory code of

pharmaceutical marketing practices in 1981 adopted the revised version in 1994”.

There seems to be obvious double standards in adoption of the code. While in the

developed countries, these firms often publish reasonably ethical advertisements

which are published in medical journals, the very same companies promote the same

drug for different indications in developing countries.

Advertising, as distinct from promotion is generally used as a direct measure to

popularise a particular drug or a remedy. It is governed by the Drugs and Magic

Remedies Act. 7

6 Source www.cci.gov.in.

7 An Act to control the advertisement of drugs in certain cases, to prohibit the advertisement for certain purposes of remedies alleged to possess magic qualities and to provide for matters connected therewith.

- 8 -

The Drugs Enquiry Committee, 1930 8 under the chairmanship of Sir R. N. Chopra

was the first authoritative attempt by the Government to look which scrutinized the

pamphlets of drugs which made spurious claims. However, not much has been

achieved since then except the introduction of the Drugs and Cosmetics Act, 1955 has

“largely remained unenforced due to the apathy and general disinterest of the health

care

fraternity

and

the

industry

refuses

to

be

cowed

down

by

legislative

enforcements” (Thawani.V. 2002). For example: Hamdard Dawa khana filed a writ to

the Supreme Court of India asking it to declare the direction for recalling 40 drugs as

bad in law as basically violating their right to free speech and right to carry on trade

and business.

It is well recognized that in case of prescription of a drug- where the doctor is

decision maker for the ultimate user the patient, the industry has a powerful influence

on prescribing habits (Lancet 1993). The industry is often blamed for its marketing

practices, which has been considerable covered and discussed in western literature

(Angell.M.

2005).

It

is

noted

that

while

doctors

uniformly

deny

that

their

understanding of drug is influenced by the activities of industry, there is considerable

evidence

to

support

the

efficacy

of

the

personal

encounter

with

a

medical

representative in shaping doctors' attitude towards drugs (Bhat.AD 1992). There is an

essential

difference

between

promotion

and

information.

While

delivering

information to the doctors about new drugs, including its usefulness and efficacy may

have precompetitive effects, marketing strategies adopted by firms may downplay the

demand side and hence raise prices for consumers. How doctor decides which drug is

to be prescribed to his patients is at the heart of controversy. Popular news reports and

mapping of recent incidence of collusion between the profit-oriented pharmaceutical

8 A committee which scrutinized the pamphlets of drugs which made spurious claims.

- 9 -

companies, pharmacists and doctors, it is noted that these actors are routinely wooed

with gifts ranging from mobile phones to sponsored weddings and sometimes

postpaid mobile connections are also provided. Interviews conducted during the

course of this study reveal that it extends from sponsored conferences in five-stars to

high-value gifts like motorcycles and. There are even cases where pharma companies

helped doctors to set up small nursing homes. However, there is no concrete evidence

to point specific people, institutions or companies, since these interviews were held in

confidence. A list of three collected news items published in the Times of India on

drug promotion does portray various facets of drug promotion in India. Such

incidences have long been noted in the medical fraternity, but have rarely been

thoroughly investigated. In this study, based on earlier studies and reports, investigate

such practices from a horizontal and vertical agreement point of view. This is despite

the fact that inappropriate prescriptions could lead to dangerous side effects, medical

complications and needless expenses for patients. It has also been noted that medical

associations have allegedly warned pharmaceutical companies, that they you don’t

sponsor our conference they will boycott your drugs. Some experts and commentators

are also of the view that breakthrough drugs that enter the market early are promoted

through scientific information.Some interviews also reveal that drug companies

sponsor weddings and birthdays of doctor’s kith and kin. Medical representatives are

under constant pressure to push for higher sales they reason why they resort to

providing perverse set of incentives to the doctors. The sales driven motivations for

MRs warrant that MRs resort to activities that can call ethics of promotion into

question.

Studies

have

indicated

that

promotional

materials

provided

by

pharmaceutical companies through their representative cannot be entirely relied upon.

Source of primary literature on drug promotion are articles published in peer reviewed

- 10 -

journals,

secondary

literature

includes

abstracts

of

various

types

of

published

literature, reference from text books and other standard literature. Commentators point

that few physicians are equipped with skills to critically evaluate and appraise it. It is

noted that lack of proper methodological understanding among physicians to evaluate

these drugs is the prime reason for them being swayed away with arguments

presented in promotional literature. It is suggested that physicians must see if a new

drug is relevant to their practice in terms of population studied, the disease and the

need for new treatment (Shetty VV et.al., 2008).

