Chapter no.

Introduction

Pharmaceutical industry
The Pharmaceutical Industry develops, produces, and markets drugs licensed for use as
medications. For this they have a well-equipped R&D department. Pharmaceutical companies
are allowed to deal in generic and/or brand medications and medical devices. They are subject to
a variety of laws and regulations of the government regarding the patenting, testing, pricing and
ensuring safety and efficacy and marketing of drugs.

The Indian Pharmaceutical industry is the second-largest in the world by volume and is leading
the manufacturing sector of India. The Indian bio-tech industry has achieved a growth rate of 17
percent and has gained revenues of Rs.137 billion ($3 billion) in the 2009-10. Bio-
Pharmaceutical was the biggest contributor generating 60 percent of the industry's growth at
Rs.8, 829 crore, followed by bio-services at Rs.2, 639 crore and bio-agriculture at Rs.1, 936
crore. The first pharmaceutical company was Bengal Chemicals and Pharmaceutical Works,
which still exists today as one of 5 government-owned drug manufacturers, in Calcutta in the
year 1930. For the next 60 years, most of the drugs in India were imported by multinationals
either in fully formulated or bulk form. The government started to encourage the growth of drug
manufacturing by Indian companies in the early 1960s, and due to the Patents Act in 1970, the
industry got an opportunity to grow. This patent act removed composition patents from food and
drugs, and though it kept process patents, these were shortened to a period of five to seven years.
The lack of patent protection made the Indian market undesirable to the multinational companies
who had dominated the market, and while they streamed out, Indian companies started to take
their places. The multinationals were market leaders at that time because of their superior
technology. As a result of this, they had gained expertise in reverse-engineering new processes
for manufacturing drugs at low costs. Although some of the larger companies have taken small
steps towards drug innovation, the industry as a whole has been following this business model
until the present.

HISTORICAL BACKGROUND OF PHARMA INDUSTRY

The origin of the earlier drugstores goes back to the middle Ages. The first known drugstore was
opened by Arabian pharmacists in Baghdad in 754,[2] and it gave way to many more, which
soon started operating throughout the medieval Islamic world and eventually medieval Europe.
Many of the drugstores in Europe and North America had gradually developed into larger
pharmaceutical companies by the 19th century. Introduction to Pharma Industry 29 The late 19th
and early 20th centuries gave birth too many of today's major pharmaceutical companies. The
discoveries of the 1920s and 1930s, such as insulin and penicillin, became the mass-
manufactured and distributed drug of that time. Switzerland, Germany and Italy were among the
front runners in these industries, with the UK, US, Belgium and the Netherlands following them.

1
In 1910s the pharmaceutical production began in India with the establishment of Bengal
Chemical and Pharmaceutical Works in Calcutta and Alembic Chemicals in Baroda privately.
With British initiatives pharmaceutical research institutes for tropical diseases like King Institute
of Preventive Medicine, Chennai (in Tamil Nadu), Central Drug Research Institute, Kasauli (in
Himachal Pradesh), Pastures Institute, Coonoor (in Tamil Nadu), etc. was setup. In its early
stages the industry received a setbacks during the post-World War II period, as a result of which
a new therapeutic developments in the Western countries had started. Natural elimination of the
older drugs gave way to the newer drug like sulpha, antibiotics, vitamin, hormones,
antihistamine etc. This resulted in the elimination of local drugs using indigenous materials and
now the industry was forced to import bulk drugs meant for processing them into formulations
and for selling in the domestic market.

The Stages of Growth

The Indian pharmaceutical industry had four stages of growth. In the first stage during 1950s–
60s, the industry was largely dominated by foreign companies and it was dependent on imported
bulk drugs. Foreign firms, were enjoying a strong patent protection under the Patent and Design
Act 1911, this had an adverse effect on the local production. Given the inadequate capabilities of
the domestic sector to start local production of bulk drugs and hesitation of foreign firms to do
so, the government decided to intervene by starting public sector enterprises. This led to the
establishment of the Indian Drugs and Pharmaceuticals Ltd.

(IDPL) plants at Rishikesh and Hyderabad in 1961 and the Hindustan Antibiotics at Pimpri,
Pune, in 1954 to manufacture penicillin. The starting of the public sector enterprises has been an
important feature in the evolution of the pharmaceutical industry and has Introduction to Pharma
Industry 30 revolutionary importance in the history of the Indian Pharmaceutical company. As
these public sector industries took initiatives in producing bulk drugs indigenously and motivated
the private domestic sector.

The second growth stage of the industry took place in the year 1970s. The enactment of the
Indian Patent Act (IPA) 1970 and the New Drug Policy (NDP) 1978 during this stage are
important milestones in the history of the pharmaceutical industry in India. The IPA reduced the
scope of patenting to only processes and non-pharmaceutical products. It also reduced the period
from sixteen to seven years. This brought in a number of changes in patent system. Compulsory
licensing after three years of the patent was also recognized. The enactment of the process patent
significantly lead to the local technological development via adaptation, reverse engineering and
new process development. As there are many ways to produce a drug, the domestic companies
were able to find out ways of producing less costly and quality drugs for supply in the domestic
market. This led to the growth and development of the domestic firms in the market. Pressure
was mounted on foreign companies to locally manufacture bulk drugs and that too from the basic

2
stage. Firms producing high technology drugs were allowed foreign ownership up to 74 per cent
under the Foreign Exchange Regulation Act (FERA) 1973 under it only those Foreign firms that
are simply producing formulations based on imported bulk drugs were required to start local
production from the basic stage within a two year period. Otherwise were required to reduce
their foreign ownership holding to 40 per cent. New foreign investments were to be permitted
only when the production involves high technology bulk drugs and formulations thereon. The
soft patent policy and policies of the government against foreign firms affected the industry and
leaded strong growth impetus to the domestic sector during 1980s.

In the third stage of its development, near self-sufficiency was achieved in the technology and
production of domestic enterprises based on large scale reverse engineering and process
innovation. This was for production of bulk drugs and has developed manufacturing technique
for all forms like tablets, capsules, liquids, orals and Injectable and so on. This gave a
competitive edge to the domestic firms in the national and international markets. In 1991,
domestic firms have emerged large in the market having about 70 and 80 per cent of the market
shares in the case of bulk drugs and formulations respectively (Lanjouw, 1998). Introduction to
Pharma Industry 32 The industry with more than 30 per cent of its production being exported to
foreign markets made it one of the most export oriented industry of India (Kumar and Pradhan,
2003). In terms of trade, the deficit which was experienced in the seventies was replaced by trade
surpluses during 1980s.

The growth momentum which started in the third stage continued in the fourth stage of the
evolution of the industry during 1990s. The production and formulations of bulk drugs rose new
heights and the share of bulk drugs in total production from a low of 11 per cent in the year
1955- 56 has gone up to 19 per cent in the year 1999-2000 . This stage has also witnessed
dramatic changes in the strategic policy of the pharmaceutical industry. Under this the licensing
requirement for drugs was abolished, 100 per cent foreign investment was permitted under
automatic route, and minimum restrictions were imposed on price control. After the three
Amendments carried out in March 1999, June 2002 and April 2005 on the Patent Act 1970, the
Indian patent regime was brought in harmony with the WTO agreement related to Trade Related
Intellectual Property Rights (TRIPs). The third and the final one, known as the Patents
(Amendment) Act, 2005 came into force on 4th April 2005 and it also introduced product patents
in drugs, food and chemicals sectors. The term of patenting was increased to 20 years period.
With these changes in the patent policy regime in the 1990s, started a new era in the history of
Indian pharmaceutical industry where the trade patterns and industrial performance was
determined by the various features such as free imports, foreign investment and technological
superiority. The Indian pharmaceutical industry is looking at this era of globalization as both an
opportunity and a challenge.

3
SIGNIFICANCE OF PHARMACEUTICAL INDUSTRY

India‘s pharmaceutical sector is receiving a major boost from population growth. According to
UN estimates, the population total looks set to rise from 1.1 bn at present to 1.4 bn in 2020. Up
until 2020 India will see as many children being born as there are people living in Germany,
France, the UK and Italy together. By 2025, India will probably have overtaken China as the
world's most populous country. Its population growth results not least from higher life
expectancy. This is attributable, among other things, to improved preventive healthcare. Of
course, though, average life expectancy in India is still markedly lower than in western countries.
While the figure is 64 years for men and 66 years for women in India, life expectancy in
Germany is 76 years for men and 82 years for women.

