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CHAPTER - I

INDUSTRY ANALYSIS

CHAPTER 1
THE PHARMACEUTICAL INDUSTRY
1.1

INTRODUCTION

The Pharmaceutical industry develops, produces, and markets drugs or pharmaceuticals
licensed for use as medications. Pharmaceutical companies are allowed to deal in generic or
brand medications and medical devices. They are subject to a variety of laws and regulations
regarding the patenting, testing and ensuring safety and efficacy and marketing of drugs.
The earliest drugstores date to the middle Ages. The first known drugstore was opened by
Arabian pharmacists in Baghdad in 754, and many more soon began operating throughout the
medieval Islamic world and eventually medieval Europe. By the 19th century, many of the
drugstores in Europe and North America had eventually developed into larger pharmaceutical
companies.
Most of today's major pharmaceutical companies were founded in the late 19th and early 20th
centuries. Key discoveries of the 1920s and 1930s, such as insulin and penicillin, became massmanufactured and distributed. Switzerland, Germany and Italy had particularly strong
industries, with the United Kingdom, the United States, Belgium and the Netherlands following
suit.
Legislation was enacted to test and approve drugs and to require appropriate labeling.
Prescription and non-prescription drugs became legally distinguished from one another as the
pharmaceutical industry matured. The industry got underway in earnest from the 1950s, due to
the development of systematic scientific approaches, understanding of human biology
(including DNA) and sophisticated manufacturing techniques.
Numerous new drugs were developed during the 1950s and mass-produced and marketed
through the 1960s. These included the first oral contraceptive, "The Pill", Cortisone, bloodpressure drugs and other heart medications. MAO inhibitors, chlorpromazine (Thorazine),
haloperidol (Haldol) and the tranquilizers ushered in the age of psychiatric medication.
Diazepam (Valium), discovered in 1960, was marketed from 1963 and rapidly became the most
prescribed drug in history, prior to controversy over dependency and habituation.
Attempts were made to increase regulation and to limit financial links between companies and
prescribing physicians, including by the relatively new U.S. Food and Drug Administration
(FDA). Such calls increased in the 1960s after the thalidomide tragedy came to light, in which
the use of a new anti-emetic in pregnant women caused severe birth defects. In 1964, the World
Medical Association issued its Declaration of Helsinki, which set standards for clinical research
and demanded that subjects give their informed consent before enrolling in an experiment.
Pharmaceutical companies became required to prove efficacy in clinical trials before marketing
drugs.

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Cancer drugs were a feature of the 1970s. From 1978, India took over as the primary center of
pharmaceutical production without patent protection.
The industry remained relatively small scale until the 1970s when it began to expand at a
greater rate. Legislation allowing for strong patents, to cover both the process of manufacture
and the specific products, came into force in most countries. By the mid-1980s, small
biotechnology firms were struggling for survival, which led to the formation of mutually
beneficial partnerships with large pharmaceutical companies and a host of corporate buyouts
of the smaller firms. Pharmaceutical manufacturing became concentrated, with a few large
companies holding a dominant position throughout the world and with a few companies
producing medicines within each country.
The pharmaceutical industry entered the 1980s pressured by economics and a host of new
regulations, both safety and environmental, but also transformed by new DNA chemistries and
new technologies for analysis and computation. Drugs for heart disease and for AIDS were a
feature of the 1980s, involving challenges to regulatory bodies and a faster approval process.
Managed care and Health maintenance organizations (HMOs) spread during the 1980s as part
of an effort to contain rising medical costs, and the development of preventative and
maintenance medications became more important. A new business atmosphere became
institutionalized in the 1990s, characterized by mergers and takeovers, and by a dramatic
increase in the use of contract research organizations for clinical development and even for
basic R&D. The pharmaceutical industry confronted a new business climate and new
regulations, born in part from dealing with world market forces and protests by activists in
developing countries. Animal Rights activism was also a challenge.
Marketing changed dramatically in the 1990s. The Internet made possible the direct purchase
of medicines by drug consumers and of raw materials by drug producers, transforming the
nature of business. In the US, Direct-to-consumer advertising proliferated on radio and TV
because of new FDA regulations in 1997 that liberalized requirements for the presentation of
risks. The new antidepressants, the SSRIs, notably Fluoxetine (Prozac), rapidly became
bestsellers and marketed for additional disorders.
Drug development progressed from a hit-and-miss approach to rational drug discovery in both
laboratory design and natural-product surveys. Demand for nutritional supplements and socalled alternative medicines created new opportunities and increased competition in the
industry. Controversies emerged around adverse effects, notably regarding Vioxxin the US,
and marketing tactics. Pharmaceutical companies became increasingly accused of disease
mongering or over-medicalizing personal or social problems.
The Indian pharmaceutical industry currently tops the chart amongst India's science-based
industries with wide ranging capabilities in the complex field of drug manufacture and
technology. A highly organized sector, the Indian pharmaceutical industry is estimated to be
worth $ 4.5 billion, growing at about 8 to 9 percent annually. It ranks very high amongst all the
third world countries, in terms of technology, quality and the vast range of medicines that are
manufactured. It ranges from simple headache pills to sophisticated antibiotics and complex
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multi-nationals are increasingly relying on contract research organizations to manage drug development. marketing. on the other hand. it takes about 7 to 10 years and only 3 out of every 20 approved drugs bring in sufficient revenue to cover their developmental costs. Objectives of drug development are to determine appropriate formulation and dosing. manufacturing and quality control. Since 2001. and manipulating these pathways using molecular biology or biochemistry. and clinical trials. The cost of innovation Drug companies are like other companies in that they manufacture products that must be sold for a profit in order for the company to survive and grow. In the past most drugs have been discovered either by isolating the active ingredient from traditional remedies or by serendipitous discovery. Drug development refers to activities undertaken after a compound is identified as a potential drug in order to establish its suitability as a medication. participating in a broad range of drug discovery and development. Modern biotechnology often focuses on understanding the metabolic pathways related to a disease state or pathogen. as well as to establish safety. of all compounds investigated for use in humans only a small fraction are eventually approved in most nations by government appointed medical institutions or boards. Often. The amount of capital required for late stage development has made it a historical strength of the larger pharmaceutical companies. More recently. Smaller organizations. in vivo studies. Research and Development Drug discovery is the process by which potential drugs are discovered or designed. there were only 18 approvals in total in 2007 and 22 back in 2006. often focus on a specific aspect such as discovering drug candidates or developing formulations. On the other hand. or 21 in total. who have to approve new drugs before they can be marketed in those countries. For instance. A great deal of early-stage drug discovery has traditionally been carried out by universities and research institutions. which is down from 26 in 2009 and 24 in 2008. In 2010 18 NMEs (New Molecular Entities) were approved and three biologics by the FDA. Research in these areas generally includes a combination of in vitro studies. Much expense is incurred in the early phases of development of compounds that will not become approved drugs. Drug discovery and development is very expensive. Often. almost every type of medicine is now made in the Indian pharmaceutical industry. They are different from some companies because the drug business is very risky. only one out of every ten thousand discovered compounds actually becomes an approved drug for sale. and only 1 out of every 3 approved drugs generates enough money to cover the development costs of previous failures. collaborative agreements between research organizations and large pharmaceutical companies are formed to explore the potential of new drug substances. sales. large multinational corporations exhibit vertical integration. This means that for a drug company to survive. the Center for 4 .cardiac compounds. and distribution. In addition. it needs to discover a blockbuster (billion-dollar drug) every few years.

the cost of developing a successful new drug (New chemical entity or NCE).3 billion USD(not including marketing expenses). These estimates also take into account the opportunity cost of investing capital many years before revenues are realized (see Time-value of money).According to Forbes. To be approved by the FDA. Critics of the pharmaceutical industry suggest that "me-too" drugs are only brought to market because their development is cheaper and less risky than drugs with a novel mechanism of action. A study by the consulting firm Bain & Company reported that the cost for discovering. While the cost of research in the U. revenues rose faster (revenues rose by $200. as well as a commitment to ongoing safety monitoring. leading to several similar drugs arriving on the market within a short period of time. multiple companies often will simultaneously develop a drug treatment within this pathway. This approval comes only after heavy investment in pre-clinical development and clinical trials. If the cost of these failed drugs is taken into account.2 billion between 1995 and 2010. approved chemical entity. such as those based on re-formulation of an existing active ingredient (also referred to as Line-extensions) are much less expensive to develop. which are defined as chemically-similar compounds or compounds with the same mechanism of action as an existing. and the resulting competition puts a downward pressure on pricing. and if a new clinical pathway is discovered. these costs can accumulate to nearly half the total expense.7 billion in 2003. developing and launching (which factored in marketing and other business expenses) a new drug (along with the prospective drugs that fail) rose over a five-year period to nearly $1. Some approved drugs. development. It may take 10 or more years for a drug to go from discovery to FDA approval. has been estimated at about 1. When a second drug arrives on the market.4 billion in that time). and approval of pharmaceuticals. However. Drugs which fail part-way through this process often incur large costs. Because of the very long time needed for discovery. however. Calculations and claims in this area are controversial because of the implications for regulation and subsidization of the industry through tax credits and federally funded research grants. proponents point to the cost benefits of market competition between similar drugs. second and third entrants also need to offer advantages over the existing therapy. 5 . while generating no revenue in return.9 approvals a year.S. the manufacturer of the first drug no longer has a monopoly.3 billion in 2009. Professors Light and Lexchin reported in 2012. development costs between $4 billion to $11 billion per drug. “Me – too” drugs Competition between pharmaceutical companies has resulted in "me-too" drugs.Drug Evaluation and Research has averaged 22. Industry-wide research and investment reached a record $65. Much of the “me-too” drug phenomenon is actually a result of independent parallel research at rival companies. such as fewer side effects or more convenient dose schedules. that the rate of approval for new drugs has been a relatively stable average rate of 15 to 25 for decades. was about $34.

