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B.PHARMACY VIII SEMESTER ELECTIVE EXAMINATION
PHARMACEUTICAL MARKETING PHAR- 485(D) P BY JOYTOSH BANERJEE TO MR. SATYENDRA SINGH LECTURER, DEPARTMENT OF PHARMACEUTICAL CHEMISTRY RAJIV ACADEMY FOR PHARMACY, MATHURA
UTTAR PRADESH TECHNICAL UNIVERSITY, LUCKNOW, UTTAR PRADESH, INDIA 2009-2010 1
Certified that Joytosh Banerjee has carried out the project work entitled ³Marketing Management´ for the partial fulfillment of B. Pharmacy VIII semester Elective examination from Uttar Pradesh Technical University, Lucknow. The project embodies result of work carried out by the student and the contents of the project do not form the basis for the award of any other degree to the candidate or to anybody else.
SUPERVISOR Mr. Satyendra Singh Lecturer Department Of Pharmaceutical Chemistry Rajiv Academy For Pharmacy Mathura (U.P.) 281001 FORWARDED BYDr. (Prof.) Devender Pathek Director Rajiv Academy For Pharmacy Mathura (U.P.) 281001 Date: 31/03/10
Today, while writing this acknowledgement, I can feel a sense of content as I have accomplished a great journey full of knowledge, life long experience and an unforgettable support and guidance of my teachers and colleagues. I owe my thanks to all the respected people who have their whole hearted support in making this project report a success. First and foremost, my thanks go to the Almighty and my parents. I would like to express my gratitude and sincere and humble thanks to Mr. Satyendra Singh (Lecturer, Department of Pharmaceutical Chemistry) R.A.P., Mathura who guided me in bringing this project report to all. This acknowledgement will remain incomplete without acknowledging the two most eminent personalities of the college. With all due respect and true sense of gratitude and obligation, I want to acknowledge honorable Dr. Devender Pathak, (Director, Rajiv Academy For Pharmacy, Mathura) and Prof. (Mrs.) Kamla Pathak (Dean) for their blessings. At last, I would like to thank my batch partners and everyone who were directly or indirectly involved in my project report.
Joytosh Banerjee Roll No. 0606650019 B.Pharm. IVth year Rajiv Academy For Pharmacy Mathura, U.P. DATE: 31 .03.10 PLACE: MATHURA
INTRODUCTION««««««««««...««««««««««««««««... 5 PHILOSOPHY OF MARKETING«««««««««««««««««««««.5 MARKETING MANAGEMENT«««««««««««««««««««««....6 MARKET ANALYSIS««««««««««««««««««««««««««7 PREDICTIVE ANALYTICS««««««««««««««««««««««.. 8 5. MARKETING STRATEGY«««««««««««««««««««««««10 MARKETING ACTION PLAN««««««««««««««««««««..12 STRATEGY EVALUATION««««««««««««««««««««..«13 6. IMPLEMENTATION PLANNING««««««««««««««««««««..13 I. PRODUCT«««««««««««««««««««««««««««...16 II. PRICING«««««««««««««««««««««««««««««.21 III. THE PHARMACEUTICAL PLACE«.«««««««««««««««««.25 - PHARMACEUTICAL MARKETING CHANNELS««««««««««..26 IV. PROMOTION«««««««««««««««««««««««««««.29 - ELEMENTS OF PROMOTIONAL MIX«««««««««««««««..30 V. PERSONAL SELLING«««««««««««««««««««««««...32 VI. PRSCRIPTION«««««««««««««««««««««««««««33 VII. POLICY««««««««««««««««««««««««««««34 VIII. PUBLIC RELATIONS«««««««««..«««««««««««««34 IX. POWER«««««««««««««««««««««««««««««...35 7. MARKET RESEARCH«««««««««««««««««««««««««.36 8. SOME OTHER FACTORS RELATED TO MARKETING MANAGEMENT«««..39 - ENTERPRISE MARKETING MANAGEMENT««««««««««««39 - MARKETING EFFECTIVENESS««««««««««««««««««40 - COMMERCIAL OPERATIONS MANAGEMENT«««««««««««42 - MARKETING RESOURCE MANAGEMENT«««««««««««««43 9. LAWS AND REGULATIONS GOVERNING INDIAN PHARMACEUTICALS««44 10. CRITICISM««««««««««««««««««««««««««««.......49 11. THE COMPETITIVE ENVIRONMENT««««««««««««««««««.51 12. SUMMARY«««««««««««««««««««««««««««««..52 13. REFERENCE«««««««««««««««««««««««««««««.55 1. 2. 3. 4.
The terms market, marketing, marketable, and marketing management are variations of a single unifying concept --exchange. Market is defined as a place or situation where voluntary exchange takes place between sellers and buyers to enhance the mutual benefits of all parties. A goods or service is marketable if it is desired by someone and he or she is willing to give up something of value to obtain it. A key problem in marketing management is how to produce marketable products and how to enhance the marketability of products already on the market. The paramount objective is creating and maintaining the demand for the firm¶s products as opposed to force customers to buy goods because they have been produced and need to be sold. Marketing management may be viewed as regulating the level, timing and character of the demand for one or more products of the firm. Specifically, it is the planning, organizing, controlling, and implementing of marketing programs, policies, strategies, and tactics designed to create and satisfy the demand for the firm¶ product offerings or services as a means of generating an acceptable profit. In essence, the marketing manager is the ³demand manager´ of the firm.
PHILOSOPHY OF MARKETING
Progressive business firms have adopted a ³marketing concept philosophy´ which guides marketing managers in fulfilling their responsibilities. Briefly defined, the marketing concept says that a company will prosper only as long as it gives consumers products that satisfy their
needs and wants at prices they are willing to pay at a profit to the company. The key elements of marketing concept are: 1. Customer satisfaction. A thorough understanding of the consumer¶s needs and wants become the focal point of all marketing action, especially product planning and development. 2. Integrated effort. The firm¶s primary emphasis must be in integrating the marketing functions with those of R&D, production, finance, and so forth. 3. Profitability. The primary goal of the firm should be profits, sales volume should be a proxy measure for satisfactory marketing performance in the short run. 4. Viability. The company and its long run survival and growth are paramount since this is to promote consumer loyalty.
Marketing management is a business discipline which is focused on the practical application of marketing techniques and the management of a firm's marketing resources and activities. Rapidly emerging forces of globalization have compelled firms to market beyond the borders of their home country making International Marketing highly significant and an integral part of a firm's marketing strategy. Marketing managers are often responsible for influencing the level, timing, and composition of customer demand accepted definition of the term. In part, this is because the role of a marketing manager can vary significantly based on a business' size, corporate culture, and industry context. For example, in a large consumer products company, the marketing manager may act as the overall general manager of his or her assigned product
From this perspect, it consists of 5 steps, beginning with the market & environment research. After fixing the targets and setting the strategies, they will be realized by the marketing mix in step 4. The last step in the process is the marketing controlling. Marketing management strategy and design effective, cost-efficient implementation programs, firms must possess a detailed, objective understanding of their own business and the market in which they operate. In analyzing these issues, the discipline of marketing management often overlaps with the related discipline of strategic planning.
Traditionally, marketing analysis was structured into three areas: Customer analysis, Company analysis, and Competitor analysis (so-called "3Cs" analysis). More recently, it has become fashionable in some marketing circles to divide these further into certain five "Cs": Customer analysis, Company analysis, Collaborator analysis, Competitor analysis, and analysis of the industry Context.