These are the following method of pharmaceutical advertising-

1.3.1 Advertising

to

the

General

Public:-

The

Drug

&

Magic

Remedies

(Objectionable Advertisement) Act & Rules mentions a list of ailments for which no

advertising is permitted. It also prohibits false or misleading advertisements which,

directly or indirectly, give false impressions regarding the true character of the drug,

make false claims, or are otherwise false or misleading in any particular respect.

There is an OPPI Code of Pharmaceutical Marketing Practices, 20101, based on the

IFPMA code. Currently, there is no specific law which prohibits the advertising of

prescription drugs.

1.3.2 Advertising the Products in Medical Journal: - Journal advertisements

attract attention because they are visually appealing also see them as a way of keeping

medical practicenor up-to-date. The Ethical Criteria for Medicinal Drug Promotion

developed by the World Health Organization (WHO) suggest the types of information

that, as a minimum should be contained in a journal advertisement (WHO 1988), (see

box ). The aim is to ensure that basic information needed for prescribing decisions is

present.

- 11 -

The medicine’s International Nonproprietary Name (INN), usually the generic name,

is a key piece of information that should always be included. Generic names help

doctors and pharmacists to identify which class a medicine belongs to and can

prevent doctors from unknowingly prescribing two medicines from the same class to

a patient.

The World Health Organization’s Ethical Criteria recommend that the following

information be included in pharmaceutical advertisements appearing in medical

journals.

Name(s) of the active ingredient(s) using either International Nonproprietary

Name (INN)

(INN) or the approved generic name of the medicine

Brand name

Content of active ingredient(s) per dosage form or regimen

Name of other ingredients known to cause problems

Approved therapeutic uses

Dosage form or regimen

Side effects and major adverse medicine reactions

Precautions, contraindications and warnings

Major interactions

Name and address of manufacturer or distributor

Reference to scientific literature as appropriate

- 12 -

1.3.3

Direct mailing of publicity material to doctors:- It is the sending of

publicity material like Textual and Audio-Visual Promotional Material to Doctor.

There has been a massive growth in direct mail campaigns over the last 5 years.

Direct mail allows an organization to use their resources more effectively by allowing

them to send publicity material to a named person within their target segment.

By personalizing advertising, response rates increase thus increasing the chance of

improving sales and it may be discussed in chapter 4.

1.3.4 Medical conferences, especially for a new product: - Companies organize

medical conference to promote new products in order to provide the information like

uses, dose regimen, contradiction & adverse effect etc. to the medical practitioner.

1.3.5 Electronic or Broadcast Media Advertising :-

Electronic or broadcast

media consists of (i) radio, (ii) television, (iii) motion pictures, (iv) video and (v) the

internet. The radio is audio in nature, appealing only to the sense of sound (ears).

Radio advertising is more effective in rural areas, as compared to urban regions.

Television, as an advertising medium, is more attractive and effective because it is an

audio-visual medium appealing to both the senses of sight sound (eyes and ears).

Different methods, such as spot announcements, sponsored programmes etc. are used

for

broadcasting

advertising

messages.

However,

broadcasting

media

are

very

expensive form of advertising and sometimes it also undertaken through movies,

video, and the internet.

The following OTC medicines advertising can be seen: -

Digestives

Antacids

- 13 -

Antiflatulents

Cold rubs and analgesic balms/creams

Vitamins/tonics/health supplements (especially herbals and ayurvedic

registered)

Medicated skin treatment

Analgesic/cold tablets

Antiseptic creams/liquids

Glucose powders

Cough syrups

Throat lozenges

Medicated dressings (Band-Aids)

Baby gripe water

Ayurvedic medicines and preparations

1.3.6

Outdoor Media: - This includes posters, neon signs, transit, point of purchase

(POP), etc. Outdoor advertising can be a good supporting media to other forms of

advertising. It is a good form of reminder advertising, especially, the POP advertising.

1.3.7 Other Media: - This includes direct mail, handbills, calendars, diaries, cinema

advertising and internet and so on. These miscellaneous media can play an important

supporting role to the major media such as television, and newspapers.

1.4 Pharmaceutical Advertisement for OTC medicine or Direct Consumer

advertising: - Prescription drugs are the drugs which are required to be dispensed

- 14 -

under the

supervision of a physician. On the other hand, over the counter drugs can

be sold directly to the consumers/patients without any doctor's prescription. The

traditional pharmaceutical media for exposing and raising the product message of

prescription drugs are professional journals, magazines or newspapers, direct mail,

convention or hospital displays and service items such as educational films, medical

illustrations

and

photographs,

office

supplies,

text

books,

and

exhibitions

etc.

