A PROJECT REPORT ON

“MARKETING MANAGEMENT”

SUBMITTED FOR PARTIAL FULFILLMENT OF AWARD OF

B.PHARMACY VIII SEMESTER ELECTIVE EXAMINATION

PHARMACEUTICAL MARKETING

PHAR- 485(D) P

BY

JOYTOSH BANERJEE

TO

MR. SATYENDRA SINGH

LECTURER, DEPARTMENT OF PHARMACEUTICAL CHEMISTRY

RAJIV ACADEMY FOR PHARMACY, MATHURA

UTTAR PRADESH TECHNICAL UNIVERSITY, LUCKNOW, UTTAR PRADESH,

INDIA
2009-2010

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 CERTIFICATE

Certified that Joytosh Banerjee has carried out the project work entitled “Marketing

Management” for the partial fulfillment of B. Pharmacy VIII semester Elective

examination from Uttar Pradesh Technical University, Lucknow. The project

embodies result of work carried out by the student and the contents of the project do not

form the basis for the award of any other degree to the candidate or to anybody else.

SUPERVISOR
Mr. Satyendra Singh
Lecturer
Department Of Pharmaceutical Chemistry
Rajiv Academy For Pharmacy
Mathura (U.P.) 281001

FORWARDED BY-
Dr. (Prof.) Devender Pathek
Director
Rajiv Academy For Pharmacy
Mathura (U.P.) 281001

Date: 31/03/10

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 ACKNOWLEDGEMENT

Today, while writing this acknowledgement, I can feel a sense of content as I have accomplished
a great journey full of knowledge, life long experience and an unforgettable support and
guidance of my teachers and colleagues.
I owe my thanks to all the respected people who have their whole hearted support in making this
project report a success.
First and foremost, my thanks go to the Almighty and my parents.
I would like to express my gratitude and sincere and humble thanks to Mr. Satyendra Singh
(Lecturer, Department of Pharmaceutical Chemistry) R.A.P., Mathura who guided me in
bringing this project report to all.
This acknowledgement will remain incomplete without acknowledging the two most eminent
personalities of the college. With all due respect and true sense of gratitude and obligation, I
want to acknowledge honorable Dr. Devender Pathak, (Director, Rajiv Academy For Pharmacy,
Mathura) and Prof. (Mrs.) Kamla Pathak (Dean) for their blessings.
At last, I would like to thank my batch partners and everyone who were directly or indirectly
involved in my project report.

Joytosh Banerjee
Roll No. 0606650019
B.Pharm. IVth year
Rajiv Academy For Pharmacy
Mathura, U.P.
DATE: 31 .03.10
PLACE: MATHURA

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CONTENTS
1. INTRODUCTION…………………………...…………………………………………... 5
2. PHILOSOPHY OF MARKETING……………………………………………………….5
3. MARKETING MANAGEMENT………………………………………………………....6
4. MARKET ANALYSIS……………………………………………………………………7
PREDICTIVE ANALYTICS………………………………………………………….. 8
5. MARKETING STRATEGY……………………………………………………………10
MARKETING ACTION PLAN……………………………………………………..12
STRATEGY EVALUATION……………………………………………………..…13
6. IMPLEMENTATION PLANNING……………………………………………………..13
I. PRODUCT………………………………………………………………………...16
II. PRICING…………………………………………………………………………….21
III. THE PHARMACEUTICAL PLACE….…………………………………………….25
- PHARMACEUTICAL MARKETING CHANNELS…………………………..26
IV. PROMOTION……………………………………………………………………….29
- ELEMENTS OF PROMOTIONAL MIX………………………………………..30
V. PERSONAL SELLING……………………………………………………………...32
VI. PRSCRIPTION………………………………………………………………………33
VII. POLICY…………………………………………………………………………34
VIII. PUBLIC RELATIONS………………………..…………………………………34
IX. POWER……………………………………………………………………………...35
7. MARKET RESEARCH………………………………………………………………….36
8. SOME OTHER FACTORS RELATED TO MARKETING MANAGEMENT………..39
- ENTERPRISE MARKETING MANAGEMENT………………………………39
- MARKETING EFFECTIVENESS………………………………………………40
- COMMERCIAL OPERATIONS MANAGEMENT……………………………42
- MARKETING RESOURCE MANAGEMENT…………………………………43
9. LAWS AND REGULATIONS GOVERNING INDIAN PHARMACEUTICALS……44
10. CRITICISM………………………………………………………………………….......49
11. THE COMPETITIVE ENVIRONMENT……………………………………………….51
12. SUMMARY……………………………………………………………………………..52
13. REFERENCE…………………………………………………………………………….55

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INTRODUCTIO

The terms market, marketing, marketable, and marketing management are variations of a single

unifying concept --exchange. Market is defined as a place or situation where voluntary exchange

takes place between sellers and buyers to enhance the mutual benefits of all parties. A goods or

service is marketable if it is desired by someone and he or she is willing to give up something of

value to obtain it. A key problem in marketing management is how to produce marketable

products and how to enhance the marketability of products already on the market. The

paramount objective is creating and maintaining the demand for the firm’s products as opposed

to force customers to buy goods because they have been produced and need to be sold.

Marketing management may be viewed as regulating the level, timing and character of the

demand for one or more products of the firm. Specifically, it is the planning, organizing,

controlling, and implementing of marketing programs, policies, strategies, and tactics designed

to create and satisfy the demand for the firm’ product offerings or services as a means of

generating an acceptable profit. In essence, the marketing manager is the “demand manager” of

the firm.

PHILOSOPHY OF MARKETING

Progressive business firms have adopted a “marketing concept philosophy” which guides

marketing managers in fulfilling their responsibilities. Briefly defined, the marketing concept

says that a company will prosper only as long as it gives consumers products that satisfy their

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needs and wants at prices they are willing to pay at a profit to the company. The key elements of

marketing concept are:

1. Customer satisfaction. A thorough understanding of the consumer’s needs and wants

become the focal point of all marketing action, especially product planning and

development.

2. Integrated effort. The firm’s primary emphasis must be in integrating the marketing

functions with those of R&D, production, finance, and so forth.

3. Profitability. The primary goal of the firm should be profits, sales volume should be a

proxy measure for satisfactory marketing performance in the short run.

4. Viability. The company and its long run survival and growth are paramount since this is

to promote consumer loyalty.

MARKETING MANAGEMENT

Marketing management is a business discipline which is focused on the practical application of

marketing techniques and the management of a firm's marketing resources and activities. Rapidly

emerging forces of globalization have compelled firms to market beyond the borders of their

home country making International Marketing highly significant and an integral part of a firm's

marketing strategy. Marketing managers are often responsible for influencing the level, timing,

and composition of customer demand accepted definition of the term. In part, this is because the

role of a marketing manager can vary significantly based on a business' size, corporate culture,

and industry context. For example, in a large consumer products company, the marketing

manager may act as the overall general manager of his or her assigned product

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From this perspect, it consists of 5 steps, beginning with the market & environment research.