The ageing of the population in India offers considerable market opportunities. According to a
UN estimate, the share of people over the age of 65 in the total population will rise from 5%
currently to 8% in 2025. This would mean roughly 55 million more people aged 65 and over than
today. As a result, typical age-related illnesses such as cancer and cardio-vascular diseases will
be more wide-spread. The pharmaceutical sector will also receive a boost from the gradual
spreading of civilization diseases such as obesity and diabetes. According to Price water house
Coopers (PwC), the number of Indians with diabetes will reach approximately 74 mn in 2025
(currently 34 mn); this is roughly the population of Turkey today. In developing countries as a
whole, there could be just fewer than 230 mn diabetes patients. This development should benefit
India‘s generics manufacturers.

For the next 15 years we expect average annual growth in India of 6-7% (Bergheim et al 2005).
Strong income growth will broaden the middle class, an important group for foreign drugs
manufacturers, as it has considerably higher incomes at its disposal than average Indians.
Already today, nearly 60 m people in India‘s middle class, with disposable incomes of EUR
3,500 to EUR 17,000 p.a., can afford western-produced medicines. Until 2025 their number
looks set to rise to approximately 580 mn (+12% p.a.), according to McKinsey estimates. Over a
space of ten years, a four-member middle-class family has seen spending on pharmaceuticals
grow five times over, to approximately EUR 170 p.a. People‘s improved income situation has
also led to a growing desire to insure against illness.

At this juncture, only 4% of all Indians have health insurance, but this share should rise strongly
over the medium term. This will have a positive impact on the demand for drugs as people with
health insurance are usually more likely to obtain prescriptions than those without cover.
Globalisation has not caused traditional medicine to be abandoned but with higher education,
rising income and a change in lifestyle, western medical treatment is gaining in importance. At
present the population especially in rural areas still sees western medicine as a stop-gap cure
which is unlikely, though, to provide a lasting solution to health problems. Today, about 70% of
the populations on the Indian subcontinent depend entirely or at least in part on traditional Indian
medicine which is cheaper and more easily available than western drugs (Uwe Perlitz 2008).
Compared to the general price index, drug prices have risen much less in the last 15 years and
remain far below average. Worldwide, India is a country of very low drug prices while

4
producing high quality medicines. Self-sufficiency with regard to pharmaceutics exceeds 90 % –
in spite of the policy of a more open economy pursued by India since 1991.

The secret of this success is the Indian Patents Act 1970. India had entered independence with
the patent system of the British colonial masters, enacted in 1911. This secured the Indian market
for the British industry. Prior to 1970, multinational companies dominated the Indian market
with a share of 85 %; pharmaceutics were largely imported whereas local production remained
minimal. Section 83 of the Patents Act 1970 states "that patents are granted to encourage
inventions and to secure that the inventions are worked in India on a commercial scale and to the
fullest extent and not to enable patentees to enjoy a monopoly for the importation". At the turn of
the century, the share of multinationals had declined to a share of 40 % of India‘s market,
including a substantial share of local processing by multinationals. About 45 of the larger scale
production units belong to multinational companies (Medicus Bulletin 2002).

Firms based in India and China could be among the first to bring biogenerics (generic versions of
biological products) to the regulated markets and faster than expected. The first biogeneric
product was approved by the European Medicines Agency (EMEA) which refers to these
products as ―biosimilars‖, in April 2006.

EVOLUTION OF THE INDUSTRY

The Indian pharmaceutical industry has come a long way since the time of independence when
multinational corporations dominated the industry. Over the years, under a favourable policy
regime, the industry has grown phenomenally and has established itself as a major supplier of not
only generic products but also new formulations. The industry, in addition to meeting domestic
demand, is in a position to export significant volume of pharmaceutical products to various
destinations, including the developed markets of USA, EU and Japan. Evolution of Indian
pharmaceutical industry can be classified into the following four periods:

Pre-1970s: The first Indian pharmaceutical company, Bengal Chemicals and Pharmaceutical
Works, which still exists today as one of 5 government-owned drug manufacturers, appeared in
Calcutta in 1930. For the next 60 years, most of the drugs in India were imported by
multinationals either in fully-formulated or bulk form. The government started to encourage the
growth of drug manufacturing by Indian companies in the early 1960s, and with the Patents Act
in 1970, enabled the industry to become what it is today. This patent act removed composition
patents from food and drugs, and though it kept process patents, these were shortened to a period
of five to seven years. The lack of patent protection made the Indian market undesirable to the
multinational companies that had dominated the market, and while they streamed out, Indian
companies started to take their places. They carved a niche in both the Indian and world markets
with their expertise in reverse-engineering new processes for manufacturing drugs at low costs.
Although some of the larger companies have taken baby steps towards drug innovation, the
industry as a whole has been following this business model until the present (EXIM Bank Report
2007).

During this period, the size of Indian pharmaceutical industry was small, both in terms of
number of firms and volume of production. MNCs dominated the market, both in terms of

5
volume of production and patent holdings, in India. The patent regime, based on Indian Patents
and Designs Act, 1911, recognized both product and process patents. Due to monopoly status
enjoyed by the MNCs, drug prices remained high during this period.

1970 – 1995: Up until the 1970s, India‘s pharmaceuticals market was mainly supplied by large
international corporations. Only cheap bulk drugs were produced domestically by state-owned
companies founded in the 1950s and 60s with the help of the World Health Organization
(WHO). These state-run firms provided the foundation for the sector‘s growth since the 1970s.
Back then, India‘s government aimed to reduce the country‘s strong dependence on
pharmaceutical imports by flexible patent legislation and to create a self-reliant sector. In
addition, it introduced high tariffs and limits on imported medicines and demanded that foreign
pharmaceutical companies reduce their shares in their Indian subsidiaries to two fifths. This
made India a less attractive location for international companies, many of which left the country
as a consequence. Especially India Drugs and Pharmaceutical Ltd. (IDPL) are credited with
speeding up the development of a national pharmaceutical industry. Several IDPL staff has
successfully founded their own firms, which now belong to the top group among India‘s
pharmaceutical companies. In the 1980s, however, the decline of state-run companies began −
among other things because of increasing central government bureaucracy and insufficient
corporate governance. Today, there are no (entirely) state-owned pharmaceutical companies left.
By contrast, the weakening of the patent system and numerous protectionist measures sped up
the development of a major national pharmaceutical industry on a private-sector basis, which
made it possible to provide the population with a large number of drugs (Uwe Perlitz 2008).

Government of India introduced a new Patent Act, which came into effect in 1972, recognizing
only process patent and not product patent. The Act enabled Indian firms to use ‗reverse
engineering process‘, to manufacture drugs, without paying royalty to the original patent holder.
The Act, along with Drug Price Control Order, provided little incentive for MNCs to introduce
new pharmaceutical products in India. During this period, the number of domestic
pharmaceutical firms increased considerably, from around 2000 units in 1970 to 24,000 units in
1995. Production of bulk drugs increased from Rs. 18 crores in 1965-66 to Rs. 1518 crores in
1995, while that of formulations increased from Rs. 150 crores to Rs. 7935 crores during this
period. The increase in production was more pronounced in case of formulations due to large-
scale production of generics by domestic firms. Low cost and high volume production has helped
the Indian pharmaceutical industry in opening export channels to explore many developed and
developing countries. Share of exports as a Percentage of total production has shown significant
increase from 3.22% in 1980-81 to 24% in 1994-95.

1995-2005: As there was no efficient patent protection between 1970 and 2005, many Indian
drug producers copied expensive original preparations by foreign firms and produced these
generics by means of alternative production procedures. This proved more cost-efficient than the
expensive development of original preparations as no funds were required for research, which
contained the financial risks. This spending block may come to as much as EUR 600 mn for only
one drug. This kind of money could previously only be raised by large corporations in the
industrial countries. The competitiveness of generics producers is based on cost-efficient
production. In this field, Indian companies are currently in top position. At one-fifth, India‘s

6
share in the global market for generic drugs is considerably higher than its share in the overall
pharmaceuticals market (approximately 2%). At the same time, India‘s pharmaceutical
companies gained know-how in the manufacture of generic drugs. Hence, the name ―pharmacy
of the poor‖ is frequently applied to India. This is of significance not least for the domestic
market as disposable income is as little as EUR 1,900 per year for roughly 140 million of the
total of 192 million Indian households (Just et al 2006) which means the majority of Indians
cannot afford expensive western preparations.