Since 2008.gov website run by the NIH. AstraZeneca. Researchers who have tried to reveal ethical issues with clinical trials. after he discussed his concerns about a clinical trial design with three ethics committees in 1999. the industry has been looked at much more closely by independent groups and government agencies. the Pharmaceutical Research and Manufacturers of America have published new guidelines urging companies to report all findings and limit the financial involvement in drug companies of researchers. US congress signed into law a bill which requires phase II and phase III clinical trials to be registered by the sponsor on the clinicaltrials. for example with support for their conference/symposium costs. and companies often look to researchers for studies that will make their products look favorable." In the United States. and a court in Amsterdam awarded Organon ₤550. In response to specific cases in which unfavorable data from pharmaceutical companysponsored research was not published. Koos Stiekema was sued by the pharmaceutical company Organon for violating his confidentiality agreement. pharmaceutical manufacturers are taking increasing advantage of tax havens to avoid taxation.000 for speeches and consulting by drugs manufacturers since 2009. Simultaneously. Johnson & Johnson and Eli Lilly have paid billions of dollars in federal settlements over allegations that they paid doctors to promote drugs for unapproved uses. For example. The award was overturned on appeal. Sponsored researchers are rewarded by drug companies. 6 . corporate whistleblowers are given a percentage of any fines levied. Some prominent medical schools have since tightened rules on faculty acceptance of such payments by drug companies. the court ruled that Stiekema's breach of confidentiality was "justified by a higher interest. or have lost their jobs. pharmaceutical companies have been increasing the cost of name-brand prescriptions to offset declining revenues as out-of-patent drugs become available as generics. An investigation by ProPublica found that at least 21 doctors have been paid more than $500. or publish papers showing harmful effects of drugs – and who saw themselves as whistleblowers – have faced or been threatened with lawsuits from drug companies. Drug researchers not directly employed by pharmaceutical companies often look to companies for grants. Lecture scripts and even journal articles presented by academic researchers may actually be 'ghost-written' by pharmaceutical companies.Controversies Due to repeated accusations and findings that some clinical trials conducted or funded by pharmaceutical companies may report only positive results for the preferred medication. Dutch medical researcher Dr. with half of the top earners working in psychiatry.000 for the trial-delay costs that resulted from Stiekema's disclosures. and about $2 billion in total paid to doctors for such services. Organon's other experts agreed that the trial design was safe.

Orphan drugs There are special rules for certain rare diseases ("orphan diseases") involving fewer than 200. or larger populations in certain circumstances. regardless of whether the drug is protected by patents. In certain instances.[33] A fourth phase of post-approval surveillance is also often required due to the fact that even the largest clinical trials cannot effectively predict the prevalence of rare side-effects. three phases of progressively larger human clinical trials may be conducted. companies that do so are rewarded with tax reductions. A product must pass the threshold for cost-effectiveness if it is to be approved. This process generally involves submission of an Investigational New Drug filing with sufficient pre-clinical data to support proceeding with human trials. whilst similar arrangements exist with the Scottish Medicines Consortium in Scotland and the Pharmaceutical Benefits Advisory Committee in Australia. a New Drug Application is submitted to the FDA. There is much speculation that a NICE style framework may be implemented in the USA in an attempt to decrease Medicare and Medicaid spending by balancing benefits to patients versus profits for the medical industry.000 patients in the United States. and subsequent changes to product labeling (it may take many months for a change identified in post-approval surveillance to be reflected in product labeling) and this is an area where congress is active. new pharmaceutical products must be approved by the Food and Drug Administration (FDA) as being both safe and effective. Treatments must represent 'value for money' and a net benefit to society. Phase I generally studies toxicity using healthy volunteers. Questions continue to be raised regarding the standard of both the initial approval process. This focuses on the efficiency (in terms of the cost per QALY) of the technologies in question rather than their efficacy. and in others the substance is withdrawn from the market completely. Following IND approval. The FDA review the data and if the product is seen as having a positive benefit-risk assessment. and market exclusivity on that drug for a limited time (seven years).Product Approval In the United States. In England NICE approval requires technologies be made available by the NHS. approval to market the product in the US is granted. The FDA provides information about approved drugs at the Orange Book site. In the UK. the British National Formulary is the core guide for pharmacists and clinicians. its indication may need to be limited to particular patient groups. Post marketing surveillance ensures that after marketing the safety of a drug is monitored closely. and Phase III is a very large study of efficacy in the intended patient population. Because medical research and development of drugs to treat such diseases is financially disadvantageous. Following the successful completion of phase III testing. In many non-US western countries a 'fourth hurdle' of cost effectiveness analysis has developed before new technologies can be provided. 7 . fee waivers. Phase II can include Pharmacokinetics and Dosing in patients.

The Pharmaceutical and Chemical industry in India is an extremely fragmented market with severe price competition and government price control. global spending on prescription drugs topped $954 billion. even as growth slowed somewhat in Europe and North America. capsules. 1. growing a huge 81 percent. There are approximately 250 large units and about 8000 Small Scale Units. with $340 billion in annual sales followed by the EU and Japan. 8 . and new 'blockbuster' drugs on the horizon. in 2011. tablets. There will be new drug launches. Russia. Pfizer's cholesterol pill Lipitor remains a best-selling drug worldwide. including increasing profits in most sectors despite loss of some patents. South Korea and Mexico outpaced that market. Indian pharmaceutical industry is expected to grow at 20% in 2014. and Phase II clinic trials throughout the year. Due to high-profile cases leading to large compensations. pharmaceutical formulations. orals. India is now among the top five pharmaceutical emerging markets. civil action has occurred. new drug filings. drug intermediates. and Advair. The Pharmaceutical industry in India meets around 70% of the country's demand for bulk drugs. Recent controversies have involved Vioxxin and SSRI antidepressants. According to IMS the global pharmaceutical industry can reach to US$1. the heartburn pill from AstraZeneca. It has expanded drastically in the last two decades. The top 20 pharmaceutical cases account for over $16 billion in recoveries. which form the core of the pharmaceutical industry in India (including 5 Central Public Sector Units). and injectables. more than twice as much as its closest competitors: Plavix. IMS Health publishes an analysis of trends expected in the pharmaceutical industry in 2013. most pharmaceutical companies endorse tort reform. Its annual sales were $12. chemicals. The United States accounts for more than a third of the global pharmaceutical market. the domestic pharmaceutical market is expected to register a strong double-digit growth of 13-14 per cent in 2013.9 billion.Legal issues Where pharmaceutics have been shown to cause side-effects. the increasing population of the higher-income group in the country will open a potential US$ 8 billion market for multinational companies selling costly drugs by 2015.000 registered units. continued growth in chronic therapies and a greater penetration in rural markets.2 Pharmaceutical Industry in India The Indian pharmaceutical sector is highly fragmented with more than 20. especially in countries where tort payouts are likely to be large. the asthma inhaler from GlaxoSmithKline. the blood thinner from Bristol-Myers Squibb and Sanofi-Aventis. Emerging markets such as China.1 trillion by 2014. Industry Revenue For the first time ever. On back of increasing sales of generic medicines. Moreover. Nexium.