After fixing the targets and setting the strategies, they will be realized by the marketing mix in

step 4. The last step in the process is the marketing controlling. Marketing management strategy

and design effective, cost-efficient implementation programs, firms must possess a detailed,

objective understanding of their own business and the market in which they operate. In analyzing

these issues, the discipline of marketing management often overlaps with the related discipline of

strategic planning.

MARKET ANALYSIS

Traditionally, marketing analysis was structured into three areas: Customer analysis, Company

analysis, and Competitor analysis (so-called "3Cs" analysis). More recently, it has become

fashionable in some marketing circles to divide these further into certain five "Cs": Customer

analysis, Company analysis, Collaborator analysis, Competitor analysis, and analysis of the

industry Context.

Department analysis is to develop a schematic diagram for market segmentation, breaking down

the market into various constituent groups of customers, which are called customer segments or

market segmentations. Marketing managers work to develop detailed profiles of each segment,

focusing on any number of variables that may differ among the segments: demographic,

psychographic, geographic, behavioral, needs-benefit, and other factors may all be examined.

Marketers also attempt to track these segments' perceptions of the various products in the market

using tools such as perceptual mapping.

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In company analysis, marketers focus on understanding the company's cost structure and cost

position relative to competitors, as well as working to identify a firm's core competencies and

other competitively distinct company resources. Marketing managers may also work with the

accounting department to analyze the profits the firm is generating from various product lines

and customer accounts. The company may also conduct periodic brand audits to assess the

strength of its brands and sources of brand equity.

The firm's collaborators may also be profiled, which may include various suppliers, distributors

and other channel partners, joint venture partners, and others. An analysis of complementary

products may also be performed if such products exist.

Marketing management employs various tools from economics and competitive strategy to

analyze the industry context in which the firm operates. These include Porter's five forces,

analysis of strategic groups of competitors, value chain analysis and others. Depending on the

industry, the regulatory context may also be important to examine in detail.

In Competitor analysis, marketers build detailed profiles of each competitor in the market,

focusing especially on their relative competitive strengths and weaknesses using SWOT analysis.

Marketing managers will examine each competitor's cost structure, sources of profits, resources

and competencies, competitive positioning and product differentiation, degree of vertical

integration, historical responses to industry developments, and other factors.

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PREDICTIVE ANALYTICS

Predictive analytics encompasses a variety of techniques from statistics, data mining and game

theory that analyze current and historical facts to make predictions about future events.

In business, predictive models exploit patterns found in historical and transactional data to

identify risks and opportunities. Models capture relationships among many factors to allow

assessment of risk or potential associated with a particular set of conditions, guiding decision

making for candidate transactions.

Predictive analytics is used in financial services, insurance, telecommunications, retail, travel,

healthcare, pharmaceuticals and other fields.

Definition

Predictive analytics is an area of statistical analysis that deals with extracting information from

data and using it to predict future trends and behavior patterns. The core of predictive analytics

relies on capturing relationships between explanatory variables and the predicted variables from

past occurrences, and exploiting it to predict future outcomes

Types

Generally, predictive analytics is used to mean predictive modeling, scoring of predictive

models, and forecasting. However, people are increasingly using the term to describe related

analytical disciplines, such as descriptive modeling and decision modeling or optimization.

These disciplines also involve rigorous data analysis, and are widely used in business for

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segmentation and decision making but have different purposes and the statistical techniques

underlying them vary.

(1). Predictive models

(2). Descriptive models

(3). Decision models

Applications

1. Analytical Customer Relationship Management (CRM)

2. Clinical Decision Support Systems

3. Collection analytics

4. Cross-sell

5. Customer retention

6. Direct marketing

7. Fraud detection

8. Portfolio, product or economy level prediction

9. Underwriting

MARKETING STRATEGY

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Once the company has obtained an adequate understanding of the customer base and its own

competitive position in the industry, marketing managers are able to make key strategic decisions

and develop a marketing strategy designed to maximize the revenues and profits of the firm. The

selected strategy may aim for any of a variety of specific objectives, including optimizing short-

term unit margins, revenue growth, market share, long-term profitability, or other goals.

To achieve the desired objectives, marketers typically Identify One Or More Target Customer

segments which they intend to pursue. Customer segments are often selected as targets because

they score highly on two dimensions:

1) The segment is attractive to serve because it is large, growing, makes frequent purchases, is

not price sensitive (i.e. is willing to pay high prices), or other factors; and

2) The company has the resources and capabilities to compete for the segment's business, can

meet their needs better than the competition, and can do so profitably. In fact, a commonly cited

definition of marketing is simply "meeting needs profitably."

The implication of selecting target segments is that the business will subsequently allocate more

resources to acquire and retain customers in the target segment(s) than it will for other, non-

targeted customers. In some cases, the firm may go so far as to turn away customers that are not

in its target segment. The doorman at a swanky nightclub, for example, may deny entry to

unfashionably dressed individuals because the business has made a strategic decision to target

the "high fashion" segment of nightclub patrons.

In conjunction with targeting decisions, marketing managers will Identify The Desired

Positioning They Want The Company, Product, Or Brand To Occupy In The Target

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Customer's Mind. This positioning is often an encapsulation of a key benefit the company's

product or service offers that is differentiated and superior to the benefits offered by competitive

products. FOR EXAMPLE, Volvo has traditionally positioned its products in the automobile

market in North America in order to be perceived as the leader in "safety", whereas BMW has

traditionally positioned its brand to be perceived as the leader in "performance."

Ideally, a firm's positioning can be maintained over a long period of time because the company

possesses, or can develop, some form of sustainable competitive advantage. The positioning

should also be sufficiently relevant to the target segment such that it will drive the purchasing

behavior of target customers.

MARKETING ACTION PLAN

 Placement and execution of required resources are financial, manpower, operational

support, time, technology support

 Operating with a change in methods or with alteration in structure

 Distributing the specific tasks with responsibility or moulding specific jobs to individuals

or teams.

 The process should be managed by a responsible team. This is to keep direct watch on

result,comparison for betterment and best practices, cultivating the effectiveness of

processes, calibrating and reducing the variations and setting the process as required.

 Introducing certain programs involves acquiring the requisition of resources: a necessity

for developing the process, training documentation, process testing, and imalgation with

(and/or conversion from) difficult processes.

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As and when the strategy implementation processes, there have been so many problems arising

such as human relations, the employee-communication. Such a time, marketing strategy is the

biggest implementation problem usually involves, with emphasis on the appropriate timing of

new products. An organization, with an effective management, should try to implement its plans

without signaling this fact to its competitors.

In order for a policy to work, there must be a level of consistency from every person in an

organization, especially management. This is what needs to occur on both the tactical and

strategic levels of management.

STRATEGY EVALUATION

 Measuring the effectiveness of the organizational strategy, it's extremely important to

conduct a SWOT analysis to figure out the strengths, weaknesses, opportunities and

threats (both internal and external) of the entity in question. This may require to take

certain precautionary measures or even to change the entire strategy.

In corporate strategy, Johnson and Scholes present a model in which strategic options are

evaluated against three key success criteria:

 Suitability (would it work?)