India‘s pharmaceutical industry has been in transition for several years now. This is the result
mainly of the changes to drug patent legislation in 2005. Prior to the Patent Amendment Bill, not
the substance itself but merely the manufacturing process was protected for a period of seven
years. India‘s patent legislation had frequently been the reason for legal disputes with large
western drug firms, especially from the US. In line with international standards, the sector is now
subject to product and process patents valid for a period of 20 years. Indian companies seeking to
copy drugs before the patent expires are forced to pay high license fees. This became necessary
following the signing by India's government of the TRIPS Agreement (Agreement on Trade-
Related Aspects of Intellectual Property Rights). So Indian drug firms could no longer simply
copy medicines with foreign patents by using alternative manufacturing processes and offer them
on the domestic market. As a consequence of these major changes to India‘s drug patent
legislation, the country‘s pharmaceutical industry is undergoing a process of re-orientation. Its
new focus is increasingly on self-developed drugs and contract research and/or production for
western drug companies.

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

8
The year 1995 recorded another milestone for the Indian pharmaceutical industry. One of the
Agreements under the World Trade Organization was complying with the Trade Related
Intellectual Property Rights (TRIPS) provisions. The TRIPS Agreement reintroduced product
patent in India. Further, during this period, tariff and non-tariff measures have come down. Such
developments have worked in favour of Indian pharmaceutical industry to undertake activities
such as clinical research and new drug development. Indigenous producers dominated the market
accounting for more than 70% of the market share. Exports also continued to increase during this
period, due to strong R&D process and low manufacturing cost.

POST-2005: India's new product patent regime is the result of the WTO's Doha Round of
negotiations in 2001. Final agreement was reached on TRIPs ground rules for patent protection
among WTO member countries, stating that both processes and products should be protected.
Subsequently, on March 22, 2005, India's parliament approved the Patents (Amendment) Act
2005, bringing in a system of product patents backdated to January 1, 2005. The new regime
protects only products arriving on the market after January 1, 1995, abolishing the previous
process patent system established by the 1970 Patent Act. Since the introduction of product
patents the MNCs have largely returned, the most recent being Merck & Co, which inaugurated
its wholly owned subsidiary MSD India Pvt Ltd in July 2005 after being absent for
approximately 20 years. Assocham believes the new patent regime will enable the development
of innovative new drugs, which will increase profitability for MNCs. It will also force domestic
players to focus on R&D, which, for those who can afford to do so, will have long-term
beneficial effects (Associated Chambers of Commerce and Industry of India Report to
Government, 2005).

PORTER‟S Competitive Forces

Porter‘s five forces analysis is a framework for the industry analysis and business strategy
development developed by Michael E Porter of Harvard Business School in 1979. It uses
concepts developed in Industrial Organization (IO) economics to derive five forces which
determine the competitive intensity and therefore attractiveness of a market. Attractiveness in
this context refers to the overall industry profitability.

Porter referred to these forces as the micro environment, to contrast it with the more general term
macro environment. They consist of those forces close to a company that affect its ability to
serve its customers and make a profit. A change in any of the forces normally requires a
company to re-assess the marketplace. The overall industry attractiveness does not imply that
every firm in the industry will return the same profitability. Firms are able to apply their core
competences, business model or network to achieve a profit above the industry average. By
applying unique business models have been able to make a return in excess of the industry
average.

9
 Porters Five Force analysis on Pharmaceutical Industry

Industry competition

Pharma industry is one of the most competitive industries in the country with as many as 10,000
different players fighting for the same pie. The rivalry in the industry can be gauged from the
fact that the top player in the country has only 6% market share, and the top five players together
have about 18% market share.
Thus, the concentration ratio for this industry is very low. High growth prospects make it
attractive for new players to enter in the industry.
Another major factor that adds to the industry rivalry is the fact that the entry barriers to pharma
industry are very low. The fixed cost requirement is low but the need for working capital is high.
The fixed asset turnover, which is one of the gauges of fixed cost requirements, tells us that in
bigger companies this ratio is in the range of 3.5 to 4 times. For smaller companies, it would be
even higher.
Many smaller players that are focused on a particular region have a better hang of the
distribution channel, making it easier to succeed, albeit in a limited way.
An important fact is that pharma is a stable market and its growth rate generally tracks the
economic growth of the country with some multiple. Though volume growth has been consistent
over a period of time, value growth has not followed in tandem.
The product differentiation is one key factor, which gives competitive advantage to the firms in
any industry. However, in pharma industry product differentiation is not possible since India has
followed process patents, with laws favoring imitators. Consequently, product differentiation is

10
not the driver, cost competitiveness is. However, companies like Pfizer and
GlaxoSmithKlineBeecham have created big brands in over the years, which act as product
differentiation tools. This will enhance over the long term, as product patents come into play
from 2005.

Bargaining power of buyers

The unique feature of pharma industry is that the end user of the product is different from the
influencer (read doctor). The consumer has no choice but to buy what the doctor says. However,
when we look at the buyer's power, we look at the influence they have on the prices of the
product.

In pharma industry, the buyers are scattered and they as such do not wield much power in the
pricing of the products. However, government with its policies plays an important role in
regulating pricing through the NPPA (National Pharmaceutical Pricing Authority).

Bargaining power of suppliers

The pharma industry depends upon several organic chemicals. The chemical industry is again
very competitive and fragmented. The chemicals used in the pharma industry are largely a
commodity.
The suppliers have very low bargaining power and the companies in the pharma industry can
switch from their suppliers without incurring a very high cost.
However, what can happen is that the supplier can go for forward integration to become a
pharma company. Companies like Orchid Chemicals and Sashun Chemicals were basically
chemical companies, who turned themselves into pharmaceutical companies.

Barriers to entry

Pharma industry is one of the most easily accessible industries for an entrepreneur in India. The
capital requirement for the industry is very low; creating a regional distribution network is easy,
since the point of sales is restricted in this industry in India.
However, creating brand awareness and franchisee amongst doctors is the key for long-term
survival. Also, quality regulations by the government may put some hindrance for establishing
new manufacturing operations. Going forward, the impending new patent regime will raise the
barriers to entry. But it is unlikely to discourage new entrants, as market for generics will be as
huge.
Threat of substitutes
This is one of the great advantages of the pharma industry. Whatever happens, demand for
pharma products continues and the industry thrives. One of the key reasons for high
competitiveness in the industry is that as an ongoing concern, pharma industry seems to have an
infinite future.

11
However, in recent times, the advances made in the field of Biotechnology, can prove to be a threat
to the synthetic pharma industry.

PRODUCT CATEGORIES AND MARKET SHARE

The pharmaceutical industry can be divided on the basis of therapeutic application and on the
basis of foam. On the basis of application, the industry can be divided into therapeutic segments,
while on the basis of foam; the industry can be divided into bulk drugs and formulations. On the
basis of application, the key segments in the pharmaceuticals Industry are as under, however
some of the therapeutic segment are overlapping because of multiple applications (ICRA Report
2002).

1. Anti-infective: (penicilium, sulphonamides Aminoglycosides tetracyclines, macrolides,

cepholsporins, auinolonesetc) anti –parasites (anti-protozoa, anti-malarias, anti-fungals, anti-
helmintic etc), anti-tuberculosis and vaccines.

2. Antipyretics and analgesics: pain killers, non-steroidal anti-inflammatory drugs (NSAIDs)

and drugs for fevers.

3. Cardivascular (CVS) drugs: cardiac therapy, anti-hypertensives and anti-hypotensives.

4. Central Nervous system (CNS) drugs: analgesics, psycoleptics, anti-epilepsy, tranquilisers

and sedatives and anti-Parkinson‘s disease.

5. Dermatological preparations: topical corticosteroids, antiseptics and anti-fungals.

6. Gastrointestinals: antacids, anti-ulcerants, anti-helmintics, anti-flatulents and anti-

diarrhoeals.

7. Genitourinary and sex hormones: corticosteroids, sex hormones and stimulants.

8. Haematologicals: anti-anaemic preparations.

9. Muscular Drugs: anti-inflammatory and anti-rheumatics.

10. Respiratory Drugs: cough and cold preparations, anti-asthmatics, anti-histamines, rubs and
anti-tuberculosis.

11. Other drugs: General nutrients, minerals and vitamins.

12
 Market Share of Different Pharmaceutical Product Categories

Source: Corporate Catalyst India Report, 2015

ANTIBIOTICS
An antibiotic is a chemical produced by or derived from micro-organisms (i.e. germs such as
bacteria and fungi) that kills bacteria or inhibits their growth (Dorlands Medical Dictionary:
antibacterial, 2007). Antibiotics are among the most frequently prescribed medications in
modern medicine. Antibiotics cure disease by killing the bacteria or by bacterial reproduction
and growth inhibition. The term antibiotic’ was coined by Selman Waksman in 1942 to describe
any substance produced by a micro-organism that is antagonistic to the growth of other micro-
organisms in high dilution (Waksman, 1947). Before bacteria can multiply and cause symptoms
of diseases, our immune system can usually destroy them. Even if symptoms do occur, our
immune system can usually cope and fight off the infection. There are occasions, however, when
it is all too much and our bodies need some help - from antibiotics.