Findings from the report suggest that more than 60% of the total antibodies market is currently dominated by diagnostic antibodies. including Sun Pharma. according to McKinsey report 'India Pharma 2015 Unlocking the potential of Indian Pharmaceuticals market'. India is home to 10.000 pharma companies. the growth in healthcare insurance industry in India is also expected to complement the overall growth in the pharmaceutical market. Of this.89 billion by 2013. improving the quality of medical training. is expected to reach Rs159. Generics Generics will continue to dominate the market while patent-protected products are likely to constitute 10 per cent of the pie till 2015. both in modern medicine and traditional Indian medicines. India plans to increase its total exports to US$ 25 billion by 2016. The Indian market for both therapeutic and diagnostic antibodies is expected to grow exponentially in the coming years. Further estimates the healthcare market in India to reach US$ 31. indicating a growing interest in new drug discovery research. nearly 80 per cent or US$ 505 million is accounted for by the domestic companies while 20 per cent or US$ 141. Investments in R&D in India have grown from US$ 52. 9 . had applied for conducting clinical trials on at least 12 new drugs in 2010.5 million in 2010. This is in league with Indian Government's Pharma Vision 2020 which aims at making India a global leader in end-to-end manufacture by 2020. making India a lucrative destination for clinical trials for global giants. The healthcare insurance industry in India is expected to grow at a CAGR of 15 per cent till 2015. The Government of India has announced a host of measures to create a facilitating environment for the Indian pharmaceutical industry.5 million comes from foreign companies. According to the estimates. India's generics exports have been growing at a rate of nearly 24 per cent annually over the last four years. The Government of India has made tax breaks available to the pharmaceutical sector and a weighted tax deduction of 150 per cent for any R&D expenditure incurred. India exports all forms of pharmaceuticals from APIs to formulations. Globally India ranks among the top exporters of formulations by volumes. in view of its growth potential. At the same time. the Indian diagnostics and labs test services. Cadila Healthcare and Piramal Life Sciences. Indian Pharmaceutical Sector Analysis India is already among the top six producers of pharmaceuticals of the world. Some of the major Indian pharmaceutical firms. registering a growth rate of 11 per cent. The policies of the Government of India are aimed at building more hospitals.7 billion in 2012-13.5 million in 2000 to US$ 646. India's pharma exports stood at US$ 14. increasing public expenditure on healthcare to 2-3 per cent of GDP. the domestic pharma market is estimated to touch US$ 20 billion by 2015.500 manufacturing units and over 3.59 billion by 2020. boosting local access to healthcare.Besides. up from the current level of 1 per cent.

Higher spending on R&D. Pharmaceutical exports have grown at a CAGR of 68 per cent over the last decade.9 billion by 2014.500 manufacturing units and over 3. India accounts for 35. according to the PwC-CII report titled “India Pharma Inc: Gearing up for the next level of growth”. the report highlighted. owing to Products Patents have made India a major destination for generic drug manufacturing. good economic growth leading to higher disposable incomes.000 by 2020. Pharma Manufacturing & Patents India is home to 10.374 Drug Master Files (DMFs) filed with the USA. improvements in healthcare infrastructure and improved healthcare financing are driving growth in the domestic market. India has been accredited with approximately 907 CEPs. Future Growth Prospects: The Indian pharma industry is on a good growth path and is likely to be in the top 10 global markets in value terms by 2020.As per ‘Pharma vision 2020’. 50. Health Insurance Penetration of health insurance is expected to more than double with over 650 million people to be covered by 2020. 10 .000) of 8.70 billion). Manufacturing costs in India are approximately 35-40 percent of those in the US due to low installation and manufacturing costs. The small and medium enterprises (SMEs) are expected to play a significant role in the growth story of the country's pharma sector as they contribute 35–40 per cent to the industry in terms of production with a turnover of about Rs 35. the government of India aims to make India a global leader in end-to-end drug manufacturing.000 pharma companies. High burden of disease. which is the highest outside of USA. Following the introduction of product patents.000 crore (US$ 5. several multinational companies are expected to launch patented drugs in India. The projected human resource requirement in the Indian pharma sector is estimated to be about 21. 845 TGA and 513 sites registered with the USFDA. Healthcare expenditure by the government of India is expected to touch US$ 86. Increasing penetration of health insurance is likely to be driven by government-sponsored initiatives such as RSBY and ESIC.7 per cent (3.

Expenditure on pharmaceuticals is likely to increase to over 40 per cent of the total spending on healthcare by households by 2015 from 28 per cent in 2007. With 70 per cent of India’s population residing in rural markets.01630 as on 11 December 2013 Household Spend & growth in Rural India Due to increasing population and income levels. but will need to move swiftly to ensure sustained growth.With the support of Pharmexcil and the Government in the form of Brand India Pharma project iPHEX. and pricing issue. clinical research and manufacturing. demand for high-end drugs is expected to reach US$ 8 billion by 2015. with great expectations. patent expiration of number of block buster drugs. There are opportunities in expanding the range of generic products as more molecule come off 11 . The core issues for most of drug companies are declining productivity of in-house R & D. 1. the sector would continue to grow and meet the healthcare requirements of the developing world. especially in the rural parts of the country would make OTC drugs easily available. Riding on better sales in the domestic and export markets. Transformations in the business model of larger pharmaceutical industry spell more opportunities for Indian pharmaceutical companies. as the industry confronts lower corporate stock prices and an increasingly cost-averse customer. As a result larger pharmaceutical companies are shifting to new business model with greater outsourcing of discovery services. pharmaceutical companies have entered a difficult period where shareholders. Indian pharmaceutical industry is expected to continue with its good performance. Exchange rate used INR 1= US$ 0. increasing legal and regulatory concern. The Indian stock market may be dreading a possible recession but Indian pharma companies seem unfazed by slowdown fears. Current global financial conditions and the threat of a broad recession accelerated the timetable for implementing transformational changes in global organizations. the market.3 CHALLENGES& FUTURE GROWTH Over the past decade. Today Indian pharmaceutical Industry can look forward to the years to come. Increased penetration of chemists. various pharma companies are investing in the distribution network in rural areas. while overall R&D costs are about one-eighth and clinical trial expenses around one-tenth of western levels. according to consulting firm Grant Thornton. and regulators have created significant pressures for change within the industry. The country will also see the largest number of merger and acquisitions (M&A) in the pharmaceutical and healthcare sector. Leaders of the largest global pharmaceutical companies recognize the need for transformational change in their organizations. Pharmaceutical production costs are almost 50 percent lower in India than in western nations.

At the same time. in focusing into drug discovery as more profits come from traditional plays. Consolidation: For the first time in many years. With the advantage of being a highly organized sector. Cost-effective chemical synthesis: Its track record of development. the pharmaceutical companies in India are growing at the rate of $ 4. It has an educated work force and English is commonly used. which is continuously growing. Competent workforce: India has a pool of personnel with high managerial and technical competence as also skilled workforce. The process of consolidation. Above all.5 billion. There is already an established international industry and business community. particularly in the area of improved cost-beneficial chemical synthesis for various drug molecules is excellent. and above all. the Indian pharma industry would have to contend with several challenges. More than 20. It provides a wide variety of bulk drugs and exports sophisticated bulk drugs. has started taking place in India. registering further growth of 8 . and technology. Information & Technology: It has a good network of world-class educational institutions and established strengths in Information Technology. has been the front runner in a wide range of specialties involving complex drugs' manufacture. particularly.000 registered units are fragmented across the country and reports say that 250 leading Indian pharmaceutical companies control 70% of the market share with stark price competition and government price regulations.9 % annually. Legal & Financial Framework: India has a solid legal framework and strong financial markets. Professional services are easily available. Globalization: The country is committed to a free market economy and globalization. it has a 70 million middle class market. 12 .patent. outsourcing. development. particularly the following  Effects of new product patent  Drug price control  Regulatory reforms  Infrastructure development  Quality management and  Conformance to global standards. which has become a generalized phenomenon in the world pharmaceutical industry. Advantage India The Indian Pharmaceutical Industry. the international pharmaceutical industry is finding great opportunities in India.

