INTRODUCTION

PHARMACEUTICAL MARKETING
IN INDIA: A MACROSCOPIC VIEW

Drug & pharmaceutical industry plays a vital role in the health care of the
any country. Rapid growth of this industry requires further attention
because even after 50 years of independence, India, with around 15
percent of the World population, accounts for less than 2 percent of the
drug production in the world. Annual per capita consumption of medicine
in India is less than 2% of that in Japan. Health care expense in India is a
dismal 0.8 percent of GDP compared with 12.4 percent in U.S.A. 6.5% in
Japan and 6.2 percent in the U.K, despite higher incidence of disease and
malnutrition. The poverty and disease in India on one hand calls for
higher standard of healthcare and pharmaceuticals production and on the
other, stultifies the growth of industry due to poor affordability of an
average Indian. Drug & Pharmaceutical industry has therefore,
encountered a tough situation which most industry have always found
difficult, to provide abundant quantity of quality products at low prices.

The Indian Pharmaceutical industry, valued at $46.2 billion has been

witnessing attractive growth rate of 15% to 20% consistently over the
past decade. This growth was build by India's large population, increasing
allocation of income to healthcare spending and exports. Exports which
currently accounts for 20% of the production value has grown by a
compound annual growth rate of 34% in the past few years due to
competitive price advantages from India's low labor and other input cost

The Indian market for pharmaceutical products stands at an enormous

$58.8 billion. The big 10 companies account for over 30% of that, take
away 45 marketer and average sales don't even come any where near the
$2.5 million marks, that's how fragmented its is some 50,000 brands from
over 20,00 companies growing fast enough to embarrass rainy day

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mushrooms and enough diseases to savage Indian population all several
times over and turn Dr. Dolittle into Dr. Don't care.

GOVERNMENT POLICIES
In a country lacking the assurance of free health care for all (not to talk of
an effective health insurance system), it is the poor patient's family who
must pay the bill. This was the justification for the policy. But it killed
any incentive to invest in R& D (Research and Development), which
makes global drug manufacturers what they are: leader of mankind's war
on disease. India's per capital consumption of drugs is said to be just $3.
In the US its over $100 and in Japan, over $400. India has about 20% of
the world's disease burden (with just 16% of its population). Western
spending is high because in a system where the government pays the
bills, the patients get themselves prescribed all sorts of pills for ailments
that aren't terribly serious. But why is Indian spending so low? Only 35%
of the population has access to modern (read allopathic) medicines. India
has alternative system of medicines, Ayurveds, e.g. are not quacks,
neither are homeopaths who make their own medicines.

India also exports sizable quantities of drugs & pharmaceuticals. More

companies are now venturing into traditional health care systems beside
modern medicine. With the launching of new drugs policy, all bulk drug
formulation and intermediaries except five bulk drugs have been de-
licensed. Many drugs that were hither to under price control have been
taken out of such control. Actually the list of controlled drugs has been
halved and is limited to 73 items.

Higher rate of return has been allowed for those drugs that are still under
price control. Companies with 51 percent foreign equity have been
brought on par with wholly Indian companies, automatic clearance would
be given for 51 percent foreign equity automatic approval would be given

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for foreign technology agreement as well. Earlier such companies had
restriction on the product they could manufacture or import. A National
Drug Authority is to be set up to monitor quality control and rational use
of medicine. A national pharmaceutical pricing authority is also to be set
up to fix prices in respect of drug, which would continue to be under price
control (Ramaswamy & Meerakumari 1988).

Recent budget proposal has announced a 10 percent drop in the peak

customs duty, which will benefit formulators and transnational
pharmaceutical companies with high raw material import contents, but
falling traffic barriers also threaten the future of the

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bulk drug players. However, the 8 percent increase will not have a
negative impact on formulators as the increase will enable a full set off
under MODVAT (Modified Value Added Tax). Similarly, the 10 percent
reduction in the tax on income from royalty and technical fees paid to
foreign companies may not affect domestic companies at all. But high
spenders on R & D like RanbaxyTM, CiplaTM and WockhardtTM will
gain. This along with the rising of investment limits in overseas joint
ventures and offices under the Export Earners Foreign Currency Account,
will provide a strong dose of incentive for India's pharmaceutical
companies to go global. (Sakaria 1988)

The Indian pharmaceutical sector is likely to witness major changes as a

result of liberalization and pressure from GATT (General Agreement on
Trade and Tariff) and WTO (World Trade Organization). Price control
are gradually being dismantled with less than 50% of the drugs coming
under purview of DPCO. This number is likely to decrease further. In
addition, as a signatory to WTO by 2010, India will be require to follow
the same product patent laws governing the west. MNCs (Multinational
Companies) in the past, have been constrained in launching new products
because of strict patents enforcement law governing their home countries.
Product patent will provide greater freedom to introduce new an advance
international portfolio products. Indian pharmaceutical companies on the
other hands are likely to suffer as a result of patent protection. It will
become increasingly difficult for them to introduce new product without
investing in basic research. Intensive research requires large investment
that can be only recover by spreading costs over a greater volume, there
by reducing average costs. However, because of high industry
fragmentation and a lack of research, few domestic company are able to
reap the benefit of scale.

To end the dominance of foreign drug companies, the Indian government

enacted a series of policies designed to foster self-sufficiency in the
production of basic drugs. Because these measures lowered barriers to
entry, thousands of medium and small Indian pharmaceutical companies

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entered the market challenging the MNCs for control. These actions laid
the foundation for today’s highly competitive domestic industry that is
capable of offering some of the lowest drug prices in the world. These
policies ended India’s dependence on expensive foreign drugs, fostered
the development of a competitive pharmaceutical industry, and guaranteed
the Indian public access to inexpensive drugs. Nonetheless, the Indian
pharmaceutical industry also became one of the country’s most heavily
regulated. The industry currently faces restrictions on

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imports, high tariff rates, ration requirements, and equity ceilings for
foreign participation.

Against this backdrop, the companies most likely to succeed will be large
companies with a wide product portfolio, those that have the ability to
undertake research and develop a strong product pipeline and those that
gain or sustain export competitive environment, it will be critical for
companies to build sustainable competitive advantage. In addition to the
strategies discussed earlier, companies have opportunities to gain an edge
over their competitors, by actively managing their product portfolio, by
executing a sound globalization strategy or by becoming an integrated
healthcare company.

The Indian pharmaceutical industry is highly regulated, essentially on three

aspects:

 Patents

 Price

 Product quality

The various legislations that govern the Indian Pharmaceutical Industry are:

 The Indian Patents Act 1970 (and the amendments thereafter)

 Drug Price Control Order (soon to be replaced by Pharmaceutical

Policy 2002)

 The Drugs and Cosmetics Act 1940

The legal framework for the industry should be such so as to increase

the strengths of the industry, mitigate the weaknesses, void off the
threats and cash in on the opportunities.

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CHAPTER –
2 RESEACH
METHODOL
OGY

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The current shift in the marketing strategy is work by multinational
pharmaceutical Companies .It is now high-end (than adaptive) development
that is being carried out by leading companies. And, increasingly, other
companies are finding themselves competing against, or working with, new
innovation-based companies. The study focuses on the processes and
outcomes of globally distributed pharma companies. This article will present
the changing marketing strategies when a pharma company shifts from
Acute base to Chronic therapy base. This article will also give an insight
about shift in supply chain process and customer and end-customer
perception which is the base of formulation of different marketing strategies.

The pharmaceutical industry is the world’s largest industry. The industry has seen
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. 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.

The Indian pharmaceutical industry came into existence in 1901, when Bengal
Chemical & Pharmaceutical Company started its maiden operation in Calcutta. The
century 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.

Pharma Marketing Process and its Challenges

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
(doctor) of Pharma industry 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

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this other expense, the industry is still plagued with some very serious strategic and
operational level issues.

From organizational perspective the most prominent performance related issues are:

1. Increased competition and unethical practices adopted by some of the

propaganda base companies.
2. Low level of customer knowledge (Doctors, Retailers, Wholesalers).
3. Poor customer (both external & internal) acquisition, development and
retention strategies.
4. Varying customer perception.
5. The number and the quality of medical representatives.
6. Very high territory development costs.
7. High training and re-training costs of sales personnel.
8. Very high attrition rate of the sales personnel.
9. Busy doctors giving less time for sales calls.
10. Poor territory knowledge in terms of business value at medical
representative level.
11. Unclear value of prescription from each doctor in the list of each sales
person.
12. Unknown value of revenue from each retailer in the territory.
13. Absence of ideal mechanism of sales forecasting from field sales level,
leading to huge deviations.
14. Absence of analysis on the amount of time invested on profitable and
not-soprofitable customers and lack of time-share planning towards
developing customer base for future and un-tapped markets

Patents - Patents are a vital aspect of the global pharma industry. Patent
protection is essential to spur basic R&D and make it commercially viable. But, only
the developed nations endorse product patents. Most third world countries have patent
laws but enforcement is totally lax.

New Drug Approval (NDA) - Prior to launching its products in any

country, a pharma company undertakes patent registration to protect its own interests.
To protect the interests of the consumers, it is necessary that the product be approved
by the drug authorities in that country. Mostly the process for seeking approval is
initiated alongside the patent registration process.

WTO - Due to pressure from the developed countries, across the world uniformity
in patent laws is being implemented under WTO (World Trade Organization - earlier
GATT i.e. General Agreement on Tariffs & Trade). Presently, different countries
have different patent types and life period. WTO has decided upon a product patent
life of 20 years in all countries.

RESEARCH & DEVELOPMENT (R&D) - The pharmaceutical

industry is characterized by heavy R&D expenditure. It is only the large

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pharmaceutical companies who can allocate significant resources for R&D to
introduce new products. As the products are an outcome of significant R&D
expenditures incurred by these companies, they have their products patented. The
patent allows the companies concerned to wield immense pricing power for their new
products.

THE COMPETITION - The level of competition on day to day basis in

very high in Acute segment, however the degree of competition in not as much as
high in Chronic therapy area. As doctor has to prescribe drug for a long time in
chronic cases and patient is suppose to consume it without any change of brand.
While in acute cases doctor is changing brands on day to day basis. In acute area
however there is a large competition from local and propaganda companies.

Pharmaceutical Company Business Strategies

What’s the secret behind successes? For one, the company operates in niche
formulations (chronic) segments such as psychiatry, cardiovascular,
gastroenterology and neurology. While most of the top Indian companies have
focused on antibiotics and anti–invectives (acute), Sun 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 Sun Pharma from the industry
growth.

The bases of marketing strategies can be best described

in these two models in both acute and chronic segments:
Super Core Model & 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 dependant on sales from a
small number of drugs. This model incorporates highly specialized approach in all the
manner . Initially the competition is seems more at entry level but since growth is
stable and more in this area; every company is striving very hard to enter in this area.
The major strategy in this model involves right focus to highly specialized customer
by well trained team.

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. Here presenting a large number of

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product and taking the advantage of opportunity cost is one of the important strategy.
Other strategy includes daily reminders to cross the perceptual filter and get the brand
name in to the sub-conscious state of mind.

Marketing approaches of Super Core Model

In pharmaceutical market 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
evident from high growth rates achieved by firms like Sun Pharma,
Dr.Reddy Laboratories, etc.. Who have focused on these segments The doctor's
prescription has become just the starting point in determining what drug the retailer
dispenses. During last five years pharma companies have started identifying the
hidden potential of oncological market also. 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 layoffs. 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 eight to ten 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
cardiology 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. Pharmaceutical companies also appoint
medical representatives and assign 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

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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 (patient) 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. All
efforts are being put for generating secondary sales i.e. from stockist to retailer.
Ensuring of auto demand with limited availability and maximum liquidation of the
products is the main characteristic of this approach.

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 customer’s (doctors) chamber. Many
companies such as Abbott, Pfizer, FDC, Aventies, Cipla etc. are known for their
availability of products.

For marketing of these types 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 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

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

In this system, doctors and 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 utility gifts to
remind the products on daily basis.

Also it is interesting to note that since this is a push system products are being pushed
in to the market so generally representatives place product orders from their stockist
on the basis of SKUs sold and schemes. In this pumping the goods in the market and
ensuring more and more primary sales i.e. from CFA to Stockist and availability of
goods are major strategies.

Normally the chances of dumping of goods at stockist and retailer level are reported
also payment recovery of companies is also not very good. Here the role of supply
chain managers can be to provide considerable value to their companies by
understanding the customers' delivery requirements. A very powerful tool for
understanding these requirements is account segmentation. A company can use
account segmentation to identify market segments Such as Acute & Chronic therapy
market. which is well positioned to serve and then organize its product range and even
SKU’s and service in a superior way.

OBJECTIVES AND SCOPE

The present study of the pharmaceutical industry of India revolves around

the following basic objectives:

 To understand how pharmaceutical company launch their product

 To know what promotional strategies are used by pharmaceutical

companies to sell their products in the market

 To understand what is the role played by sales representatives in this

regard

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 CHAPTER – 3

REVIEW OF LITRATURE

A review was conducted of 70 publications; 43 publications were concerned with the

pharmaceutical quality directly while 37 publications were concerned with the general quality
practices. The content of those sources was analyzed and the following themes were
identified:

Guidelines of the pharmaceutical quality.

General practices recently applied in the pharmaceutical industry.

Alka Chadha (2008) This paper studies the impact of the strict patent regime on the patenting
activity of Indian pharmaceutical firms and finds that patenting activity of these firms has
increased after the signing of TRIPs. The study is conducted for 65 pharmaceutical firms for
the period 1991 to 2004 using different parametric and semiparametric count panel data
models. Results across different count data models indicate a positive and significant impact
of the introduction of stronger patents on patenting activity. Further, the results show a
gestation lag of 2 years between R&D spending and patent applications.

Beena, S (2006) This paper tries to address the extent, nature and impact of the recent surge in
consolidation strategies especially in the form of mergers and acquisitions followed by the
firms in the Indian pharmaceutical industry. The study found that many of the firms are
implementing these strategies in the new context of globalisation mainly to overcome the
acute competition arising out of the pro-market reforms and to strengthen their market
portfolio. The study reaches the conclusion that the consolidation strategies followed by the
firms enabled them to cut down the wasteful expenses to a greater extent and which resulted
in better performance of the merging firms compared to the non-merging firms in this
industry.