Pharmaceutical Advertisement for Direct Consumer normally done by Print Media

Advertising. The print media consists of newspapers, magazines, journals, handbills,

etc. No newspaper or journal today can survive without advertising revenue. Print

media advertising, even today, is the most popular form; and revenue Derived by

mass media from advertising has, therefore, been progressively increasing year after

year. Print media appeals only to the sense of sight, i.e. eyes. Printed advertisements

have the advantage of being directly in front of the consumer who elects to read them.

By reading an advertisement the consumers becomes better informed and are more

likely to follow-up on the product. In addition, print media has the advantage of being

tangible to consumers who can carry the medium with them or follow-up with it on

the web.

1.5 Strategies for New and Switched OTC Pharmaceutical Products:- OTC

marketing strategies are most important and unavoidable aspect of any pharmaceutical

organization especially what happens when a pharmaceutical products losses the

patent protection, it is important to consider whether radical change is really

necessary. It may be that the pharmaceutical product is operating in a niche category

that is too small to attract challenging generic competition, at least in the short term. It

could also be that the awareness and image of the brand is so strong in patients and

doctors minds that it would retain most of its equity even after the loss of patent

- 15 -

protection. In most cases however, the entry of generic competitors radically alters the

competitive setting and

calls for appropriate radical

responses, the

few major

strategies available to pharmaceutical brands facing competition from OTC and

generic

products

are

briefly

reviewed.

Marketing

strategies

available

for

a

prescription drug facing competition from existing generic product involve a trade-off

between brand building and price competition.

A company can also resort to no marketing oriented strategies such as legal efforts to

extend

patent

protection

or

tactical

alliances

with

generic

makers

and

can

simultaneously implement different strategies, thereby creating a hybrid model. It is

nevertheless useful to review each strategy independently, starting from the most

common to the least common. Some of the strategies are discussed here

i) Low Price strategy: This strategy has the lowest potential for brand building. On

the other hand, narrowing the price gap with revital addresses the main problem

created by the expiry of the patent; that the equity of the brand can no longer sustain a

large price differential with what is, essentially, the same product. At the extreme,

comparing the price with the generic will make doctors, pharmacists and regulators

indifferent between the two and may force the weakest generic makers out of the

business, given their lower economies of scale. On the other hand, price competition

invites retaliation and can quickly degenerate into a price war that would kill all the

profits in the category. Another issue to be kept in mind here is that most doctors who

prescribe the drug are not aware of prices. Communicating the price to the consumers

is therefore an integral part of this strategy.

ii) Divest strategy: - It involves cutting all promotional and research expenses

once the brand faces direct competition from revital and redirecting the savings

- 16 -

towards brands that are still enjoying patent protection. Sometimes, this ‘milking’

strategy actually involves price increases to take advantage of the higher brand equity

of the brand among the smaller segment of hard core loyal customers. This strategy

leads to the lowest levels of brand building as the brand is not supported and price

competition as the price advantage is not challenged. The success of this strategy

depends on the inertia of doctors, patients and the other Stakeholders. When their

motivation to switch to the newly-available generic is low, either because of low

financial incentives or strong attachment to the brand or to the value of brand equity

for funding research and development, such a strategy can deliver high profitability, at

least over the short term. As many examples have shown, it is not always easy to

convince doctors and patients to upgrade to the new patent protected drug in the

category and patenting these next-generation products is becoming increasingly hard.

One of the major drawbacks of this strategy is that it encourages generic makers to

challenge drug patents more aggressively, knowing that the market will be all theirs as

soon as they have received the green light. Introducing new and improved flavors,

packaging, or delivery systems can lead to additional emotional or functional

consumer benefits. The resulting differentiation enhances the awareness and image of

the brand and hence increases its equity. Because these innovations typically do not

extend patent life however, it is more difficult to pass the costs on to the consumer

when facing generic competition and hence, this strategy’s leads one step ahead

towards price competition. In addition, these improvements can be easily copied by

generics and thus often have only a weak impact on sales, while reducing margins.

These changes can also be perceived as marketing gimmicks and hurt the perceived

scientific integrity of the brands which Provide more value to the money.