venture fund for research in the public and private domain and such other measures. Gujarat  GlaxoSmithKline (GSK) and the Hyderabad-based Biological E Ltd have teamed up for early stage research and development (R&D) of a six-in-one combination pediatric vaccine against polio and other infectious diseases  Claris Life sciences Ltd has entered into joint venture (JV) agreement with two Japanbased drug makers Otsuka Pharmaceutical and Mitsui & Co Ltd for its injectable business in India and other emerging markets  Nipro Corporation has set up India's first dialyser manufacturing facility at Shirwal near Pune. besides Nafcillin and Ondansetron injection 13 . These are used for the treatment or prevention of ailments such as HIV-AIDS.1. internationally competitive scientific manpower for pharma research and development (R&D). It is expected that this measure will promote the competitiveness of India as an investment destination and be instrumental in attracting higher levels of FDI and technology inflows into the country. etc. Basic customs duty and excise duty reduced on Iodine. Probiotics are a cost-effective means of combating bacterial infections. The Department of Pharmaceuticals has prepared a 'Pharma Vision 2020' document for making India one of the leading destinations for end-to-end drug discovery and innovation and for that purpose. Investment  Israel-based Teva Pharmaceuticals in collaboration with Procter & Gamble (P&G) plans to set up world's largest over-the-counter (OTC) medicine facility at Sanand.4 GOVERNMENT INITIATIVES AND INVESTMENT Government Initiative The Union Finance Minister highlighted few points in union budget 2012-13:    It is proposed to extend concessional basic customs duty of 5 per cent with full exemption from excise duty/CVD to six specified life-saving drugs/ vaccines.60 million)  Aurobindo Pharma Ltd has received approval from the US Food and Drug Administration (USFDA) to manufacture and market various medicines namely Oxacillin injections and Rizatriptan Benzoate tablets in the US. renal cancer. with an investment of Rs 700 crore (US$ 130. the department provides requisite support by way of world class infrastructure. the need for overseas investors to get a no-objection from their JV partner before venturing out on their own or roping in another local firm has been removed by the Pharmaceuticals Export Promotion Council (Pharmexcil). It is proposed to reduce the basic customs duty on this item from 10 per cent to 5 per cent Basic customs duty and excise duty reduced on soya products to address protein deficiency among women and children. Marking a new trend of investments from foreign players in the Indian pharma sector.

It was founded by Eli Lilly in 1876 and John C. According to a report by IMS Health the global market size of pharmaceuticals is expected to reach nearly $1. Efient. the specialties division of Strides Arcolab. Indiana in the United States. 14 . Eli Lilly and Strides Arcolab have inked a pact to increase delivery of cancer medicines in emerging markets. Pharmaceutical companies are responsible for discovering new drugs. The world owes Lilly for the first massproduction of Penicillin. These pharmaceutical companies not only play a very important role in the medicine industry but also play a significant role in the revenue industry and the development of a nation. 10. Olanzapine. It has its headquarters in Indianapolis. Though United States is still the largest pharmaceutical market in the world. Pharmaceutical industry is growing fast and many industries are emerging more prominently among others with their peaking sales and healthcare revenues. All drugs so produced have to go through a strict process of patenting and testing and are subjected to all sorts of safety checks and a variety of laws and regulations. The Indian pharmaceutical industry stands at the third position in terms of volume and 14th in terms of value. Salk Polio vaccine and insulin and is the largest producer and distributor of psychiatric medications in the world. Many people owe their lives to many lifesaving medicines without which they might not have seen another day in their life. Other drugs produced by Lilly are namely Arzoxifine.5 TOP 10 WORLD’S LARGEST PHARMACEUTICAL COMPANIES: The world “Pharmaceutical” comes from Greek word “Pharmakeia” with the modern translation as “Pharmacia”. Lechleiter is the present chairman. We all are aware of many existing pharmaceutical companies as we have used many of their medicines during our sickness phases. president and CEO of the company. will make cancer medicines and Eli Lilly will market them in emerging geographies 1.1 trillion in 2014. Though the world might face recession but the pharmaceutical industry is more likely to shine through it and grow more rapidly. It employs thousands of people per plant and thus helps in the GDP of a country. etc. Here is the list of top 10 world’s largest pharmaceutical companies. marketing them and getting them licensed for their use as medications. Lilly Eli Lilly and Company is an American global pharmaceutical company. Agila Specialties.

Its headquarters is located in Abbott Park. dacogen. medicinal devices.7 billion. Johnson & Johnson Johnson & Johnson is a US based multinational company which manufactures medicinal devices. Abbott Laboratories Abbott Laboratories is a US based global pharmaceuticals and health care products company employing about 90. 8. Clean and clear facewashes. James Wood Johnson and Edward Mead Johnson. Wallace Calvin Abbottin 1888 and was then known as Abbott Alkaloidal Company. ceftobiprole. It was founded in 1886 by Robert wood Johnson I. Johnson & Johnson is a leading name in many household items like Johnson & Johnson baby products. The other drugs manufactured by it are Bapineuzumab. Miles D.9 billion and net income of $10. Illinois.9. New Jersey. Risperdal. topamax. North Chicago. procrit. It has gross sales of $24. White is the chairman and CEO of the company. etc.nutritional and animal healthcare products. the anti-psychotic medication was the highest seller drug at $4. Band-Aid. Its leading drug is a blocker drug called Humira. rivaroxaban. Neutrogena skin and beauty products. It was founded by Dr.000 employees.6 billion. pharmaceuticals and consumer packaged goods. 15 . etc. The Company’s headquarters is located in New Brunswick. It produces many pharmaceutical products.

Tomudex. Betaloc. AstraZeneca AstraZeneca plc founded on 6th April 1999. It specializes in Prescriptive medicines including Carbocaine. etc. Switzerland. and a variety of other medicines in the areas of oncology. invirase. The other companies owned by Roche are Genentech. It has the gross sales of $28. Its main headquarters is located in Basel.7 billion and net income of $8 billion. Naropin. Cubicin. The acid reflux medication called Nexium is its leading product at $5.5 billion. Zomig. It also manufactures a range of Diabetes management products under the brand name Accu-check. herceptin. Rohypnol. cellcept. is a Swedish-British multinational pharmaceutical and biologics company. etc. in 1896.8 billion. neuroscience. It has gross sales of $22 billion with net profit of $9. 16 . It was the first company to produce synthetic vitamin C at a large scale under the brand name of Redoxon. tamiflu. gastrointestinal. 6.7. Its leading drug is Herceptin a medication for breast cancer at $2. The various drugs produced by Roche include Accutane.2 billion. Zestril. Roche Hoffmann-La Roche is a Swiss global healthcare company founded by Fritz Hoffmann-La Roche after whom the company is named. It is also the manufacturer of drugs for cholesterol treatment called Crestor and antipsychotic drug called Seroquel. through the merger of the Sweden-based Astra AB and the UK-based Zeneca Group. Bactrium. Chugai pharmaceuticals and Ventana. lexinor.

4. GSK also manufactures nutritional products. sensodyne. Peyronie’s disease. Cordaptive. Mectizan. Its top selling drug at $7 billion is Advair used for asthema and chronic obstructive pulmonary disorder treatment.5.5 billion and net income of $10. asthma.. drinks and other healthcare goods like Horlicks. GlaxoSmithKline GlaxoSmithKline plc is a multinational company based in the United Kingdom dealing in the fields of pharmaceutical. Kenneth Frazier is the chairman. New Jersey. Inc. The various drugs manufactured by it are Vioxx. president and CEO of the company and it was founded in 1891 as a subsidiary of Merck KGaA. etc. is an American pharmaceutical company with its headquarters located in Whitehouse Station. isentress. Boost. vaccines and consumer healthcare. 17 . cancer. virus control. GSK was formed by the merger of Glaxo Wellcome plc and SmithKline Beecham plc in the year 2000. It came out as an independent company in 1917 after being confiscated by US Government during World War I. Merck Merck & Co. diabetes. etc. It has maintained its leading status with its pharmaceutical sales of $38. It manufactures products for various diseases including mental health. etc. loss of libido. etc.6 billion. of which the patients were not forewarned. biologics. The company is been sued for its drug called Propecia whose side effects include persistent sexual dysfunction. Merck is also the publisher of world’s largest selling medical textbook called the Merck Manual of diagnosis and therapy and a series of other medical reference books.

6 billion is the thrombosis medication Lovenox. Sanofi-Aventis was formed in 2004 by the merger of Aventis and SanofiSynthélabo and later in 2011 changed the name to Sanofi. Sanofi-Aventis Sanofi-Aventis. The various drugs manufactured by the company are aflibercept. Its leading drug at $3. in the various areas of oncology. It is involved in research and development and manufactures pharmaceutical products to be sold primarily in the prescription market.7 billion.3. 2. Humenza vaccine. otamixaban. France. Novartis 18 . Over-the-counter medicines are also developed by the company. cardiology and virology. iniparib.5 billion and a net income of $9. Sanofi-Aventis has gross sales of $38. etc. jevtana. a French multinational pharmaceutical company has its headquarters in Paris. Its various companies in other sectors include Sanofi Pasteur in Vaccine business and Merial in animal healthcare.