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Chadda (2006) in her paper has tried to show that Indian firms are spending huge resources to
secure non-infringing process patents in foreign countries. After tapping the developing
countries, they are trying to access developed countries with drug master filings (DMFs) for
bulk actives supply and abbreviated new drug applications (ANDAs) for formulations.

Chadha (2005) there is a stricter patent regime has stimulated patenting activity in the Indian
pharmaceutical industry.

Chaturvedi and Chataway (2006) has described in their study about Smaller
pharmaceuticals do not have these resources and might not be able to survive in the market.
Indian firms are adapting to the changing environments R&D is recognized as the ‘survival
kit’ in the post-TRIPs scenario. The paper observed that Indian firms are investing in R&D not
only for new drug discovery but for developing capabilities to assimilate and exploit
knowledge available externally. They are also positioning themselves as a partner of choice
for technology savvy national and multinational firms.

Chaudhuri (2007) explores that R&D expenditure has dramatically increased for a segment
of the Indian pharmaceutical industry after TRIPS came into effect. It is not only that the
amount of R&D expenditure has increased, but there has been a drastic shift in the structure of
R&D activities of the Indian companies. Earlier they were primarily engaged with the
development of new processes for manufacturing drugs, now they are also involved in R&D
for new chemical entities (NCE). Indian Pharmaceutical Industry has Exciting Opportunities
in Post- TRIPS period.

Dhar & Gopakumar (2006) provides analysis to indicate the performance of the firms in the
Indian pharmaceutical industry following the changes in the patent regime necessitated by the
Agreement on TRIPS. The study shows that the R&D spending of some of the leading firms,
in particular, Ranbaxy and Dr Reddy’s has shown increase in Post- TRIPS period. As a result,
R&D intensities of the firms have improved significantly.

Dinar Kale & Steve Little (2007) has describes about the Indian pharmaceutical industry has

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 emerged as a leading supplier of generic drugs to both developing and developed countries.
The movement of the Indian pharmaceutical industry along the R&D value chain represents a
remarkable shift from an importer to an innovator of drugs. The Indian government's
industrial and technology policies along with changes in regulation of intellectual property
rights played a crucial role in shaping this development of R&D capability. Using the
‘capability creation model’ this paper discusses the learning processes and stages involved in
this dramatic accumulation of technological capability. This analysis shows that the Indian
pharmaceutical industry has followed a trajectory from duplicative imitation to creative
imitation to move up the value chain of pharmaceutical R&D. Finally as a result of changes in
patent law the industry is learning to develop capabilities in innovative R&D. The basic and
intermediate technological capabilities gained from imitative learning gave these firms a solid
base for development of competence in advanced innovative R&D. These findings have
implications for government policies as well as firm strategies in other developing countries
albeit with some limitations due to global harmonization of patent laws being promoted by
the World Trade Organization.

Grace (2004) reveals that the prospects of changing intellectual property on pharmaceutical
industry are extremely positive for the future of the Indian industry. The study shows that one
third of all FDA applications came from India in 2003 and this number is expected to be one
half in 2004. MNCs have been interested in working with Indian firms for some time, attracted
by lower cost structure.

Gupta (2007) Indian companies are increasing their rate of DMF filings every quarter. Indian
generic players are also increasing their participation in the advanced markets, particularly the
US. ANDA filings with USFDA are also increasing in Post- TRIPS period.

Haritha Saranga , B.V. Phani (2008) The Indian Pharmaceutical Industry (IPI) will be going
through a major shift in its business model, from the year 2005 onwards, as the existing Process
Patent regime gives way to the Product Patent regime, in order to comply with the Trade Related
Intellectual Property Rights System (TRIPS) agreement. As a result, IPI, comprising of more
than 20,000 players, is slowly consolidating with mergers, acquisitions and alliances; and getting
ready to adapt to the new environment. In such a dynamic environment it would be imperative to

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examine whether there are any common firm level factors which aid in the survival and growth
of a firm. This assumes crucial importance due to the fact that it is almost impossible for any
firm to control the factors which affect the industry as a whole. This is particularly true when the
changes are driven due to the process of globalization and not due to any policy changes of
individual governments. With this objective, we have used Data Envelopment Analysis (DEA)
on a sample of 44 companies that have survived at least the past one-decade, to determine the
best practices in the Indian Pharmaceutical Industry. The results of DEA have been analysed
along
with their Compounded Annual Growth Rate (CAGR) to see if internal efficiencies and growth
rate are related in the Indian Pharmaceutical Industry. We have also used regression analysis to see
the correlations between various inputs/outputs and the growth rates. Various models of DEA
like Constant Returns to Scale (CCR), Variable Returns to Scale (BCC) and Assurance Region
(AR) are used to substantiate the results obtained.

Jaya Prakash Pradhan (2003) In the present paper, it is attempted to empirically verify the
impact of economic liberalization on the R&D behaviour of Indian pharmaceutical firms
controlling for the effects of several firm specific characteristics including firm size. The results
from the Tobit analysis for a sample of firms over the period 1989-90 to 2000-01 indicate that
competitive pressure generated by liberalization has worked effectively in
pushing Indian pharmaceutical firms into R&D activity. A host of firm characteristics like
firm age, size, profitability, intangible assets, export orientation and outward foreign direct
investment are also found to be important determinants of innovative activity in the industry.
The study suggests several policy measures to further indigenous technological
efforts of pharmaceutical firms, which include, removing obstacles that inhibit outward
orientation of firms, providing special scheme for small size firms in the overall technology
policy for the industry, intensifying collaborative research efforts between private sectors
and government research institution, and utilizing flexibilities in the TRIMs agreements to
persuade foreign firms to relocate their R&D units into the country.

Jaya Prakash Pradhan (2006) What are the trends in the global competitiveness of the
Indian pharmaceutical industry? Where does this industry stand when compared to global peers on
pharmaceutical value‐added, productivity, research and development and trade performance? What are

23
the new strategies that Indian pharmaceutical companies are adopting to become global players? These
questions are addressed in this paper. It is found that strategic government policies were the main
factors that transformed the status of the Indian pharmaceutical industry from a mere
importer and distributor of drugs and pharmaceuticals to an innovation‐driven cost‐effective producer of
quality.

Jaya Prakash Pradhan , (2007) This paper examines the impact of stronger protection for
intellectual property on the exports of a technologically imitative country such as India. The
Indian experience in pharmaceutical exports can further add to the existing literature, which is
otherwise largely limited to the experience of OECD countries and the USA. The empirical
analysis suggests that even an imitative developing country's exports need not be negatively
affected by strengthening patent regime globally, and in fact, in the case of pharmaceuticals,
India stands to benefit from market expansion effects. However, this finding in the case of
pharmaceutical products cannot be argued to hold for other sectors of the Indian economy, and
any generalization on overall impact of stronger patent regime on aggregate exports from the
Indian economy must be based on further sectoral studies.

Jayashree Dubey, Rajesh Dubey The World Trade Organization (WTO) has set rules for
international trade, with the objective to provide maximum benefits to the consumers. One of its
aims is to remove trade barriers to international competition. The Organization is based on the
principles of free trade; predictability through binding and transparency; national treatment
(treating foreigners and locals equally); granting most favored nation status; dismantling trade
barriers, for example, removal of quota restrictions and tariff bindings; and promoting fair
competition. At the same time developed nations have used their power while negotiating the
rules of trade, and this has posed a great challenge to developing countries. It can be claimed that
the rules have been framed in a way which gives opportunities to serve customers of the WTO
countries. Only companies with a competitive advantage can survive in the global arena, and this
also applies to Indian industries. Since the WTO prevents the use of subsidies and other
protective measures, the economic environment will change. This requires bringing major
changes in the business system in India. Under this system, the textile, food processing and
leather industries will benefit. Although there is confusion among the Indian pharmaceutical

24
companies at present, in this area also India can take the opportunity to grow. Madhya Pradesh

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15
LIMITATIONS

The process employed to select the sample was simple random sampling. Simple
random sampling refers to that sampling technique in which each and every unit of the
population has an equal and same opportunity of being on the sample. In simple random
sampling, which item gets selected is just a matter of chance. Random sampling
technique is generally employed to extract the fruitful results. This includes the overall
design, the sampling procedure, the data collection methods, the field methods and the
analysis procedures
The pharmaceutical industry is one of the major, most successful also rapidly growing
industries worldwide. It contributes significantly to the economies of many countries all
around the world, both as a major employer and as an export earner.
Marketing and sales of pharmaceutical products is very different from other products
such as say groceries, cosmetics, food items, vehicles, etc. One, pharmaceutical
products (apart from over the counter OTC drugs) can only be obtained from a chemist
on a doctor’s prescription. Thus here the customer is the doctor, who is well versed in
pharmacology. Two, medicines and drugs can only be prescribed by a doctor only
when it is deemed necessary for the patient’s recovery from illness; that is, it is
ethically wrong for a doctor to needlessly prescribe medicines. Under these medical and
ethical constraints, how does the pharmaceutical company promote its products? This is
the purpose and objective of the study.

16
THEORETICAL PERSPECTIVE
Historical Prospective

The production of bulk drug was virtually non existent in India at the time of
independence in 1947. It increased from a meager $715 million in 1962 to $2.4 billion
in 1980 and further about $8.4 billion in 1990. Production of formulation is increased
from $90 million in 1947 to $14.4 billion in 1980 to $36.3 billion in 1990. The demand
for pharmaceuticals increased due to increase in population, increase in affordability of
a section of population and government emphasis on health program. The industry grew
despite claims of price & production control. By the year 2000 the demand for
pharmaceuticals is expected to reach up to $6.72 billion per annum. There has been
1000% growth in the number of drug manufacturers in India since 1970. That was the
year when the Indian Patent Acts and Drug Price Control Order (DPCO) came into
force (The Eastern pharmacist 1988). While the first accorded intellectual property
protection to manufacturing processes (not product formulas), the second began
regulating prices to ensure that drug manufacturer who were being allowed to copy
foreign drugs would make them cheaply available to the common man.
Indian Drug and Pharmaceutical (D & P) industry presents a picture of fast
development. Today, India manufactures most of its requirement of bulk drugs and
formulation. In fact, more than 30,000 different pharmaceutical formulation worth $210
million are manufactured and sold in India. There are 45 major pharmaceutical firms,
each with a sizable investment and sales turnover. Investment ranges between $1.47
million to $4.2 million the sales ranges between $2.10 million to $54.6 million per
annum. Growth in this industry was to the tune of 23.4 per cent in 1997-98. This was
phenomenal in comparison with the other industries most of which have run into losses
or very nominal profits leading to a slowing down of the growth.

17
Table: 4.1: India’s Pharmaceutical Industry
India’s pharmaceutical industry is one of the fastest growing segments of the Indian
economy with an average annual growth rate of 14 percent during 2005-2008. Overall,
the Indian market for pharmaceuticals is projected to grow at an average annual rate of
between 15 and 20 percent during 2005 - 2010. The surge in production has been driven
by legislative reforms, the growth in contract manufacturing and outsourcing, value
added foreign acquisitions and joint ventures, India’s mastery of reverse engineering of
patented drug molecules, and India’s efforts to comply with its World Trade
Organization (WTO) Trade Related Intellectual Property Agreement (TRIPs)
obligations. When India joined the WTO in 1995, its pharmaceutical exports were
valued at less than $600 million. By 2009, its exports had grown to $3.7 billion and
accounted for more than 61 percent of industry turnover. Currently, Indian
pharmaceutical companies produce between 20 and 22 percent of the world’s generic
drugs (in value terms) and offer 60,000 finished medicines and nearly 400 bulk drugs
used in formulations.
The pharmaceutical industry in India is going through a major shift in its business
model in the last few years in order to get ready for a product patent regime from 2009
onwards. This shift in the model has become necessary due to the earlier process patent
regime put in place since 1972 by the Government of India. This was done deliberately
to promote and encourage the domestic health care industry in producing cheap and
affordable drugs. As prior to this the Indian pharmaceutical sector was completely
dominated by multinational companies (MNCs). These firms imported most of the bulk
drugs (the active pharmaceutical ingredients) from their parent companies abroad and

18
sold the formulations (the end products in the form of tablets and capsules, syrups etc.)
at prices unaffordable for a majority of the Indian population. This led to a revision of
Government of India’s (GOI) policy towards this industry in 1972 allowing Indian
firms to reverse engineer the patented drugs and produce them using a different process
that was not under patent. The entry of MNC’s was also discouraged by restricting
foreign equity to 40%. The licensing policy was also biased towards indigenous firms
and firms with lesser foreign equity. All these measures by GOI laid foundations to a
strong manufacturing base for bulk drugs and formulations and accelerated the growth
in the Indian Pharmaceutical Industry (IPI), which today consists of more than 20,000
players. As a result the Indian pharmaceutical industry today not only meets the
domestic requirement but has started exporting bulk drugs as well as formulations to the
international market.
LEADING INDIAN PHARMACEUTICAL MANUFACTURERS

India’s leading pharmaceutical companies are striving to compete not only in the
domestic Indian market, but also in the global market for both generic drugs and
original products. Sales for India’s largest 200 pharmaceutical companies grew from
$7.9 billion in 2007 to $8.6 billion in 2008, or by 9 percent. By 2008, 9 of the top 10
Indian 21 drug makers were Indian-owned firms accounting for more than 44 percent
of total industry sales. India’s top five pharmaceutical companies, in terms of sales, are
Ranbaxy Laboratories, Dr. Reddy’s Laboratories, Aurobindo Pharmaceutical, GSK-
India, and Cipla. These companies manufacture a wide range of generic drugs (branded
and non-branded), intermediates, and active pharmaceutical ingredients (APIs).
In terms of total sales, Ranbaxy Laboratories is India’s largest pharmaceutical company
and one of the world’s top ten generic drug makers. In 2009, exports accounted for
nearly 80 percent of Ranbaxy’s sales and the United States is Ranbaxy’s largest market.
Ranbaxy accounts for 23 percent of India’s pharmaceutical industry revenues. Ranbaxy
is a vertically integrated company with a presence across the pharmaceutical value
chain, offering a range of unbranded and branded generics, active pharmaceutical
ingredients, and biotechnology products. Ranbaxy markets its products in more than
100 countries, a sales presence in 23 of the world’s top 25 pharmaceutical markets, and
has manufacturing facilities in 8 countries. Cipla, India’s second-largest pharmaceutical

20
company, is best know for its anti- AIDs drugs, and Dr. Reddy’s Laboratories, India’s
third-largest pharmaceutical company, also rely heavily on exports as its revenues.
Table: 4.2: India’s top 10 pharmaceutical company sales ($million)

MNC PRESENCE IN INDIA:

Many of the world’s leading pharmaceutical companies have subsidiaries or other
operations in India. Multinational companies like GlaxoSmithKline (GSK) Baxter,
Aventis, Pfizer, Novartis, Wyeth, and Merck have been active in India’s
pharmaceutical market mainly through subsidiaries. The re-introduction of product
patents precipitated the return of a large number of other MNCs, some of whom left
during the process patent era. MNC pharmaceutical companies have also been attracted
by tax holidays, the deduction of capital R&D expenditures, and other financial
incentives offered by the Indian government. Industry sources indicate that the most
significant challenges facing MNCs are the uncertainly over pharmaceutical price
controls and data exclusivity.
There are approximately 34 foreign drug companies engaged in the Indian
pharmaceutical market and among them are 15 of the world’s 20 largest pharmaceutical
companies. According to FICCI, although MNCs have not launched new products they
have invested in new production facilities and R&D centers and many are engaged in
contract manufacturing, clinical trials, and other forms of outsourcing. In 2008-09,
MNCs invested more than $172 million in India’s pharmaceutical industry and FDI has
grown by a compound annual growth rate (CAGR) of 62 percent during 2002-06.