Department analysis is to develop a schematic diagram for market segmentation, breaking down the market into various constituent groups of customers, which are called customer segments or market segmentations. Marketing managers work to develop detailed profiles of each segment, focusing on any number of variables that may differ among the segments: demographic, psychographic, geographic, behavioral, needs-benefit, and other factors may all be examined. Marketers also attempt to track these segments' perceptions of the various products in the market using tools such as perceptual mapping.
In company analysis, marketers focus on understanding the company's cost structure and cost position relative to competitors, as well as working to identify a firm's core competencies and other competitively distinct company resources. Marketing managers may also work with the accounting department to analyze the profits the firm is generating from various product lines and customer accounts. The company may also conduct periodic brand audits to assess the strength of its brands and sources of brand equity.
The firm's collaborators may also be profiled, which may include various suppliers, distributors and other channel partners, joint venture partners, and others. An analysis of complementary products may also be performed if such products exist.
Marketing management employs various tools from economics and competitive strategy to analyze the industry context in which the firm operates. These include Porter's five forces, analysis of strategic groups of competitors, value chain analysis and others. Depending on the industry, the regulatory context may also be important to examine in detail.
In Competitor analysis, marketers build detailed profiles of each competitor in the market, focusing especially on their relative competitive strengths and weaknesses using SWOT analysis. Marketing managers will examine each competitor's cost structure, sources of profits, resources and competencies, competitive positioning and product differentiation, degree of vertical integration, historical responses to industry developments, and other factors.
Predictive analytics encompasses a variety of techniques from statistics, data mining and game theory that analyze current and historical facts to make predictions about future events.
In business, predictive models exploit patterns found in historical and transactional data to identify risks and opportunities. Models capture relationships among many factors to allow assessment of risk or potential associated with a particular set of conditions, guiding decision making for candidate transactions.
Predictive analytics is used in financial services, insurance, telecommunications, retail, travel, healthcare, pharmaceuticals and other fields.
Predictive analytics is an area of statistical analysis that deals with extracting information from data and using it to predict future trends and behavior patterns. The core of predictive analytics relies on capturing relationships between explanatory variables and the predicted variables from past occurrences, and exploiting it to predict future outcomes
Generally, predictive analytics is used to mean predictive modeling, scoring of predictive models, and forecasting. However, people are increasingly using the term to describe related analytical disciplines, such as descriptive modeling and decision modeling or optimization. These disciplines also involve rigorous data analysis, and are widely used in business for 9
segmentation and decision making but have different purposes and the statistical techniques underlying them vary.
(1). Predictive models (2). Descriptive models (3). Decision models
1. Analytical Customer Relationship Management (CRM) 2. Clinical Decision Support Systems 3. Collection analytics 4. Cross-sell 5. Customer retention 6. Direct marketing 7. Fraud detection 8. Portfolio, product or economy level prediction 9. Underwriting
Once the company has obtained an adequate understanding of the customer base and its own competitive position in the industry, marketing managers are able to make key strategic decisions and develop a marketing strategy designed to maximize the revenues and profits of the firm. The
selected strategy may aim for any of a variety of specific objectives, including optimizing shortterm unit margins, revenue growth, market share, long-term profitability, or other goals.
To achieve the desired objectives, marketers typically Identify One Or More Target Customer segments which they intend to pursue. Customer segments are often selected as targets because they score highly on two dimensions:
1) The segment is attractive to serve because it is large, growing, makes frequent purchases, is not price sensitive (i.e. is willing to pay high prices), or other factors; and
2) The company has the resources and capabilities to compete for the segment's business, can meet their needs better than the competition, and can do so profitably. In fact, a commonly cited definition of marketing is simply "meeting needs profitably."
The implication of selecting target segments is that the business will subsequently allocate more resources to acquire and retain customers in the target segment(s) than it will for other, nontargeted customers. In some cases, the firm may go so far as to turn away customers that are not in its target segment. The doorman at a swanky nightclub, for example, may deny entry to unfashionably dressed individuals because the business has made a strategic decision to target the "high fashion" segment of nightclub patrons.
In conjunction with targeting decisions, marketing managers will Identify The Desired Positioning They Want The Company, Product, Or Brand To Occupy In The Target Customer's Mind. This positioning is often an encapsulation of a key benefit the company's product or service offers that is differentiated and superior to the benefits offered by competitive products. FOR EXAMPLE, Volvo has traditionally positioned its products in the automobile 11
market in North America in order to be perceived as the leader in "safety", whereas BMW has traditionally positioned its brand to be perceived as the leader in "performance."
Ideally, a firm's positioning can be maintained over a long period of time because the company possesses, or can develop, some form of sustainable competitive advantage. The positioning should also be sufficiently relevant to the target segment such that it will drive the purchasing behavior of target customers.
MARKETING ACTION PLAN
Placement and execution of required resources are financial, manpower, operational support, time, technology support
Operating with a change in methods or with alteration in structure Distributing the specific tasks with responsibility or moulding specific jobs to individuals or teams.
The process should be managed by a responsible team. This is to keep direct watch on result,comparison for betterment and best practices, cultivating the effectiveness of processes, calibrating and reducing the variations and setting the process as required.
Introducing certain programs involves acquiring the requisition of resources: a necessity for developing the process, training documentation, process testing, and imalgation with (and/or conversion from) difficult processes.
As and when the strategy implementation processes, there have been so many problems arising such as human relations, the employee-communication. Such a time, marketing strategy is the biggest implementation problem usually involves, with emphasis on the appropriate timing of
new products. An organization, with an effective management, should try to implement its plans without signaling this fact to its competitors.
In order for a policy to work, there must be a level of consistency from every person in an organization, especially management. This is what needs to occur on both the tactical and strategic levels of management.
Measuring the effectiveness of the organizational strategy, it's extremely important to conduct a SWOT analysis to figure out the strengths, weaknesses, opportunities and threats (both internal and external) of the entity in question. This may require to take certain precautionary measures or even to change the entire strategy.
In corporate strategy, Johnson and Scholes present a model in which strategic options are evaluated against three key success criteria:
y y y
Suitability (would it work?) Feasibility (can it be made to work?) Acceptability (will they work it?)
The Marketing Metrics Continuum provides a framework for how to categorize metrics from the tactical to strategic.
After the firm's strategic objectives have been identified, the target market selected, and the desired positioning for the company, product or brand has been determined, MARKETING MANAGERS FOCUS ON HOW TO BEST IMPLEMENT THE CHOSEN STRATEGY. Traditionally, this has involved implementation planning across the "4Ps" of marketing: PRODUCT MANAGEMENT, PRICING, PLACE (I.E. SALES AND DISTRIBUTION CHANNELS), AND PROMOTION.
Taken together, the company's implementation choices across the 4Ps are often described as the marketing mix, meaning the mix of elements the business will employ to "go to market" and execute the marketing strategy. The overall goal for the marketing mix is to consistently deliver a compelling value proposition that reinforces the firm's chosen positioning, builds customer loyalty and brand equity among target customers, and achieves the firm's marketing and financial objectives.
In many cases, marketing management will develop a marketing plan to specify how the company will execute the chosen strategy and achieve the business' objectives. The content of marketing plans varies from firm to firm, but commonly includes:
An executive summary Situation analysis to summarize facts and insights gained from market research and marketing analysis
The company's mission statement or long-term strategic vision A statement of the company's key objectives, often subdivided into marketing objectives and financial objectives
The marketing strategy the business has chosen, specifying the target segments to be pursued and the competitive positioning to be achieved
Implementation choices for each element of the marketing mix (the 4Ps).