Also it committed sexual discrimination against 12 female sales representatives which was criticized worldwide.000 per month. The Pfizer Company’s top selling drug is the cholesterol drug namely Lipitor at $12.counter drugs. Novartis is involved in various controversies. 130.Novartis International AG. infections and infestations. 1. contact lenses. cardiology. a settlement deal is being negotiated till date between the asbestos victims and Pfizer. apixaban. Macugen. in the areas of oncology. experimenting a new drug during a cholera outbreak in Nigeria on children which led to the death of about 50 children and one of its acquired companies called Quigley which sold asbestos-containing insulation products for years. Pfizer has $44. diclofenac. etc. neurology and psychiatry. Lyrica.4 billion in pharmaceutical sales and has gained a net profit of $8 billion. The company was founded in 1849 in New York City by cousins Charles Pfizer and Charles Erhart. carbamazepine. Its research headquarters is located in Groton. 19 . valsartan (Diovan) and Glivec. The discovery of Terramycin in 1950 paved the pathway of the company’s growth from a small-scale chemical company to becoming the world’s largest pharmaceutical industry. Novartis produces a range of products including vaccines. Novartis has been on the face of the pharmaceutical industry for about 250 years owing to its formation by merger of Swiss companies Ciba-Geigy and Sandoz Laboratories in 1996.5 billion and a net income of $12 billion. Pfizer Pfizer is the world’s largest research-based pharmaceutical industry based in the United States of America. opthamalogy. the biggest of them being the alleged launching of a court case against India in 2006 seeking the prohibition of development of generic medicines based on patented medicines.7 billion. over-the. Connecticut. Novartis claimed that the company needed a new patent to protect its investment on the anti-cancer medicine called Glivec which was refused by IPAB. etc. Zithromax. Pfizer also was involved in quite many controversies including lawsuits that were filed against it for illegal marketing of the arthritis drug Bextra. Novartis is a manufacturer of drugs including clozapine. a multinational pharmaceutical company is based in Basel. Pfizer has developed many medicines and vaccines like Sutent. It has been found that the generic medicines cost only Rs. Switzerland. Diovan is the highest selling medication by the company used for hypertension medication at $ 5 billion and had pharmaceutical sales of $25. veterinary medicines. latreperdine. 8500 as opposed to Glivec that costs the cancer patients about Rs.

R&D. since the point of sales is restricted in this industry in India. sales etc. THREAT OF SUBSTITUTES: the main substitutes to the synthetic pharmaceutical industry are mainly the emerging biotechnology chemical industry. 4. The fragmented nature of the organic chemicals industry prevents it from having much bargaining power over the manufacturers as the switching cost is low for the manufacturers. New entrants will face difficulties in gaining trust of doctors/patients & they also need time to develop efficient distribution channels & preferred arrangements with doctors/ pharmacists. marketing. The introduction of TRIPS part of WTO agreement has led to huge barriers for potential entrants. Also in developing countries like India. & capital requirement & financial requirements. BARGAINING POWER OF BUYERS: the buyer does not have much power over the manufacturers because of the presence of influencing element i.1. The existing companies have advantage in terms of costs involved in launching new drugs & formulations. 5. THREAT OF NEW ENTRANT: The industry has high entry barrier for new entrants. BARGAINING POWER OF SUPPLIERS: the main suppliers are the organic chemical industry & labor forces.e. Differentiation of products from the existing products in the market & creating brand awareness in the minds of doctors & pharmacists. 1970 recognized process but not product patents. The capital requirement for the industry is very low. Regulatory policies including patents. The Indian Patent Act. ii. regulatory standards. the doctors. The new companies would find it difficult to achieve this. The presence of economies of scale in manufacturing. 1970 under which the power to control prices is with the NPPA (National Pharmaceutical Pricing Authority) the low power of buyers does not have much effect on the manufacturers. INTENSITY OF RIVALRY: the Indian Pharmaceutical industry is highly fragmented with around 250-300 manufacturing & formulation units in the organized sector which contribute to only 70% of the market share of the total sales in the country.6 PORTER’S FIVE FORCES ANALYSIS 1. Except in generic & OTC medicines. The major barriers to entry are: i. the buyer does not normally switch medicines. Due to the extremely fragmented nature of industry & government policies like DPCO (Drug Price Order Control). iv. creating a regional distribution network is easy. 3. iii. the traditional medicines also play a major substituting role. 2. The concentration ratio (proportion of total industry output by the largest firm in the 20 .

21 . Also government subsidies have led to the proliferation of many small players. major MNCs like Pfizer & GSK started introducing newer products in the market thereby increasing competition in the industry. The key driver in this industry is the cost-competitiveness. After 2005. Since the product patents were not valid in the country till 2005.industry) for the industry is very low. the differentiation in the product is very low.

CHAPTER -II COMPANY ANALYSIS 22 .

Reddy's made history in February when it entered the German branded generics market. The company is focused on creating and delivering innovative and quality products to help people lead healthier lives. active pharmaceutical ingredients. We are all set to spread pure wings further and touch more lives across the globe. Brazil and South Africa. Dr. Reddy’s generic formulations have also become very popular in quality-conscious regulated markets such as the US and Europe. critical care and biotechnology products. it has its headquarters in India. Dr. the world's second-largest after the USA. bacterial infections and pain. diagnostic. Germany. China. Dr. The company develops. although India and the USA each accounts for around a third of the firm's total sales. It operates in over 60 countries. Reddy’s focused on cancer diabetes. It commercialized various treatments so as to provide high tech treatment to the masses. Reddy’s laboratories was founded by Dr. Though Dr. The medicines of Dr. such as Russia. and also to rolling out its existing product range in major regulated markets including Australia and New Zealand. Anji Reddy in 1984. not through building a business organically there but with the purchase of Betapharm. All this has been possible because of our innovative and sustained marketing efforts. 23 . manufactures and markets a wide range of pharmaceutical products India and overseas. Dr. The company is already strongly present in most of the world's biggest less-regulated markets. The subsidiaries of this company are found at various countries like US. This is the largest overseas acquisition by an Indian pharmaceutical company so far. entrepreneur-scientist. Reddy's Laboratories is located in various parts of the world. Dr. France and the rest of Europe. for$570 million. Dr. It is now looking towards expansion in Spain. in 1984 the DNA of the company. kits. Reddy's Pharmaceutical Company is very much customer friendly. It takes care of the fact that maximum people get benefited by the products of this pharmaceutical company. Reddy’s is the research-based company with vertically integrated operations. is drawn from its founder and his vision to establish India’s first discovery led global pharmaceutical company in fact. which was founded by Chairman Dr. Reddy’s Laboratories is an emerging global pharmaceutical and biotechnology company.COMPANY ANALYSIS 2. Reddy’s produces finished dosage forms. it is this spirit of entrepreneurship that has shaped the company to become what it is today. Dr. Reddy's Laboratories is one of the popular pharmaceutical companies with base in more than 100 countries. Germany's fourth-largest generics manufacturer. Anji Reddy. It tries to meet the medical needs of the people. The basic research program of Dr.1 ABOUT THE COMPANY Dr. Reddy's Laboratories Limited are easily available all across the globe.

Dr Reddy's Laboratories Ltd has launched Finasteride tablets. LIFE: Life in not living. in the US market. Reddy's Laboratories Limited. RESEARCH: Research is to see what everybody else has seen and to think what nobody else has thought. and achieves the impossible. HOPE: Hope sees the invisible. The values that guide the thoughts and actions are: 24 . and Brazil. Russia. say and so. 16 countries have the representative offices of Dr. To strive for excellence in everything they think. PURPOSE: Providing affordable and innovative medicines for healthier lives. a bio-equivalent generic version of Propecia (Finasteride) tablets.UK. but living in health. The tablets are used for treating male pattern hair loss. 21 countries have third party distribution. VALUES:Our business practices are guided by highest ethical standards of truth integrity and transparency. touches the intangible.

expertise and resources to create greater value across functions. Merged in to Dr. Harmony & Social Responsibility: Dr.Reddy’s is dedicated to achieving the highest levels of quality in everything we do to delight customers.      Bulk Branded formulation Generics R&D emerging business Corporate center Units:  Strategic Business Units Bulk has 6units: 3units at Bollaram 1 unit at Geedimetla 1 unit at Miryalaguda 1unit at Pydi Bhimavaram  Strategic BU Formulation has 8 units: 1 unit at Bollaram (INJ) 25 .Quality: Dr. Dimensions: Cheminor drugs Ltd. in each one of us. internal & external. a desire to excel and willingness to experiment.Reddy’s seek opportunities to build relationships and leverage knowledge. Respect for the individual: We uphold the self-esteem and dignity of each other by creating an open culture conducive for expression of views and ideas irrespective of hierarchy Innovation & continuous learning: We create an environment of innovation and learning that fosters. Collaboration & Teamwork: Dr. every time. businesses and locations. Reddy’s Laboratories Ltd.Reddy’s take utmost care to protect our natural environment and serve the communities in which they live and work. Reddy’s Labs in the year 2000-01 restructured as Strategic Business Units of Dr.

constituting 8% of total world’s production. Targeting and Positioning) Segment: Active Pharmaceutical Ingredients (APIs). It is one of the most attractive industries globally as its growth continues to outperform that of the global industry.3 Major Competitors: Indian pharmaceutical industry is globally ranked fourth in terms of volume. differentiated formulations and News Chemical Entities (NCEs) Target Group: Healthcare professionals. Cipla 26 . generics. Its value is estimated at $17 billion. Thanks to the technological investment. Custom Pharmaceutical Services (CPS). 1. retail outlets Positioning: Committed to providing affordable and innovative medicines for healthier lives 2. OSD) 2 units at Baddi (OSD) 1 unit at Yanam (OSD) FTO-9 is Unit being constructed in Vishakapatnam (INJ) 2. it has been able to mass produce drugs from all major therapeutic groups.2 units at Bachupally (OSD) 2 unit at Vishakapatnam (INJ. biosimilars`.2 STP (Segmenting.