21
However, many industry experts believe that the return of the world’s leading
pharmaceutical companies will gradually erode India’s cost advantages. According to
the Organization of Pharmaceutical Producers of India, multinational drug companies
currently command 24 percent of the domestic Indian market, through their share could
rise to 40 percent by 2010.
MARKETING FUNCTIONS

“Promotion” means any activity undertaken, organised or sponsored by a member

company which is directed at healthcare professionals to promote the prescription,
recommendation, supply, administration or consumption of its pharmaceutical
product(s) through all media, including the internet. A marketing program in order to
be successful must have a right mixture of marketing mix, not to mention market
research, a quality product, extensive distribution network acceptability, strong dose of
promotion coupled with a right price. A unique feature of the pharmaceutical market is
that it is one of the most fragmented markets in the country. The maximum market is
held by small companies, the largest pharmaceuticals company holding only 6 percent
of the market share. This leads to unique marketing mixes.
The Indian pharmaceutical market is small, both by Western standards and in terms of
per capita consumption. Although India is the world’s leading producer of generic
drugs, its annual per capita consumption of pharmaceuticals is among the lowest in the
world at approximately $4.50 per person, as compared with $820 in the United States
and $13 in China in 2006. The value of India’s pharmaceutical industry nearly doubled
from $3.2 billion in 2000 to more than $6.2 billion in 2009, or by an average of 12
percent annually (table 10). According to the Associated Chambers of Commerce and
Industry of India (Assocham), the Indian pharmaceutical market grew at an average
annual rate of 13.6 percent during 2006-2010 to reach $9.5 billion in sales by 2010.
This 51 growth is expected to be driven by: access to low cost, high volume generic
drugs; mergers and acquisitions: industry consolidation; and India’s growing
importance as a pharmaceutical contract manufacturing and services location.
Approximately 80 percent of domestic industry production consists of formulations,
with the remainder consisting of bulk drugs.

22
Considering the healthcare of the Indian Public, the Govt. of India encouraged the
domestic pharmaceutical companies in India. When the international norms recognized
the product patent, the government of India enacted the Indian Patent Act in 1970
(process patent), with the objectives of allowing the domestic companies to grow. The
Indian Patent Act recognized the “Process” to manufacture a product and not the end
“Product”. Indian companies took advantage of the Patent Act and succeeded in
producing molecules, which were under Patent Production else where, at a cost that was
lower than the original research cost. By taking the cost advantages, the Indian
Pharmaceutical companies fixed their prices lower than the prices fixed by the Multi
National Companies manufacturing the drugs. Apart from the Indian Patent Act 1970,
DPCO, FERA and increased imports tariffs also helped the growth of the domestic
pharmaceutical companies. With a view to the above effect, the Multinational
Companies’ market share, decreased from 100% in the year 1947 to 80% and 33% in
the years 1970 and 1991 respectively with corresponding increase in domestic
company’s market share.
LARGE MARKET SHARE FOR GENERIC DRUGS

As there was no efficient patent protection between 1970 and 2005, many Indian drug
producers copied expensive original preparations by foreign firms and produced these
generics by means of alternative production procedures. This proved more cost-efficient
than the expensive development of original preparations as no funds were required for
research, which contained the financial risks. This spending block may come to as
much as EUR 600 m for only one drug. This kind of money could previously only be
raised by large corporations in the industrial countries. The competitiveness of generics
producers is based on cost-efficient production. In this field, Indian companies are
currently in top position. At one-fifth, India’s share in the global market for generic
drugs is considerably higher than its share in the overall pharmaceuticals market
(approx. 2%). At the same time, India’s pharmaceutical companies gained know-how in
the manufacture of generic drugs. Hence the name “pharmacy of the poor” which is
frequently applied to India. This is of significance not least for the domestic market as
disposable income is as little as EUR 1,900 per year for roughly 140 million of the total
of 192 million Indian households1, which means the majority of Indians cannot afford
expensive western preparations.

23
Fig. 4.1: Market Share of Corporate

Fig. 4.2: Market Share of MNCs & Local Companies

Between 1996 and 2006, nominal sales of pharmaceuticals on the Indian subcontinent
were up 9% per annum and thus expanded much faster than the global pharmaceutical
market as a whole (+7% p.a.). Indian companies strongly expanded their capacities,
making the country by and large self-sufficient. Nonetheless, with total sector sales of
roughly EUR 10 bn, India commands a less than 2% share in the world’s
pharmaceutical market (1966: 1.5%). This puts the country in twelfth place
internationally, even behind Korea, Spain and Ireland and before Brazil, Belgium and
Mexico. Among the Asian countries, India’s pharmaceuticals industry ranks fourth at
8%, but has lost market share to China, as sales growth there was nearly twice as high
and sales volumes nearly four times higher than in India.

24
 Globalization has not caused traditional medicine to be abandoned but with higher
education, rising income and a change in lifestyle, western medical treatment is gaining
in importance. At present the population especially in rural areas still sees western
medicine as a stop-gap cure which is unlikely, though, to provide a lasting solution to
health problems. Today, about 70% of the population on the Indian subcontinent
depends entirely or at least in part on traditional Indian medicine which is cheaper and
more easily available than western drugs.
 Indian companies have recognized the opportunity presented by western pharma in
search of lower costs and higher profits, and are exploiting the low cost base and pool
of highly skilled labour in their market to develop a thriving outsourcing industry,
positioning India as a key provider of contract research and manufacturing services.
 India is increasing its R&D and biotechnology focus and taking advantage of the low
R&D productivity of developed markets to gain partnerships with western players.
These alliances enable the companies to gain expertise in discovery and development as
well as maximizing revenues if and when products reach the market.
 Pharmas and biotechs in the US, Europe and Japan have realized the increasing role of
India at a global level. Many players are outsourcing non-core activities of the research
and manufacturing process. Outsourcing is a popular option, while off- shoring via
direct investment, joint venture or acquisition is also proving successful.
Function of Sales

In India front and marketing (doctor convincing and sales) is where the action is. The
point of differentiation has been the relationship with doctors (through medical
representatives) But doctor aren't always enthused. Says Savita Mikhi, who runs a
private clinic in Delhi, "many companies believe wrongly that a nattily clad medical
representative or literature printed on glossy paper makes for impressive
communication.

25
 Advertising

The various dimensions of pharmaceutical marketing are Demographic (age, sex,

family, etc), Generic (as per generic equivalent present in them), Therapeutic group,
Competitive (depending upon number of competitors present), and fifth dimension is
the time. In pharmaceutical markets, major segments considered are:
a) Consumer or Prescription markets:

These consist of individuals who go to practicing doctors.

b) Institutional markets:

These contain large hospitals, Public and Private sectors along with government’s
hospital including medical colleges.
c) Industrial markets:

These consist of bulk drugs and their formulations.

d) Over the counter (OTC) markets:

Drugs, which are non-prescription medicines and can be sold directly to end-users.
Based on product category, the pharma industry can be divided into:
a. Bulk Drugs: (The active ingredient for making formulations.)

b. Formulations: (The final form, in which the drugs are sold i.e. Syrups,

c. Injections, Tablets and Capsules)

In general, business in pharmaceutical market is conducted in two major ways, that is,
either by institutional selling or through trade business.
Pharmaceutical marketers in the USA, having just been allowed to advertise drugs on
Television, have taken the big risks. They are advertising like crazy and even have the
websites to keep patients fully informed of diseases dosages side effects and so on. In
India too, earlier this year MAA. Bozell set up Lewis Grace. Bozell, is a subsidiary
responsible for pharmaceutical advertising. Now, Ogilvy & Marther and Redeffusion
are reportedly considering similar moves. To begin with, they will try to bring their
skills to the ordinary business of making audiovisual, prints or multimedia sales pitches

26
 to the doctors. This could improve the communication of OTC products, which have
been turning more love and care oriented. Johnson & Johnson's touch therapy
commercial is good example of the use of emotion. Advertising agencies will have to
educate themselves well, because the main reason that in house publicity departments
manage to torpedo the suggestion of agency help is the fact that no body wants their
wonder pills to be handled by bubble gum jingle makers. Says the marketing manager
of a small, but fast growing Indian company, "Advertising agencies may be good for
selling the image of the company as whole but at the level of each brand, what can they
do? They don't know anything."
Pharmaceutical marketing experts are aware that well timed advertising directed to
doctors tends to boost sales of the brand that spent the marketing dollars. In the case of
marketing directly to health professionals, the question is whether promotion is (as most
drug companies claim) primarily information on how the drug works or is intended to
persuade doctors to prescribe the drug more frequently.
Although there has been a lot of research on the persuasive versus informative role of
drug promotion, there is little consensus and certainly more investigation is needed in
the context of developing countries. Nevertheless, a WHO commissioned literature
review of existing evidence in this regard reveals that while doctors’ opinions on the
usefulness of the information from drug companies vary, most believe that such
information is biased.
The analysis revealed:

 Generic names of drugs are not revealed in more than 10% of advertisements.

 Only 22.7% disclosed any adverse effects.

 Just 25.1% provided any precautionary information.

 Only 51.7% cited any references.

The Thai and Indian examples contradict established norms of ethical practice in this
area. The WHO Criteria clearly states that advertisements in all forms to physicians and
health related professionals should be fully consistent with the approved scientific data
sheet for the drug concerned or other source of information with similar content.

27
Moreover, advertisements that make a promotional claim should at least contain
summary scientific information.
While these examples of advertisements focus on specific countries and companies, this
should not be interpreted as evidence of a higher prevalence of information quality
problems compared to other countries or companies. It is clear however that the poor
quality of information provided to doctors in developing countries cannot be dismissed
as infrequent and isolated cases, but rather can be viewed as a systemic breach of
responsibility and ethical norms by market leaders.
Research shows that there is a strong correlation between irrational prescribing
behaviour and the use of commercial sources of information. The impact of flawed and
incomplete information is ultimately passed on to the world’s poorest and most
vulnerable consumers. Evidence suggests that doctors in developing countries, like their
counterparts in other countries, rely heavily on drug companies for drug information,
particularly for new drugs. However, while doctors in countries like the US, UK and
Australia have access to independent sources of drug information, this is not the case in
many developing countries. This is a major challenge in terms of providing doctors
with reliable information that can then be passed on to consumers.
Marketing Research Function

Marketer, in order gain information, conducts market research, which in Indian

pharmaceutical industry can be as simple as chatting with doctors, retailers and hospital
administration or as complex as surveying a nationally representative sample of
specialists or corporate hospitals and identifying the emerging health care needs. The
pharmaceutical major are fond of syndicated data. Many companies routinely buy ORG
(Operation Research Group) panel study and C-MARKTM studies for different brands
and keep them in computer memory for easy retrieval and analysis. For them, it just
feels good to know that data can be accessed when needed. But when it comes to
developing strategies for their brands, these companies do not operate on the basis of
this data. On the contrary, CadilaTM Health care (ZydusTM) group, takes the data very
seriously. It has meetings with all of the brand managers every month to study the
implications and develop strategic actions along with top management teams. This
company is using information actively, whereas many other companies use the

28
information either as an academic appendage during a presentation of low immediate
relevance or as a defense shield during a performance review.
Marketing research data only provides a base for action in the market place, the action
which has to be implemented through various mix's of promotion. It is important to
understand that the promotional mix for any brand or organization is dependent upon
the mix of advertising, personal selling and public relation. Over use of personal selling
in pharmaceuticals via medical representatives and limitations on advertising
pharmaceutical products due to FDA (Federal Drug Administration) restrictions,
presents an opportunity to explore the role of and exploit the Public Relations function
in the pharmaceutical industry.
Pharmaceutical marketing is quite different than marketing of any other goods. Within
pharmaceutical products, marketing of prescription products is a way different from
that of over-the- counter (OTC) drugs and actual behaviour of prescribed drug market
may vary based upon various parameters. In case of prescribed drug market, typical
sales process is as follows:

Fig. 4.3: Drug requiring prescription

In this case, the patient – customer - do not have much or any say in purchase of the
product, perhaps other than spending the money. The decision makers are the

29
 physicians or doctors treating the patient. They will prescribe drug of a particular brand
if they are:
- Aware of the product.

- Convinced about the utility and usage of the product.