Case study: New indication widens growth spectrum Flagyl (metronidazole) of May & Baker (now Rhone Poulene), was being used mainly to treat ³giardiasis´. The company had found out in the sixties that their product was very effective in treating ³amoebiasis´ which was prevalent in India. The company launched an aggressive promotion of flagyl in the treatment of amoebiasis and replaced the conventional treatment of amoebiasis with emetine and dihydroemetine injections. Many other brands of metronidazole joined the bandwagon. Flagyl even today remains one of the major brands of May & Baker (now Rhone Poulene Rorer, which is recently acquired by Nicholas Piramal). ³A company¶s product is what it has to sell? Under marketing concept philosophy, a product is viewed as a reservoir of satisfactions that accrue to its owner either from possession or use. 16
These satisfactions are often more than functional and fulfill other needs such as aesthetic gratification, convenience, social status, psychological well-being, and so forth. Prior to the adoption of marketing concept philosophy the technological or engineering dimensions of the product were the primary focuses. Today, however, products are designed and marketed with a strong emphasis on the unique attributes and benefits which the physical product represents. Primary attention is placed on consumer¶s needs and wants at the planning and development stage. For example, Revlon does not sell just cosmetics; it also sells the promise of beauty and glamour. In air travel, budget airlines, such as People Express, are marketing transportation at lowest cost per-air-mile while competitors are selling transportation plus convenience and personal comfort²at a higher price. A product is company¶s main link with the consuming public. A poorly conceived product, no matter how well it is promoted, priced, or distributed, will fail in the long run. The task of developing product and product lines and positioning them in the marketplace to maximize customer satisfaction is called merchandising. The essence of product policy is forecasting all dimensions of the environment along with the customer desires to determine the types of products the various market segments desire and then integrating these forecasts with an analysis of the firm¶s existing and non-existing marketing strengths, skills, resources. A policy of product differentiation involves modifying particular product attributes with the goal of tapping new market segments or enlarging demand in a current segment. Market segmentation recognizes the fact that markets are not homogenous. Automobile manufacturers use this policy by producing sub-compacts, compacts, and mid size, luxury models.
Planned obsolence is another product policy where the goal is to introduce products, usually with superficial or minor variations, in order to get current owners to purchase the new model. Product positioning strategy refers to the manner in which the product is targeted at particular consumer segments either through the intrinsic attributes of the products or through the image created for the product through promotion. Gillette¶s ³Right Guard´ was originally positioned as a deodorant for men but later was repositioned as a deodorant for family. David Ogilvy in 1971, pointed out that ³the result of our campaigns depend less on how we write your advertising than how your product is positioned´. It is the information explosion that has led to this realization. There are over 8,000 companies churning out over 60,000 products. An urban doctor on a typical working day meets about 12 to 15 medical representatives, who in turn detail about 5 to 8 products. That means an exposure of 60 to 120 products. Add to this the information through newspapers, magazines, professional journals, radio and television messages, etc. If the product is distinctly different in that product category and if it fits with a similar, equivalent perception of the consumer, only then, that product is likely to be ranked higher in consumer¶s mind. Product positioning is a strategy for creating a unique product image which increases total profits. Firms that are planning modifications of existing product or introduction of new products will naturally, in keeping with their market objectives, striving, position there product¶s entry so that it will produce maximum sales and profits. The three primary tasks of product ± positioning in the drug industry are: (a) The type of conditions for which the product will be prescribed. (b) The type of patient for whom the product will be considered suitable; (c) The product with which the product will compete closely.
Case: Dr. Reddy¶s Laboratories and the cost leadership.
Cheminor Drugs and Dr. Reddy¶s Laboratories, the bulk drug units belonging to Dr. Reddy¶s Laboratories group of companies, had done remarkably well in the manufacturing and marketing of bulk drugs. Within four years, the company had achieved the cost leadership in manufacturing at least three bulk drugs, namely ibuprofen, methyldopa and norfloxacin. How did the company achieve all this in such a short time? There are two reasons. Firstly, the economies of scale. The company is the third largest producer of ibuprofen and methyldopa in the world. The huge volumes had given the company the cost leadership. The second reason is that the company had also achieved technological superiority.
Finally, a strategy related to all of them is benefit segmentation. This involves identifying a particular market segment which is highly sensitive to the presence of one or more key product attributes. For example, some travelers will stay only at motels or hotels which have indoor swimming pools and/ or saunas. Product design, packaging, and materials are three of the more important aspects of product strategy. Product design begins with market research. Packaging in this era of self-selection is critical for the product because aside from protecting the product it:(1) Gives information (2) Promotes (3) Often reduces selling costs (4) Facilitates the use of the product. The package is perhaps the most important component of communication about your product. That is why package or pack is called ³The silent salesman´ of a product. Color, design, shape, size, brand name, materials, labels and typography are the components of the packaging communication process. Each component must interact harmoniously and synchronizes to evoke
the desired responses in the consumer. It is important to note that people react to the whole and not to the individual components. Today, new- product management is an important part of a firm¶s competitive strategy. Within industry, a number of organizational arrangements have recently evolved. 1. A product manager is often charged with the responsibility of keeping the product up-todate. 2. A new-product manager may have the task of maintaining a steady stream of new products for the various product managers. 3. A product planning committee, composed of top executives, represents the functional areas of business. 4. A new product department. Managing product lines is a never ending process since all products have a life-cycle: (1) Introductory stage. (2) Growth stage (3) Maturity stage (4) Saturation stage (5) Decline
Intro Growth Maturity Saturation Decline
Basic life cycle of new products.
Case: Me-too strategy meets with a disaster! Imitation may be the best form of flattery. But it could falter when overdone or without proper analysis in marketing. Inspired by the success Tylenol¶s classic repositioning strategy, Burroughs Welcome marketed there brand acetaminophen, Ridake, (manufactured by Litaka Laboratories). The company had chosen the OTC route. Large ads of Ridake appeared in leading newspapers. The copy was almost similar to the copy of Tylenol¶s ads in the U.S., when Tylenol was introduced many years ago. There were strong objections to these ads as they were hyper critical about the popular aspirin. Comparative (or combative) advertisings were almost a nonexistent at that time in India. The resistance to their advertising strategy was so high that the company had to withdraw these ads. The company finally got rid of the product that was supposed to get rid of the pain (hence the name Ridake).
Probably, the marketing manager¶s most important task is pricing because pricing is the economic consideration for which the management must balance the product¶s costs with the requirements of the marketplace. It requires the decision maker to make judgments concerning consumer income, business conditions, competitive reaction, corporate goals, and costs of production and distribution. For consumers, value is a personal thing; it is what on is willing to give up or trade off in order to acquire the product. Marketing managers have to be able to do three things to be effective price setters: (1) Estimate the product¶s value to particular market segments and produce a product in line with this estimate, (2) Convincing the consuming public that the product price is fair and the best value to the rupee, and
(3) Develop pricing policies and strategies that will generate sufficient revenues in the longrun to satisfy investors and assure survival.
In making pricing decisions, the marketing manager must take into account the following factors: (1) The nature and extent of consumer demand; (2) The short- and long-run costs of manufacturing and selling the product; (3) The competitive reactions; (4) The antitrust laws; (5) The promotional strategy; (6) The channels of distribution; (7) Profit goals; and (8) Life cycle of the product. Many pricing formulas can be reduced to two basic approaches: (1) The Cost approach. (2) The Market or Demand approach
Three commonly accepted pricing formulas are: (1) Prices are set equal to allocated total costs, plus a certain standard percentage markup. This is a full cost formula where price reflects the average total cost unit plus a margin of profit. (2) Prices are set equal to a certain percentage of product cost at each level of production and distribution. This method, the markup formula, is basic in the wholesale and retail trade.