 Feasibility (can it be made to work?)

 Acceptability (will they work it?)

IMPLEMENTATION PLANNING

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The Marketing Metrics Continuum provides a framework for how to categorize metrics from the

tactical to strategic.

After the firm's strategic objectives have been identified, the target market selected, and the

desired positioning for the company, product or brand has been determined, MARKETING

MANAGERS FOCUS ON HOW TO BEST IMPLEMENT THE CHOSEN STRATEGY.

Traditionally, this has involved implementation planning across the "4Ps" of marketing:

PRODUCT MANAGEMENT, PRICING, PLACE (I.E. SALES AND DISTRIBUTION

CHANNELS), AND PROMOTION.

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Taken together, the company's implementation choices across the 4Ps are often described as the

marketing mix, meaning the mix of elements the business will employ to "go to market" and

execute the marketing strategy. The overall goal for the marketing mix is to consistently deliver a

compelling value proposition that reinforces the firm's chosen positioning, builds customer

loyalty and brand equity among target customers, and achieves the firm's marketing and financial

objectives.

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In many cases, marketing management will develop a marketing plan to specify how the

company will execute the chosen strategy and achieve the business' objectives. The content of

marketing plans varies from firm to firm, but commonly includes:

 An executive summary

 Situation analysis to summarize facts and insights gained from market research and

marketing analysis

 The company's mission statement or long-term strategic vision

 A statement of the company's key objectives, often subdivided into marketing objectives

and financial objectives

 The marketing strategy the business has chosen, specifying the target segments to be

pursued and the competitive positioning to be achieved

 Implementation choices for each element of the marketing mix (the 4Ps).

I. PRODUCT

Case study: New indication widens growth spectrum

Flagyl (metronidazole) of May & Baker (now Rhone Poulene), was being used mainly to
treat “giardiasis”. The company had found out in the sixties that their product was very
effective in treating “amoebiasis” which was prevalent in India. The company launched
an aggressive promotion of flagyl in the treatment of amoebiasis and replaced the
conventional treatment of amoebiasis with emetine and dihydroemetine injections. Many
other brands of metronidazole joined the bandwagon. Flagyl even today remains one of
the major brands of May & Baker (now Rhone Poulene Rorer, which is recently acquired
by Nicholas Piramal).

“A company’s product is what it has to sell? Under marketing concept philosophy, a product is

viewed as a reservoir of satisfactions that accrue to its owner either from possession or use.

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These satisfactions are often more than functional and fulfill other needs such as aesthetic

gratification, convenience, social status, psychological well-being, and so forth.

Prior to the adoption of marketing concept philosophy the technological or engineering

dimensions of the product were the primary focuses. Today, however, products are designed and

marketed with a strong emphasis on the unique attributes and benefits which the physical product

represents. Primary attention is placed on consumer’s needs and wants at the planning and

development stage. For example, Revlon does not sell just cosmetics; it also sells the promise of

beauty and glamour. In air travel, budget airlines, such as People Express, are marketing

transportation at lowest cost per-air-mile while competitors are selling transportation plus

convenience and personal comfort—at a higher price.

A product is company’s main link with the consuming public. A poorly conceived product, no

matter how well it is promoted, priced, or distributed, will fail in the long run. The task of

developing product and product lines and positioning them in the marketplace to maximize

customer satisfaction is called merchandising.

The essence of product policy is forecasting all dimensions of the environment along with the

customer desires to determine the types of products the various market segments desire and then

integrating these forecasts with an analysis of the firm’s existing and non-existing marketing

strengths, skills, resources.

A policy of product differentiation involves modifying particular product attributes with the goal

of tapping new market segments or enlarging demand in a current segment.

Market segmentation recognizes the fact that markets are not homogenous. Automobile

manufacturers use this policy by producing sub-compacts, compacts, and mid size, luxury

models.

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Planned obsolence is another product policy where the goal is to introduce products, usually

with superficial or minor variations, in order to get current owners to purchase the new model.

Product positioning strategy refers to the manner in which the product is targeted at particular

consumer segments either through the intrinsic attributes of the products or through the image

created for the product through promotion. Gillette’s “Right Guard” was originally positioned as

a deodorant for men but later was repositioned as a deodorant for family.

David Ogilvy in 1971, pointed out that “the result of our campaigns depend less on how we

write your advertising than how your product is positioned”.

It is the information explosion that has led to this realization. There are over 8,000 companies

churning out over 60,000 products. An urban doctor on a typical working day meets about 12 to

15 medical representatives, who in turn detail about 5 to 8 products. That means an exposure of

60 to 120 products. Add to this the information through newspapers, magazines, professional

journals, radio and television messages, etc. If the product is distinctly different in that product

category and if it fits with a similar, equivalent perception of the consumer, only then, that

product is likely to be ranked higher in consumer’s mind. Product positioning is a strategy for

creating a unique product image which increases total profits. Firms that are planning

modifications of existing product or introduction of new products will naturally, in keeping with

their market objectives, striving, position there product’s entry so that it will produce maximum

sales and profits.

The three primary tasks of product – positioning in the drug industry are:

(a) The type of conditions for which the product will be prescribed.

(b) The type of patient for whom the product will be considered suitable;

(c) The product with which the product will compete closely.

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 Case: Dr. Reddy’s Laboratories and the cost leadership.

Cheminor Drugs and Dr. Reddy’s Laboratories, the bulk drug units belonging to Dr.
Reddy’s Laboratories group of companies, had done remarkably well in the
manufacturing and marketing of bulk drugs. Within four years, the company had
achieved the cost leadership in manufacturing at least three bulk drugs, namely
ibuprofen, methyldopa and norfloxacin. How did the company achieve all this in such a
short time? There are two reasons. Firstly, the economies of scale. The company is the
third largest producer of ibuprofen and methyldopa in the world. The huge volumes had
given the company the cost leadership. The second reason is that the company had also
achieved technological superiority.

Finally, a strategy related to all of them is benefit segmentation. This involves identifying a

particular market segment which is highly sensitive to the presence of one or more key product

attributes. For example, some travelers will stay only at motels or hotels which have indoor

swimming pools and/ or saunas.

Product design, packaging, and materials are three of the more important aspects of product

strategy. Product design begins with market research. Packaging in this era of self-selection is

critical for the product because aside from protecting the product it:-

(1) Gives information

(2) Promotes

(3) Often reduces selling costs

(4) Facilitates the use of the product.

The package is perhaps the most important component of communication about your product.

That is why package or pack is called “The silent salesman” of a product. Color, design, shape,

size, brand name, materials, labels and typography are the components of the packaging

communication process. Each component must interact harmoniously and synchronizes to evoke

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the desired responses in the consumer. It is important to note that people react to the whole and

not to the individual components.

Today, new- product management is an important part of a firm’s competitive strategy. Within

industry, a number of organizational arrangements have recently evolved.

1. A product manager is often charged with the responsibility of keeping the product up-to-

date.

2. A new-product manager may have the task of maintaining a steady stream of new

products for the various product managers.