- Reasonably certain that the prescribed drug can be made available by the drug retailer
in required amount of time.
After following the above logic, the doctor prescribes the drug, but the drug retailer
plays a major role in effecting actual sale and he may:
- Not have the prescribed product in the ready stock.

- Not consider that the prescribed product has sufficient demand to stock the product.
- Suggest or just substitute product of the competitor company having similar
composition, most of the times without even knowledge of the prescribing doctor.
All this will perhaps happen just because there is less brand awareness as a
consequence of less promotional efforts by the product company.
USE OF PUBLIC RELATION

Very few pharmaceutical marketers in India use public relations as a marketing tool.
Many of them think Public Relation entails sending out a few press releases, holding a
few conferences and conducting some event when company launches a new molecule
or product. In reality, Public Relation usually ends up making a point at a very personal
level. Its impact in the industry is seen at several levels affecting doctors and brands.
Some years ago, CiplaTM was forced to make use of Public Relation tools when its
major communication medium--medical representatives turned--un-cooperative. The
company conducted meetings for not more than 10 customers at a time and ensured that
thousands of such meetings took place at different locations in the country. This helped
ciplaTM in building one-to-one relationship with its customers. Prudent use of Public
Relation has also helped the organization in creating a positive platform for direct
response communication.

30
DRUG DISTRIBUTION

Many a times drugs promoted through professional service representatives do not

appear on the shelves of the retailing chemist. This can be attributed to ineffective
distribution system. Although distribution is recognized in India as an important
function, many pharmaceutical marketers accord it a mere supportive role; so the
distribution system has remained traditional with little or no innovations.
Superstockists/stockists, distributors and C& FA's (Carrying & Forwarding Agent) have
traditionally been very loyal to pharmaceutical marketers. As a result, strategic changes
in distribution arrangement were rarely recommended or carried out. Problems, if any,
were always sorted out amicably and changes, when at all, were concerned only with
adding or deleting stockists in the distribution chain. Over time when AIOCD (All India
Organization of Chemist & Druggist) mobilized retailers in every state, pharmaceutical
companies found their freedom to appoint stockist restricted by retailer pressure.
There have been other changes too. One may view the distribution set up as a
concentric pattern with patients at the center with each ring representing a link in the
chain. It must be noted that some rings prefer by passing the next one. Some
companies, for instance, deal directly with stockists, whereas some high end products
that require highly sensitive servicing are distributed directly to doctors. Some
innovative ideas have been coming from such companies like HoechstTM,
SarabhaiTM, Sandoz (NovaratisTM) and now Nicholas ParimalTM.
In 1988 Sandoz decided to make changes in its method of giving discount to C & F
(Carrying and Forwarding Agents) through a simple innovation. Instead of paying
direct percentage on sales to agents it started paying on basis of case lots. Each case lot
weighed approximately 12-15 kg and on each case lot, it paid $ .19 - $ .32 to C&FA. As
result, SandozTM reduced the cost of operations by 1.2 percent of its total turn over, an
enormous figure when calculated in rupee terms. It is often true that effective
distribution along with right pricing differentiates a success from a failure in market
place. In India, most companies market a vast portfolio of products (that others are also
selling) and pricing decisions are delegated. In a market with many brands meeting the
same need, even the rare marketer who begins by formulating a program based on
inputs from the doctors and patients often ends up glossing over question of profit while
setting the price. In the old days production volume were often kept fixed (either by the

31
company or the licensing authority). In this state costs were easy to measure and simple
cost plus pricing used to work. Also marketers had to live under the rules of Drug Price
Control Order (DPCO), the government price fixing instrument for essential drugs.
Since liberalization began in 1991 the DPCO has been loosing its grip and the prices of
many formulations, allowing market forces to play the regulator. Other aspects of
liberalization have made companies hungry for growth. In such a dynamic state of
existence where growth is both desirable and achievable, pricing is less simple. Lack of
strategic thinking leads to chaotic pricing. Every body agrees that intelligent pricing
can be used as a critical edge for any product. Yet in the pharmaceutical industry,
trends suggest that enough thought is not being given to such serious decisions. A
single player marketing thoughtless decision can have repercussions on the entire
market. Many marketing managers don't understand the impact of their own decision
on the market. As a result, they think of themselves as either price takers or makers.
There is rarely a marketer who wants to upset the apple cart--strategically--by becoming
a price breaker. This can be suitably illustrated with the example of GlaxoTM:
GlaxorTM, When it launched CeterzineTM an anti-allergic, played price maker. It set a
price it thought fit, then came a crowd of followers, and they were price takers. So
there was a market where GlaxoTM, UCBTM and UnichemTM were all selling at $ .06
per tablet. Then came SOLTM. It decided to reset the scale and change the markets
dynamics So it played price breaker, selling its CeterzineTM brand at $.023 per tablet.
In 18 months it was selling higher volume then GlaxoTM i.e., the price maker brand.
GlaxoTM did not react and continued with the same price. Today Lupin and Core are
selling below SOL's price. So the price breaker managed to start a price war, but
GlaxoTM has won back the brand leadership.
DRUG PROMOTION METHOD

“The commercial needs of countless, fiercely competing pharmaceutical companies has led
them to depend on the tried and tested 3Cs: convince if possible, confuse if necessary, and
corrupt if nothing else works.”
Health professionals in developing countries work in overstretched and under resourced
sectors on low pay and in difficult conditions. In such conditions the promotions from
the drug companies are inviting. Disparities in health spending between the world’s

32
 richest countries and the world’s poorest countries are such that a relatively cheap
promotion in a developing country will generate much more interest there than it would
in a developed country.
The aim of drug promotion is to persuade people to buy more drugs and/or to pay
higher prices. This is done by increasing the perceived value of the drug via one or
more of several approaches including:
 Increasing the perceived frequency and/or severity of the indications.

 Widening the indications to include more people.

 Increasing the perceived likelihood and magnitude of benefits.

 Decreasing the perceived likelihood and magnitude of harms.

 Increasing the use of the drug for longer durations.

The World Health Organization defines drug promotion as including: “all informational
and persuasive activities by manufacturers and distributors, the effect of which is to
induce the prescription, supply, purchase and/or use of medicinal drugs.” The main aim
of promotion is not to inform but to persuade. Consumer goods advertisements rarely
convey much information about the features of the product. Instead the emphasis of
much advertising is on associating consumption of the product with positive feeling.
Regardless of where they are operating, most drug companies try to identify where
people are on the following behaviour change stages and then deploy sophisticated
marketing techniques to motivate them to move one or more stages towards repeat use:

Each move requires motivation and decision making so drug companies study how to
understand human motivations and decision-making. Public relations techniques bypass
people’s defences by giving the impression that the message is coming from a
trustworthy source.
Table 4.3: Doctor-directed promotion methods

33
ISSUES RELATING TO PROMOTION:

The ethical promotion of prescription medicines is vital to the pharmaceutical industry's

mission of helping patients by discovering, developing and marketing new medicines.
Ethical promotion helps to ensure that healthcare professionals have access to
information they need, that patients have access to the medicines they need and that
medicines are prescribed and used in a manner that provides the maximum healthcare
benefit to patients.
It is understood that national laws and regulations usually dictate the format and content
of the product information communicated on labelling, packaging, leaflets, data sheets
and in all promotional material. Promotion should not be inconsistent with locally
approved product information. Promotional information should be clear, legible,
accurate, balanced, fair, objective and sufficiently complete to enable the recipient to
form his or her own opinion of the therapeutic value of the pharmaceutical product
concerned. Promotional information should be based on an up-to-date evaluation of all
relevant evidence and reflect that evidence clearly. It should not mislead by distortion,
exaggeration, undue emphasis, omission or in any other way. Every effort should be
made to avoid ambiguity. Absolute or all-embracing claims should be used with caution

34
 and only with adequate qualification and substantiation. Descriptions such as 'safe' and
'no side effects' should generally be avoided and should always be adequately qualified.
Promotion should be capable of substantiation either by reference to the approved
labeling or by scientific evidence. Such evidence should be made available on request
to healthcare professionals. Companies should deal objectively with requests for
information made in good faith and should provide data which are appropriate to the
source of the inquiry.
All printed promotional materials must be legible and include:

 the name of the product (normally the brand name);

 the active ingredients, using approved names where they exist;

 the name and address of the pharmaceutical company or its agent responsible for
marketing the product;
 date of production of the advertisement; and “abbreviated prescribing information”
which should include an approved indication or indications for use together with the
dosage and method of use, and a succinct statement of the contraindications, precautions
and side effects.
The same requirements shall apply to electronic promotional materials as applied to
printed materials. Specifically, in the case of pharmaceutical product related websites:
 The identity of the pharmaceutical company and of the intended audience should be
readily apparent;
 The content should be appropriate for the intended audience;

 The presentation (content, links, etc.) Should be appropriate and apparent to the
intended audience; and
 India-specific information should comply with drugs & magic remedies act.

ETHICS IN PHARMACEUTICAL PRODUCTS PROMOTION

35
Recently the Organization of Pharmaceutical Producers of India (OPPI), which is a
premier organization of pharmaceutical manufacturers in India, has revised its model
code on standards of promotion activity to medical practitioners. This model code aims
to restrict pharmaceutical companies from providing ‘freebies’ to medical practitioners
so as to reduce influence on prescribing drugs of a particular company. This is based
on the International Federation of Pharmaceutical Manufacturers Associations (IFPMA)
code which is considered as a model code. Section 2.2 of General Principles of OPPI
code states that ‘No financial benefit or benefit-in-kind (including grants, scholarships,
subsidies, support, consulting contracts or educational or practice-related items) may be
provided or offered to a healthcare professional in exchange for prescribing,
recommending, purchasing, supplying or administering products or for a commitment
to continue to do so’. This clearly states the refined position of OPPI code which is
based on a noble intention of having a rationale for prescribing a product of a particular
company by the medical professional without any influence so as to benefit the patient.
It gives more freedom to medical professionals to choose the treatment option for
patients on a case by case basis if they are not influenced by pharmaceutical companies.
But it is a well-known fact that there are many companies trying to influence the
prescribing habit of doctors with their kind gesture towards the practitioner, which
ultimately tempts other companies also to lure the medical practitioners by providing
freebies, apart from scientific information including literature, brochure and other
scientific inputs. The condition of the Indian pharma industry is also pathetic with more
than 20,000 manufacturing units that sell more than 70,000 brands.
It is virtually impossible for any medical practitioner or even a common man to
remember the whopping number of brand names. Every company or manufacturer
wants to survive in this cut-throat competition and thus direct their efforts towards these
unhealthy practices. Though the OPPI code has tried to amend some of these unethical
practices in tune with IFPMA code, which is welcomed by trade associations, some
lacunae exist. What about companies that are not members of OPPI? What if
companies continue to promote their product in an unscientific way? Is there any
mechanism by which unscientific promotion by companies is restricted? Besides, the
companies that are not members of OPPI may not follow the code and can circumvent
the provisions, still continue to influence the medical practitioners. The Drugs and
Magic Remedies (Objectionable Advertisements) Act in India states only the conditions

36
for which a drug

37
cannot be directly advertised. At present there are no provisions to monitor how
companies, that are not members of OPPI, adhere to standard practices. While the new
code by OPPI may not be music to the ears of medical practitioners since many of them
would be devoid of the favours accorded to them by certain pharmaceutical companies.
At the same time it is required that the prescription generated at the hands of the
practitioner takes care of the patient’s clinical condition and, more importantly, the
economic status of the patient. Let the medical practitioner be an unbiased or an
impartial judge of what is required and for which patient. What is needed is a concrete,
directed and focused effort by all players of the pharmaceutical industry and other
stakeholders as well, in order to regulate the promotional activities of pharmaceutical
companies to medical practitioners. As OPPI has modelled its code on the IFPMA code,
all trade associations of pharmaceutical industry, government, NGOs and common men
should join hands together to curtail the practice of influencing medical practitioners.
Governments can frame and enact laws and legislations that would take care of
marketing practices and create a monitoring authority that would monitor the
promotional activities of pharmaceutical companies in India.
PROBLEMS AND PROSPECTS OF SALES PROMOTION IN PHARMACEUTICAL
INDUSTRY

Marketing communications strategy will set out exactly how to promote an

organization, initiative, product or service across a whole range of different media –
from advertising campaigns to search engine optimization. It should set clear objectives
so that you can measure success and crucially, it should provide the best solution within
the available budget. It is part of the marketing mix, which includes all the means by
which a company communicates directly with present & potential customers. It is the
process of presenting an integrated set of stimuli to a target with the intent of evoking a
desired set of responses within the target market & setting a channel to receive,
interpret & act upon messages & identifying new communication opportunities.
Marketing communication is a systematic relationship between a business and its
market. There are twelve different communication tools available to the marketer:
personal selling, advertising, sales promotion, direct marketing, public relation,
sponsorship, exhibitions, merchandising, the internet, word of mouth and corporate
identity. These communication tools constitute the marketing communication mix. Each

38
element of these communication mix should integrate with other tools of
communication mix so that a unified message is consistently reinforced. Sales
promotion comprises various marketing techniques which are often used tactically to
provide added value to an offering with the aim of accelerating sales and gathering
market in that particular segment. In pharmaceutical marketing communication the
main objective is to make an impression and more important is to make an impression
long lasting. In the current rat race several national and multinational pharma
companies have gained remarkably for their exceptional communication strategies for
sales promotion.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
(doctor) of pharma industry is responsible . Essentially, the end-user (patient) consumes.
The pharmaceutical industry is the world's largest industry due to worldwide revenues
of approximately US$2.8 trillion. Pharma industry has seen 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,
Dr.Reddy's , CIPLA and Dabur have already established their presence. 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.

39
 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. There can be several challenges for pharma
marketing with global channels opening up from all directions it has become an art of
its own kind. Some of the important aspects can be as the followings
 Increased competition and unethical practices adopted by some of the pharma
companies.
 Low level understanding of customer knowledge (Doctors, Retailers, Wholesalers).

 Dissimilar customer perception.

 Quality of medical representatives.

 Recruitment process of medical representatives.

 High training and re-training costs of sales personnel.

 Busy doctors giving less time for sales calls.

 Poor territory knowledge in terms of business value at the level of medical

representatives.
 Valuing of prescription from each doctor in the list of each sales person.