(3) Prices are set equal to variable direct cost plus some amount added to cover allocated overhead and profit contribution. This is known as the profit margin formula and uses only variable costs as a starting point.
Key Factors Affecting the Pricing Decision 1. Market structure²the number and size of competing firms and ease of entry 2. Market conditions---general economic conditions 3. Competitive behavior---collusion, price behavior, price matching 4. Product---its perishability; durability; stage of life cycle; type²producer or consumer goods; cost of production and distribution; distinctive substitutes 5. Customers--- their urgency of needs; ability to pay; location; potential number; purchase behavior; use of product²intermediate or ultimate; perception of seller or brands; susceptibility to promotion 6. Goals or Objective of Seller---desire for market share; target rate of return on capital; beating or matching competition; recapturing full costs; exploiting excess capacity; maximizing sales rather than profits; exploiting monopoly power; market leadership.
FORMULA FOR PRICING AS PER DRUGS (PRICE CONTROL) ORDER, 1970
RP = (MC+CC) × (1÷MU/100)
Where RP = Suggested retail price MC = the cost of materials: includes the cost of basic drugs and pharmaceuticals CC = the cost of conversion or the cost of formulation
PC = the packing charges, includes the cost of packing materials and packaging expenses; and NW = the ³mark- up´, is meant to cover forwarding charges, promotional sales services. If any trade commissions. expenses, after
MARK-UPS PERMISSIBLE UNDER DRUGS (PRICE CONTROL) ORDER, 1970 S.no. Type of products 1. 2. Ongoing and old products Percent 75
New products but not original (not developed 100* (for the first 3-5 through extensive work) years)
New products that are original (developed through 150* (for the first 3-5 extensive work) years)
Case: Dr. Reddy¶s Laboratories create entry barrier with their cost leadership! Norfloxacin, a broad-spectrum antibiotic highly effective in urinary tract infections, was introduced in the Indian market in 1988. The market size for urologicals was around Rs. 16 crore in 1988 with an annual growth rate of 105%. The introduction of Norfloxacin accelerated the growth rate of the category itself to a frantic pace. A number of brands were introduced in quick succession. But Cipla¶s NORFLOX was a brand leader right from the beginning, with a formidable share of 19.3%. As regards the price, almost all the brands were selling at around Rs.8/ capsule of 400mg strength and around Rs.18/ capsule of 800mg strength. Enter Norilet, brand of Norfloxavin from Stangen, a group company of the Dr. Reddy¶s Laboratories, a leading manufacturer of bulk drugs at Hyderabad. Dr. Reddy¶s Laboratories started manufacturing the bulk drug Norfloxacin and very quickly achieved cost leadership. The cost effectiveness of their Norfloxacin manufacturing was so high that they were able to market their Norfloxacin brand, Norilet, at less than the prevailing market price. Norilet 400mg was priced at ground Rs.4/ capsule and Norilet 800mg at around Rs.8/ capsule. Norilet was making inroads into competition very rapidly. Not only that, it even created an entry barrier. No brand of Norfloxacin has been introduced ever since! 24
III. THE PHARMACEUTICAL PLACE
Distribution activity is concerned with ³placing´ goods and services when they are needed and where are they wanted. Place or distribution is crucial an element for achieving success at the marketplace. However unique and beneficial your product may be, if it is not available when it is needed and where it is wanted, you cannot hope to succeed. Developing and managing the channels of distribution are a major line responsibility of the marketing manager. Developing a channel strategy emphasizes the spatial and temporal dimensions of marketing. A channel of distribution is the route that the product follows in its passage from the producer and the consumer. Critical factors affecting this route are: (1) Nature of the goods (industrial, perishability, bulk), (2) Nature and location of the markets, (3) Price of the product, (4) Availability of middleman, transportation and storage facilities, (5) Sales effort required by middleman, and (6) Resources of the manufacturer. Channel management involves two basic problems: the selection of proper channel for the product and maintaining the channel. Three policy alternatives may be considered in the selection of the channel: (1) The policy of general or intense distribution, whereby the firm seeks to obtain the widest possible distribution for its product by allowing it to be sold everywhere by anyone willing to stock it. (2) The policy selective distribution, where the manufacturer chooses only those outlets that are best able to serve that company¶s needs. 25
(3) The policy of using exclusive dealerships, which allows only one distributor to stock and sell the product in a given market.
PHARMACEUTICAL MARKETING CHANNELS
While a marketing channel requires at a minimum, two parties, in so far as the manufacturer of prescription drugs is concerned, the law requires that at least one intermediary stands between the manufacturer and consumer- i.e., the doctor. It is illegal for the manufacturer to sell prescription drugs directly to the patient. Usually the physician is not considered as a member of the distribution channel. Instead, he is considered an influencer or intermediary customer and therefore is not drawn into such diagrams. He is considered only as the decision maker. One cannot overlap the role of pharmacists and the need of their services in the process of drug distribution. The distribution channel can look as in fig.: MANUFACTURER
The various people involved in a pharmaceutical distribution channel are: Manufacturer, Physician, Wholesaler, Stockist, Carry & forward agent, Retailer, Chemist & Druggists.
As a general rule, middlemen operating under a selective or exclusive distribution policy are expected to expend more effort in marketing the product. Two basic strategies are used to facilitate the operation: (1) A push strategy where the producer makes heavy use of all its promotional funds and selling efforts among channel members to secure cooperation and loyalty, and (2) The pull strategy where the producer emphasizes advertising and sales promotion to the ultimate consumer to pull the product through the channel. (3) Usually most consumer goods companies use a combination of push and pull strategies to achieve their goals.
Franchising represents a special type of channel which is derived from an older channel arrangement known as Wholesaler sponsored voluntary chains, mainly in the grocery field. The current idea is that the franchisor (manufacturer or the wholesaler) gives the franchisee the legal
right to sell the franchisor¶s goods or services in a restricted market; the franchisor provides the franchisee with the equipment, the product or services, marketing management know- how and often some financial assistance. The franchisee agrees to market the product or service according to the conditions specified by the franchisor. In essence, there are three general types of franchisee agreement: (1) The manufacturer sponsored franchisee as in the case of auto dealers; (2) The manufacturer or the wholesaler sponsored franchise as in the case of Coca Cola; (3) The service firm sponsored franchise system which is most familiar as in the case of Hertz, Mc Donald¶s.
Case: Margins hold the key to success! Johnson & Johnson, the transnational giant in the OTC healthcare business, introduced a new sanitary napkin modest in the early 70s to take on the pioneer Comfit of Christine Hoyden. Johnson & Johnson took their image for granted, and marketed the product. The product never really took-off, and was finally withdrawn. What could be the reason for the failure of a market-driven and professionally managed like Johnson & Johnson? Surprising, as it might seem, the reason was that the low retail margins offered.
Case: The power of margins tilting the market share balance is more than marginal! It was the turn of Glaxo¶s family products division in the late 70s to face the trade boycott. Glaxo did not increase the trade margins on their leading brand of farex (infant food with milk and cereal), which was a distant number two brand, experienced a sudden spurt in sales. It was almost a windfall for cerelac. Glaxo subsequently conceded a revision in the trade margin. By then it had already paid the price. A number of farex users were already converted to cerelac. Glaxo has been trying to regain its lost market share for ever since!