Although there are a number of different types of antibiotics, they all work in one of the
following two ways:
 A bactericidal antibiotic kills the bacteria. Penicillin is a bactericidal. A bactericidal
usually either interferes with the formation of the bacterium's cell wall or its cell contents.
 A bacteriostatic stops bacteria from multiplying.

13
Antibiotics target microorganisms such as bacteria, fungi and parasites. However, they are not
effective against viruses. If an individual has an infection, it is important to know whether it is
caused by a bacteria or a virus. Most upper respiratory tract infections, such as the common cold
and sore throats are generally caused by viruses - antibiotics do not work against these viruses.
If antibiotics are overused or used incorrectly there is a chance that the bacteria will become
resistant - the antibiotic becomes less effective against that type of bacterium.

CLASSIFICATION OF ANTIBIOTICS
Antibiotics are commonly classified based on their mechanism of action, chemical structure, or
spectrum of activity. Most antibiotics target bacterial functions or growth processes (Calderon et
al, 2007). Antibiotics that target the bacterial cell wall (penicillin‘s, cephalosporin‘s), or cell
membrane (polymixins), or interfere with essential bacterial enzymes (quinolones, sulfonamides)
are usually bactericidal in nature. Those that target protein synthesis, such as the
aminoglycosides, macrolides, and tetracyclines, are usually bacteriostatic (Finberg et al, 2004).
Further categorization is based on their target specificity: "Narrow-spectrum" antibiotics target
particular types of bacteria, such as Gram-negative or Gram-positive bacteria, whereas broad-
spectrum antibiotics affect a wide range of bacteria. In the last few years, three new classes of
antibiotics have been brought into clinical use. This follows a 40-year hiatus in discovering new
classes of antibiotic compounds. These new antibiotics are of the following three classes: cyclic
lipopeptides (daptomycin), glycylcyclines (tigecycline), and oxazolidinones (linezolid) (Cunha,
2009). Tigecycline is a broad-spectrum antibiotic, whereas the two others are used for Gram-
positive infections. These developments show promise as a means to counteract the bacterial
resistance to existing antibiotics.
The main classes of antibiotics include:
• Macrolides
• Aminoglycosides
• Cephalosporins
• Fluoroquinolones
• Penicillins
• Tetracyclines
• Carbapenems

ANTIBIOTIC RESISTANCE
The emergence of antibiotic resistance is an evolutionary process that is based on selection of
organisms that have enhanced ability to survive doses of antibiotics that would have previously
been lethal (Levy SB, 1994). Antibiotics like Penicillin and Erythromycin, which used to be one-
time miracle cures are now less effective because bacteria have become more resistant.
Antibiotics themselves act as a selective pressure that allows the growth of resistant bacteria
within a population and inhibits susceptible bacteria (Levy SB, 1994). Antibiotic selection of

14
pre-existing antibiotic resistant mutants within bacterial populations was demonstrated in 1943
by the Luria–Delbrück experiment (Luria SE et al, 1943). Survival of bacteria often results from
an inheritable resistance (Witte W, 2003). Any antibiotic resistance may impose a biological
cost. Spread of antibiotic-resistant bacteria may be hampered by reduced fitness associated with
the resistance, which is disadvantageous for survival of the bacteria when antibiotic is not
present. Additional mutations, however, may compensate for this fitness cost and aids the
survival of these bacteria (Andersson DI, 2006).
The problem of resistance has been exacerbated by the use of antibiotics as prophylactics,
intended to prevent infection before it occurs. Indiscriminate and inappropriate use of antibiotics
for the treatment of the common cold and other common viral infections, against which they
have no effect, removes antibiotic-sensitive bacteria and allows the development of antibiotic-
resistant bacteria.

CHALLENGES TO PHARMACEUTICAL INDUSTRY

All of these changes are ultimately good for the Indian pharmaceutical industry, which suffered
in the past from inadequate regulation and large quantities of spurious drugs. They force the
industry to reach a level necessary for global competitiveness. However, they have also exposed
some of the inadequacies in the industry today. Its main weakness is an underdeveloped new
molecule discovery program. Even after the increased investment, market leaders such as
Ranbaxy and Dr. Reddy‘s Laboratories spent only 5-10% of their revenues on R&D, lagging
behind Western pharmaceuticals like Pfizer, whose research budget last year was greater than the
combined revenues of the entire Indian pharmaceutical industry. This disparity is too great to be
explained by cost differentials, and it comes when advances in genomics have made research
equipment more expensive than ever. The drug discovery process is further hindered by a dearth
of qualified molecular biologists. Due to the disconnect between curriculum and industry,
pharmas in India also lack the academic collaboration that is crucial to drug development in the
West (Dyer et al 2004).

It is expected to witness drugs sales rise by an annual 8% to nearly EUR 20 bn between 2006 and
2015. To be sure, this growth rate is higher than that seen for Germany (+5% p.a.) and the entire
world (+6%). Nonetheless, India‘s share in world pharmaceutical sales will rise only marginally
to a good 2%. Growth of India‘s pharmaceutical industry and thus its share in global drugs
manufacturing could even be slightly higher if the infrastructure problems could be remedied
quickly. While the pharmaceutical industries of China and Singapore will likely continue to
show much higher growth, India looks set to even lose market share in Asia. Mainly affected by
this development are smaller Indian companies with sales of up to EUR 10 mn which focus on
traditional Indian medicines. It is likely that many of these companies will merge or disappear
from the market altogether. By contrast, large pharmaceutical companies with sales volumes of
over EUR 50 m will be able to increase their sales as they will be better equipped to adjust their
product ranges to the demands of international markets. These firms will expand their capacities
in India – mostly in the sector‘s clusters surrounding Delhi and Mumbai – but will also take over
firms in the industrial countries. Medium-sized businesses will benefit from increasing contract
production for western firms.

15
Overall the share of pharmaceuticals in the total chemicals industry in India will come to roughly
17% in 2015 (2006: 18%), compared with 28% in Germany (from 24% in 2006). For the world
as a whole, the ratio will likely be only slightly lower than the German level (25%). Although
India‘s pharmaceutical sector is growing strongly, the population‘s demand for drugs cannot be
met by the country‘s own production in all segments. At EUR 1.5 bn, India‘s total drugs imports
are comparable in size to Norway‘s entire pharmaceuticals market. Imports look set to continue
to rise strongly. On a medium-term horizon, one-fifth of the world‘s pharma sales will be
accounted for by the emerging markets. China will then be among the group of the five largest
manufacturers, while India will join the group of the ten largest suppliers.

PROFILE OF SELECTED PHARMACEUTICAL FIRMS

1. ABBOTT

Since 1910, Abbott has been dedicated to helping people in India live healthier lives through a
diverse range of science-based nutritional products, diagnostic tools, branded generic
pharmaceuticals, and diabetes and vascular devices.

Headquartered in Mumbai, Abbott India Limited, a publicly listed company and a subsidiary of
Abbott Laboratories, takes pride in offering high-quality trusted medicines in multiple
therapeutic categories such as women's health, gastroenterology, cardiology, metabolic disorders
and primary care.

One of India's fastest-growing pharmaceutical companies, Abbott India Limited is part of

Abbott's global pharmaceutical business in India.

We have expertise across product development, manufacturing, sales and customer service and
are dedicated to providing high-quality, reliable products with the expert clinical support our
customers need.

Abbott India Limited believes in providing quality healthcare through a mix of global and local
products for people in India. Our in-house development and medical teams undertake product
and clinical development tailored to the unique needs of the Indian market. Our employees work
to produce high-quality, high-volume formulations using cost efficient processes. And, our
trained personnel are dedicated to ensuring compliance with international quality standards.

2. SUN PHARMA

16
Sun Pharma, officially known as Sun Pharmaceutical Industries Limited, was founded in 1983
by Dilip Shanghvi. The company is headquartered in India's financial capital Mumbai,
Maharashtra. Active Pharmaceuticals Ingredients (APIs) and formulations are known to be Sun
Pharma's specialised areas. It targets a wide spectrum of chronic and acute treatments. Its
therapeutic segments of over 3000 high quality molecules include psychiatry, anti-infectives,
neurology, cardiology, orthopaedic, diabetology, gastroenterology, ophthalmology, nephrology,
urology, dermatology, gynaecology, respiratory, oncology, dental and nutritionals. On 15 June
2015, Sun Pharma was India's largest pharmaceutical company with the market capitalisation
valued at Rs 2,01,706.41 crore.