 Unknown value of revenue from each retailer in the territory.

l). Sales forecasting from field sales level to actual level.

Absence of analysis on the amount of time invested on profitable and not-so-profitable

customers and lack of time-share planning towards developing customer base for future
and un-tapped markets.
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 according
to the requirement. Retail chemists buy medicines on daily or weekly basis
from authorized stockiest as per demand. Patients visit chemists for buying medicines

40
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 the doctor,
customer (patient) 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 different pharmaceutical 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. All efforts are being put for generating
secondary sales i.e. from stockist to retailer. Now-a-days the companies are a Ensuring
of auto demand with limited availability and maximum liquidation of the products is
the main characteristic of this approach. 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
Academic and Scientific Services) activities for promoting its chronic therapy range.
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. Some times they were also mixed with CSR activity
sponsorship like free health camps, diabetic camps etc. Of late the pharma companies
also ventured into the rural areas and along with doctors they are also approaching the
RMP doctors to bridge the gap between the product and their ultimate customers – the
patients.
Over the last couple of years, pharma marketing professionals are slowly changing their
strategies. This drift is driven by market forces. Patients' understandings of the disease
and disease management have also seen a positive shift. Today, a doctor is subject to a

40
lot of questioning and reasoning by the patients both about the disease and disease
management. Hence, we see some of the products in the ''direct-to-consumer'' mode of
sale wherever the regulatory requirements permit. For Indian companies marketing
differentiation coupled with aggressive selling is the key. Even today more than 50 per
cent of Indian pharma market is rural and the ''GATT Effect'' will not be immediate in
rural India. To know the doctor's mind and also to occupy a place there with a brand;
the brand manager must be in the market with the doctors and understand the specific
needs of the doctors and design promotion. Aggressive sales push at the doctor and
retailer level and consistent repeat visits can drive a brand ahead. An old saying is that
''Doctors have a very strong memory and hence forget what they do not want to
remember.'' The challenge to a marketing man today is to ensure that his brand falls in
the category of ''Want to remember'' with as many doctors as possible. This is an
extremely difficult task, needing a lot of innovative approach. This is precisely the real
task of a sales personnel in pharmaceutical marketing .Slowly and steadily the industry
is growing to beat all the possible hurdles away. Hopefully success is not far away.
PROMOTIONAL STRATEGIES OF PHARMA COMPANIES IN INDIA

The key determinants of success of any Pharmaceutical industry, besides the cost and
availability of capital are brand building. In the pharmaceutical business in India, most
companies work on monthly, bimonthly or quarterly promotional cycles; and
promotional resources are carefully allocated to ensure that the company achieves
maximum sales. Most organisations bring out ‘strategy guides, which provide details on
inputs, information on competition, approaches to detailing and sometimes a chart on
incentives.
Strategies are much more than plans to achieve goals. They differ from operating
procedures because they are drawn from changing market situations and are thus live
and dynamic. The term ‘market’ refers to all actual and potential buyers of a product or
service, who possess purchasing power, authority and willingness to purchase. The
global pharmaceutical market is currently estimated to be over US$ 400 bn and is
projected to grow at about 5 per cent per annum over the next few years. Due to the
rapid growth of the pharmaceutical industry, marketing has also become an important

41
 determinant of the survival and growth of various pharmaceutical companies, amidst
the increasing competition faced by them.
The marketing strategies that are employed by pharmaceutical firms can be broadly
classified into two types as follows:
 Promotional strategies

 Defense strategies

Promotional strategies

Co-marketing: While co-marketing is a new concept all over the world, it started in a
nascent form even before the 1970s in India. Co-marketing strategy enables
organisations to focus more on market reach, penetration and brand share. The ultimate
objective of such approaches is to develop brand image and brand equity. Unichem
promoted saffola oil (of Bombay Oil Mills) to cardiologists as a part of their
promotional strategy. Later on, as the advantages become apparent, companies like
Johnson & Johnson and Wipro used this strategy to promote their baby care products to
doctors.
Brand image marketing: Pharmaceutical companies identify and build their strength by
calibrated strategy to ensure that doctors and customers see them in favourable light.
Research reveals that there is a direct relationship between a brand’s awareness level,
its image and its market share. Thus companies now a days are adapting this strategy of
improving the brand image, which in turn improves their sales and profitability.
Seven steps to a better brand image: Most of the pharmaceutical companies are
concentrating on this strategy to nurture the image of the company and in turn market
their products successfully.
The type of image, a company wants to brandish, can be furnished with the following
seven steps.
 Play host: In this, a small group of doctors is invited and briefed whenever a new brand
is introduced. Earlier, unique has used this strategy to a good effect for Metrogyl
remains a market leader even in the wake of new molecule.

42
 Respect doctors’ schedules and get to the point straightway. Also make the
presentation brief and memorable.
 Be factual: Factual and realistic information is effective. Case studies, clinical trials,
promotional trials, cure rate of drugs and side effects all need to be collected and
documented properly to create a favourable perception.
 Maintain respect: A conversation followed by a thank you note is usually adequate.
Medical representatives and managers need to be trained accordingly to create a
favourable impression.
 Be brief and subtle: Initially to create perceptions and awareness about a company,
information should be given in encapsulated form so that the customer is not burdened
with more information.
 Identify your uniqueness: The overall strategy may include an advertising or a public
relations agency handling everything.
 Develop field staff to maintain quality standards

Involvement marketing

It started in a very small way in India, by way of brand promotion — Abdec Drops,
‘Healthy Baby’ contests, Ferradol’s Milkshakes (provided at hospital gatherings) and
Parke Davis giving away monograms to final year MBBS students at ‘specific disease’
symposia in medical college in the 1960s. Lupin, Kopran and Cadila started launching
almost every product with the involvement of the target groups. From 1980s,
involvement of the general medical fraternity in the product development has become
almost a standard industry practice.
Wockhardt advertised its tonic (Winofit) and anti-obesity drug (Flabolin) without the
brand name in a local press and told patients to ask their general practitioners and
family physicians what the anti-obesity drug was all about.
Lupin involved chest specialists in the working of the company. From 1990 onwards,
companies like Torrent, Glaxo and Cipla started targeting individual through direct
marketing.

43
 Extra-value strategy: Some of the brightest marketers keep rises low but necessarily the
lowest and find ways to offer value-extras that the lowest price competitors can’t
match. Dr Reddy’s Laboratories started this trend and today every company is extra
cautious about pricing any new product.
Medico-marketing: The purpose of medico-marketing is to promote corporate products
and services with the help of medical representatives and by other direct response
marketing methods. The Continuous Medical Education (CME) model has been
successfully used in medico-marketing.
Successful medico-marketing requires careful planning and organisation of
management.
Examples of medico-marketing strategy used to promote pharmaceutical products are:

Win Medicare celebrated a medico-marketing event for its new product Hepa-Merz, a
hepatoencephalopathy-related product. The medical concept was fully developed with
creative communication as a key platform. An innovative hypothesis, “liberation of
ammonia” to treat hepatoencephalopathy, was discussed among the gathering of
specialists at different regional centres. All of them were convinced of its efficacy.
The Upjohris’ medical-marketing consultants programme for the launch of new
products was exceptionally successful. The company took A-class medical practitioners
as marketing consultants in a few specific geographic areas and worked through them
for a period of two years, including the supervision of pre-launch and post-launch
tracking.
The right media mix strategy

The right media mix, utilised by the company, can promote its products considerably.
The various promotional media used are:
 Medical magazines and Journals (Physician’s Digest, Lancet, Headache, Drug Today,
CIMS, MIMS, IDR etc)
 Conferences, Seminars and Symposia

 Promotional trials

44
 Newspaper advertising

 Free-standing supplements

 Conference videos

 Video messages

Marketing strategy based on innovative distribution: In 2005, the marketing strategy

of the pharmaceutical company Sandoz included change in method of giving discounts
to carrying & forwarding agents (C&FAs) through a simple innovation. Instead of
paying direct percentage on sales to C&FAs, it started paying on the basis of case lots.
Each case lot weighed approximately 12-15 kg and on each case lot, Rs 8-10 was paid
to the C&FA.

Table 4.4: Major alliances between Indian & International companies:

S.No Indian Company International Partner Objective Place of Operation
1 Cipla Novopharm Marketing International
2 Dr. Reddys’ Biomed Marketing International
3 Lupin Labs Fujisawa, Merck, Marketing & International
Global Corp. Manufacturing
4 Ranbaxy Elililly, Aventis, Marketing, Supply International
Glaxo of Both bulk drugs & in India
5 SmithKline Beecham Knoll, Glaxo Marketing India
6 Panacea Biotec Chiron Marketing India
As a result, the company not only improved the sales of its products, but also managed
to reduce the cost of operations by 1.2 per cent of its total turnover.
Public relations consultancies (PRCs)- an important part of marketing strategies: Most
of the pharmaceutical companies in India and abroad are nowadays hiring the services
of PRCs as part of their marketing strategies. Public relations cover a broad spectrum of
activities — from internal communication to external publicity and also financial
reporting. The major task of PRCs is to build a one-to-one, positive, effective,
motivating and self-assuring relationship with the consumer through mass or individual
media. It encompasses brochures, industry booklets, mailings, catalogues, corporate
communication devices and websites. All of these have their importance as marketing
tools.

45
 Example: The services of PRCs had been utilised by Cipla as apart of its marketing
strategies for the launch of new products, when its major communication medium i.e.
medical representatives turned uncooperative. The company conducted meetings for not
more than 10 customers at a time and ensured that thousands such meetings took place
at different locations in the country. This helped Cipla in building one-to-one
relationship with its customers.
Contract Sales Organisations (CSOs)- A strategic Marketing Tool: Pharmaceutical
companies are using the services of CSOs as strategic weapon for increasing the
geographical coverage of their products, as well as to have competitive edge at key
moments.
Advantages of CSOs are:

 Minimised fixed overheads

 Managed resources at the launch of new product

 Increased sales force whenever need arises. For eg. when a brand is under threat from
the competitor
 Provide creative, short-term brand resources

 Help in providing market development initiatives

 Allow companies to economically reach physicians they would not ordinarily be able to
call on, providing additional sales coverage tailored to a specific need
Entering into alliances, acquisitions, mergers & joint ventures with MNCs to market
and sell their products: The reach of marketing and distribution network is an important
determinant of success in the pharmaceutical industry. Hence, as an important
marketing strategy, companies are strengthening their marketing and distribution
network and thus improving their reach and efficacy.
A way to do this is to enter into alliances and joint ventures with other companies.
Nicholas Piramal is the prime example of a company that has entered into a number
of alliances with MNCs to market its product.
Clinico-promotional study

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A clinico-promotional study is usually done by pharmaceutical companies which need
to take decisions concerning their own products and how they are to be sold. The only
way to properly execute an economic clinico-promotional study is thorough
understanding of a drug’s properties, the disease for which it has been approved, and
the marketing issues involved.
Every marketer needs the help of results from an economic clinico-promotional study
when he has to substantiate the claims of his brands, and demonstrate how the product
is differentiated in a crowded pharmaceutical market.
Eg. A company conducted clinico-promotional study for Syu, a nutritional protein
product, among adolescents at different orphanages and established the weight and
height benefits to a highly convincing degree. This became a platform for its promotion.

47
Direct-to-Consumer (DTC) marketing strategy

This is recent approach which has been used by various pharmaceutical companies
mainly abroad (USA and UK). USA has pioneered DTC advertising. The reason DTC
has become an area of interest over the last few years, is that it is a way of influencing
people who actually use the medicine.
DTC essentially means a campaign or communication programme intended for and
targeted to consumers. In relation to pharmaceutical products, the consumers may be
patient or family members, caregivers or the general public. Initially, doctors were
worried about the patients failing to understand the drug related information and
impairment of doctor /patient relationship, but DTC did not lead to any such
apprehensions and is now a mainstay of product promotion in the US.
Internet has totally rejuvenated direct marketing and DTC as a promotional medium.
Resources like Euro RSCG’ s Media Turf’s online tracking can help track individual
doctors online, which is immensely useful for pharma companies to deliver targeted
communication to them.
Defense Strategies

Besides promotional strategies, a number of defense strategies have also been used by
various pharmaceutical companies to market, promote & extend the life cycle of their
products.
These are:

New Indications or Uses of the Product: In US, a new indication can extend a product’s
protected life as the market exclusivity period is extended by three years for each new
indication. Often, companies more important indications during the launch of the
product & less important indications are introduced when product is at decline stage in
its life cycle. Eg. Lovenox, a product for curing thrombosis was launched with one
indication in orthopedic surgery by Aventis. Currently, it has eight indications. By
revealing more & more indications of the same drug, the company has more than
doubled its original peak sales for this drug.

48
Reformulation

A similar strategy to gaining new indications is to produce a new formulation on an

existing marketed drug. This line extension will often be associated with a more
convenient dosing form or a longer lasting formulation. This strategy is most commonly
used where old technology is an immediate-release formulation requiring multiple daily
doses is replaced by a ’new technology’ once daily formulation of the drug.
Pfizer defended its hypertensive drug - Procardia for a number of years with this
strategy.
Switching strategy

This strategy relies on moving patients from an older drug (whose patent is about to
run out) on to the newer version (which has patent protection). The theory is that by
the times generics of the original drug hit the market after its patent has expired,
patients have already been switched to newer drug and are unlikely to switch back to
the older, now generic drug. Pfizer successfully used this strategy to switch patients on
to Procardia XR from its original drug Procardia near the time, when Procardia’s patent
was about to expire.
Paying generic companies off

A dubious strategy of paying generic makers to delay them from entering the market
has also been used. E.g., Hoechst Marion Roussel (now part of Aventis) paid Andrx
US$ 10 million per quarter not to launch its generic version of Cardizem.
As a consequence of the mounting evidence of counterfeiting in Asia, companies in
India and abroad are hiring services of institutes such as ’Pharmaceutical Security
Institute’.
Counterfeit medicine is a product that is deliberately mislabeled with respect to identity
and/or source. Such medicines can affect the company’s image. Therefore, companies
are hiring the services of various agencies to check this grey marketing.
It can thus be concluded that the key determinants of success of any Pharmaceutical
industry, besides the cost and availability of capital are brand building (or brand

49
Strength) and marketing strategies adopted by them as these have a profound impact on
growth and market share of all pharmaceutical companies.
GLOBAL TRENDS IN PHARMA PROMOTIONS & MARKETING

Fig. 4.4: Pharma’s Current Model

As the Verispan promotional audit data show, pharmaceutical companies spend a
disproportionate amount of their promotional budgets on face-to-face detailing. The
$11.2 billion does not even include the cost of samples! In contrast, the amount spent
on ePromotion is minuscule.
For every 100 sales rep visits to physician offices, only 56 actually see the physician
and of these 27 merely drop off samples without talking to the physician. Schecter
claims that when reps actually get to talk to physicians, the call only lasts 4.6 minutes
on average.