Promotion is communication to the potential consumer and refers to the non price selling activities of the firm. Three important types are advertising, personal selling, and sales promotion. Advertising is any paid form of non personal presentation of merchandise to the group by an identified sponsor. Personal selling is the process of assisting and persuading a prospect to but a commodity in a face-to-face situation. Sales promotion includes such devices as trading stamps, dealer aids, incentive travel, premiums, contests, and so on. In practice, sales promotion activities are used primarily to supplement advertising or personal selling. The general goal for the promotion element in the marketing mix is to increase sales but the strategic objective is to enhance the effectiveness of other marketing mix components. Advertising and personal selling are different means to the same end- increasing sales. Usually they are employed together. Advertising appeals to the mass mind whereas personal salesmanship is directed to the individual. Advertising assists the sales people and makes their product more productive by giving preliminary information about the product to prospects or developing goodwill toward the sponsor. The successful marketing manager is always aware of the fact that the promotional activities are a cost to the firm. Therefore selling expenditures have to be justified in terms of increased sales and profits. Using incremental reason, the added expense of any promotional outlays should equal or exceed the additional profits generated. This is not always possible because some types of promotional outlays are common to more than one product while others are intended to be long- term as in the case of institutional advertising or trade shows. For example, paying athletes large sum of money to use your products is necessary because competitors do it, but the sales benefits are taken on faith. 29
Promotional decisions must be based on organizational goals and marketing objectives. The logical sequence of promotional decisions from a strategic perspective is: 1. Identifying target markets and audiences. 2. Determining objectives and tasks. 3. Preparing a promotion budget. 4. Selecting the promotional mix. 5. Evaluating and implementing the promotional strategy. 6. Feedback.
ELEMENTS OF PROMOTIONAL MIX
The promotional mix in pharmaceutical marketing includes personal selling, advertising, sales promotion and publicity. These can be further segmented for the purpose of clarity and better understanding: 1. Personal selling: Medical representatives detailing the company¶s products to the doctors, with the help of visual aids, leave- behind- literatures, product monographs, samples, gifts, etc. 2. Advertising: Preparation of visual aids, leave- behind- literatures, product monographs to assist medical representatives in their detailing effort. Advertising in specialized media like medical journals and souvenirs, preparing advertising material for seminars and medical symposia; preparing mailers for doctors and dealers; preparing advertising material for print media and commercials for radio and television in case of OTC formulations.
3. Sales promotion: Deciding on special bonus offers, free goods and gifts to trade. Deciding on physician¶s samples and gifts, etc. 4. Publicity: Organizing medical symposia and seminars, conducting trials; conducting exhibitions, deciding and executing product publicity campaigns for truly innovative products.
Case: Innovative communication strategy pushes a product to brand leadership position! One company had found out an innovative way to communicate its rather me ± too product. The company had fixed a battery operated electrical display behind the visualaid that can light up with the pressing of a button to create a neon-sign effect in the doctor¶s chamber. Every time the representative announced the brand name, he used to press the button and the brand name was illuminated. The reaction and the response of the doctors to this novel and innovative device was one pleasant surprise. It made the brand name really memorable. This certainly paved the way for the brand¶s long march towards leadership position!
Case: Participation and involvement rejuvenate a tired old brand. A leading pharmaceutical company in India came up with an idea of involving the doctor in detailing. How to make him participate in the interview? This was necessary because the company was re-launching one of its very old brands. The company finally hit upon an idea of requesting the doctor to give the company¶s medical representatives the first prescription for the brand as soon as detailing was over. The skeptical field force implemented the strategy rather hesitatingly. But when the first few doctors wrote the brand prescription after the detailing was over without any reservation, the skepticism of the field force was converted into enthusiasm. The ³brand name´ found its way into the doctor¶s pen. The campaign was an unprecedented success!
Besides the 4Ps of marketing mix, 5 more Ps also deserve an equal importance. These are as follows:
Personal selling is one of the most crucial elements of pharmaceutical marketing. The nature of the competition and its intensity in the Indian pharmaceutical market has made personal selling the crucial determinant factor for the success that it is today. In a market where both products and strategies are ³me-too´ rather ³me-me-too´ in nature, the battle is more between the talents of the different selling teams. A well trained, highly motivated force plays a decisive role in winning the marketing wars. There is more to personal selling than achieving sales targets. A company¶s medical representatives are its most important of communication source to its prospective customers. They are also the most important source of feedback regarding customer¶s perception of their products and also about competitor¶s activities. They are the most vital two-way communication link between the company and the customers. Companies, which perceive the important role of their sales force clearly and focus their attention and their efforts and program to improve the effectiveness of their medical representatives as a source of communication, are sure to win. The nature of sales force management is changing and challenging. The increasing unionization of medical representatives and the militant attitudes and approaches of some of their associations are causing concern to many managers. These are also making the task of sales force management more challenging than ever before.
The management of industrial relations depends entirely on good inter- personal relations that are based on mutual respect for each other¶s competence and view point. It cannot be based on convenience. What is needed is the creation of an ³assertive climate´ in an organization.
That the ³prescription´ is the single most important element to be studied in pharmaceutical marketing is universally recognized and accepted. Yet the attitude of many a pharmaceutical marketing practitioner towards the study of prescription research can best be described as ambivalent. No magic formula! Apparently, there is no magic formula that can enhance or accelerate the rate of prescription generation. But the active ingredients of successful prescription generation are universally acknowledged. They are: precise positioning backed by relevant segmentation strategy and tactics, perceptible product differentiation in the product, creative communication, which is target specific and above all persuasive detailing by medical representatives. What is probably missing in this success formula is the relative weight ages that are to be given or the exact strengths or concentration in which each of these ingredients should be mixed. Prescription research can provide insights into these areas. What is more important than everything else is the firm conviction that increased prescription generation is the only way to successful pharmaceutical marketing.
A number of government regulations and legislations influence and intervene in the monitoring of operations of a business organization. The regulations and controls have been steadily increasing over the years. The corporate policy is therefore governed to a considerable extent by the public policy. A number of advocacy groups and special interest groups like the Drug Action Forum and the consumer protection groups are also increasing their pressure and influence on the government and business is formulating their policies. An understanding and awareness of public policy is essential for any marketing practitioner. They should have a clear idea of the legal implications of their decisions, for these regulations affect all the elements of the marketing-mix. Achieving leadership in a given industry brings certain responsibilities to be fulfilled by the organization towards the society, that is, general public. The business leadership should be a leader in this area too.
VIII. PUBLIC RELATIONS
Public relations seem to have come of age. Public relations managers are indeed shedding their con-men image. Indeed the profession as such is growing out of its ³image-makers´. The shift in emphasis is from image to personality. Yesterday¶s public relations professionals were supposed to have been busy creating a corporate image among the public. Today, they are engaged in building a distinct a personality for the organization in the minds of the general public and in creating favorable public opinion and attitude towards supporting the aims and actions of the
organization. There is more than mere semantics to this shift in emphasis from image to personality.
Power is a multifaceted concept. Power is essential to make an organization effective. Power gives the organization the much-needed competitive edge to win at the market place. The many sources of power in the context of an organization are its: (a) Resources (b) People (c) Size (d) Technology (e) Coalitions (f) Franchise (g) Niche (h) Integration strategies (i) Innovation (j) Prescription generating ability (k) Quality When power from all the sources is synchronized and focused to accomplish the corporate objectives what is the outcome? Uncommon success. That is what happened in the case of the Indian pharmaceutical industry. Consider the spectacular successes that companies like Cadilla, Ranbaxy, Cipla, Lupin, Wockhardt, Torrent, Aristo, Alchem, American Remedies, Sun Pharma and Citadel had achieved during the past few years. And reflect on the reasons behind the 35
enormous staying power demonstrated by the companies like Glaxo, Pfizer, Hoechst and Alembic. On closer examination of the reasons behind their success, the reinforcing and regenerating nature or property of power becomes obvious. The message is clear. Proper use of power propels the organization to the top. Misuse or abuse of power pushes them down into oblivion.