3. GLAXO SMITHKLINE BEECHAM(GSK)

Established in the year 1924 in India GlaxoSmithKline Pharmaceuticals Ltd. (GSK Rx India) is
one of the oldest pharmaceuticals company and employs over 3500 people. Globally, they are a £
28.4 billion, leading, research-based healthcare and pharmaceutical company. GSK is One of the
market leaders in India with a turnover of Rs. 2572 crore and a share of 4.3%. The GSK mission
is to improve the quality of life by enabling people to do more, feel better and live longer. This
mission drives to make a real difference to the lives of millions of people with commitment to
effective healthcare solutions.

GSK worldwide

 GSK is one of the world's leading research-based pharmaceutical and healthcare

companies.
 They employ over 96,500 people in over 100 countries
 Around 13,000 people work in our research teams across the world to discover new
medicines
 The vaccines are included in immunisation campaigns in 182 countries worldwide
 Every second, they distribute more than 35 doses of Vaccines.
 Every minute, more than 1100 prescriptions are written for GSK products.
 Every hour they spend more than £ 300,000 (US$562,000) to find new medicines
 January 2008 marked the tenth anniversary of our programme to help eliminate lymphatic
filariasis (elephantiasis). Since the start of this programme they have donated more than
1.4 billion albendazole tablets to countries affected by LF
 GSK global community investment and charitable donations were £ 222 million in 2010

4. PFIZER

Since Pfizer was founded by Cousins Charles Pfizer and Charles Erhart in 1849, the
pharmaceutical company has remained dedicated to discovering and developing new, and better,
ways to prevent and treat disease and improve health and wellbeing for people around the world.

17
From the miracle of penicillin to Pfizer Helpful Answers, which helps people without
prescription coverage maintain access to important medications, to medicine safety website, they
focus on meeting the world's diverse health needs.

 Pfizer India Headquartered in Mumbai engaged more than 2300 employees and has state
of art manufacturing facility at Thane, Maharashtra.
 Pfizer Limited (India) has a turnover of US$ 165.86 million (November 2009)
 Pfizer is the highest spenders in pharmaceutical R&D globally, Pfizer has made clinical
research investments of US$ 6.28 million (November 2009) in India
 The company was awarded the FICCI SEDF (Socio Economic Development Foundation)
Certificate of Commendation for its social responsibility efforts
 Pfizer has won several awards including that for the multinational pharmaceutical
company of the year and the most respected MNC

5. CIPLA

Cipla laid foundations for the Indian pharmaceutical industry back in 1935 with the vision to
make India self-reliant in healthcare. Over the years Cipla has emerged as one of the most
respected names not just in India but worldwide. Its state of the art R&D center has given the
country and the world many firsts. This includes the revolutionary AIDS cocktail for less
than a dollar a day. With over 40 manufacturing units across the country, Cipla manufactures
over 1200 products in 80 therapies.
With a turnover of over US $ 1 billion, Cipla serves doctors and patients in over 183
countries. It has earned a name for maintaining one global standard across all its products and
services. Cipla continues to support, improve and save millions of lives with its high-quality
drugs and innovative devices.
Cipla is 2nd largest pharmaceutical company in India in terms of retail sales. Cipla
manufactures an extensive range of pharmaceutical & personal care products and has
presence in over 170 countries across the world. Cipla's product range includes
Pharmaceuticals, Animal Health Care Products, OTC, Bulk Drugs, Flavours & Fragrances,
and Agrochemicals. Cipla also provides a host of consulting services such as preparation of
product and material specifications, evaluation of existing production facilities to meet GMP,
definition of appropriate plant size and technologies etc.

Government Initiative
As per minister of chemicals and fertilizers Ram Vilas Paswan, “we have already taken in
principle decision to create a separate department for the pharmaceutical Sector, considering the
robust growth witnessed by the pharmaceutical Sector Inthe country.”

As per the official said, “having a full fledge department exclusively dedicate to the
pharmaceutical industry would help the sector especially when export area counting close to
50% of the total pharma production in the country.”

18
Health minister A. Ramadass said the government is considering a bill that to provide for
accreditation of all hospital down to district level and he says that only 2-3% Indians have any
form of health insurance and in the coming Years there will be a massive surge in it. The
government has launched an
Rs1.25 billion project for scientific validation of traditional health care system of Ayurveda,
homoeopathy, unani, and siddha.

The finance Ministry’s investment commission emphasis’s that healthcareDelivery is already one
of the largest service sector industries in India, Expects the industry to grow and contribute upto
5% of GDP (at around Rs 240000crores) by 2010.

Mrs Renuka Chowdhury said that medical tourism could bring in extra Foreign exchange worth
Rs 5000-10000 crore.

In addition tour operators have been advised to include Ayurveda health destination in their
marketing venture, especially in view of increasing popularity of Ayurveda

 Export Promotion Cell:

 An Export Promotion cell in this sector has been incorporatedwith the objective of
 Boosting Pharmaceutical exports
 Function as a nodal centre
 Promotional Activities aiming at accelerating pharma exports.
 Suggestions for modifications in the EXIM Policy.
 Seminars / Workshops on standards, quality control requirements etc.
 Pharma Export Promotion Council ( Pharmexcil):

The Pharma Export Promotion Council (Pharmexcil) has been constituted with the objective
of Facilitation of exports of Drugs, Pharmaceuticals, Biotechnology products, Herbal Medicines,
Diagnostics. Export thrust to various products through workshops, conferences and seminars and
delegate visits.

 Foreign Direct Investment (FDI) in Drugs and Pharmaceuticals:

FDI upto 74% in the case of bulk drugs, their intermediate Pharmaceuticals and formulations
(except those produced by the use of recombinant DNA technology)would be covered under
automatic route.

FDI above 74% for manufacture of bulk drugs will be considered by theGovernment on case to
case basis for manufacture of bulk drugs from basic stages and their intermediates and bulk

19
drugs produced by the use of recombinant DNAtechnology as well as the specific cell/tissue
targeted formulations provided it involves manufacturing from basic stage.

Provisions of Union Budget 2007-08 for the Pharma Sector

1. Weighted deduction on in-house R&D expenditure extended for a period of five more
years until March 31, 2012.
2. Service Tax Exemption to DCGI2 approved CRO3s offering clinical trials for technical
testing and analysis services for testing of new drugs
3. Peak customs duty reduced to 10%
4. Concessional rate of 5% customs duty plus Nil CVD on specified items extended to all
research institutions registered with DSIR4
5. Additional 15 imported items for R&D purposes allowed to be imported at 5%customs
duty.
6. Increased budgetary allocation towards AIDS control and immunization for Polio

ADVANTAGE
 Competent workforce:

India has a pool of personnel with high managerial and technical competence as
alsoskilled workforce. It has an educated work force and English is commonly used.Professional
services are easily available.

 Cost-effective chemical synthesis:

Its track record of development, particularly in the area of improved cost-beneficial chemical
synthesis for various drug molecules is excellent. It provides a wide variety of bulk drugs and
exports sophisticated bulk drugs.

 Legal & Financial Framework:

India has a 53 year old democracy and hence has a solid legal framework and strong financial
markets. There is already an established international industry and business community.

 Information & Technology:

It has a good network of world-class educational institutions and established strengths in

Information Technology.

 Globalisation:

The country is committed to a free market economy and globalization. Above all, it has a70
million middle class market, which is continuously growing.

20
  Consolidation:

For the first time in many years, the international pharmaceutical industry is finding great
opportunities in India. The process of consolidation, which has become a
generalized phenomenon in the world pharmaceutical industry, has started taking place in India.

21
 Company Profile

About Alkem
The Company was incorporated as a private limited company ‘Alkem Laboratories Private
Limited’ on August 8,1973 at Patna under the Companies Act, 1956 and subsequently became a
deemed public limited company under section 43A(2) of Companies Act, 1956 on October 26,
1988. Pursuant to the Company passing a resolution under section 21 of Companies Act, 1956
and upon issuance of a fresh certificate of incorporation consequent on change of name dated
August 21, 2001, the name of the Company was changed to ‘Alkem Laboratories Limited’ with
effect from October 26, 1988. the registered office was originally located at ‘Exhibition Road,
Patna – 800 001, Bihar, India’. the Company filed Company Petition No. 356(17)/ ERB/ 2007
before the Company Law Board, Eastern Region Bench at Kolkata for shifting the registered
office of the Company from the State of Bihar to the State of Maharashtra, as approved by a
special resolution at its extra-ordinary general meeting held on January 29, 2007. The Company
Law Board, Eastern Region Bench at Kolkata passed an order dated July 30, 2007 whereby it
confirmed the alteration of the situation clause in the Memorandum of Association, from the
State of Bihar to the State of Maharashtra. Pursuant to the order, the registered office of the
Company was shifted to ‘Alkem House, Senapati Bapat Marg, Lower Parel, Mumbai – 400 013,
Maharashtra, India’ with effect from August 2, 2007.