03 billion INR 3. It is a leading manufacturer of cephalosporin.S. Antara. Net sales = 63. Its products are exported to about 125 countries. It is one of the fastest growing generic drug players in the U. Volini. Tamiflu. weight control. It stands for Chemical. Net sales = 69. Relenza. etc. Suprax. etc are some of the products it produces.64 billion INR 27 . and Japan. diabetes. Ranbaxy labs It has its headquarters in Gurgaon. Japanese pharma company Daiichi Sankyo acquired a majority stake in the company in 2008. etc are some of the drugs manufactured by it.77 billion INR 2.It is based in Mumbai. etc are some of the drugs manufactured by it. It manufactures drugs for arthritis. Net sales = 53. Industrial and Pharmaceutical Laboratories. Lupin Laboratories It is based in Mumbai. Revital. cardiovascular diseases.

AstraZeneca and Pfizer are its marketing products. etc are some of its products. anti-allergics. cardiovascular products. It manufactures drugs for cardiology. anti-retrovirals. psychiatry.S. Sun pharma Its headquarters are at Mumbai. Raloxifene. It produces antibiotics. etc.4.15 billion INR 28 . Pantocid. neurology. It is a manufacturer of generic drugs and APIs.84 billion INR 5. are the prime markets for its drugs. India and the U. etc are some of the drugs it manufactures. etc. Aurobindo Pharma It has its headquarters at Hyderabad. Net sales = 42. Ritonavir. Aquamet nasal spray. Net sales = 40.

etc are some of its products. agiolax.66 billion INR 29 . Pantoprazole.52 billion INR 7. skin care products and a lot of OTC products. It has around 1000 products. Alpraz plus. etc are some of its products. It is also a generic drug manufacturer. Androz 50. Torrent pharma It is an Ahmedabad based company. herbal products. It is a flagship company of Torrent group. Cadila Healthcare Its headquarters are at Ahmedabad. earlier known as Trinity Laboratories Ltd. It produces not only pharmaceutical products but also diagnostics. Net sales = 31. Net sales = 27.6.

It has its presence in 98 countries across the globe. Wockhardt used to manufacture baby food Farex and nutrition drink Protinex which it later sold to Abbott pharma.41 billion INR 9.8. Wockhardt It has its headquarters in Mumbai. Xe133. Vietnam. A large percentage of its revenues are from Europe. Net sales = 26. Prednisone. The company has its presence not only in the developed nations but also in developing countries like Russia. Brazil. Terazosin. Net sales = 26. etc are some of the drugs it manufactures. It also owns the Wockhardt hospitals.5 billion INR 30 . etc. It also manufactures a lot of radiopharmaceuticals like Iodine-131. Jubilant Life It is a leading Drug discovery and development solutions provider out of India. etc.

G V Prasad - Co.4 Organizational Hierarchy: WHOLE-TIME DIRECTORS Satish Reddy - Chairman Satish Reddy is the Chairman of Dr Reddy’s Laboratories Ltd. Satish directs two of the company’s core businesses: Pharmaceutical Services & Active Ingredients and Global Generics. In 1993. Reddy’s Laboratories. Reddy’s group company as Executive Director.2. a Dr.Chairman & CEO 31 . the key revenue earning streams. His association with Dr. Reddy’s began in 1991 when he joined Globe Organics. he was appointed as Executive Director of Dr. In 1997 he became Managing Director and in 2013 was appointed Vice Chairman and Managing Director.

North America Generics M V Ramana - Executive Vice President . Chandrasekhar Sripada Saumen Chakraborty - President & Global Head of HR President. Cartikeya Reddy- Executive Vice President . Reddy's bags the NASSCOM-CNBC IT User Award again! 32 .Proprietary Products Samiran Das - Executive Vice President & Head FTO and GGPM Dr.Biologics Dr.President .Pharmaceutical Services & Active Ingredients (PSAI) Umang Vohra - Executive Vice. and has spearheaded Dr. Reddy's named Best Workplace in Biotech/ Pharma Industry June 10. Reddy’s foray into Biosimilars and Differentiated Formulations. Institute of Life Sciences and Acumen Fund. Prasad serves on the boards of the Indian School of Business. Amit Biswas - Executive Vice President . Raghav Chari - Executive Vice President. He is the architect of the company’s successful Global Generics and API strategies. 2009 ET & Great Places to Work.  Dr.Emerging Markets Alok Sonig - Senior Vice President & India Business Head (Generics) Dr. US.Integrated Product Development - Sr. CFO & Global Head of IT&BPE Dr.Prasad leads the core team which drives growth and performance at Dr. KVS Ram Rao (CTO) AWARDS AND RECOGNITIONS:  Global HR Excellence Awards 2009-2010 for outstanding contribution to the cause of education. A Chemical Engineer from the Illinois Institute of Technology in Chicago. Prasad additionally holds a Master’s degree in Industrial Administration from Purdue University.President & Head. Reddy’s. R Ananthanarayanan . Management Team: Abhijit Mukherjee - Chief Operating Officer Dr. Vice President & Head .  Global HR Excellence Awards 2009-2010 for Organization with Innovative HR Practices.  Dr.Chemical Technical Operations (IPDO) Dr.

000 employees Weakness: 1. Long gestational period for new drug development 3. 2.IBLA 2009. Preliminary investment for Drug discovery is very high 2.5 SWOT Analysis: Strengths: 1. 4.  Founder Chairman.  Dr. Reddy's lauded for Corporate Social Responsibility at the CNBC . The acquisition of Beta pharma helped to introduce an array of generic products and show its presence in the European markets.  IFPRESS confers Dr. Strict government regulations and policies affects operational efficiency Opportunities: 1. an inexpensive variety of pegfilgrastim. Reddy's bags award at the SAFA Best Presented Accounts Awards 2008. of Morelos. Reddy's. Discovery of drugs is a highly unpredictable business 2. New partnerships to develop Biosimilars business 3. Dowpharma/Chirotech acquisition provided proprietary chiral and bio-catalysis technology. Leverage Biologics & Cytotoxic Infrastructure to deal with the need of Oncology Market 2. used to fight infection in chemotherapy where company has sold some 1. Reddy's facility in Mexico conferred the “Quality and Competitiveness Award” by the State Govt. Develop cost effective ways of new drug development to improve business in emerging markets Threats: 1. Has a strong workforce of over 15. M Venkateswarlu Memorial Award 2009 on Dr.  ICAI Award for Golden Peacock Award for Excellence in Corporate Governance. Increasingly stringent regulations for new drug development 33 . Company launched Peg-grafeelTM.  Dr. Dr. 2. 3.5 million units of it. Anji Reddy conferred the BioSpectrum Asia-Pacific Life Time Achievement Award 2010. Dr.

CHAPTER .III DISCUSSION ON TRAINING 34 .

35 . 3.2 ROLES AND RESPONSIBILITIES Role:  I have been assigned to work along with marketing team of the company straight away after joining.1 WORK PROFILE: Designation : Marketing Intern Department : Sales and Marketing Reporting To : Marketing Manager (Middle-east) Job Description : To analyze the market and prepare a report Working Hours : From 9 am to 6 pm (from Monday to Friday) 3.  To analyze the pharmaceutical market from the given data and prepare a report.  My efforts and contribution helped the company to understand the market and take strategic decisions in marketing and introducing new products and reach their targets to certain extent. (Such as what are the top companies. Responsibilities:  Work along with marketing team and understanding about the pharmaceutical industry and also learning the pharmaceutical terminology.DISCUSSION ON TRAINING 3.  Successfully submitted the report of different countries and companies.3 CONTRIBUTION TO THE ORGANIZATION  After the efficient training and study. market share and etc. I was able analyze the market trends.  Profiling of the companies which are competitors to Dr.)  To collect the data about different countries pharmaceutical market from the employees of marketing team who are dealing with that particular country. their growth.Reddy’s (Collecting the data from various sources).