Market research can be defined as the systematic gathering, recording and analyzing of data about the problems relating to the distribution and sales of goods. The market research department is a staff function that services the entire organization, because the need for market research information is pervasive. The justification for market research is that it helps to keep the executive informed and thus serves as a basis for making decisions. The qualified market researcher is a highly qualified expert in designing studies, collecting and analyzing data, and storing and processing it for future use. Progressive companies are establishing marketing information systems (MIS) to coordinate the several information flows affecting marketing. A MIS may be defined as ³a structured, interacting complex of persons, machines, and procedures designed to generate an orderly flow of pertinent information collected both from intra and extra firm sources for use as the basis for decision making in specific responsibility are of marketing management´. The MIS concept recognizes that too much information may be as bad as too little information in this age of electronic technology for collecting and processing data. The goal is to make certain the marketing managers have access to marketing intelligence so that they are able to perform the key tasks of planning and control. Here the bottom line is marketing intelligence. 36
Market-research departments usually are headed by a director who reports to the top marketing executive. Research personnel are specialists (for e.g., statisticians, psychologists, economists) in using the technical tools of their work. If a company cannot afford to maintain a full time marketing-research department, the responsibility for research will be assigned to one of the marketing executives and an outside agency will be relied upon to provide the actual technical research. These external agencies are varied as to mode of operation, but in general there are 8 basic types: 1. Consulting firms that work for the company as independent contractors. 2. Syndicated data services (for e.g., A.C. Nielson, Daniel Starch) that assemble certain types of data and sell them on a subscription basis. 3. Specialized service organization that performs limited functions such as computer programming, field interviews, data storage and statistical analysis. 4. Trade associations supported by contributions from firms in the industry that serve an entire industry. 5. Media that has full time research staffs to perform certain kinds of marketing studies on a continuing basis and perform specialized services only upon request. 6. Advertising agencies that perform marketing research studies for clients on a free-plusexpense basis. 7. Universities with bureaus of business research that contract to do studies for business people or industries. 8. The government strategies (for e.g., the Small Business Administration, the Agricultural Market Service) that sponsor or perform research for an industry or for a certain kind of business.
Below are listed some typical market-research projects and applications: 1. Product studies, which include developing and testing new products, measuring product preference, and testing package design. 2. Consumer studies, which identify potential consumers, measure characteristics (income, habits, attitudes, etc.), motivation research, brand loyalty, consumer pools and panels. 3. Market analysis, which tries to measure current sales and potential sales trends forecast, short-run and long-run sales; analysis of business conditions and trends. 4. Sales analysis, appraises sales policies, measures distributor and dealer performance, evaluate sales territories, sales compensation studies, store audits, establishment of sales quotas and territories. 5. Advertising studies, which attempt to measure the effectiveness of evaluating advertising campaigns, determine advertising appeals and measure media audiences. 6. Distribution cost analysis, which seeks to measure the actual cost of distributing a product by marking channel cost studies, transportation cost including handling and insurance, and storage costs. Marketing managers must know enough about recent techniques to be able to evaluate reports and to communicate with the market research personnel. A working knowledge of statistics and accounting is vital in the interpretation of market-research information. The typical marketingresearch report will contain a summary of the key findings and will have several technical appendices at its end. For e.g., almost all market surveys are based on some type of probability sample, and sales forecasting relies heavily on trend analysis and statistical correlation. The marketing executive is not expected to be an expert in every field, but he has to know enough about methodology to ask intelligent questions of the researcher. Likewise, it is vital for the
manager of marketing researcher to have an understanding of the firm¶s marketing plans, programs and procedures.
MANAGEMENT ENTERPRISE MARKETING MANAGEMENT
Enterprise Marketing Management defines a category of software used by marketing operations to manage their end-to-end internal processes. EMM is subset of Marketing Technologies which consists of a total of 3 key technology types that allow for corporations and customers to participate in a holistic and real-time marketing campaign.
EMM consists of other marketing software categories such as Web Analytics, Campaign Management, Digital Asset Management, Web Content Management, Marketing Resource Management, Marketing Dashboards, Lead Management, Event-driven Marketing, Predictive Modeling and more. The goal of deploying and using EMM is to improve both the efficiency and effectiveness of marketing by increasing operational efficiency, decreasing costs and waste, and standardizing marketing processes for an accurate and predictable time to market. The benefit of using an EMM suite rather than a variety of point solutions is improved collaboration, efficiency and visibility across the entire marketing function, as well as reduced total cost of ownership. Depending on the variable combinations of solutions, EMM can mean several different things to
specific brands and industries. Enterprise Marketing Management allows for corporations to put in place a baseline of their operations that will allow them to begin evolution towards a holistic solution that incorporates customer experience, expectation and brand value associated with Marketing Technologies.
Marketing effectiveness is the quality of how marketers go to market with the goal of optimizing their spending to achieve good results for both the short-term and long-term. It is also related to Marketing ROI and Return on Marketing Investment (ROMI).
Marketing effectiveness has four dimensions:
y y y y
Corporate Competitive Customers/Consumers Exogenous Factors There are five factors driving the level of marketing effectiveness that marketers can achieve:
1. Marketing Strategy ± Improving marketing effectiveness can be achieved by employing a superior marketing strategy. By positioning the product or brand correctly, the product/brand will be more successful in the market than competitors¶ products/brands.
Even with the best strategy, marketers must execute their programs properly to achieve extraordinary results. 2. Marketing Creative ± Even without a change in strategy, better creative can improve results. Without a change in strategy, AFLAC was able to achieve stunning results with its introduction of the Duck (AFLAC) campaign. With the introduction of this new creative concept, the company growth rate soared from 12% prior to the campaign to 28% following it. 3. Marketing Execution ± By improving how marketers go to market, they can achieve significantly greater results without changing their strategy or their creative execution. 4. Marketing Infrastructure (also known as Marketing Management) ± Improving the business of marketing can lead to significant gains for the company. Management of agencies, budgeting, motivation and coordination of marketing activities can lead to improved competitiveness and improved results. The overall accountability for brand leadership and business results is often reflected in an organization under a title within a (Brand management) department. 5. Exogenous Factors - Generally out of the control of marketers, external or exogenous factors also influence how marketers can improve their results. Taking advantage of seasonality, interests or the regulatory environment can help marketers improve their marketing effectiveness.
COMMERCIAL OPERATIONS MANAGEMENT
Commercial Operations Management (COM) unifies marketing and sales within organizations. This is accomplished by integrating Brand Management, Innovation management, Product Management, Marketing Operations Management (MOM), Channel & Sales Management and Customer Interaction Management. Commercial Operations Management is the alignment of people, process and technology to support commercial activities and improve both innovation and marketing effectiveness. Commercial Operations Management means that enterprises entering into a competitive process, whether ³in the market´ or ³for the market´, hold both the product innovation and marketing team accountable for their commercial and financial outcome.
The integration of these functional areas is particularly important when organizations want to clarify accountability for key decisions, redesign processes and linking them to measurable outcomes, or improve skills and improving processes.