Major Events:

1973-

Incorporation of the Company.

22
1978-

The Company established its first plant at Taloja, Maharashtra.

1988-

The Company became a deemed public limited company.

1992-

The Company established its manufacturing facility in Mandwa, Maharashtra. This facility was
converted into an API facility in 2005.

1998-

The Company established its Kachigam manufacturing facility in Gujarat.

2001 –

Startronic Pharmachem Private Limited and Indo Propkem amalgamated with the Company.

2002-

The Company established its Amaliya manufacturing facility in Gujarat.

2003-

The Company set up its research and development facility at Taloja, Maharashtra.

2005-

The Company established its manufacturing facility in Baddi, Himachal Pradesh.

2006-

The anti-infective drug Taxim became the first drug in the Indian pharmaceutical industry to
cross 1,000 million in terms of domestic sales in India (Source: IMS Research)

2007-

23
The Company established its manufacturing facility in Kumrek, Sikkim.

The Company filed its first ANDA in the United States for the drug, Amlodipine.

The Company shifted its Registered Office from Patna, Bihar to Mumbai, Maharashtra.

2009-

The Company acquired Pharmacor, a generic pharma company in Australia.

2010-

The Company acquired The PharmaNetwork, LLC, the holding company of Ascend Laboratories
LLC.

2011-

The Company acquired Enzene Bio sciences Limited.

2012-

The Company acquired an API manufacturing facility in the United States.

2014-

The Company acquired the Clindac.

2015-

The Company acquired a formulation manufacturing facility in the United States.

Awards and achievements:

2002-

The Company was awarded the Pharma Business and Technology Excellence Award in 2002 as
'India’s Most Esteemed Pharmaceutical Company'

2004-

24
The product Taxim was awarded the Pharma Business and Technology Excellence Award for
successful brand in 2004

2005-

The Company was awarded the Overall Performance Award for Group B at the 5th Express
Pharma Awards in 2005

2009-

The Company received a certificate of appreciation for outstanding export performance in the
category of formulations by the Pharmaceuticals Export Promotion Council of India, supported
by Ministry of Commerce and Industry, GOI

-The Company received the certificate of appreciation in the category of ‘Formulation Experts’
by the Pharmaceuticals Export Promotion Council of India, supported by Ministry of Commerce
and Industry, GOI

2013 –

The Company was awarded the India’s most admired pharma company award for 2013 at the 6th
Annual Pharmaceutical Leadership Summit in 2013

2014 –

The Product ‘Clavam’ was awarded as the ‘Brand of the Year’ at the AWACS Award, 2014

2016 –

Alkem's Mandva Plant successfully obtains the Establishment Inspection Report from the US
FDA -Alkem receives EIR from the US FDA for its Daman formulation facility

MISSION & VISION

Mission::
We commit ourselves to total customer care by delivering world-class products and services.

25
Vision::
To be the leader in the pharmaceutical industry.

Core Values::
We as Arisers hail from diverse backgrounds and cultures. Each of us have different upbringing
that influences our views, opinions, preferences, prejudices, beliefs etc. This diversity is our
strength. We need to constantly build upon this strength, harnessed by our core values. .

These core values, you will agree, help us develop a sense of trust, ownership and pride amongst
each of our stakeholders who are associated with Alkem. It guides us in building a sustainable
organization that can withstand the test of time.

INTEGRITY

When truth is paramount

Thoughts and actions entail doing the right thing at all times and in all circumstances; whether or
not anyone is watching. This requires inner courage and conviction, no matter what the
consequences are. It is honoring one's commitments and being accountable for one's actions,
end-to-end.

EXCELLENCE

When best is not enough

Passion for excellence means not doing extra-ordinary things, but doing ordinary things in all
pursuits exceedingly well. Passion and excellence are forces that fuel each other on the exclusive
path to leadership. As we are what we repeatedly do, excellence then becomes not an act, but a
habit.

CUSTOMER AND FAMILY FIRST

When customer comes first, they last

The guiding principle behind caring for customers and family is being honest in building and
nurturing relationships. Our mantra in customer service is ‘Alkem’ We believe in setting high
standards when it comes to maintaining relationships.

TEAMWORK

Teamwork makes the Dream work

An ideal organization facilitates participation and involvement of each of its members in various
decision making processes. It not just leads to commitment but also ensures ownership of the end
result by each member. Team to us is something that facilitates mutual brainstorming resulting in
accomplishing the assigned task.

26
CONSTANT LEARNING

Life is a continuous learning experience

Continuous learning is the key skill that ensures growth and sustainability of any organization.
Continuous up gradation of one’s knowledge and competence will surely give a competitive
edge to us. You will agree, our organization provides platform for continues learning that not
only enhances knowledge but also evolves all of us into matured alkemites.

RESPONSIBILITY

When every smile matters

Concern for Society & Environment is a sense of responsibility and contribution to society
that defines our existence. It entails making a difference in the quality of lives and
environment surrounding us. It is important to encourage fellow-members on collective as
well as individual basis to fulfill the responsibility of leaving behind a world abundant in
flora and fauna, rich in time tested values & ideals and above all wealthy in social fervor for
our future generations.

Marketing Mix- 4Ps of Marketing

Product:
Alkem Pharma is a leading manufacturer of both pharmaceuticals and active pharmaceutical
ingredients (API). An Alkem laboratory has been catering to various therapeutic sectors
inclusive of neurology, diabetology, psychiatry, cardiology, respiratory etc. All these product
offerings come under its marketing mix. It has always believed on innovating products and
coming up with new medicines with major focus on the growing chronic therapies. Alkem
Pharma has a Patent on a medicine for curing skin lesions. It is gradually shifting towards
generic medicines along with patent expiries and the volume driven growth in the pharma
market. It provides both Ayurvedic and Allopatic medicines in the form of syrups, tablets,
capsules etc.
Some of Alkem Pharma’s famous brands include:
 Taxim
 Swich
 Clavam
 Pan D& 40
 Gemcal
 Xone

Price:
Alkem Pharma has always try to maintain a reasonable pricing strategy to meet he needs of the
local people. It tries to optimize the operational cost thus help in maintain affordable prices. The

27
pricing policies followed by Alkem Pharma are on par with the major competitors in its
marketing mix. The consumers are now becoming highly price sensitive. This is a threat to the
company. Alkem Pharma produces generic medicines at a very low cost thus giving it a
competitive advantage. With their diversified product line they have been able to meet both high
end and low end products. Also owning a lot of patents under their name has helped them earn a
lot of profits. The Alkem Pharma company has succeeded in differentiating itself as cost
leadership.

Place:
Alkem pharma is one of the leading pharmaceutical industries spreading its business worldwide.
It has around 10 manufacturing plants in almost 3 continents. Recently it has set up
manufacturing facilities in Nepal and Baddi. Alkem pharma has been spending a lot in its R&D
projects and tus leading to various successful endeavours. Alkem Pharma has its headquarters in
Mumbai, Maharashtra. The plants are located in India, Canada, Egypt, Hungary, Mexico, Us,
Brazil, Romania, Ireland, Morocco, Nigeria, South Africa etc. Alkem Pharma has been
successfully serving patients in around 150 nations across the globe.

Promotion:
Alkem Pharma follows a very strong promotional and marketing activity in its marketing mix
and focuses on reaching the customers everywhere. Their Tagline depicts the intentions of the
company and attracts the people. They carry out various television ads ad also spreads awareness
through print medias. The Alkem Pharma company stresses on niche segment like psychiatry and
lifestyle meds etc. helping it to grow fourfold to have a revenue. Alkem Pharma have also earned
awareness through various sponsoring programmes and hoardings etc. they also come up with
attractive offers and schemes on meeting the described sales to its agents and distributors. This
completes an insight into Alkem Pharma marketing mix.

