Digital channels in

Pharma: Fad or
Future?
Digital Channels in Pharma: Fad or Future?

Introduction

The Indian pharmaceutical market (IPM) was valued at ~US$17 billion in FY18 and it is expected to reach
~US$20 billion by 2020. Offline pharmacies account for more than 95% of overall pharmaceutical sales in
India.
Bulk of the supply of medicine in India to patient happens through traditional offline pharmacy stores. (refer
to appendix A for pharma distribution flow). With time, new digital channels for fulfilment have emerged.
The current market size for Digital Channel market operating in India is estimated to be between US$ 0.14
billion to US$ 0.42 billion at present and expected to reach US$2.7 billion by 2023. There are over 200
players in this market with few big players emerging as market leaders. Digital Channels may increasingly
gain acceptance due to an increase in the ageing population base with a need for direct delivery of chronic
therapy medicines, deeper internet penetration and higher smartphone acceptance. They are exercising
their scope for both forward integrations (lab diagnostics, doctor consultations) and backward integrations
(distribution).

Problem statement

Pharma sales are prescription driven. Doctors have been the focus for product promotions (see appendix
A) by pharmaceutical companies. In contrast, Digital Channels claim to add value for the end
patient/customer by making medicine available to them seamlessly. The entrance of Digital Channels might
cause disruption in the traditional pharma set-up as regulations around it are still being developed.
Please note: According to the drug regulations in India, a company cannot promote a Schedule H/Schedule
H1/Schedule G/ Schedule X drug brands directly to consumer (patients). For example, you cannot promote
a GSK paracetamol to a patient, but you can cite the disease, and its prevention measures for educating
the patients.

Your deliverables

With disruption come opportunities and threats for pharma companies. Imagine that you are working as a
strategy manager for a multinational pharma company. You are expected to evaluate this trend and
propose whether a traditional pharma company should leverage this. Further provide solutions with an
understanding of possible market changes in the future. The key deliverables also include how you would
measure the success of your ideas on-
1. Assessing if the Digital Channels are a fad or future
2. Trends likely to emerge with Digital Channels in pharma
3. Opportunities to leverage Digital Channels for a traditional Pharma Company
Please note: Solutions presented should be within the scope of existing drug regulations.
You need to submit a 6-slider presentation (including introduction and references) in .ppt or .pptx format.

1
Appendix A

Demand generation and demand fulfilment model for Traditional Pharma Companies

Demand generation model for traditional Pharma companies is done by product promotions to doctors.
The chemists are visited by the sales force for demand fulfilment activities. The availability of a product at
chemists plays a huge role in fulfilment of the prescription. Doctors are the main decision maker of the
pharma value chain. Around 80% of medicine sold by the retailers in India are prescription based.
The value chain for Pharma sales is
Pharma company CFA (Carrying and Forwarding Agents) – Stockist/Distributor – Chemist – Customer
(with prescription from a doctor)

Appendix B

References:
Articles/papers
https://www.expresspharma.in/cover-story/e-pharmacies-waging-a-battle-for-survival/407595/
https://www.ey.com/Publication/vwLUAssets/EY-e-pharma-delivering-healthier-outcomes/$File/EY-e-
pharma-delivering-healthier-outcomes.pdf
Regulations

https://www.manifestias.com/2019/01/29/draft-rules-on-e-pharmacy/