- 17 -

iii)

Innovation

strategy

sort

of

introducing

a

completely

new

molecule,

pharmaceutical companies can innovate by launching new forms and dosages or by

demonstrating effectiveness for new indications. They can also innovate by offering

better services for doctors and better communication on the illness and on the brand

through higher promotion by the medical representatives. Compared with the ‘Milk

and Divest strategy, this option also entails low price competition, but can improve

the equity of the off-patent brand by offering additional patent protection. On the

other hand, innovations require years of research before being authorized and, in some

countries, do not necessarily extend the duration of the patent. Provide more value for

the money introducing new and improved flavors, packaging, or delivery systems

(e.g. easy to swallow pills, or patches) can lead to additional emotional or functional

consumer benefits. The resulting differentiation enhances the awareness and image of

the brand and hence increases its equity. Because these innovations typically do not

extend patent life however, it is more difficult to pass the costs on to the consumer

when facing generic competition and hence, this strategy’s lead is one step ahead

towards price competition. In addition, these improvements can be easily copied by

OTC marketing companies and thus often have only a weak impact on sales, while

reducing margins. These changes can also be perceived as Marketing gimmicks and

hurt the perceived scientific integrity of the brand. Pharmaceutical companies can try

to fight at both ends of the market by introducing their own generic. This will reduce

the profitability of generic makers and may deter them from entering the category. On

the other hand, pharmaceutical companies have realized that producing and marketing

revital requires different skills to their traditional business and that it is difficult to be

a strong player in both business models.

- 18 -

To overcome this difficulty, pharmaceutical companies can license the drug before the

expiry of the patent in exchange for royalties. The new copy will typically be priced

higher than a true generic, but will benefit from first mover advantage, preferential

access to raw material and manufacturing know how, while still deterring entry from

other generic makers.

1.5.1 Invest in generics: - Pharmaceutical companies can try to fight at both ends of

the market by introducing their own generic. This will reduce the profitability of

generic 9 makers and may discourage them from entering the category. On the other

hand, pharmaceutical companies have realized that producing and marketing generics

requires different skills to their traditional business and that it is difficult to be a

strong player in both business models. Finally it is inevitable that the competition

from generics will erode the profitability of the original brand and pharmaceutical

companies should not put up a fight and the continuous investments in brand building,

coupled with price cuts and at the end consumers, marketers both are happy.

1.5.2 Pharmaceutical Companies Business Strategies for Prescription Drugs: -

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

been increasing 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 Therapy Area that achieve substantial global

sales. The success of this model depends on achieving large returns from a

Generic drugs are marketed under a non-proprietary or approved name rather than a proprietary or brand name.

- 19 -

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

(ii) Core Model in which a larger number of drugs from Acute Therapy 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.

1.5.2.1 Marketing approaches of Super Core Model: - In pharmaceutical market

there has been a significant shift from Acute towards Chronic Therapy 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 evident from high

growth rates achieved by firms like Sun Pharma, Dr. Reddy Laboratories and Dabur

Pharma Ltd. who have focused on these segments. 10 Medical representatives are

rearranged throughout the new companies and more or less some of the sales

representatives are 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

geographical area 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

10 Source S.K.Saxsena “A review of marketing strategies work by different pharmaceutical companies”

- 20 -

prescribe drugs and thus increase sales. In this model medical representatives are the

key actors. For Example:

in a small oncology 11 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. The pharmaceutical distribution channel is indirect with usually three

channel members i.e. depot/C&FA, stockiest and chemist and it is shown in figure

1.1.

CORE CUSTOMER (Doctor)

and it is shown in figure 1.1. CORE CUSTOMER (Doctor) END- CUSTOMER (Patients) NON CORE CUSTOMER

END- CUSTOMER (Patients)

figure 1.1. CORE CUSTOMER (Doctor) END- CUSTOMER (Patients) NON CORE CUSTOMER (Retailers) CUSTOMER (Stockiest)

NON CORE CUSTOMER (Retailers)

END- CUSTOMER (Patients) NON CORE CUSTOMER (Retailers) CUSTOMER (Stockiest) CUSTOMER (C & FA) Fig.1.1: Pull

CUSTOMER

(Stockiest)

NON CORE CUSTOMER (Retailers) CUSTOMER (Stockiest) CUSTOMER (C & FA) Fig.1.1: Pull System Working In

CUSTOMER (C & FA)

Fig.1.1: Pull System Working In Chronic Therapy Segment

11 Oncology is a branch of medicine that deals with tumours.

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Pharmaceutical marketing is a specialized field where medical representatives form

the backbone of entire marketing effort. Moreover field force should have good

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

the demand for their products i.e. from Doctor to Retailer to Stockiest to C&FA to

company.