28
 Chapter No. 2

Literature Review

Cliodna AM McNulty, Tom Nichols, David P French, Puja Joshi and Chris C Butler

INTRODUCTION
There has been a steady rise in antibiotic resistance worldwide.1 As resistance is associated with
antibiotic use,2,3 and reductions in use have been associated with a fall in resistance,4 there have
been concerted antibiotic stewardship efforts directed at clinicians5 and public expectations for
antibiotics for respiratory tract infections (RTI).6 Total antibiotic dispensing in primary care in
England increased by about 7% between 2007 and 2011.7 Recent poster or leaflet campaigns in
England, which encouraged the public not to take antibiotics for acute RTI, probably had little
effect on antibiotic use.8 In contrast, multifaceted interventions are generally more successful,
especially if based on behavior change theory to address with GPs the importance of antibiotic
resistance and its relationship to use, and if they also provide tools to facilitate behavior change
in both patients and clinicians.9–13 Although the illness iceberg has been described,14 GPs may
prescribe antibiotics unnecessarily to the majority of patients presenting with RTIs,15 moreover
patients who are prescribed antibiotics for RTI have a history of high consultation behavior and
re-attendance.16 Antibiotic prescribing decisions should take individual patient perspectives into
account; and good data on the patients journey through their RTI illness should help inform GPs’
management and the further development and roll-out of multifaceted interventions.9,17 The aim
of this study was to build up a profile of the ‘RTI clinical iceberg’ by estimating how often
members of the general public were affected by an RTI in the past 6 months, how they managed
it, how many visited their GP and why, what they expected from this visit and their expectations
for antibiotics in a range of clinical scenarios, whether they had been prescribed immediate or
delayed antibiotics, and their adherence behaviour.
METHOD
Overview
This was a two-phase study; qualitative in depth interviews informed questions which were used
in an Ipsos MORI survey conducted in households in England during January 2011.18
Qualitative interview study
A sample of adult members of the public with diverse ethnicity and deprivation were
opportunistically recruited in pharmacies in four areas of England. Responders who had recently
had an RTI, were asked to participate in a later telephone interview.18 The interview structure
was based on Leventhal’s Common Sense Model19 and explored the recent RTI illness episode
and what healthcare advice they had sought, if any.18,20 All interviews were audiorecorded,
transcribed verbatim, and subjected to thematic analysis.18 Responder validation was not sought

29
as all participants turned down the offer to be sent the findings for review. Initially, the
transcripts were read and codes developed for the themes identified; subsequently the research
team read a sample of transcripts, and discussed and agreed the coding. An iterative process was
used in which interviews proceeded with the analysis, allowing for exploration of emerging
themes during recruitment. After 17 interviews it was agreed that no novel data were being
collected. There were no obviously inconsistent findings emerging therefore it was agreed not to
look for disconfirming data when developing themes.
Questionnaire survey
The results of the qualitative interviews were used to inform the survey questions about
responders’ actions with their most recent RTI illness, and the list of possible actions that
responders were then asked to choose from as their answer. (Questionnaire available from
authors). For the Ipsos MORI questionnaire survey in January 2011, multistage sampling was
used to recruit 1767 adults aged ≥15 years from across England for face-to-face interviews in
their own home.18 Briefly, the interviews form part of Ipsos MORI’s weekly ‘Capibus’ survey;
approximately 180 local area authorities are randomly selected in the first stage of sampling.
Those selected n Wales and Scotland do not feature in this study. In the second stage of
sampling, one output area of between 60 to 100 addresses is randomly selected from each local
area authority. Interviewers are given age and sex quotas of responders for each output area.
Interviewers go door-to-door inviting the person who answers (provided they are over 15 years
old) to participate. If that person refuses, interviewers can invite another member of the
household. Households are visited throughout the week; during the day, evenings, and weekends
so that working people can be included. Interviewers do not revisit non-responding households.
About one interview is completed for every three or four doors on which they knock.

Responders were asked several different questions about their expectations for antibiotics,
and their antibiotic use. First responders were asked if they expected their GP or nurse to
prescribe antibiotics if they went to see them with different RTI conditions; secondly they
were asked if in the past year they had asked their GP or nurse for antibiotics for themselves
or for someone else for any condition and what happened if they asked; we also asked if in
the past year they had been prescribed antibiotics for any condition and if they had finished
the course as prescribed, or offered a delayed antibiotic prescription. Responders were then
asked whether they agreed with a number of statements about antibiotics, whether they
expected different RTI symptoms would get better more quickly with antibiotics, and how
much of a problem they thought antibiotic side effects were.
Responders were then asked completely different questions on an unrelated Ipsos MORI
topic, before being asked whether they had had sore throat, cold, cough, or flu symptoms in
the previous 6 months, how the symptoms of their most recent RTI had affected their general
health and what actions they took as a result. If they had contacted or visited their GP surgery
with their most recent RTI they were asked their reasons and expectations for consulting. The
possible answers to these questions that were derived from the interview responders (plus
‘other’ and ‘don’t remember’) were displayed on a show card.
Percentages were adjusted using weights defined by sex and, within sex, by age, social grade,
region and working status to correct for known selection biases. Social grade is the
classification originally developed for the National Readership Survey and based on

30
occupation. All results allow for using Stata (version 11.2). Significance tests for differences
in percentages were a variation of the Pearson c2 test.18 Significance tests include no
correction for the number of possible comparisons that could have been made.
RESULTS
Qualitative interview
Study Seventeen participants who had recently had RTI or flu symptoms (10 female, 16
white, one south Asian) were interviewed between 3 and 8 days after their pharmacy visit.17
The eight participants who had visited a pharmacy and not their GP surgery did not report
that their illness was affecting their day to day life, (Box 1) and did not describe pain as a
symptom. The nine participants who had also visited their GP had two things in common:
their symptoms affected day-to-day life, sleep, or activities, and they described symptoms
that included pain (Box 2). Several participants mentioned that they had visited their GP
because they wanted reassurance, or were prompted to go by family or friends. Several
participants reported that they would not expect antibiotics for a cough or cold, but would if
symptoms were prolonged or severe, or if they had an underlying illness such as asthma.

31
 Chapter No. 3

Research Methodology

This research is to study on the treatment for respiratory tract infection and chemist analysis
from Navi Mumbai area’s different specialization of doctors.

Primary data was collected through a 1 questionnaire cum interview. Questionnaire for
doctor consisting 9 questions in that included questions ranging from area of customer to
satisfaction level was constructed and data of 70 Doctors was recorded in Navi Mumbai
(Vashi) area.

32
OBJECTIVE:

 To understand and analyze the doctors molecule preferences.

 To understand the reason for choosing the same molecule for the treatment of respiratory
tract infection.

 To check the brand loyalty of the consumer.

 To understand the purpose of consuming the particular molecule.

 To analyze doctor satisfaction in health antibiotics amongst others molecules.

 To recognize people’s choice among various brands.

 To study the problems faced by the doctors in using the antibiotics.

 To offer findings and suggestions.

 To study the products and services of various Pharma companies.

 To understand the various influential factors of buying decision.

These factors include:

o Economy
o Packaging of product
o Brand name

33
 Chapter No. 4

4.1 Findings & Discussion

From above table it can be interpreted that 95% of respondents are prescribing antibiotics in
Respiratory tract infection

Most of the respondents are prescribing Antibiotics in RTI because it gives relief from infection.

34
From above table it can be interpreted that 94% of respondent preferred cell wall inhibitor and
60% of respondent preferred DNA gyrase inhibitors.

Most of the respondent preferred cell wall inhibitor because of its better effective and shows less
resistance than other antibiotics

35
From above table it can be interpreted that 85% of respondent preferred to prescribe generic
medicines and 85% of respondent preferred to prescribe branded medicines.

Most of the respondent preferred generic as well as branded medicines because of it’s totally
depend on consumer psychology as well as their choice of selection of antibiotics.

36
From above table it can be interpreted that 94% of respondent preferred to prescribe first,
second, third generation medicines and 93% of respondent preferred to prescribe fourth
generation medicines.

Most of the respondent preferred first, second, third generation medicines because it’s depend on
certain type of bacterial infection which cause respiratory tract infection.

37
From above table it can be interpreted that 84% of respondents are preferred both route of
administration antibiotics for treatment of Respiratory tract infection.

Most of the respondents are preferred both route of administration Antibiotics in RTI because it
gives relief from infection.

38
From above table it can be interpreted that 48% of respondent preferred to prescribe other
molecule and 48% of respondent preferred cefixime and cefadroxil to prescribe molecules for
treatment of RTI.

Most of the respondents are preferred other Antibiotics for treatment of RTI because it’s totally
depend on doctors perception and patient compliance.

39
 From above table it can be interpreted that 60% of respondents are preferred to prescribe both
forms antibiotics for treatment of Respiratory tract infection.

Most of the respondents are preferred to both forms Antibiotics for treatment of RTI because it’s
totally depend on molecule effectiveness and patient compliance.