3. A product planning committee, composed of top executives, represents the functional

areas of business.

4. A new product department.

Managing product lines is a never ending process since all products have a life-cycle:

(1) Introductory stage.

(2) Growth stage

(3) Maturity stage

(4) Saturation stage

(5) Decline

Intro Growth Maturity Saturation Decline

Basic life cycle of new products.

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 Case: Me-too strategy meets with a disaster!

Imitation may be the best form of flattery. But it could falter when overdone or without
proper analysis in marketing.
Inspired by the success Tylenol’s classic repositioning strategy, Burroughs Welcome
marketed there brand acetaminophen, Ridake, (manufactured by Litaka Laboratories). The
company had chosen the OTC route. Large ads of Ridake appeared in leading
newspapers. The copy was almost similar to the copy of Tylenol’s ads in the U.S., when
Tylenol was introduced many years ago. There were strong objections to these ads as they
were hyper critical about the popular aspirin. Comparative (or combative) advertisings
were almost a nonexistent at that time in India. The resistance to their advertising strategy
was so high that the company had to withdraw these ads. The company finally got rid of
the product that was supposed to get rid of the pain (hence the name Ridake).

II. PRICING

Probably, the marketing manager’s most important task is pricing because pricing is the

economic consideration for which the management must balance the product’s costs with the

requirements of the marketplace. It requires the decision maker to make judgments concerning

consumer income, business conditions, competitive reaction, corporate goals, and costs of

production and distribution.

For consumers, value is a personal thing; it is what on is willing to give up or trade off in order to

acquire the product. Marketing managers have to be able to do three things to be effective price

setters:

(1) Estimate the product’s value to particular market segments and produce a product in line

with this estimate,

(2) Convincing the consuming public that the product price is fair and the best value to the

rupee, and

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 (3) Develop pricing policies and strategies that will generate sufficient revenues in the long-

run to satisfy investors and assure survival.

In making pricing decisions, the marketing manager must take into account the following factors:

(1) The nature and extent of consumer demand;

(2) The short- and long-run costs of manufacturing and selling the product;

(3) The competitive reactions;

(4) The antitrust laws;

(5) The promotional strategy;

(6) The channels of distribution;

(7) Profit goals; and

(8) Life cycle of the product.

Many pricing formulas can be reduced to two basic approaches:

(1) The Cost approach.

(2) The Market or Demand approach

Three commonly accepted pricing formulas are:

(1) Prices are set equal to allocated total costs, plus a certain standard percentage markup.

This is a full cost formula where price reflects the average total cost unit plus a margin of

profit.

(2) Prices are set equal to a certain percentage of product cost at each level of production and

distribution. This method, the markup formula, is basic in the wholesale and retail trade.

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 (3) Prices are set equal to variable direct cost plus some amount added to cover allocated

overhead and profit contribution. This is known as the profit margin formula and uses

only variable costs as a starting point.

Key Factors Affecting the Pricing Decision

1. Market structure—the number and size of competing firms and ease of entry

2. Market conditions---general economic conditions

3. Competitive behavior---collusion, price behavior, price matching

4. Product---its perishability; durability; stage of life cycle; type—producer or consumer

goods; cost of production and distribution; distinctive substitutes

5. Customers--- their urgency of needs; ability to pay; location; potential number; purchase

behavior; use of product—intermediate or ultimate; perception of seller or brands;

susceptibility to promotion

6. Goals or Objective of Seller---desire for market share; target rate of return on capital;

beating or matching competition; recapturing full costs; exploiting excess capacity;

maximizing sales rather than profits; exploiting monopoly power; market leadership.

FORMULA FOR PRICING AS PER DRUGS (PRICE CONTROL) ORDER, 1970

RP = (MC+CC) × (1÷MU/100)

Where

RP = Suggested retail price

MC = the cost of materials: includes the cost of basic drugs and pharmaceuticals

CC = the cost of conversion or the cost of formulation

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PC = the packing charges, includes the cost of packing materials and packaging

expenses; and

NW = the “mark- up”, is meant to cover forwarding charges, promotional expenses, after

sales services. If any trade commissions.

MARK-UPS PERMISSIBLE UNDER DRUGS (PRICE CONTROL) ORDER, 1970

S.no Type of products Percent

.
1. Ongoing and old products 75
2. New products but not original (not developed 100* (for the first 3-5

through extensive work) years)

3. New products that are original (developed 150* (for the first 3-5

through extensive work) years)

Case: Dr. Reddy’s Laboratories create entry barrier with their cost leadership!

Norfloxacin, a broad-spectrum antibiotic highly effective in urinary tract infections, was

introduced in the Indian market in 1988. The market size for urologicals was around Rs.
16 crore in 1988 with an annual growth rate of 105%. The introduction of Norfloxacin
accelerated the growth rate of the category itself to a frantic pace. A number of brands
were introduced in quick succession. But Cipla’s NORFLOX was a brand leader right
from the beginning, with a formidable share of 19.3%. As regards the price, almost all the
brands were selling at around Rs.8/ capsule of 400mg strength and around Rs.18/ capsule
of 800mg strength.
Enter Norilet, brand of Norfloxavin from Stangen, a group company of the Dr. Reddy’s
Laboratories, a leading manufacturer of bulk drugs at Hyderabad. Dr. Reddy’s
Laboratories started manufacturing the bulk drug Norfloxacin and very quickly achieved
cost leadership. The cost effectiveness of their Norfloxacin manufacturing was so high
that they were able to market their Norfloxacin brand, Norilet, at less than the prevailing
market price. Norilet 400mg was priced at ground Rs.4/ capsule and Norilet 800mg at
around Rs.8/ capsule. Norilet was making inroads into competition very rapidly. Not only
that, it even created an entry barrier. No brand of Norfloxacin has been introduced ever
since!

III. THE PHARMACEUTICAL PLACE

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Distribution activity is concerned with “placing” goods and services when they are needed and

where are they wanted. Place or distribution is crucial an element for achieving success at the

marketplace. However unique and beneficial your product may be, if it is not available when it is

needed and where it is wanted, you cannot hope to succeed.

Developing and managing the channels of distribution are a major line responsibility of the

marketing manager. Developing a channel strategy emphasizes the spatial and temporal

dimensions of marketing. A channel of distribution is the route that the product follows in its

passage from the producer and the consumer. Critical factors affecting this route are:

(1) Nature of the goods (industrial, perishability, bulk),

(2) Nature and location of the markets,

(3) Price of the product,

(4) Availability of middleman, transportation and storage facilities,

(5) Sales effort required by middleman, and

(6) Resources of the manufacturer.

Channel management involves two basic problems: the selection of proper channel for the

product and maintaining the channel. Three policy alternatives may be considered in the

selection of the channel:

(1) The policy of general or intense distribution, whereby the firm seeks to obtain the widest

possible distribution for its product by allowing it to be sold everywhere by anyone

willing to stock it.

(2) The policy selective distribution, where the manufacturer chooses only those outlets that

are best able to serve that company’s needs.