MARKETING RESOURCE MANAGEMENT
Marketing Resource Management (MRM) provides the software infrastructure to support Marketing Operations Management. Marketing Operations Management is the alignment of people, process and technology to support marketing activities and improve marketing effectiveness. The growing importance of an effective MRM strategy is reflected by the number of leading organizations which are following this path, with implementations of software provided by some of the leading technology vendors operating in this space. This growth is also reflected in the growing importance of the marketing operations role in organizations.
MRM generally refers to technology for the areas of planning, design and production within marketing and MRM solutions do not provide the analytics, decisioning and automated execution capabilities for personalized marketing across channels. MRM is a subset of Enterprise Marketing Management (EMM) solutions which provide more complete capabilities for all of the functions and roles within the marketing.
The short falls with MRM is that it is considered at times to be the all and every in marketing solutions for a given marketing operation. The reality of MRM is that it is roughly 5 to 10% of the overall solution that puts into place a procedure for automating paper pushing and approval processes with an emphasis on standardizing marketing processes throughout an organization.
The Drugs and Cosmetics Act, 1940: This Act regulates the import, manufacture, distribution and sale of drugs in India. · Schedule M of the Drugs and Cosmetics Act specifies the general and specific requirements for factory premises and materials, plant and equipment and minimum recommended areas for basic installation for certain categories of drugs. · Schedule T of the Drugs and Cosmetics Act prescribes Good Manufacturing Practices (GMP) specifications for manufacture of Ayurvedic, Siddha and Unani medicines. · Schedule Y of the Drugs and Cosmetics Act governs the clinical trials legislative requirements of the Drugs and Cosmetics Act. The Pharmacy Act, 1948: This legislation regulates the profession of Pharmacy in India. Under the provisions of this act the Central Government constitutes a Central Pharmacy Council of India and the State Governments constitute State Pharmacy Councils. The Drugs and Magic Remedies (Objectionable Advertisement) Act, 1954: This Act provides to control the advertisements regarding drugs and prohibits the advertising of remedies alleged to possess magic qualities. The Narcotic Drugs and Psychotropic Substances Act, 1985: This is an act concerned with control and regulation of operations relating to Narcotic Drugs and Psychotropic Substances. The Medicinal and Toilet Preparations (Excise Duties) Act, 1956: An Act to provide for the levy and collection of duties of excise on medicinal and toilet preparations. The Drugs Price Control Order (DPCO), 1995: This is an order issued by the Government of India under the Essential Commodities Act, 1955 to regulate the prices of drugs. The Order 44
provides the list of price controlled drugs, procedures for fixation of prices of drugs, method of implementation of prices fixed by Government and penalties for contravention of provisions among other things. For the purpose of implementing provisions of DPCO, powers of the Government have been vested in the National Pharmaceutical Pricing Authority (NPPA). Good Clinical Practice (GCP) Guidelines: The Ministry of Health, along with Drugs Controller General of India (DCGI) and Indian Council for Medical Research (ICMR) has come out with draft guidelines for research in human subjects. These GCP guidelines are essentially based on Declaration of Helsinki, World Health Organization (WHO) guidelines and International Conference on Harmonization (ICH) requirements for good clinical practice. The following are some of the other laws which have a bearing on pharmaceutical manufacture, distribution and sale in India: · The Industries (Development and Regulation) Act, 1951 · The Trade and Merchandise Marks Act, 1958 · The Indian Patent and Design Act, 1970 · Factories Act Regulatory Bodies: The Ministry of Health & Family Welfare (MoHFW) and the Ministry of Chemicals and Fertilizers (MoC&F) of the Government of India play a major role in regulating the pharmaceutical sector in the country. MINISTRY OF HEALTH & FAMILY WELFARE (MOHFW): Department of Health: The following are the main agencies of the department which deal with key issues including drug approvals:
· Central Drugs Standard Control Organization (CDSCO): As an agency of the Department of Health, the CDSCO works both at the Central and the State level and is responsible for ensuring safety, efficacy and quality of drugs supplied to the public. The agency performs the above mentioned functions with the Drugs Controller General of India (DCGI) as the executive head. · Drugs Controller General of India (DCGI): The DCGI is an apex body in the pharmaceutical industry governing issues such as product approval and standards, clinical trials, introduction of new drugs, import licences for new drugs and enforcing new drug legislation. The following are the major acts which the Department of Health administers: · The Drugs & Cosmetics Act, 1940 · The Prevention of Food Adulteration Act · The IMA Act · The Tobacco Control Act MINISTRY OF CHEMICALS AND FERTILISERS (MOC&F): The Ministry of Chemicals & Fertilizers constitutes bodies such as the Department of Chemicals & Petrochemicals and the National Pharmaceutical Pricing Authority (NPPA). These departments are entrusted with the responsibility of policy making, planning, development and regulations relating to Chemicals, Petrochemicals and Pharmaceuticals. Department of Chemicals & Petro-Chemicals: This department is the concerned authority for formulating and implementing policies and programmes for achieving growth and development of pharmaceuticals in the country. In order to attract investment into the sector, the Department has undertaken several initiatives, the major being the Pharmaceutical Policy with the objective to strengthen the production, export & R&D. The first comprehensive pharmaceutical policy in India was formulated in 1978.
The national pharmaceutical policy has seen a number of changes through new policy guidelines issued in 1986, 1994 and recently in 2002. Pharmaceutical Policy 2002 - The main objectives of the policy are: · To ensure availability of good quality essential pharmaceuticals at reasonable prices for mass consumption. · To strengthen the indigenous capability for cost effective quality production and export of pharmaceuticals by reducing trade barriers in the pharmaceutical sector. · Quality control system for pharmaceutical production and distribution to make quality an essential attribute of the domestic industry. · Encouraging pharmaceutical R&D that is compatible with the country's needs. · To encourage new investment in the pharmaceutical industry and the introduction of new technologies and new drugs. Draft Pharmaceutical Policy 2006 - The Department of Chemicals has released the draft of the New Pharmaceutical Policy 2006 which is waiting for approval by the Indian Government. The draft National Pharmaceutical Policy, 2006 seeks to strengthen the Drug Regulatory System and Patent offices in the country. It focuses on research and drug development with clinical trials. The policy aims at providing a better access to anti-cancer and anti-HIV/AIDS drugs to the patients. It seeks to rationalize the excise duty on pharmaceuticals and to streamline the system of bulk procurement of drugs by the Government besides promoting the generic medicines.
National Pharmaceutical Pricing Authority (NPPA): It has been entrusted with the task of fixation / revision of prices of bulk drugs and formulations, enforcement of provisions of the
Drugs (Prices Control) Order and monitoring the prices of controlled and decontrolled drugs in the country.
Drugs Price Control Order (DPCO), 1995: The Drugs Price Control Order (DPCO), 1995 is an order issued by the Government of India under the Essential Commodities Act, 1955 to regulate the prices of drugs. DPCO controls the domestic prices of major bulk drugs and their formulations with an aim to provide patients with medicines at affordable prices. DPCO ascertains, as per Drug Policy guidelines, the bulk drugs (and their formulations) to be kept under price control. At the State level, the State Food and Drug Administrations (FDAs) monitor the drug manufacture, sale, and testing by companies in their jurisdiction. There are also two main statutory bodies formed by Parliament: · The Drugs Technical Advisory Board, whose technical experts advise the Central and State Governments on special technical matters involving drug regulation, and · The Drugs Consultative Committee, where Central and State drug officials ensure that drug control measures are enforced uniformly in all states. The domestic pharmaceutical industry is represented by the following three main pharmaceutical associations: Organization of Pharmaceutical Producers of India (OPPI): This is a premier association of research based international and large pharmaceutical companies in India and is also a scientific and professional body. Indian Drug Manufacturers' Association (IDMA): The IDMA represents the interests of domestic manufacturers and plays a vital role in the growth and development of the
pharmaceutical industry, by taking up with the Government major issues such as Price Control, Patents and Trade Marks Laws, Quality & GMP, R&D, Exports and so on. Indian Pharmaceutical Association (IPA): This is the premier professional association of pharmacists in India.