40
From above table it can be interpreted that doctors practicing to age between 11-30 and that is
64% they preferred to prescribe antibiotics and 48% of patients age between the 50 & above
preferred to prescribe antibiotics for treatment of RTI.

Most of the respondents are preferred to prescribe antibiotics to age between 11-30 that is 64%
because of at this particular age the chances of respiratory tract infection chances is more
compare to other age of peoples.

41
From above table it can be interpreted that quality is important factors for doctors while
prescribing molecule to patients.

Most of the respondents are having quality is important while prescribing brand because without
quality doctors will not come to know about brand.

42
From above table it can be interpreted that 80% of respondents are satisfied with price of brands
of company which they are prescribing.

Alkem should be more focus on price of brand because as compare to others brand alkem
product price is little bit high and that was found only 70% doctors only preferred to prescribe
alkem company products so, alkem need to focus on their brand efficacy.

43
From above table it can be interpreted that 91% of respondents are satisfied with efficacy of
brands of Abbott company which they are prescribing.

Alkem should be more focus on efficacy of brand because as compare to others brand alkem
product efficacy was found only 81% so, alkem need to focus on their brand efficacy.

44
 SWOT Analysis
The SWOT analysis of the Alkem pharmaceuticals Pvt. Ltd. company reveals the position in the
Indian pharmaceutical industry.

Respect to its internal and external environment.

a) Strengths

• Low-cost, highly skilled set of English speaking labour force and proven track record in design
of high technology manufacturing devices.

• Growing treatment naive patient population.

• Low cost of innovation, manufacturing and operations.

• Having all varieties of products with lower price.

• Enough field force for promotion.

b) Weaknesses

• Stringent pricing regulations affecting the profitability of pharma companies.

• Poor all-round infrastructure is a major challenge.

• Poor health insurance coverage.

• Poor HR plans and fewer employees oriented.

45
c) Opportunities

• Global demand for generics rising.

• Rapid OTC and generic market growth.

• Increased penetration in the non - metro markets.

• Large demand for quality diagnostic services.

• Significant investment from MNCs.

• Public-Private Partnerships for strengthening Infrastructure.

• Opening of the health insurance sector and increase in per capita income - the growth drivers.

• India, a potentially preferred global outsourcing hub for pharmaceutical products due to low
cost of skilled Labour.

d) Threats

• Wage inflation.

• Government expanding the umbrella of the Drugs Price Control Order (DPCO).

• Other low-cost countries such as China and Israel affecting outsourcing demand for Indian
pharmaceutical products

• Entry of foreign players (well-equipped technology-based products) into the Indian market.

46
 Recommendations

• Doctors are giving more importance to Efficacy of brand and promotion of brand
therefore company should provide this two parameter to satisfy doctors.
• Doctors are least satisfied with Availability of brand therefore recommended to be highly
active when it comes to Availability of brand.
• There is lot of advices to RTI Patients from doctors, company need to convey this to RTI
patient by giving them Pamphlet or putting Poster in Doctors clinic.
• Doctors wants changes from pharma industry, company should be more oriented to
satisfied doctors needs.
• The company should arrange Continuing Medical Education (CME), Seminars for their
customers i.e. doctors for promotion of brand.
• The company should have more concern about Non- moving products, because it leads to
increase in inventory and indirectly this is loss to company only. Also company should
minimize expiry and breakage.
• The company should give scheme to Stockiest for Seasonal product to increase product
sales.

47
CONCLUSION:

 The findings and analysis and overall study of the,” ANALYSIS OF

DOCTORS PERCEPTION TOWORDS PRESCRIBE ANTIBIOTICS
FOR TREATMENT OF RESPIRATORY TRACT INFECTION ” shows
that Cefixime is the most preferred molecule amongst the other
antibiotic molecules.

 The study also claimed that advertisement being the most major reason
for the preference of their respective molecule to decide to buy that
brand.

 The other reasons were the molecule loyalty and molecule trust that
makes the doctors buy their RTI molecule.

 The major factor that a doctors considers while choosing a molecule is

the effective for that RTI.

 Packaging of the product also highly influence the buying decision of the
doctors by attracting doctors and generating an unintentional need
looking at the product.

 Manufacturing and expiry date is one another factor that the doctors
consider or take into consideration while making a purchase.

 Taste also effects the term called brand switching that may cause a
consumer to switch from one brand to another.

 It is also concluded that people are available with variety of options and
are also available about the different brands of the antibiotics available
in the market.

48
 Bibliography
 https://en.wikipedia.org/wiki/Respiratory_tract_infection
 Cliodna AM McNulty, Tom Nichols, David P French, Puja Joshi and Chris C Butler
• www.scribd.com
• www.wikipidiapharmaindustry
• www.nhs.conditions/respiratory-tract-infection/pages/introduction.aspx
• emedicine.medscape.com/article/302460-overview

49
 ANNEXURE

QUESTIONNAIRE

TOPIC: - RESPIRATORY TRACT INFECTION SURVEY

DR NAME:-

QUALIFICATION: - AGE:-

LOCATION:-

Q1) ARE YOU PRISCRIBING ANTIBIOTICS FOR RESPIRATORY TRACT INFECTIONS?

1) YES 2)NO AGE:-

Q2) WHICH CLASS OF ANITIBIOTICS YOU PREFERRED GENERALLY FOR

PAITIENT IN INFECTIOUS CASES: - HOW IMPORTANT RANK THEM ON 4 POINT
SCALE. PLEASE GIVE ME ONE RANK TO ONE PARAMETER.

(1= MOST IMPORTANT, 4= LEAST IMPORTANT)

Sr Parameters Importance
No.`

1 CELL WALL INHIBITOR

2 PROTEIN SYNTHESIS
INHIBITOR

3 DNA GYRASE INHIBITORS

4 OTHERS

50
Q 3) WHICH TYPE OF ANTIBIOTICS DO YOU PREFER FOR PATIENT? HOW
IMPORTANT RATE THEM ON 4 POINT SCALE. PLEASE GIVE ME ONE RANK TO
ONE PARAMETER. (1= MOST IMPORTANT, 4= LEAST IMPORTANT)

Sr Parameters Importance
No.

1 GENERIC

2 BRANDED

3 FRANCHISE PRODUCT

4 OTHERS

Q 4) IN CLASS OF ANTIBIOTICS WHICH TYPE OF GENEARATION DRUG IS YOU

PRISCRIBE IN CASE OF RESPIRATORY TRACT INFECTION? HOW IMPORTANT
RANK THEM ON 4 POINT SCALE. PLEASE GIVE ME ONE RANK TO ONE
PARAMETER. (1= MOST IMPORTANT, 4= LEAST IMPORTANT)

Sr Parameters Importance
No.
(MENTION CLASS)

1 FIRST GENRATION

2 SECOND GENRATION

3 THIRD GENRATION

4 FOURTH GENRATION

51
Q 5) WHICH TYPE OF ROUTE OF ADMINASTRATION YOU IS PREFERRED FOR
THE PATIENT IN ANTIBIOTICS?

1) ORAL 2) PARENTRAL 3) BOTH

WHY? (PLEASE MENTION YOUR COMMENT):-

Q 6) IN RESPIRATORY TRACT INFECTION WHICH MOLECULE YOU ARE

PREFERS PRESCIBE OF THE FOLLWING ANTIBIOTICS PLEASE RANK IN
ORDER OF REFERENCE.

Parameters IMPORTANCE

CEPHODOXIME PROXETIL
CEFIXIME
CEFADROXIL
OTHERS{PLEASEMENTION NAME}

Q 7) IS YOU PREFER TO PRESCRIBE ANTIBIOTIC COMBINATION WITH OTHER

ANTIBIOTICS OR IN PLAIN FORM

1) PLAIN FORM 2) WITH COMBINATION

WHY? (PLEASE MENTION YOUR COMMENT

Q 8) WHICH AGES OF PATIENTS YOU MOST PREFERS TO PRISCRIBE

ANTIBIOTICS? PLEASE RANK THE FOLLWING FACTORS FOR RTI (1:- MOST
IMPORTANT 4:- LEAST IMPORTANT)

Parameters IMPORTANCE

0-10

11-30

31-50

50 & ABOVE

52
Q 9) COMPARED WITH OTHER PHARMACEUTICAL COMPANY PRODUCTS
WHICH COMPANY PRODUCT IS MUCH MORE EFFFECTIVE? PLEASE GIVE ME
ONE RANK TO ONE PARAMETER. (1= MOST EFFECTIVE, 4= LEAST EFFECTIVE)

FACTOR ALKEM ABBOTT SUN PHARMA MANKIND

QUALITY
PRICE
EFFICACY

53