Fig. 4.5: Reduction in U.S. Primary care promotional spending

50
Given these statistics, Schechter said Merck is on course to significantly reduce its
promotional spend by 2010 and estimates it will cut its field force spending by 9% in
2007 (see figure at left; which shows that the field force bar is lower in 2007 than in
2005.). According to PharmExec.com, however, "Merck spokeswoman Amy Rose
wasn't having any of it [talk about a 9% reduction in detailing]." "This is not a head-
count reduction," said Rose. "Our new model calls for an increased use of technology
[and metrics], and it is much more customer-focused."
If the recent iPhone craze proves anything, customer focus means including more
technology-based channels in the marketing mix. While pharma is focused on face-to-
face selling, physicians – like other consumers – are changing their media habits as
illustrated in this Google chart.

Fig. 4.6: Media consumption habits have changed

Consumers are spending more and more time online and less and less time reading,
listening to the radio, or watching TV. Media spending by all advertisers – not just
pharma – needs to shift to new channels that consumers are using and, according to
Google, this shift is overdue.

51
 Fig. 4.7: Consumers are spending

Engaging Customers on Their Terms

Schecter and other pharma business leaders are shifting and fully intend to leverage
innovation and technology. This shift will add a new dimension to pharmaceutical
advertising:
Engagement.
Reach and Frequency are the traditional factors used to measure marketing
effectiveness and ROI. Reach is how many "eyeballs" see your promotional message
and frequency is how often they see it. Technology adds another dimension to the
analysis: Engagement, which also encompasses depth. Certainly, pharmaceutical
products demand communications that offer engagement and depth much more so that
packaged goods for example. Several advertising associations are working to develop a
new metric to measure engagement.
This sounds exactly what Merck's Schechter had in mind when he talked about
embracing new ways to engage physicians. The most effective way of engaging
physicians and consumers using innovative technology is through Web 2.0 social
networking tools. The pharmaceutical industry so far has a poor track record when it
comes to using these tools effectively. And, like any powerful tool, when used
improperly, Web 2.0 tools can be "risky."
Back in 2006, Pharma Marketing News hosted a reader survey to predict future trends
in the pharmaceutical marketing mix. The survey asked readers for their opinions
regarding the impact and risk of several physician marketing channels. They were also
asked how they saw the mix shifting in the next few years.

52
When evaluating impact, respondents were asked to think of reach, credibility, and
content richness as important factors -- the greater these attributes, the greater will be
the impact. Risk factors, on the other hand, include potential to cause customer
dissatisfaction or push back, increased regulation, negative publicity, etc. If marketers
should avoid the channel, then risk would be high.
The results of the survey can be plotted in graphical form:

Fig. 4.8: Physician Marketing Channels

Let's focus on traditional face-to-face promotion (rep) and eDetailing or epromotion.

While face-to-face promotion has a very high impact potential it is also risky and is
becoming even more risky, according to survey respondents. [Risky because of
increasing physician push back, denying reps access to physicians, and state laws
attempting to limit access to physicians by sales reps. This is what the downward red
arrow is showing. In fact, the tip of the arrow is where this channel may be at today!
eDetailing or ePromotion also has high impact. At the time this survey was run,
eDetailing was thought to be as “risky” as face-to-face selling, but now it has the
potential at least of being LESS risky and MORE impactful than traditional sales reps.
Hopefully, Merck's rejiggering of its marketing mix towards new technology will
become the standard by which other pharmaceutical companies evaluate their own
marketing plans. Or maybe, Merck has a unique product mix for which technology is
better suited to promote. In that case, we may not see other pharma companies follow
Merck.

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EVIDENCE OF ETHICAL FAILURES

Doctors are the main targets for the promotional activities of drug companies in
developing countries. With the power to prescribe and a high status in society their
opinion of a drug very often determines its sales success. It is therefore not surprising
that the majority of marketing spend by industry leaders goes towards direct-to-doctor
(DTD) promotion.
These marketing practices are common to most contexts whether in developing
countries or developed. However some issues are of particular concern to developing
countries where health budgets are smaller and resources have to stretch much further.
For instance in developing countries the lack of government funding for professional
development activities for health professionals can make drug company sponsored
meetings more valuable. Lack of resources for surgeries and even personal medical
resources can also make offers from drug companies more inviting. The sheer volume
of promotion as well as the types of cases we have come across in our research raises
serious concerns about whether drug companies are able to regulate their promotion
activities effectively, while ensuring high standards of consumer protection.
Gifts

Among the promotional tactics employed by pharmaceutical companies is the practice

of giving gifts to doctors. In developing countries, these range from small items such as
gifts, pens and notebooks to expensive foreign holidays, televisions, air conditioners
and even jewellery. However what stands out in the developing country context is the
practice of giving lavish personal gifts that have no pretence at medical value. A
Kashmiri newspaper reported a doctor as saying “Medical representatives of
pharmaceutical companies whose products may or may not be efficacious without any
qualms offer cash, refrigerators, colour televisions, laptops, PCs, mobile phones, ovens,
phone bills, cars, tuition fee of their children, and lots more.”
Similarly, one Indian doctor noted, ‘“The newer multinational and major players in the
market have started to hire marketing professionals and take their brand promotion very
seriously and many try to build a personal rapport with the doctor by remembering
special occasions like their birthdays and anniversaries and besides the regular festivals.
The companies have started to spend more and more in keeping the doctors and their

54
employees happy rather than their customers. 'Gifting' of air conditioners, washing
machines, microwaves, cameras, televisions, and expensive crystals is a normal
accepted norm nowadays. So are frequent pampering in form of CMEs [Continuing
Medical Education meetings] and lectures in star hotels followed by lavish dinners and
cocktails.”
Such practices not only contravene the national industry code on ethical promotion, but
also are often nontransparent. These gifts may be hidden in official company reports of
spending under budget lines for seminars and events. As a result, establishing an
accurate picture of the actual costs associated with gifts to doctors can be difficult for
health watchdogs and consumer groups who are concerned about the influence of drug
companies on health professionals.
BUT DOES THIS GIFT GIVING MATTER?

A sales representative in India reported: “Since there is no documentation of these gifts,

the doctors can switch over from one product to another when perks of one company
exceed that of another. The doctors neglect other aspects of the drug like its efficacy,
suitability for the patient, the cost etc. With so many multinational companies
competing in India, the money spent over these activities is increasing day by day.”
Our research brought to the fore three key areas where the interaction between
pharmaceutical companies and health professionals suggests an unhealthy relationship,
with significant conflicts of interest.
First, health professionals’ belief about gifts shows recognition of the fact that gifts do
have an impact on prescribing behaviour. This can promote irrational drug use by
consumers that is not based on reliable data on real needs, safety, efficacy and price of
the drug, but rather on the marketing tactics of individual companies. Second, examples
of the way in which the gift relationship between companies and doctors is cultivated
reveals a disregard for ethical practice. Finally, examples of how prescribing behaviour
is affected by gifts suggest that such practices negatively affect consumer health and
safety and may increase unnecessary spending on healthcare.

55
 HEALTH PROFESSIONALS’ BELIEFS ABOUT GIFTS

As a marketing strategy, in cultivating a gift relationship with doctors, drug companies

are in effect creating a relationship of reciprocity where, upon receiving a gift, doctors
may feel obligated to respond. Whether they are conscious of it or not is not relevant.
Existing literature suggests that doctors hold a range of views about gifts. In general
doctors readily accept gifts that are smaller and socially more acceptable. There is a
sense of ‘unique invulnerability’, that only ‘other’ doctors are influenced by gifts. This
theory of unique vulnerability suggests that doctors are more willing to say that other
doctors are influenced more than they are themselves, but this hypothesis warrants
additional research.

Fig. 4.9: Hypothesis warrants additional research

Key findings showed a high level of interaction between the pharmaceutical industry
and the medical profession. Although the latter recognize the influence of these
interactions on prescriptions and the elevation of the cost of the final product, they find
it appropriate to receive benefits.
 86% receive medical samples frequently.

 39% receive desk gifts.

 19% receive invitations to congresses.

 12% receive free lunches.

56
Half of the doctors believe that receiving benefits from the pharmaceutical industry has
an influence on medical prescription, but only 27% accept this as influential in their
own prescriptions.
Doctors may be unaware of the fact that drug companies influence their prescribing
behaviour. Although many have suggested that doctors should distance themselves
from drug companies, it is easier said than done.
Sales representatives

According to their career profile, pharmaceutical sales representatives spend most of

their business time on the road, talking with pharmacists, hospital personnel,
physicians, patient advocacy groups, and even retirement homes, increasing the
visibility of their company’s products and the volume of their sales.
One to one visits from sales representatives are proven to be the most effective way to
promote drugs to doctors because they can identify the behaviour change stage and the
main motivators and decision-making styles of the person they are selling to and adapt
their approach accordingly. The main influencing techniques used by drug sales
representatives try to focus on doctors’ tendencies to trust experts, trust their peers and
trust likable (friendly and/or attractive) people, to be consistent with their commitments
and to act on reciprocal obligations when given gifts. Visits from sales representatives
are often coordinated with other methods such as providing gifts, free samples or
running advertising campaigns.
A study published in June 2007, revealed that medical sales representatives noted that
there were often inconsistencies between what they had been told to tell the doctor
during promotional visits and what was detailed in the literature. Also, doctors noted
that they received literature only if they repeatedly requested it. These social
responsibility failures pose significant threats in the context of a country like India,
which is a poorly regulated environment and is further complicated by a significant
uneducated consumer base and a highly privatised health system. Personal comments
by sales representatives and health professionals alike from many parts of the
developing world are suggestive of an ethically questionable relationship fostered by
drug companies.

57
Brand education

It is clear that companies face a conflict of interest in providing an accurate picture of

negative impacts of their product. This presents a problem for doctors everywhere, but
particularly in developing countries, who rely heavily on the drug information provided
by the company and in many cases cannot access independently verified data. However,
doctors can also be complicit in the problem when they choose to endorse a company’s
marketing campaign or assume the role of a seemingly “independent” key opinion
leader to shape a positive perception of the drug among health professionals. In some
cases the pharmaceutical industry manages to coopt academia and unduly influence
what health researchers reveal about their findings, as the non-profit organisation
Doctors for Research Integrity asserts. One significant result is that medical journal
articles on new drugs may be ghost written and influenced by drug companies’ public
relations (PR) firm.
Despite obvious failures in their promotions vetting and compliance systems for
company codes, the industry continues to insist on a model of pure self-regulation.
What is needed is a rigorous system of oversight and continuous consultation among
key stakeholders including consumer advocates, the drug industry, government
agencies, and health professionals.
CAN SELF-REGULATION WORK?

"All advertising is inherently unethical. That's how you sell things" said a New York
attorney. Selling drugs is like selling any other commodity. Pharmaceutical companies
choose to spend more on medical drug promotion rather than on research and
development because drug promotion is what earns them money. There have been
numerous studies which have incontrovertibly stated that drug promotion influences
prescribing practices, a fact that is not acceptable to many doctors. If drug promotion
were not so successful, would the companies spend billions marketing their ware?
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" in 1988 and has recommended their implementation to its member
countries. This document defines drug promotion as "all the information and persuasive

58
activities by manufacturers and distributors in order to induce the prescription, supply,
purchase and/or use of medicinal drugs". It also suggests what can be considered
appropriate hospitality and gifts. There is evidence that drug utilization problems are
increasingly encountered in many developing countries due to the unethical marketing
practices of the pharmaceutical industry. Unfortunately the guidelines drawn up by the
WHO, are flouted in practice with impunity since there are no effective legislative
measures to support them.
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. The information is also insufficient, sometimes contains unproven scientific
claims and is published by many medical journals from these countries. In an attempt to
get a grip on the situation the International Committee of Medical Journal Editors
suggested that editors must take full responsibility for what appears in their journals.
Many journals appointed committees to examine advertising material before
publication. Yet this was beyond journals in many developing countries who were eager
to grab the money that advertising (ethical or unethical) brought in.
Even though it has been proven time and time again that drug advertising in India is
unethical, nothing much is being done to curb it. The annual conferences of the various
national bodies of medical specialities are a glaring example of how deep the rot has
spread. Today no medical conference is organised without getting financial support
from the pharmaceutical industry. In return for the lavish financial assistance,
companies are allowed to select speakers, choose the topics for discussion, advertise
their brand image and so on, a situation akin to the indoctrination done in terrorist
camps. If this situation is allowed to continue we shall have a nation full of doctors who
rely on the drug companies to dictate what they should prescribe.
Unfortunately, though India had a head-start in this direction with the constitution of
the Drug Enquiry Committee in 1930 under the chairmanship of Sir R.N. Chopra which
scrutinized the pamphlets of drugs which made spurious claims, we have not made a