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 (3) The policy of using exclusive dealerships, which allows only one distributor to stock and

sell the product in a given market.

PHARMACEUTICAL MARKETING CHANNELS

While a marketing channel requires at a minimum, two parties, in so far as the manufacturer of

prescription drugs is concerned, the law requires that at least one intermediary stands between

the manufacturer and consumer- i.e., the doctor. It is illegal for the manufacturer to sell

prescription drugs directly to the patient. Usually the physician is not considered as a member of

the distribution channel. Instead, he is considered an influencer or intermediary customer and

therefore is not drawn into such diagrams. He is considered only as the decision maker. One

cannot overlap the role of pharmacists and the need of their services in the process of drug

distribution. The distribution channel can look as in fig.:

MANUFACTURER

PHYSICIAN

PHARMACIST

CONSUMER

26
The various people involved in a pharmaceutical distribution channel are: Manufacturer,

Physician, Wholesaler, Stockist, Carry & forward agent, Retailer, Chemist & Druggists.

As a general rule, middlemen operating under a selective or exclusive distribution policy are

expected to expend more effort in marketing the product. Two basic strategies are used to

facilitate the operation:

(1) A push strategy where the producer makes heavy use of all its promotional funds

and selling efforts among channel members to secure cooperation and loyalty, and

(2) The pull strategy where the producer emphasizes advertising and sales promotion

to the ultimate consumer to pull the product through the channel.

(3) Usually most consumer goods companies use a combination of push and pull

strategies to achieve their goals.

PUSH PULL

MANUFACTURER MANUFACTURER

WHOLESALER WHOLESALER

RETAILER RETAILER

CUSTOMER CUSTOMER

Franchising represents a special type of channel which is derived from an older channel

arrangement known as Wholesaler sponsored voluntary chains, mainly in the grocery field. The

current idea is that the franchisor (manufacturer or the wholesaler) gives the franchisee the legal

27
right to sell the franchisor’s goods or services in a restricted market; the franchisor provides the

franchisee with the equipment, the product or services, marketing management know- how and

often some financial assistance. The franchisee agrees to market the product or service according

to the conditions specified by the franchisor.

In essence, there are three general types of franchisee agreement:

(1) The manufacturer sponsored franchisee as in the case of auto dealers;

(2) The manufacturer or the wholesaler sponsored franchise as in the case of Coca Cola;

(3) The service firm sponsored franchise system which is most familiar as in the case of

Hertz, Mc Donald’s.

Case: Margins hold the key to success!

Johnson & Johnson, the transnational giant in the OTC healthcare business, introduced
a new sanitary napkin modest in the early 70s to take on the pioneer Comfit of
Christine Hoyden. Johnson & Johnson took their image for granted, and marketed the
product. The product never really took-off, and was finally withdrawn. What could be
the reason for the failure of a market-driven and professionally managed like Johnson
& Johnson? Surprising, as it might seem, the reason was that the low retail margins
offered.

Case: The power of margins tilting the market share balance is more than
marginal!

It was the turn of Glaxo’s family products division in the late 70s to face the trade
boycott. Glaxo did not increase the trade margins on their leading brand of farex
(infant food with milk and cereal), which was a distant number two brand,
experienced a sudden spurt in sales. It was almost a windfall for cerelac. Glaxo
subsequently conceded a revision in the trade margin. By then it had already paid the
price. A number of farex users were already converted to cerelac. Glaxo has been
trying to regain its lost market share for ever since!

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 IV. PROMOTION

Promotion is communication to the potential consumer and refers to the non price selling

activities of the firm. Three important types are advertising, personal selling, and sales

promotion. Advertising is any paid form of non personal presentation of merchandise to the

group by an identified sponsor. Personal selling is the process of assisting and persuading a

prospect to but a commodity in a face-to-face situation. Sales promotion includes such devices as

trading stamps, dealer aids, incentive travel, premiums, contests, and so on. In practice, sales

promotion activities are used primarily to supplement advertising or personal selling. The

general goal for the promotion element in the marketing mix is to increase sales but the strategic

objective is to enhance the effectiveness of other marketing mix components.

Advertising and personal selling are different means to the same end- increasing sales. Usually

they are employed together. Advertising appeals to the mass mind whereas personal

salesmanship is directed to the individual. Advertising assists the sales people and makes their

product more productive by giving preliminary information about the product to prospects or

developing goodwill toward the sponsor.

The successful marketing manager is always aware of the fact that the promotional activities are

a cost to the firm. Therefore selling expenditures have to be justified in terms of increased sales

and profits. Using incremental reason, the added expense of any promotional outlays should

equal or exceed the additional profits generated. This is not always possible because some types

of promotional outlays are common to more than one product while others are intended to be

long- term as in the case of institutional advertising or trade shows. For example, paying athletes

large sum of money to use your products is necessary because competitors do it, but the sales

benefits are taken on faith.

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Promotional decisions must be based on organizational goals and marketing objectives. The

logical sequence of promotional decisions from a strategic perspective is:

1. Identifying target markets and audiences.

2. Determining objectives and tasks.

3. Preparing a promotion budget.

4. Selecting the promotional mix.

5. Evaluating and implementing the promotional strategy.

6. Feedback.

ELEMENTS OF PROMOTIONAL MIX

The promotional mix in pharmaceutical marketing includes personal selling, advertising, sales

promotion and publicity. These can be further segmented for the purpose of clarity and better

understanding:

1. Personal selling: Medical representatives detailing the company’s products to the

doctors, with the help of visual aids, leave- behind- literatures, product monographs,

samples, gifts, etc.

2. Advertising: Preparation of visual aids, leave- behind- literatures, product monographs to

assist medical representatives in their detailing effort. Advertising in specialized media

like medical journals and souvenirs, preparing advertising material for seminars and

medical symposia; preparing mailers for doctors and dealers; preparing advertising

material for print media and commercials for radio and television in case of OTC

formulations.

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 3. Sales promotion: Deciding on special bonus offers, free goods and gifts to trade.

Deciding on physician’s samples and gifts, etc.

4. Publicity: Organizing medical symposia and seminars, conducting trials; conducting

exhibitions, deciding and executing product publicity campaigns for truly innovative

products.

Case: Innovative communication strategy pushes a product to brand leadership

position!

One company had found out an innovative way to communicate its rather me – too
product. The company had fixed a battery operated electrical display behind the visual-
aid that can light up with the pressing of a button to create a neon-sign effect in the
doctor’s chamber. Every time the representative announced the brand name, he used to
press the button and the brand name was illuminated. The reaction and the response of
the doctors to this novel and innovative device was one pleasant surprise. It made the
brand name really memorable. This certainly paved the way for the brand’s long march
towards leadership position!

Case: Participation and involvement rejuvenate a tired old brand.

A leading pharmaceutical company in India came up with an idea of involving the

doctor in detailing. How to make him participate in the interview? This was
necessary because the company was re-launching one of its very old brands. The
company finally hit upon an idea of requesting the doctor to give the company’s
medical representatives the first prescription for the brand as soon as detailing was
over. The skeptical field force implemented the strategy rather hesitatingly. But when
the first few doctors wrote the brand prescription after the detailing was over without
any reservation, the skepticism of the field force was converted into enthusiasm. The
“brand name” found its way into the doctor’s pen. The campaign was an
unprecedented success!