The Indian pharmaceutical industry is already over-brimming with many ³me-too´ drugs. In this situation, each pharmaceutical giant is adopting µaggressive¶ marketing strategies. For this they are paying heavy penalties too. But to keep their position maintained (or in other words, to maintain the product life cycle) in the market, they seem ready to pay the heavy prices. Some reports related to these are as follows: 1. Michigan among 13 states in suit BY PATRICIA ANSTETT FREE PRESS MEDICAL WRITER February 26, 2009 A New York drug company paid pediatricians consulting fees and treated them to expensive meals and entertainment to get them to prescribe antidepressants to children, a class action charged Wednesday. The U.S. Justice Department and attorney generals from Michigan and 12 other states plus the District of Columbia filed suit in U.S. District Court in Massachusetts alleging that Forest Laboratories tried to build sales for Celexa and Lexapro by encouraging their use in children. The drugs only are approved for adults. Each carries a warning that the drug may cause suicidal thoughts.
Doctors can prescribe adult drugs to children, but the company's actions violate laws that forbid drug companies from paying kickbacks to doctors to encourage their prescription of a drug, the Justice Department said. Michigan Attorney General Mike Cox said the company failed to tell doctors that some studies have found the drugs are ineffective in children and may have put some kids at risk. Michigan's Medicaid program paid $3.5 million between 2000 and 2008 for prescriptions of the two drugs to children under age 16. 2. Big pharma pays billions in fines for bribing doctors Rema Nagarajan, TNN, Sep 16, 2009, 12.53am IST In what seems to be a case of giving the fox the job of guarding the henhouse, the government has decided to curb the practice of bribing doctors for promoting drugs by allowing pharmaceutical companies to self-regulate rather than have a legislation to tackle the menace. This is despite the fact that more than a quarter of the members of the Organisation of Pharmaceutical Producers of India (OPPI) ² an association mainly of multinationals which is estimated to account for 70% of the drug market in India ² are subsidiaries of companies that have been penalized in the US for illegally promoting various drugs through inducements for doctors. The latest to be penalized is pharma giant Pfizer, which on September 2 shelled out $2.3 billion in one of the biggest healthcare fraud settlements. The charge against Pfizer was that it promoted drugs for usages not approved by the Food and Drug Administration, by inducing doctors to prescribe the drugs by wining and dining them and sending them for exotic trips.
Another big player, Eli Lilly, was fined $1.42 billion at the beginning of the year for illegally promoting a drug, Zyprexa, by funding continuing medical education of doctors through millions of dollars in grants to push them to prescribe the drugs for unapproved use. Drug companies spend billions of dollars wooing doctors--more than they spend on research or consumer advertising [all of which contributes to the high cost of health care in the U.S.] Much of this money is spent on giving doctors free samples, free food, free medical refresher courses and payments for marketing lectures [using materials prepared by the drug companies]. The Institute's report recommends that these efforts end. Last year in a tiny nod designed to appease critics, several big drug companies agreed to stop giving pens, prescription pads, coffee mugs and other small gifts to doctors, but they defended the other practices criticized by the Institute of Medicine report. These have a very bad impact on customer's part. The industry which is meant to serve the patient has shifted its focus towards making big profits. Steps should be taken to curb these kinds of marketing strategies.
THE COMPETITIVE ENVIRONMENT
Of all the external environments, in which the firm operates, it is the competitive environment that has the most immediate impact and is the easiest to understand. Apart from customers, competitors are the most important determinants of the market share. It is important to prepare as complete a profile as possible of each of a firm¶s major competitors.. The important questions to ask are: 1. Company history of three major competitors for each major product. 2. Plant location. 51
3. Investment history of the past five years, plant expansion, new licensed capacities, public issues, etc. 4. Financial history of last five years like net sales, cost of sales, inventory, net income, total assets, operating expenses, gross margin, net margin, inventory turnover, profitability, return on investment (ROI), etc. 5. Major products of competitors accounting for80% of their sales and their growth in last five years. 6. Product quality of the competitors: what is the emphasis given by the competitors for product quality? How do they compare with the firm¶s product quality standards on a ten point-scale?
Pharmaceutical marketing can be studied from various perspectives. Managerial approach is the most widely adopted, which essentially consists of assisting the marketing manager in selecting the best combination of marketing activities for achieving organizational goals. The major steps involved in any good marketing management are:-
(1) formulation of objectives, (2) identification of target market by market opportunity assessment, resource environment analysis, and by selection of specific segmentation or differentiation strategy, and
(3) development of an optimal marketing mix, a combination of four controllable marketing variables --- product, price, place and promotion --commonly known as four Ps, to achieve marketing through the target market, and (4) Implementation and evaluation of marketing strategy.
In effect, management of marketing functions can be described as providing the right product, at the right price, at the right place, with right information, to the right market, to achieve the organizational objectives. The Task Force on Prescription Drugs endorsed this approach when it described rational prescribing as ³Prescribing the right drug for the right patient, at the right time, in right amounts, and with due considerations of relative costs.´ In the formulation of objectives of the management, using this approach, may be guided by many orientations, such as production, finance, sales, or customer orientation. The customer orientation, according to the marketing concept, is considered the cornerstone of modern marketing management. Although its advocates have usually discussed the application of this approach only from a manufacturer¶s perspective, there is nothing inherent in the approach indicating that it cannot be adopted by parties other than pharmaceutical manufacturers, such as community pharmacies. In effect, this approach can be successfully adopted by hospital pharmacies interested in developing reimbursable clinical pharmacy programs.
The major limitation of this approach is that it views marketing as a tool for achieving organizational objectives (a normative view) and not as a field of investigation (a positive theory view). Furthermore, emphasis on achievement of organizational goals through the appropriate identification of target market(s) in the pharmaceutical marketplace may lead to the development
of many ³me-to´ drugs, and may create a class of many needed ³orphan´ drugs. In other words, achievement of organizational goals at the micro level in the pharmaceutical marketplace may not always be the most beneficial for society.
1. Massie Joseph L., ³Essentials of Management ´, Fourth edition, Seventeenth Indian reprint, 2002, Eastern Economy Edition, Pentice-Hall of India Private Ltd., New Delhi. 2. Prof. Sood A.K., ³Cases in Marketing Managrment´, June 2003, Symbiosis Centre for Distance Learning, Pune. 3. Smith Mickey, ³Principles Of Pharmaceutical Marketing´, Third Edition, reprint 2004, CBS Publishers and Distributors Pvt. Ltd., New Delhi. 4. Kotler Philip and Keller Kevin Lane, ³ Marketing Management´, Twelfth edition, Third impression,2007, Dorling Kinderseley (India) Pvt. Ltd. New Delhi, Licencees of Pearson Education in South Asia. 5. Chaganti Subba Rao, ³Pharmaceutical Marketing In India Concepts Strategies Cases´, Pharma Book Syndicate, Hyderabad. 6. Internet portal: www.google.com, www.scribd.com, www.wikipedia.com.
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