59
dent in this direction. The Drugs and Magic Remedies Act which came into force in
1955 and was amended in 1961, 1967 and in 1992 have not been enforced due to the
apathy and general disinterest of the health care fraternity and the industry refuses to be
cowed down by legislative enforcements. Hamdard Dawakhana was asked to recall 40
drugs. But they chose to file a writ in Supreme Court in 1959 on the grounds that their
right to free speech and right to carry on trade and business were violated. The Supreme
Court however, dismissed the petition. The drug industry fast learnt to take advantage
of the loopholes in the law and continued with unethical marketing practices. The
problem became so serious that S. Narayen, Commissioner, FDA Maharashtra, in the
foreword to a book on the Drugs and Magic Remedies act by S.W.Deshpande in 1994,
admitted that 'economic liberalization seems to give the impression that manufacturers
have the right to sell and the market place is what must decide the rules of the game. In
the dizzy of activity, various ploys are used to sell the product. Some of these not only
mislead the consumer but can also be harmful'.
The internet is perhaps one of the greatest boons to the medical establishment. Doctors
are able to check the validity of information given to them by drug companies and
therefore it is now being reported that drug companies are hesitant to tell outright lies as
before. But the industry relies on the fact that doctors are busy people who would not
find the time to counter check information they have received. The ever innovative
marketing executives have come up with yet another brilliant ace in the form of direct-
to-consumer (DTC) advertising. This is the advertising of branded drugs through
popular media. In India we are already exposed to television advertisements for inhalers
in bronchial asthma, insulin for diabetes mellitus. This is a scaled down, modified
version of DTC advertising. If DTC is approved, then drug companies will dictate what
doctors prescribe through their patients.
A small silver lining is perhaps the efforts of a few medical colleges where
undergraduate students and interns are taught to critically analyze drug promotional
material and are sensitized to the "tricks of the trade" of the pharmaceutical companies.
The "one on one" interview with the medical representative is perhaps the most
powerful tool of drug promotion which is followed worldwide. Interns are now being
taught to "take control" of these interviews and use them to get reliable information.
Videos have been made with the assistance of the WHO and are being used to train
interns on some aspects of dealing with medical representatives. It is too early to judge

60
what impact these interventions will have, but it must be kept in mind that tiny drops of
water make a mighty ocean.
These efforts, though isolated and small at present, will nevertheless reach a critical
mass which shall be self propagating one day. It is hoped that in future we shall have a
new generation of doctors who demand that all drug promotion be ethical. Unless this
demand comes from the medical establishment who refuse to take lavish gifts, eat
lunches and dinners sponsored by drug companies, and attend CME programmes paid
for by the companies we can never expect drug companies to self regulate.
Consumers trust doctors to act in the best interests of their patients. However, most
consumers are largely unaware of the influence of the pharmaceutical industry’s
marketing on the very health professionals they rely on. Between 1995 and 2005, the
percentage of total spending on sales and marketing was by far the biggest corporate
expense for the pharmaceutical industry. The excesses of drug marketing are well
recognized by industry insiders. A survey conducted by PricewaterhouseCoopers
showed 94% of industry stakeholders said that pharmaceutical companies spent too
much money on advertising.

Weak regulatory capacity…

Even in India, a fast emerging economy with a pharmaceutical industry of its own and a
relatively strong civil society, there is inadequate oversight of the drug industry.

61
According to a 2003 memorandum of the All India Drug Control Officers
Confederation, in order to be effective, the number of drug inspectors needed to more
than quadruple from 700 to 3000.
Results in risks to consumer safety

Campaigners for the rational use of drugs say that regulatory authorities in India are
slow to protect consumers from drugs that have been banned, withdrawn, or marketed
under restrictions in North America, Europe, and many other Asian countries. For
example, Rofecoxib, the internationally recalled antiarthritis drug sold by Merck & Co.
as Vioxx, Ceoxx and Ceeoxx, was among some of the controversial drugs available in
the domestic market in 2009.The drug was officially banned in India, in October 2004,
a month after the official Merck recall. Dr C.J. Shishoo, a trustee at the Consumer
Education and Research Centre, a CI member and consumer action group based in
Ahmedabad, observes that at least half a dozen drugs with dubious safety profiles are
still being marketed in India as there were no adverse reports available with the
regulator.
This is supported by a senior official from the central drug regulatory department in
India who was reported as saying, “Currently our mechanism is grossly inadequate to
tackle the issues related to pharmacovigilance as there are no public interaction systems
wherein the doctors or patients can share their experiences with the regulator directly.
Since the department is also facing severe people crunch, it is not able to dedicate
special cells or people with the task of collecting patient responses. Hence, whenever
there is a recall of a drug abroad, we do not have any relevant data to take follow-up
actions. This makes the department always dependent on the drug alerts of the US
Food and Drug Administration or European regulators to initiate an action here.”
Despite the obvious role aggressive marketing played in magnifying the harmful impact
of drugs like VIOXX12, many governments assert that they favour a co regulatory
approach (i.e. industry code compliance and legislation) to ensure ethical drug
promotion. In practice though, most governments relegate drug marketing to self-
regulation by the industry itself. Legislation in many countries is outdated and does not
necessarily cover consumer protection concerns for modern drug promotion methods
via disease awareness campaigns, patient groups or the internet.

62
Weak codes of conduct

Moreover, many industry-based systems for monitoring drug promotion mainly rely on
complaints mechanisms. These mechanisms are largely inadequate because too many
violations are missed. This conclusion has been supported by a review of research in a
2009 report by the World Health Organization (WHO) and Health Action International
(HAI).
In addition, the sanctions meted out by industry bodies are often negligible and do not
serve as a deterrent for irresponsible behaviour by the companies or their employees. If
there are no sanctions, or only small fines are imposed when a violation is discovered,
then the deterrent effect is minimal. It may be more cost effective from the company’s
point of view, given the large investment it has already made on advertising, to pay the
fine for an extended period of time rather than withdraw the advertisement.
THE IMPACT OF IRRESPONSIBLE MARKETING

Developing countries face multiple health challenges as a result of widespread poverty

and under-funded public health systems, and it would be unfair to place them all at the
door of the pharmaceutical industry. However the question to be asked of
pharmaceutical companies is whether, in this context, their marketing practices help or
hinder efforts to improve health and on at least three counts the answer appears to be
‘no.’

In 2009, the Indian National Commission on Macroeconomics and Health labelled 10

out of 25 top selling brands of medicines in the country as being either “irrational or
non-essential or hazardous.” Those brands are listed in the table below and include a
number of market leaders. These issues are important in developed and developing
countries but are particularly pressing in developing countries where each dollar that is
misused is a dollar that can’t easily be replaced.

63
Pushing the wrong pills

Finally there is the question of whether the pharmaceutical industry is simply too
market driven. Operating in a competitive market and with falling revenues there is
immense pressure on companies to deliver the next ‘block buster’ drug. The inevitable
pressure on companies is to focus on the wealthiest markets and the most marketable
conditions. This has led to a concentration on ‘me too’ drugs that tap into lucrative
markets but add little additional medical value and even ‘disease mongering’ or the
medicalisation of conditions that had previously been seen as lifestyle issues and only
in extreme cases a cause for medical intervention.
By promoting drugs that are not needed, pharmaceutical companies could detract from
efforts to improve the overall public health of consumers in developing countries. It is
true that many other factors such as poor training and a lack of regulatory infrastructure
are also at the root of these problems. However as global leaders, with financial clout to
affect change, drug companies and particularly the market leaders have social
responsibilities in ensuring their marketing activities do not lead to negative outcomes
for patients and consumers of their products.
GlaxoSmithKline

What they say: “We are aware of the sensitivity and concerns regarding the marketing
of medicines and we are absolutely committed to high ethical standards. We have
developed marketing codes and policies and provide training to guide sales
representatives, to ensure that they behave ethically and comply with the law.”

What they do: Following communications on our research questionnaire, a member of

staff at GSK’s Corporate Responsibility team said: “I have forwarded your details to
someone else at GSK and if they are interested in participating, they will contact you
directly.” We received no response or further acknowledgement to our queries from
GSK.

64
 Sanofi-Aventis

What they say: “In its promotional practices, Sanofi-Aventis adheres to both national
and international codes governing the profession. The Group has also developed
responsible marketing guidelines that cover promotional materials, congresses and
seminars, pharmaceutical sales calls and post-marketing studies. Continuous training
for medical sales representatives (who number 35,000 worldwide) is designed to ensure
the quality of their presentations during promotional visits.”

What they do: Unlike most of their counterparts in the industry, this company did not
allow us to speak directly to senior CSR managers. After being forced to engage with
the company through the only means available – an on-line query form – we received
no response from the company on their marketing practices in emerging markets.

STRENGTHS AND WEAKNESSES OF INDIA’S

PHARMACEUTICAL INDUSTRY:

India’s comparative advantages lie in its cost competitiveness, its reverse engineering
experience, its large pool of less expensive English-speaking scientific and engineering
workers, and its well-developed chemical industry infrastructure. India’s
pharmaceutical companies can also operate at much lower profit margins that their
Western counterparts. Today, India produces some of the cheapest drugs in the world,
especially because labor costs are 50 to 55 percent cheaper than in the West. Industry
experts indicate that infrastructure costs are 40 percent lower and fixed cost are
estimated to be 12 percent to 20 percent less that in the United States and Western
Europe. Consequently, India can produce bulk drugs that cost 60 percent less that in the
West and can open a production plant in India 40 percent cheaper than in developed
countries. Because of this, India has become a hub for pharmaceutical research and
development and clinical trials for many leading foreign pharmaceutical companies.

65
The challenge facing pharmaceutical marketers in the next decade will be to
demonstrate value of product through promotional innovation, combined with the
required emphasis on efficiency and safety of their product. To do so, they should turn
to pharmacoeconomics--an evolving field that examines the issues in the context of the
market's health care system. Health care system, of what is understood of the term,
differs from country to country, place to place and city to city. Lay persons in India
tend to examine only single patient cost. But from a social perspective one may want to
know what sort of treatment option minimizes overall costs. In the future the degree of
fragmentation is likely to decline significantly wide product portfolio and distribution
strength could become a key competitive advantage among the larger players. Smaller
players focused on research and development will probably be approached for alliance
by larger companies. Domestic companies with International research and development
or marketing ties are likely to succeed. In long term as companies established major
presence in other parts of wider health care pharmaceuticals chain, there is likely to e an
emergence of a new set of competitors -- the integrated health care firms -- that will
have significantly greater power than pure pharmaceutical companies.

66
 CHAPTER – 5
DATA ANALYSIS

67
 DATA ANALYSIS

1. For how many years you are practicing as a medical practicener (Doctor)?

 Less than one year ---------------------------------- 17 per cent

 From one to five years ----------------------------- 32 per cent

 Five to Ten years ----------------------------------- 36 per cent

 More than Ten years ------------------------------- 12 per cent

 Can not remember --------------------------------- 03 per cent

Less than five 17%

years
Five to ten years 32%
Ten to Twenty 36%
years
More than twenty 12%
years
Can not remember 3%

Fig 6.1: Practicing as a medical practicener

Interpretation:

68
  At the initial stage of the research, an attempt was made to
understand the profile of the doctors in terms of their experience
in the industry. Great care was taken to ensure that the sample is
adequate and representative of the universe.
2. Do you agree that India’s pharmaceutical industry is one of the fastest
growing segments of the Indian economy?

40%

35%

30%

25%

20%

15%
Less than five years
10% Five to ten years
5% Ten to Twenty years
More than twenty years
0%
Can not remember

17
  Agree ------------------------------------------- 43 per cent
 Strongly Agree-------------------------------- 37 per cent
 Disagree ---------------------------------- 09 per cent
 Strongly Disagree ---------------------------- 04 per cent
 Do not know/ Can not say ------------- 07 per cent

45%
40%

35%
30%

25%
20%

15% Agree
Strongly Agree
10%
Disagree
5% Strongly Disagree
0% Do not know/ Can not say

Agree 43%
Strongly Agree 37%
Disagree 9%
Strongly Disagree 4%

Do not know/ Can 7%

not say

Fig 6.2: The fastest growing segments of the Indian economy

Interpretation:
 India’s pharmaceutical industry is one of the fastest growing segments of the
Indian economy and this is also one of the vital industrial segments which are
directly related to the health of the nation.

18
3. Do you agree that the marketing strategy of the pharmaceutical industry should be
different from the marketing strategy in non-pharmaceutical segments?
 Agree ------------------------------------ 50 per cent
 Strongly Agree ------------------------- 32 per cent
 Disagree -------------------------------- 10 per cent
 Strongly Disagree -------------------- 04 per cent
 Do not know/ Can not say ---------- 04 per cent

50%
45%
40%
35%
30%
25%
20%
Agree
15% Strongly Agree
10% Disagree
5% Strongly Disagree
0% Do not know/ Can not say

Agree 50%
Strongly Agree 32%
Disagree 10%
Strongly Disagree 4%

Do not know/ Can 4%

not say

Fig 6.3: Pharmaceutical segments

Interpretation:

 The structure and the dynamics of the pharmaceutical industry are different
from that of other industrial domains. This is what necessitates the
pharmaceutical sector to formulate a unique marketing strategy to suit their
industry requirements and that appears to be different, in practice and normative
sphere, from other industries.

19
4. Do you agree that institutional selling is quite prevalent when it comes to pharmaceutical
market in India?
 Agree ------------------------------------- 44 per cent
 Strongly Agree ------------------------- 30 per cent
 Disagree -------------------------------- 10 per cent
 Strongly Disagree --------------------- 06 per cent
 Do not know/ Can not say ------------ 10 per cent

45%

40%

35%

30%

25%

20%
Agree
15%
Strongly Agree
10% Disagree
5% Strongly Disagree
Do not know/ Can not say
0%

Agree 44%
Strongly Agree 30%
Disagree 10%
Strongly 6%
Disagree
Do not know/ 10%
Can not say

Fig 6.4: Pharmaceutical market in India

Interpretation:
 In general, business in pharmaceutical market is conducted in two major ways,
that is, either by institutional selling or through trade business. The respondents
were of the opinion that institutional selling is quite prevalent in the Indian
pharmaceutical industry.

20
 5. Do you agree that the pharmaceutical companies need to use innovative and
better promotional measures for selling their products?
 Agree -------------------------------------- 60 per cent
 Strongly Agree --------------------------- 37 per cent
 Disagree ---------------------------------- 01 per cent
 Strongly Disagree ----------------------- 00 per cent
 Do not know/ Can not say ------------- 02 per cent

60%

50%

40%

30%

Agree
20%
Strongly Agree
Disagree
10%
Strongly Disagree
Do not know/ Can not say
0%

Agree 60%
Strongly Agree 37%
Disagree 1%
Strongly 0%
Disagree
Do not know/ 2%
Can not say

Fig 6.5: Innovative and better promotional measures for selling their products
Interpretation:

 Even though it appears to be a serious industry on which the health of the nation
rests, a deeper understanding of the industry will make it clear that business
practices and sales promotion measures are a common thing and gradually
becoming more aggressive and competitive among the pharmaceutical
companies in India.