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Besides the 4Ps of marketing mix, 5 more Ps also deserve an equal importance.

These are as follows:

V. PERSONAL SELLING

Personal selling is one of the most crucial elements of pharmaceutical marketing. The nature of

the competition and its intensity in the Indian pharmaceutical market has made personal selling

the crucial determinant factor for the success that it is today. In a market where both products

and strategies are “me-too” rather “me-me-too” in nature, the battle is more between the talents

of the different selling teams. A well trained, highly motivated force plays a decisive role in

winning the marketing wars.

There is more to personal selling than achieving sales targets. A company’s medical

representatives are its most important of communication source to its prospective customers.

They are also the most important source of feedback regarding customer’s perception of their

products and also about competitor’s activities. They are the most vital two-way communication

link between the company and the customers. Companies, which perceive the important role of

their sales force clearly and focus their attention and their efforts and program to improve the

effectiveness of their medical representatives as a source of communication, are sure to win.

The nature of sales force management is changing and challenging. The increasing unionization

of medical representatives and the militant attitudes and approaches of some of their associations

are causing concern to many managers. These are also making the task of sales force

management more challenging than ever before.

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The management of industrial relations depends entirely on good inter- personal relations that

are based on mutual respect for each other’s competence and view point. It cannot be based on

convenience. What is needed is the creation of an “assertive climate” in an organization.

VI. PRESCRIPTION

That the “prescription” is the single most important element to be studied in pharmaceutical

marketing is universally recognized and accepted. Yet the attitude of many a pharmaceutical

marketing practitioner towards the study of prescription research can best be described as

ambivalent.

No magic formula!

Apparently, there is no magic formula that can enhance or accelerate the rate of prescription

generation. But the active ingredients of successful prescription generation are universally

acknowledged. They are: precise positioning backed by relevant segmentation strategy and

tactics, perceptible product differentiation in the product, creative communication, which is

target specific and above all persuasive detailing by medical representatives. What is probably

missing in this success formula is the relative weight ages that are to be given or the exact

strengths or concentration in which each of these ingredients should be mixed. Prescription

research can provide insights into these areas. What is more important than everything else is the

firm conviction that increased prescription generation is the only way to successful

pharmaceutical marketing.

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 VII. POLICY

A number of government regulations and legislations influence and intervene in the monitoring

of operations of a business organization. The regulations and controls have been steadily

increasing over the years. The corporate policy is therefore governed to a considerable extent by

the public policy.

A number of advocacy groups and special interest groups like the Drug Action Forum and the

consumer protection groups are also increasing their pressure and influence on the government

and business is formulating their policies.

An understanding and awareness of public policy is essential for any marketing practitioner.

They should have a clear idea of the legal implications of their decisions, for these regulations

affect all the elements of the marketing-mix.

Achieving leadership in a given industry brings certain responsibilities to be fulfilled by the

organization towards the society, that is, general public. The business leadership should be a

leader in this area too.

VIII. PUBLIC RELATIONS

Public relations seem to have come of age. Public relations managers are indeed shedding their

con-men image. Indeed the profession as such is growing out of its “image-makers”. The shift in

emphasis is from image to personality. Yesterday’s public relations professionals were supposed

to have been busy creating a corporate image among the public. Today, they are engaged in

building a distinct a personality for the organization in the minds of the general public and in

creating favorable public opinion and attitude towards supporting the aims and actions of the

34
organization. There is more than mere semantics to this shift in emphasis from image to

personality.

IX. POWER

Power is a multifaceted concept. Power is essential to make an organization effective. Power

gives the organization the much-needed competitive edge to win at the market place. The many

sources of power in the context of an organization are its:

(a) Resources

(b) People

(c) Size

(d) Technology

(e) Coalitions

(f) Franchise

(g) Niche

(h) Integration strategies

(i) Innovation

(j) Prescription generating ability

(k) Quality

When power from all the sources is synchronized and focused to accomplish the corporate

objectives what is the outcome? Uncommon success. That is what happened in the case of the

Indian pharmaceutical industry. Consider the spectacular successes that companies like Cadilla,

Ranbaxy, Cipla, Lupin, Wockhardt, Torrent, Aristo, Alchem, American Remedies, Sun Pharma

and Citadel had achieved during the past few years. And reflect on the reasons behind the

35
enormous staying power demonstrated by the companies like Glaxo, Pfizer, Hoechst and

Alembic. On closer examination of the reasons behind their success, the reinforcing and

regenerating nature or property of power becomes obvious. The message is clear. Proper use of

power propels the organization to the top. Misuse or abuse of power pushes them down into

oblivion.

MARKET RESEARCH

Market research can be defined as the systematic gathering, recording and analyzing of data

about the problems relating to the distribution and sales of goods. The market research

department is a staff function that services the entire organization, because the need for market

research information is pervasive. The justification for market research is that it helps to keep the

executive informed and thus serves as a basis for making decisions. The qualified market

researcher is a highly qualified expert in designing studies, collecting and analyzing data, and

storing and processing it for future use.

Progressive companies are establishing marketing information systems (MIS) to coordinate the

several information flows affecting marketing. A MIS may be defined as “a structured,

interacting complex of persons, machines, and procedures designed to generate an orderly flow

of pertinent information collected both from intra and extra firm sources for use as the basis for

decision making in specific responsibility are of marketing management”. The MIS concept

recognizes that too much information may be as bad as too little information in this age of

electronic technology for collecting and processing data. The goal is to make certain the

marketing managers have access to marketing intelligence so that they are able to perform the

key tasks of planning and control. Here the bottom line is marketing intelligence.

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Market-research departments usually are headed by a director who reports to the top marketing

executive. Research personnel are specialists (for e.g., statisticians, psychologists, economists) in

using the technical tools of their work. If a company cannot afford to maintain a full time

marketing-research department, the responsibility for research will be assigned to one of the

marketing executives and an outside agency will be relied upon to provide the actual technical

research. These external agencies are varied as to mode of operation, but in general there are 8

basic types:

1. Consulting firms that work for the company as independent contractors.

2. Syndicated data services (for e.g., A.C. Nielson, Daniel Starch) that assemble certain

types of data and sell them on a subscription basis.

3. Specialized service organization that performs limited functions such as computer

programming, field interviews, data storage and statistical analysis.

4. Trade associations supported by contributions from firms in the industry that serve an

entire industry.

5. Media that has full time research staffs to perform certain kinds of marketing studies on a

continuing basis and perform specialized services only upon request.

6. Advertising agencies that perform marketing research studies for clients on a free-plus-

expense basis.

7. Universities with bureaus of business research that contract to do studies for business

people or industries.

8. The government strategies (for e.g., the Small Business Administration, the Agricultural

Market Service) that sponsor or perform research for an industry or for a certain kind of

business.