CHAPTER .IV RESEARCH METHODOLOGY 36 .

amidst the increasing competition faced by them. It determines the data collection method. Due to the rapid growth of the pharmaceutical industry. Most organizations bring out ‘strategy guides. which provide details on inputs. Marketing strategy also means identifying the specific marketing mediums you will use to position your product in the marketplace. This research is carried out to find out the marketing strategy followed by the different pharmaceutical companies. bimonthly or quarterly promotional cycles. marketing has also become an important determinant of the survival and growth of various pharmaceutical companies.2 Research Design The research design determines the direction of the study throughout and the procedures to be followed. Dr.1 Introduction and Background Marketing: The action or business of promoting and selling products or services. In the pharmaceutical business. who possess purchasing power. most companies work on monthly. Strategies are much more than plans to achieve goals.Reddy’s is one of the leading pharmaceutical company in the country. information on competition. The company has a good distribution channel and also it has huge market share in the country. The term ‘market’ refers to all actual and potential buyers of a product or service. the fieldwork and so on. approaches to detailing and sometimes a chart on incentives. Dr. This research helps to know the promotional activities of the different companies and to implement the strategies. Dr. and promotional resources are carefully allocated to ensure that the company achieves maximum sales.Reddy’s is one of the leading pharmaceutical company in India. They differ from operating procedures because they are drawn from changing market situations and are thus live and dynamic. including market research and advertising. 37 . Marketing strategy will depend on the target market. Marketing Strategy: Marketing strategy is defined as a process that can allow an organization to concentrate its resources on the optimal opportunities with the goals of increasing sales and achieving a sustainable competitive advantage.Reddy’s is a major player in generics market. 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. 4. sampling method. authority and willingness to purchase. To anticipate the promotional strategies or measures for selling their products.RESEARCH DESIGN 4.

quality control. It is used where alternative choice can be done or the description of the situation has to be made. The appropriate research design formulated is detailed below. Interviews. Internal source: which originates from the specific field or area where research is carried out e. marketing etc.  To know the distribution channel adopted by existing players in the industry. publish broachers. use. Since the aim of the study is to obtain complete and accurate information.2. Focus Group Discussions Etc. It is committed to deliver high quality drugs and formulation at an affordable price for the general public. how it proceeds.1 Statement of the problem: The purpose of this study was to identify and evaluate the marketing strategies being used by pharmaceutical companies in India. Scope of the study: The research is carried out in Hyderabad region during the period of April and May 2014. packaging. safety. official reports etc. action. storage. development. discovery. The researcher must be able to define what he wants to measure and must find adequate methods of measuring the population.g. The data was collected from the medical practitioners and medical representatives. 4. 4.3 Research Methodology Nature of Data Primary Data: Primary data is basically fresh data collected directly from the target respondents. It could be internal and external source of data. Secondary Data: Secondary data that is already available and published. The scope of this Project is to understand and describe the various stages that are associated with drugs in pharmacy i. the procedure must be carefully planned. formulation. 38 . it could be collected through Questionnaire Surveys.This is a conclusive type of research. Pharmacy is one of the foremost amongst future economy drivers. so that majority of people can afford it. The study will benefit pharmaceutical companies who wish to market their products in several ways.2.  To study the effectiveness of sales promotion in pharmaceutical industry. A Research Methodology defines the purpose of the research. 4.e.2 Research Objective:  To study the Marketing strategy implemented in Pharmaceutical Industry. how to measure progress and what constitute success with respect to the objectives determined for carrying out the research study.

External Source: This originates outside the field of study like books, periodicals, journals,
newspapers and Internet.

Sample Size:
Sample size

:

50

Sample area

:

Hyderabad

Sample Unit
:
Officials of many
Practitioners, medical representatives in Hyderabad

pharmaceutical

companies,

medical

Data Collection
Primary data: Primary data was selected from the sample by a self-administrated
questionnaire in presence of the interviewer.
Secondary Data: Secondary data was collected through Articles, Reports, Journals,
Magazines, Newspapers and Internet.
Sampling Procedure Actually Employed:
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.
Sampling Technique
Convenience 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

Analytical Tools:
Simple statistical tools have been used in the present study to analyze and interpret the data
collected from the field. The study has used percentiles method and the data are presented in
the form of tables and diagrams.

Limitations:
1. This report is based on some selected questionnaire only.
2. The report is based on only 50 sample size.
3. This data is collected only from medical representatives, Officials of pharmaceutical
companies, medical Practitioners.
4. This research is confined to Hyderabad location only.

39

4.3 DATA ANALYSIS
The following is the analysis of the data collected from the 50 respondents on the study of
marketing strategies of pharmaceutical industry.
1. For how many years you are practicing as a medical practitioner (Doctor)?




Less than one year ---------------------------------From one to five years ----------------------------Five to Ten years ----------------------------------More than Ten years ------------------------------Cannot remember ---------------------------------

17 per cent
32 per cent
36 per cent
12 per cent
03 per cent

40%
35%
30%
25%
20%

Less than five years
Five to ten years

15%

Ten to Twenty years

10%

More than twenty years
Can not remember

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

17%
32%
36%
12%
3%

Fig 4.1: Practicing as a medical practitioner

Interpretation:
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.

40

2. Do you agree that India’s pharmaceutical industry is one of the fastest growing
segments of the Indian economy?
 Agree --------------------------------------

43 per cent

 Strongly Agree ---------------------------

37 per cent

 Disagree ----------------------------------

09 per cent

 Strongly Disagree -----------------------

04 per cent

 Do not know/ Can’t say -------------

07 per cent

45%
40%
35%
30%
25%

Agree

20%

Strongly Agree

15%

Disagree

10%

Strongly Disagree

5%

Do not know/ Can not say

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

43%
37%
9%
4%
7%

Fig 4.2: 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.

41

42 . 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’t say ---------.3: Pharmaceutical segments Interpretation: The structure and the dynamics of the pharmaceutical industry are different from that of other industrial domains. in practice and normative sphere. This is what necessitates the pharmaceutical sector to formulate a unique marketing strategy to suit their industry requirements and that appears to be different. from other industries.04 per cent 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Agree Strongly Agree Disagree Strongly Disagree Do not know/ Can not say 50% 32% 10% 4% 4% Fig 4.3.

4. 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.4: 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. 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’t say ---------------- 02 per cent 60% 50% 40% 30% Agree Strongly Agree 20% Disagree Strongly Disagree 10% Do not know/ Can not say 0% Agree Strongly Agree Disagree Strongly Disagree Do not know/ Can not say 60% 37% 1% 0% 2% Fig 4. 43 .

5. 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. In the case of marketing directly to health professionals. 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’t 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/ Can not say 4% Fig 4.5: 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. 44 . The practice of offering gifts to the doctors to influence their prescriptions is a common strategy among the pharmaceutical companies.

6: 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. 45 .6. 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/ Cannot say ----------------------------- 15 per cent 60% 50% 40% 30% They aim to inform about the product They aim to persuade to purchase Other motives 20% 10% 0% They aim to inform about the product 22% They aim to persuade to purchase 60% Other motives 3% Do not know/ Can not say 15% Do not know/ Can not say Fig 4.

improve and monitor legislation ----------------. 46 .01 per cent 90% Implement. Your recommendation to the industry and government regarding the promotional strategy of the pharmaceutical companies? You can choose more than one option.  Implement.7.86 per cent  Stop the practice of gifts to doctors ----------------------------.12 per cent  Do not know/ Cannot say ---------------------------------------. 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.67 per cent  Ensure codes of conduct on drug promotion ------------------.7: 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.70 per cent  Other measures ----------------------------------------------------.74 per cent  Measures to improve the transparency of drug companies’ marketing activities --------------------------------------------. improve and monitor legislation 80% Measures to improve the transparency of drug companies’ marketing activities 70% 60% Stop the practice of gifts to doctors 50% Ensure codes of conduct on drug promotion 40% 30% Other measures 20% 10% Do not know/ Can not say 0% Fig 4.

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/ Cannot say--------------------- 10 per cent 60% 50% 40% 30% yes no cant say 20% 10% 0% yes 36% no 54% cant say 10% Fig 4.8. 47 .8: The Challenges of the Foreign Players From the above table and graph:  It is inferred that 54 percent of the respondents agree that entry of multinationals is not a major challenge to the domestic players and also they are strong enough to face the challenges.