21
 6. Does the Pharmaceutical companies offer gifts to the doctors to influence their
prescriptions in favour of their company medicines?
 Yes -------------------------------------------- 95 per cent
 No --------------------------------------------- 01 per cent
 Do not know/ Can not say ----------------- 04 per cent

100%

90%

80%

70%

60%

50%

40% Yes
No
30% Do not know/ Can not say

20%

10%

0%

Yes 95%
No 1%
Do not know/ 4%
Can not say

Fig 6.6: Prescriptions in favour of their company medicines

Interpretation:

 Pharmaceutical marketing experts are aware that well timed advertising directed to
doctors tends to boost sales of the brand that spent the marketing dollars. In the case
of marketing directly to health professionals, the question is whether promotion is
(as most drug companies claim) primarily information on how the drug works or is
intended to persuade doctors to prescribe the drug more frequently. The practice of
offering gifts to the doctors to influence their prescriptions is a common strategy
among the pharmaceutical companies.

22
 7. Out of the following which one is more correct when it comes to the promotional
strategy of pharmaceutical companies in the view of the doctors?
 They aim to inform about the product ----------------- 22 per cent
 They aim to persuade to purchase --------------------- 60 per cent
 Other motives -------------------------------------------- 03 per cent
 Do not know/ Can not say ----------------------------- 15 per cent

60%

50%

40%

30%

They aim to inform about

20% the product
They aim to persuade to
10% purchase
Other motives
0%
Do not know/ Can not say
They aim to 22%
inform about the
product
They aim to 60%
persuade to
purchase
Other motives 3%
Do not know/ 15%
Can not say

Fig 6.7: Promotional strategy of pharmaceutical companies

Interpretation:

 The promotional strategy of the pharmaceutical companies is more oriented towards

persuading the doctors to prescribe their products and the patients to purchase their
products than simply to display information on the quality and availability of the
product. This is one criterion which makes the marketing strategy of the
pharmaceutical companies different from that of others.

23
 8. Do you agree that unethical standards exist in the promotion of pharmaceutical
products in India?
 Agree ------------------------------------- 52 per cent
 Strongly Agree ------------------------- 20 per cent
 Disagree -------------------------------- 20 per cent
 Strongly Disagree --------------------- 03 per cent
 Do not know/ Can not say ------------ 05 per cent

60%

50%

40%

30%

20% Agree
Strongly Agree
10%
Disagree
0% Strongly Disagree
Do not know/ Can not say
Agree 52%
Strongly Agree 20%
Disagree 20%
Strongly Disagree 3%

Do not know/ 5%
Can not say

Fig 6.8: Promotion of pharmaceutical products in India

Interpretation:

 Adherence to ethical standards while pursuing the promotional strategy for selling
their products is a concern in the pharmaceutical industry. It is an accepted fact that
the promotional measures does contain unethical practices. It is for the government,
the industry and the consumers to put a comprehensive effort to ensure that the
practices of unethical standards are withdrawn from the health industry.

24
 9. Your recommendation to the industry and government regarding the promotional
strategy of the pharmaceutical companies? You can choose more than one option.
 Implement, improve and monitor legislation ------------------ 74 per cent
 Measures to improve the transparency of drug companies’ marketing
activities ----------------------------------------------- 86 per cent
 Stop the practice of gifts to doctors ------------------------------ 67 per cent
 Ensure codes of conduct on drug promotion -------------------- 70 per cent
 Other measures ------------------------------------------------------ 12 per cent
 Do not know/ Can not say ----------------------------------------01 per cent

90%
Implement, improve and monitor
legislation
80%
Measures to improve the
70%
transparency of drug companies’
marketing activities
60%
Stop the practice of gifts to
doctors
50%
Ensure codes of conduct on drug
40%
promotion

30%
Other measures
20%

10% Do not know/ Can not say

0%

Fig 6.9: The industry and government regarding

Interpretation:

 Whilst the pharmaceutical industry clearly has an important role to play in tackling
the health challenges their involvement in the promotion of medicines presents a
serious conflict of interest. It is equally important that health professionals have
access to independent and up to date advice on medicines so that they can make
informed judgments about the most appropriate medication for patients.

25
10. Do you think that the entry of Multinationals is a Major Challenge to the domestic
Players in the Pharmaceutical Market and are they ready to face the Challenges of
the Foreign Players?
 Yes ----------------------------------------------- 36 per cent
 No ------------------------------------------------ 54 per cent
 Do not know/ Can not say--------------------- 10 per cent

60%

50%

40%

30%
yes
no
20%
cant say

10%

0%

yes 36%
no 54%
cant say 10%

Fig 6.10: The Challenges of the Foreign Players

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11. What type of Marketing Strategy would you prefer to expand your Market size?

45%
40%
35%

30%
25%
20% B2B
15% B2C
Both
10%
5%
0%

B2B 23%
B2C 32%
Both 45%

Fig 6.11: Market size

 B2B --------------------------------------------------------------23 PER CENT
 B2C ------------------------------------------------------------ 32 per cent
 Both -------------------------------------------------------------- 45 percent

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12. What type of Marketing Strategy does you as More Profitable?

50%
45%
40%
35%
30%
25%
B2B
20%
B2C
15%
Both
10%
5%
0%

B2B 24%
B2C 47%
Both 31%

Fig 6.12: More Profitable

 B2B-------------------------------------------------------------- 24 per cent
 B2C ------------------------------------------------------------- 47 per cent
 Both ------------------------------------------------------------- 31 percent

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13. What do you think is the Major challenge from the Marketing point of view for the
Pharmaceutical Industry in India?
 Fragmentation of the market ---------------------------- 38 per cent
 Market risk due to lack of price control mechanism- 22 per cent
 MNCs ------------------------------------------------------ 23 per cent
 Others ------------------------------------------------------ 17 per cent

40%

35%

30%

25%

20%
fragmentation of the market

15%
risk due to price control
mechanism
10% MNC's

5% Others

0%

fragmentation of 38%
the market
risk due to price 22%
control
mechanism
MNC's 23%
Others 17%

Fig 6.13: Major challenge from the Marketing

83
14. What innovative distribution channel do you suggest to better market your products?
 Better consumer supply chain -------------------------------------------- 34 per cent
 Emotional Branding ---------------------------------------------------------- 42 per cent
 Alliance with other corporate leaders for promotion of the product-12 per cent
 Greater media participation and power branding ---------------------- 10 per cent
 Others -------------------------------------------------------------------------- 02 per cent

45%

40%

35%

30%

25%

20%

15% better supply chain

emotional branding
10%
corporate alliances
5% greater media participation
others
0%

better supply 34%

chain
emotional 42%
branding
corporate 12%
alliances
greater media 10%
participation
others 2%

Fig 6.14: Suggest to better market your products

84
15. Are you aware that the pharmaceutical companies in India are shifting their focus
from conventional method of marketing to non-conventional method of
marketing?

 Yes---------------------------------------------- 86 percent
 No --------------------------------------------- 05 percent
 Do not know/ Can not say ---------------- 09 per cent

90%
80%
70%
60%
50%
40% yes
30% no
cant say
20%
10%
0%

yes 86%
no 5%
cant say 9%

Fig 6.15: The pharmaceutical companies in India are shifting their focus from
conventional method of marketing

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16. Do you think that market ethics/ medical Ethics are a major factor in the new
distribution channel of marketing?

 Yes------------------------------------------------------- 57 per cent

 No ------------------------------------------------------ 28 per cent
 Do not know/ Can not say -------------------------- 15 per cent

60%

50%

40%

30%
yes
20% no
cant say
10%

0%

yes 57%
no 28%
cant say 15%

Fig 6.16: Distribution channel of marketing

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17. Do You Think That These Non-Conventional Marketing Methods Are Effective
Methods Of Pharma Marketing In The Present Age?

 Yes------------------------------------------------ 77 percent
 No ----------------------------------------------- 12 percent
 Do not know/ Can not say ------------------ 11 per cent

60%

50%

40%

30%
yes
20% no
cant say
10%

0%

yes 36%
no 54%
cant say 10%

Fig 6.17: Pharma Marketing in the Present Age

87
18. Do you believe that technology utilization and innovative distribution channels will
help in marketing of Pharma products in India?

 Yes---------------------------------------------- 75 per cent

 No --------------------------------------------- 07 percent
 Do not know/ Can not say ----------------- 18 per cent

80%
70%

60%

50%
40%
yes
30%
no
20% cant say
10%

0%

yes 75%
no 7%
cant say 18%

Fig 6.18: Distribution channels will help in marketing of Pharma products in India

88
19. Major weakness of the pharmaceutical industry’s marketing strategy.

 Branding --------------------------------- 07 per cent

 Publicity --------------------------------- 09 percent

 R&D ------------------------------------- 77 percent

 Do not know / can not say ------------ 07 per cent

80%

70%

60%

50%

40%
branding
30%
publicity
20% R&D
10% cant say

0%

branding 7%
publicity 9%
R&D 77%
cant say 7%

Fig 6.19: Major weakness of the pharmaceutical industry’s

89
20. Do you follow branding of products as a marketing strategy?

 Yes------------------------------------------------------------------------- 74 percent
 No ------------------------------------------------------------------------ 05 percent
 Do not know/ Can not say --------------------------------------------21 percent

80%

70%

60%

50%

40%
yes
30%
no
20% cant say
10%

0%

yes 74%
no 5%
cant say 21%

Fig 6.20: Products as a marketing strategy

90
21. Do you have a dealer network? Do you sell directly or through dealers?

As regards their marketing strategy, it could be derived from their responses that
they have a large dealer network. A customer may also contact their branch
office in his/her area to get the names and addresses. They can also supply
sections directly. For smaller lots, the traders/ dealers may be contacted.

91
22. Do you think that foreign direct investment (FDI) should be allowed in the
pharmaceutical sector in India?

 Yes------------------------------------------------- 21 percent

 No-------------------------------------------------- 43 percent

 Do not know/ Cannot say----------------------- 36 percent

yes 21%
no 43%
cant say 36%

92
 CHAPTER 5

CONCLUSIONS

 Implement, improve and monitor legislation in line with the WHO Resolution on
the Rational Use of Medicines and the WHO Ethical Criteria for Medicinal Drug
Promotion.

 Support the provision of independent information on drugs for consumers and

health professionals.

 Implement and enforce a ban on gifts to doctors.

 Enforce strict sanctions that will deter poor corporate practice in drug promotion.

 Take measures to improve the transparency of drug companies’ marketing activities

and seriously address the conflict of interest encountered in drug companies’
funding of medical education.

Ensuring high standards in the promotion of medicines is important to consumers’

health and helps to save money for health providers and patients. Without proper
controls consumers can be subject to misleading or inaccurate claims and the promotion
of expensive branded medicines that have no greater medical value than cheaper non-
branded products. Whilst the pharmaceutical industry clearly has an important role to
play in tackling the health challenges their involvement in the promotion of medicines
presents a serious conflict of interest.

It is equally important that health professionals have access to independent and up to

date advice on medicines so that they can make informed judgements about the most
appropriate medication for patients. Governments must make continued medical
education (CME) a priority and alleviate the need for doctors to rely on industry-
dominated information provision mechanisms.

Improved regulation of drug promotion will generate a number of benefits for various
stakeholders. Consumers will have a better chance of getting the most appropriate drug
for their condition. Regulations that lead to improved drug use can lower direct costs
(e.g. subsidy costs and import costs) which should be welcomed by governments and

93
tax payers. Finally, socially responsible drug companies will also benefit if regulation

94
helps to create a level playing field and prevent unscrupulous companies
from manipulating the market through irresponsible marketing.

 The pharmaceutical industry

 Key recommendations at the company level:

 Stop the practice of gifts to doctors

 Implement rigorous policies on vetting of drug promotion materials

and adherence to existing codes of conduct

Provide transparent and verifiable information on the precise nature of

relationships and associated funding for all stakeholder groups, including
health professionals, pharmacists, students, journalists, clinical research
organizations and patient groups.

95
 REFERNCES

BIBLIOGRAPHY

Books

Chaudhary, P. (1998), Rx Factor: Strategic Creativity in Pharmaceutical Marketing,

New Delhi, India: Response Books.
Mittal, D.K. (1994), Drug and Pharmaceutical Industry, New Delhi, India: Anmole
Publication Pvt. Ltd.
Ramaswamy, V.S. & Meerakumari, N.S. (1996), Marketing Management: An Indian
Prospective, New Delhi, India: Macmillian India Ltd.
Sakaria George (1997), "Reform: The Inside Story," Business Today (March 7-21),
72- 76.
Smarta, R.B. (1998), "Getting friendly," Advertising and Marketing (February 1-15),
51- 54.
Smarta, R.B. (1998) "Distribution as a strategic weapon" Advertising and Marketing
(May 16-31), 30-32.
Smarta, R.B. (1998) "The bigger objectives", Advertising and Marketing (March 1-
15), 24-26.
Smarta, R.B. (1998) "Sensible Pricing", Advertising and Marketing (January 1-15),
74- 76.
(1988), "The Eastern Pharmacist: An Independent Organ of
Pharmaceutical Industry", Trade & Profession (April), XXXI (364), 37-56.
(1998), "The Next Level: Survey of Pharmaceutical Marketing",
Advertising and Marketing (August 31), 72-78.
(1998), "Wielding the Scalpel", The Strategist Quarterly (April-June),
16-19.

Internet website Links

www.governmentstatisticaldata.com
www.historyofpharmaceuticalindustry.com
www.otcpharmaceuticalproducts.com
www.cipla.com

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www.bookrags.com/sciences/genetics/antibiotics-wrog.html
www.bookrags.com/others/health/cephalosporines-woh.html
www.indianfoline.com/phar/feat/thmo.html

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