marketing of prescription drugs in india
TRANSCRIPT
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CAPSTONE PROJECT(2008-10)
ITM BUSINESS SCHOOL
Marketing of Prescription
Drugs in India
Guided by: Submitted by:Dr. V. V. Sople Ankit Porwal
Deputy Director, (KH2008PGDMF036)
ITM Business School PGDM - Marketing
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ITM Business School 2
Objective:
To study the guidelines for marketing of prescription drugs in India.
To study the customer behavior towards the major marketing techniques utilized by
the pharmaceutical companies.
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History of Pharmaceutical Industry
The first known drugstore was opened in Baghdad in 754 and many
more soon began operating in Islamic world and Europe.
By the 19th century, many of the drug stores in Europe and North
America, eventually developed into larger pharmaceutical companies.
Most of today's major pharmaceutical companies were founded in the
late 19th and early 20th centuries.
Valium (diazepam), discovered in 1960, was marketed from 1963 and
rapidly became the most prescribed drug in history.
Cancer drugs were a feature of the 1970s. Drugs for heart disease and for AIDS were a feature of the 1980s.
There are now more than 200 major pharmaceutical companies.
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Indian Pharmaceutical Industry
Highly organized sector.
Ranked 4thin terms of volume (8% of worlds production).
Ranked 13th in terms of value.
Estimated to be worth $ 4.5 Billion, and growing at about 89 % annually.
Highly fragmented with 30,000 registered units. Out of which 330 are large
units and 8000 are small scale units.
These form the core of pharmaceutical industry.
Also include 7 Central public sector units (Eg. Indian Drugs &
Pharmaceuticals Ltd., Hindustan Antibiotics Ltd.). These units produce ready to use medicines & almost 350 bulk drugs.
Leading 330 companies control 70 % of the market.
Ranbaxy leads with 7 % of the market share.
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Major Players in IndianPharmaceutical Industry
Rank Company Revenue 2007 (Rs crore)1 Ranbaxy 4,198.962 Dr.ReddysLaboratories 4,162.253 Cipla 3,763.724 Sun Pharmaceutical Industries 2,463.595 Lupin Laboratories 2,215.526 Aurobindo Pharma 2,080.197 GlaxoSmithKline 1,773.418 Cadila Healthcare 1,613.009 Aventis 983.80
10 Ipca Laboratories 980.44Source: Rediff - June 2008
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Power of Suppliers Volume benefits occur. Inputs standard available locally. Numerous suppliers- Switching cost low. Suppliers can go for forward integration.
Raw material cost constitute more than 50% of a totalexpenses.
Barriers to Entry Govt. Policies supportive
for entry but priceregulations exists.
Economies of scale exist.
Industry Competition
Highly Competitive. Top five players have mere 18 % of
market share. Lower fixed cost and high
working capital.
Threat of Substitute No substitute for the
medicines. Biotechnology is a
threat to syntheticpharmaceuticalproducts.
Power of Buyers End consumers do not have bargaining power. Brand identity exists but is in the hands of influencer. Price sensitivity is less. Highly fragmented market so buyer concentration v/s
industry is low.
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Strengths Low cost. Strong technical skills. Huge potential
market. Competent workforce. Globalization.
Weakness Poor R&D
Expenditure. Highly fragmented. Price regulations. Labor laws.
Opportunities
Off patent drugs. Expansion of
healthcare industry. Outsourcing of the
products. Innovations.
Threats
Transition fromprocess to productpatents.
Other low cost
countries. Counterfeit drugs.
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Marketing ofPrescription Drugs
OPPI Guidelines
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Standards of promotional information
Consistency of Product Information.Accurate and not misleading.
Substantiation.
Printed Promotional MaterialAll Printed Promotion materials other than those used for reminders must
include:
The brand name of the product.
The active ingredients, using the approved name where they exist.
The name and the address of pharmaceutical company or its agent
responsible for marketing the product.
Date of production of the advertisement.
Abbreviated prescribing information.
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Electronic Materials including audio visuals
The indication of pharmaceutical company and of the intended audience
should be readily apparent.
The content should be appropriate for intended audience.
The presentation ( content, links etc. ) should be appropriate and apparent
to the intended audience.
India- specific information should be complied with Drugs and Magic
Remedies Act.
Interactions with Healthcare Professionals
Events
Hospitality
Gifts and Items of Medical Utility
Samples
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Events
Scientific and educational objective
Events Involving Foreign Travel
Promotional Information at Events
Sponsorship
GuestsPayment for Speakers and Presenters
Hospitality
Appropriate Venue
Limits of Hospitality
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Gifts and Items of Medical Utility
Cash
Personal Gifts
Promotional Aids
Items of Medical Utility
Cultural courtesy Gifts
Samples
Sample permitted
Control and Accountability
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Survey
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Objective : To study the customer behavior towards the major
marketing techniques utilized by the pharmaceutical companies.
Sample :Constitutes of Physicians from Mumbai and Delhi.
Sample Size :50
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Quality of the product
Price of the product
Company associated with the product
Trials and studies
Samples of the product
Gifts and Sponsorships
Relationship with Sales Representative (Due to regular visits.)
Factors, which drive a customer to prescribe the product are:
Factors which are important for the brand recall of a product are:
Name related to company/ molecule/ disease
Name easy to pronounce
Short name of the product
Constant reminders by the company
Tent Cards, Printed Reminders
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Do customer shift from one brand to another:
84%
16%
Yes
No
Introduction of a newer molecule
Price
Trail of a new product
Promotional effort of the company
Persistence of the sales representative
Factors responsible for shifting:
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28%
72%
Yes
No
Is there any impact of relationship marketing on the business:
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FUTURE OF THE PHARMACEUTICAL INDUSTRY
Clinical trials in India cost US$ 25 million each, whereas in US they cost
between US$ 300-350 million each.
With market value of about US$ 45billion in 2005, the generic sector is
expected to grow to US$ 100billion in the next few years.
Clinical Research Outsourcing (CRO), a budding industry valued over US$ 118
million per year in India, is estimated to grow to US$ 380 million by 2010
In India investigational new drug stage costs around US$ 10-15 million, which is
almost 1/10th of its cost in US (US$ 100-150million)
For the first time, the seven largest markets will contribute to just 50 percent of
growth, while seven emerging marketsBrazil, China, India, Mexico, Russia,
Indonesia, and Turkeywill contribute to nearly 25 percent of growth
worldwide.
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LEARNINGS
This project provided an immense knowledge and overview of thepharmaceutical industry and the marketing practices utilized by the
pharmaceutical industry.
It helped me to understand the way a customer behave towards any promotional
tool.
It helped me in learning about the various factors that are responsible to make
any marketing strategy successful in pharmaceutical industry.
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