48 .9.9: Market size From the above table and graph: It is inferred that B2B and B2C both strategies are preferred in expanding the market size. What type of Marketing Strategy would you prefer to expand your Market size?  B2B ----------------------------------------------- 23 per cent  B2C------------------------------------------------ 32 per cent  Both ----------------------------------------------- 45 per cent 45% 40% 35% 30% 25% 20% B2B B2C Both 15% 10% 5% 0% B2B 23% B2C 32% Both 45% Fig 4.

10: Major challenge from the Marketing From the above table and graph: It is inferred that fragmentation of market is the major challenge that company faces in expanding their business. 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% fragmentation of the market 20% risk due to price control mechanism MNC's 15% 10% Others 5% 0% fragmentation of the market risk due to price control mechanism MNC's Others 38% 22% 23% 17% Fig 4. 49 .10.

50 .02 per cent 45% 40% 35% 30% 25% better supply chain 20% emotional branding 15% corporate alliances 10% greater media participation others 5% 0% better supply chain emotional branding corporate alliances greater media participation others 34% 42% 12% 10% 2% Fig 4.11.11: Suggest to better market your products From the above table and graph: It is inferred that emotional branding is the most innovative distribution channel used in marketing the products. 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 -----------------------------------------------------------------------.

51 . Do you believe that technology utilization and innovative distribution channels will help in marketing of Pharma products in India?  Yes-----------------------------------------.12.07 percent  Do not know/ Can’t say--------------- 18 per cent 80% 70% 60% 50% 40% yes no cant say 30% 20% 10% 0% yes 75% no 7% cant say 18% Fig 4.75 per cent  No------------------------------------------.13: Distribution channels will help in marketing of Pharma products in India From the above table and graph: It is inferred that technology utilization is an innovative distribution channel which helps in marketing products in an efficient manner.

14: Major weakness of the pharmaceutical industries From the above table and graph: It is inferred that R&D is considered as the weakness for pharma companies in India. Major weakness of the pharmaceutical industry’s marketing strategy.13.  Branding --------------------------------- 07 per cent  Publicity --------------------------------- 09 percent  R&D ------------------------------------- 77 percent  Do not know / can’t say ------------ 07 per cent 80% 70% 60% 50% branding 40% publicity 30% R&D 20% cant say 10% 0% branding publicity R&D cant say 7% 9% 77% 7% Fig 4. 52 .

53 .74 percent  No -----------------------------------------------------------------------.15: Products as a marketing strategy From the above table and graph: It is inferred that branding of product in the minds of customer is a branding strategy practiced in pharma companies. Do you follow branding of products as a marketing strategy?  Yes ----------------------------------------------------------------------.21 percent 80% 70% 60% 50% 40% yes no cant say 30% 20% 10% 0% yes 74% no 5% cant say 21% Fig 4.05 percent  Do not know/ Can’t say -------------------------------------------.14.

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. the traders/ dealers may be contacted. For smaller lots. A customer may also contact their branch office in his/her area to get the names and addresses.15. 54 . They can also supply sections directly.

55 .15: Pharmaceutical sector in India From the above table and graph: It is inferred that most of the respondents are against FDI allowing in pharmaceutical in India. 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 45% 40% 35% 30% 25% 20% yes no cant say 15% 10% 5% 0% yes 21% no 43% cant say 36% Fig 4.16.

Even though it appears to be a serious industry on which the health of the nation rests. 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. 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. 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 inferred that B2B and B2C both strategies are preferred in expanding the market size. 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. in practice and normative sphere. Great care was taken to ensure that the sample is adequate and representative of the universe. 56 .5 FINDINGS. an attempt was made to understand the profile of the doctors in terms of their experience in the industry. This is what necessitates the pharmaceutical sector to formulate a unique marketing strategy to suit their industry requirements and that appears to be different. The structure and the dynamics of the pharmaceutical industry are different from that of other industrial domains. Pharmaceutical marketing experts are aware that well timed advertising directed to doctors tends to boost sales of the brand that spent the marketing dollars. It is inferred that fragmentation of market is the major challenge that company faces in expanding their business. It is inferred that 54 percent of the respondents agree that entry of multinationals is not a major challenge to the domestic players and also they are strong enough to face the challenges. 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. OBSERVATIONS & CONCLUSION Findings:           At the initial stage of the research. from other industries. This is one criterion which makes the marketing strategy of the pharmaceutical companies different from that of others. In the case of marketing directly to health professionals. 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.4.

and weak patent protection poses a long-term threat to investment in India's drug market. 57 . etc.  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.     It is inferred that emotional branding is the most innovative distribution channel used in marketing the products. particularly because of the industry's low capital requirement and the lack of product patents. It is inferred that technology utilization is an innovative distribution channel which helps in marketing products in an efficient manner.  Support the provision of independent information on drugs for consumers and health professionals.  Implement and enforce a ban on gifts to doctors. Foreign firms also find it difficult to operate in India due to arbitrary Bureau of Industrial Cost and Pricing (BICP) pricing changes. 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. Conclusion:        Marketing and sales of pharmaceutical products is very different from other products such as say groceries. arbitrary local FDA decisions. vehicles. Price controls have a strong effect on profitability in the industry. Indian pharmaceutical industry is climbing up the value chain from bringing a pure reverse engineering industry focus on domestic market. Recommendations:  Implement. and is forecast to increase at an annual rate of 15 . It is inferred that R&D is considered as the weakness for pharma companies in India.there are now more than 20.20% in the future.  Enforce strict sanctions that will deter poor corporate practice in drug promotion. It is inferred that most of the respondents are against FDI allowing in pharmaceutical in India. The structure and the dynamics of the pharmaceutical industry are different from that of other industrial domains. food items. high import duties (about 42%) and complex import procedures. The Indian pharmaceutical industry is highly fragmented .000 domestic manufacturers of end-use pharmaceuticals. Current demand in the Indian pharmaceutical sector stands at about $4 to $5 billion. It is inferred that branding of product in the minds of customer is a branding strategy practiced in pharma companies. cosmetics.

com www.com 58 .com www.otcpharmaceuticalproducts.wikipedia. “Research Methodology methods and techniques”. 2. C. 2nd edition. Publishers.R.com www.BIBLIOGRAPHY Reference Books: 1.scribd.drreddys.historyofpharmaceuticalindustry. Kothari. “Marketing Management”. Pearson education Asia publication Websites:- www. 13th Edition. New Age International (p) ltd. Phillip Kotler.com www.

ANNEXURE Questionnaire: 1 For how many years you are practicing as a medical practitioner (Doctor)?      Less than one year From one to five years Five to Ten years More than Ten years Cannot remember 2 Do you agree that India’s pharmaceutical industry is one of the fastest growing segments of the Indian economy?      Agree Strongly Agree Disagree Strongly Disagree Do not know/ Can’t say 3 Do you agree that the marketing strategy of the pharmaceutical industry should be different from the marketing strategy in non-pharmaceutical segments?      Agree Strongly Agree Disagree Strongly Disagree Do not know/ Can’t say 4 Do you agree that the pharmaceutical companies need to use innovative and better promotional measures for selling their products?      Agree Strongly Agree Disagree Strongly Disagree Do not know/ Can’t say 5 Does the Pharmaceutical companies offer gifts to the doctors to influence their prescriptions in favour of their company medicines?  Yes  No  Do not know/ Can’t say 59 .

improve and monitor legislation Measures to improve the transparency of drug companies’ marketing activities Stop the practice of gifts to doctors Ensure codes of conduct on drug promotion Other measures Do not know/ Cannot say 8 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  No  Do not know/ Cannot say 9 What type of Marketing Strategy would you prefer to expand your Market size?  B2B  B2C  Both 10 What do you think is the Major challenge from the Marketing point of view for the Pharmaceutical Industry in India?     Fragmentation of the market Market risk due to lack of price control mechanism MNCs Others 11 What innovative distribution channel do you suggest to better market your products?     Better consumer supply chain Emotional Branding Alliance with other corporate leaders for promotion of the product Greater media participation and power branding 60 .6 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 They aim to persuade to purchase Other motives Do not know/ Cannot say 7 Your recommendation to the industry and government regarding the promotional strategy of the pharmaceutical companies? You can choose more than one option.       Implement.

 Others 12 Do you believe that technology utilization and innovative distribution channels will help in marketing of Pharma products in India?  Yes  No  Do not know/ Can’t say 13 Major weakness of the pharmaceutical industry’s marketing strategy.     Branding Publicity R&D Do not know / can’t say 14 Do you follow branding of products as a marketing strategy?  Yes  No  Do not know/ Can’t say 15 Do you have a dealer network? Do you sell directly or through dealers? 16 Do you think that foreign direct investment (FDI) should be allowed in the pharmaceutical sector in India?  Yes  No  Do not know/ Cannot say 61 .