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Below are listed some typical market-research projects and applications:

1. Product studies, which include developing and testing new products, measuring product

preference, and testing package design.

2. Consumer studies, which identify potential consumers, measure characteristics (income,

habits, attitudes, etc.), motivation research, brand loyalty, consumer pools and panels.

3. Market analysis, which tries to measure current sales and potential sales trends forecast,

short-run and long-run sales; analysis of business conditions and trends.

4. Sales analysis, appraises sales policies, measures distributor and dealer performance,

evaluate sales territories, sales compensation studies, store audits, establishment of sales

quotas and territories.

5. Advertising studies, which attempt to measure the effectiveness of evaluating advertising

campaigns, determine advertising appeals and measure media audiences.

6. Distribution cost analysis, which seeks to measure the actual cost of distributing a

product by marking channel cost studies, transportation cost including handling and

insurance, and storage costs.

Marketing managers must know enough about recent techniques to be able to evaluate reports

and to communicate with the market research personnel. A working knowledge of statistics and

accounting is vital in the interpretation of market-research information. The typical marketing-

research report will contain a summary of the key findings and will have several technical

appendices at its end. For e.g., almost all market surveys are based on some type of probability

sample, and sales forecasting relies heavily on trend analysis and statistical correlation. The

marketing executive is not expected to be an expert in every field, but he has to know enough

about methodology to ask intelligent questions of the researcher. Likewise, it is vital for the

38
manager of marketing researcher to have an understanding of the firm’s marketing plans,

programs and procedures.

SOME OTHER FACTORS RELATED TO MARKETING

MANAGEMENT

ENTERPRISE MARKETING MANAGEMENT

Enterprise Marketing Management defines a category of software used by marketing

operations to manage their end-to-end internal processes. EMM is subset of Marketing

Technologies which consists of a total of 3 key technology types that allow for corporations and

customers to participate in a holistic and real-time marketing campaign.

EMM consists of other marketing software categories such as Web Analytics, Campaign

Management, Digital Asset Management, Web Content Management, Marketing Resource

Management, Marketing Dashboards, Lead Management, Event-driven Marketing, Predictive

Modeling and more. The goal of deploying and using EMM is to improve both the efficiency and

effectiveness of marketing by increasing operational efficiency, decreasing costs and waste, and

standardizing marketing processes for an accurate and predictable time to market. The benefit of

using an EMM suite rather than a variety of point solutions is improved collaboration, efficiency

and visibility across the entire marketing function, as well as reduced total cost of ownership.

Depending on the variable combinations of solutions, EMM can mean several different things to

specific brands and industries. Enterprise Marketing Management allows for corporations to put

39
in place a baseline of their operations that will allow them to begin evolution towards a holistic

solution that incorporates customer experience, expectation and brand value associated with

Marketing Technologies.

MARKETING EFFECTIVENESS

Marketing effectiveness is the quality of how marketers go to market with the goal of

optimizing their spending to achieve good results for both the short-term and long-term. It is also

related to Marketing ROI and Return on Marketing Investment (ROMI).

Marketing effectiveness has four dimensions:

 Corporate

 Competitive

 Customers/Consumers

 Exogenous Factors

There are five factors driving the level of marketing effectiveness that marketers can

achieve:

1. Marketing Strategy – Improving marketing effectiveness can be achieved by employing

a superior marketing strategy. By positioning the product or brand correctly, the

product/brand will be more successful in the market than competitors’ products/brands.

Even with the best strategy, marketers must execute their programs properly to achieve

extraordinary results.

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 2. Marketing Creative – Even without a change in strategy, better creative can improve

results. Without a change in strategy, AFLAC was able to achieve stunning results with

its introduction of the Duck (AFLAC) campaign. With the introduction of this new

creative concept, the company growth rate soared from 12% prior to the campaign to

28% following it.

3. Marketing Execution – By improving how marketers go to market, they can achieve

significantly greater results without changing their strategy or their creative execution.

4. Marketing Infrastructure (also known as Marketing Management) – Improving the

business of marketing can lead to significant gains for the company. Management of

agencies, budgeting, motivation and coordination of marketing activities can lead to

improved competitiveness and improved results. The overall accountability for brand

leadership and business results is often reflected in an organization under a title within a

(Brand management) department.

5. Exogenous Factors - Generally out of the control of marketers, external or exogenous

factors also influence how marketers can improve their results. Taking advantage of

seasonality, interests or the regulatory environment can help marketers improve their

marketing effectiveness.

COMMERCIAL OPERATIONS MANAGEMENT

Commercial Operations Management (COM) unifies marketing and sales within

organizations. This is accomplished by integrating Brand Management, Innovation management,

41
Product Management, Marketing Operations Management (MOM), Channel & Sales

Management and Customer Interaction Management. Commercial Operations Management is

the alignment of people, process and technology to support commercial activities and improve

both innovation and marketing effectiveness. Commercial Operations Management means that

enterprises entering into a competitive process, whether “in the market” or “for the market”, hold

both the product innovation and marketing team accountable for their commercial and financial

outcome.

The integration of these functional areas is particularly important when organizations want to

clarify accountability for key decisions, redesign processes and linking them to measurable

outcomes, or improve skills and improving processes.

MARKETING RESOURCE MANAGEMENT

Marketing Resource Management (MRM) provides the software infrastructure to support

Marketing Operations Management. Marketing Operations Management is the alignment of

people, process and technology to support marketing activities and improve marketing

42
effectiveness. The growing importance of an effective MRM strategy is reflected by the number

of leading organizations which are following this path, with implementations of software

provided by some of the leading technology vendors operating in this space. This growth is also

reflected in the growing importance of the marketing operations role in organizations.

MRM generally refers to technology for the areas of planning, design and production within

marketing and MRM solutions do not provide the analytics, decisioning and automated

execution capabilities for personalized marketing across channels. MRM is a subset of Enterprise

Marketing Management (EMM) solutions which provide more complete capabilities for all of

the functions and roles within the marketing.

The short falls with MRM is that it is considered at times to be the all and every in marketing

solutions for a given marketing operation. The reality of MRM is that it is roughly 5 to 10% of

the overall solution that puts into place a procedure for automating paper pushing and approval

processes with an emphasis on standardizing marketing processes throughout an organization.

LAWS AND REGULATIONS GOVERNING INDIAN

PHARMACEUTICALS:

The Drugs and Cosmetics Act, 1940: This Act regulates the import, manufacture, distribution

and sale of drugs in India.

43
· Schedule M of the Drugs and Cosmetics Act specifies the general and specific requirements

for factory premises and materials, plant and equipment and minimum recommended areas for

basic installation for certain categories of drugs.

· Schedule T of the Drugs and Cosmetics Act prescribes Good Manufacturing Practices (GMP)

specifications for manufacture of Ayurvedic, Siddha and Unani medicines.

· Schedule Y of the Drugs and Cosmetics Act governs the clinical trials legislative requirements

of the Drugs and Cosmetics Act.

The Pharmacy Act, 1948: This legislation regulates the profession of Pharmacy in India. Under

the provisions of this act the Central Government constitutes a Central Pharmacy Council of

India and the State Governments constitute State Pharmacy Councils.

The Drugs and Magic Remedies (Objectionable Advertisement) Act, 1954: This

Act provides to control the advertisements regarding drugs and prohibits the advertising of

remedies alleged to possess magic qualities.

The Narcotic Drugs and Psychotropic Substances Act, 1985: This is an act concerned with

control and regulation of operations relating to Narcotic Drugs and Psychotropic Substances.

The Medicinal and Toilet Preparations (Excise Duties) Act, 1956: An Act to provide for the

levy and collection of duties of excise on medicinal and toilet preparations.

The Drugs Price Control Order (DPCO), 1995: This is an order issued by the Government of

India under the Essential Commodities Act, 1955 to regulate the prices of drugs. The Order

provides the list of price controlled drugs, procedures for fixation of prices of drugs, method of

implementation of prices fixed by Government and penalties for contravention of provisions

among other things. For the purpose of implementing provisions of DPCO, powers of the

Government have been vested in the National Pharmaceutical Pricing Authority (NPPA). Good

44
Clinical Practice (GCP) Guidelines: The Ministry of Health, along with Drugs Controller

General of India (DCGI) and Indian Council for Medical Research (ICMR) has come out with

draft guidelines for research in human subjects. These GCP guidelines are essentially based on

Declaration of Helsinki, World Health Organization (WHO) guidelines and International

Conference on Harmonization (ICH) requirements for good clinical practice.

The following are some of the other laws which have a bearing on pharmaceutical manufacture,

distribution and sale in India:

· The Industries (Development and Regulation) Act, 1951

· The Trade and Merchandise Marks Act, 1958

· The Indian Patent and Design Act, 1970

· Factories Act

Regulatory Bodies:

The Ministry of Health & Family Welfare (MoHFW) and the Ministry of Chemicals and

Fertilizers (MoC&F) of the Government of India play a major role in regulating the

pharmaceutical sector in the country.

MINISTRY OF HEALTH & FAMILY WELFARE (MOHFW):

Department of Health: The following are the main agencies of the department which deal with

key issues including drug approvals:

· Central Drugs Standard Control Organization (CDSCO): As an agency of the Department of

Health, the CDSCO works both at the Central and the State level and is responsible for ensuring

safety, efficacy and quality of drugs supplied to the public. The agency performs the above

mentioned functions with the Drugs Controller General of India (DCGI) as the executive head.

45
· Drugs Controller General of India (DCGI): The DCGI is an apex body in the pharmaceutical

industry governing issues such as product approval and standards, clinical trials, introduction of

new drugs, import licences for new drugs and enforcing new drug legislation.

The following are the major acts which the Department of Health administers:

· The Drugs & Cosmetics Act, 1940

· The Prevention of Food Adulteration Act

· The IMA Act

· The Tobacco Control Act

MINISTRY OF CHEMICALS AND FERTILISERS (MOC&F):

The Ministry of Chemicals & Fertilizers constitutes bodies such as the Department of Chemicals

& Petrochemicals and the National Pharmaceutical Pricing Authority (NPPA). These

departments are entrusted with the responsibility of policy making, planning, development and

regulations relating to Chemicals, Petrochemicals and Pharmaceuticals.

Department of Chemicals & Petro-Chemicals: This department is the concerned authority for

formulating and implementing policies and programmes for achieving growth and development

of pharmaceuticals in the country. In order to attract investment into the sector, the Department

has undertaken several initiatives, the major being the Pharmaceutical Policy with the objective

to strengthen the production, export & R&D.

The first comprehensive pharmaceutical policy in India was formulated in 1978.

The national pharmaceutical policy has seen a number of changes through new policy guidelines

issued in 1986, 1994 and recently in 2002. Pharmaceutical Policy 2002 - The main objectives of

the policy are:

46
· To ensure availability of good quality essential pharmaceuticals at reasonable prices for mass

consumption.

· To strengthen the indigenous capability for cost effective quality production and export of

pharmaceuticals by reducing trade barriers in the pharmaceutical sector.

· Quality control system for pharmaceutical production and distribution to make quality an

essential attribute of the domestic industry.

· Encouraging pharmaceutical R&D that is compatible with the country's needs.

· To encourage new investment in the pharmaceutical industry and the introduction of new

technologies and new drugs.

Draft Pharmaceutical Policy 2006 - The Department of Chemicals has released the draft of the

New Pharmaceutical Policy 2006 which is waiting for approval by the Indian Government. The

draft National Pharmaceutical Policy, 2006 seeks to strengthen the Drug Regulatory System and

Patent offices in the country. It focuses on research and drug development with clinical trials.

The policy aims at providing a better access to anti-cancer and anti-HIV/AIDS drugs to the

patients. It seeks to rationalize the excise duty on pharmaceuticals and to streamline the system

of bulk procurement of drugs by the Government besides promoting the generic medicines.

National Pharmaceutical Pricing Authority (NPPA): It has been entrusted with the task of

fixation / revision of prices of bulk drugs and formulations, enforcement of provisions of the

Drugs (Prices Control) Order and monitoring the prices of controlled and decontrolled drugs in

the country.

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Drugs Price Control Order (DPCO), 1995: The Drugs Price Control Order (DPCO), 1995 is an

order issued by the Government of India under the Essential Commodities Act, 1955 to regulate

the prices of drugs. DPCO controls the domestic prices of major bulk drugs and their

formulations with an aim to provide patients with medicines at affordable prices. DPCO

ascertains, as per Drug Policy guidelines, the bulk drugs (and their formulations) to be kept

under price control. At the State level, the State Food and Drug Administrations (FDAs) monitor

the drug manufacture, sale, and testing by companies in their jurisdiction. There are also two

main statutory bodies formed by Parliament:

· The Drugs Technical Advisory Board, whose technical experts advise the Central and State

Governments on special technical matters involving drug regulation, and

· The Drugs Consultative Committee, where Central and State drug officials ensure that drug

control measures are enforced uniformly in all states.

The domestic pharmaceutical industry is represented by the following three main

pharmaceutical associations:

Organization of Pharmaceutical Producers of India (OPPI): This is a premier

association of research based international and large pharmaceutical companies in India and is

also a scientific and professional body.

Indian Drug Manufacturers' Association (IDMA): The IDMA represents the interests of

domestic manufacturers and plays a vital role in the growth and development of the

pharmaceutical industry, by taking up with the Government major issues such as Price Control,

Patents and Trade Marks Laws, Quality & GMP, R&D, Exports and so on.

Indian Pharmaceutical Association (IPA): This is the premier professional

association of pharmacists in India.

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CRITICISM

The Indian pharmaceutical industry is already over-brimming with many “me-too” drugs. In this

situation, each pharmaceutical giant is adopting ‘aggressive’ marketing strategies. For this they

are paying heavy penalties too. But to keep their position maintained (or in other words, to

maintain the product life cycle) in the market, they seem ready to pay the heavy prices. Some

reports related to these are as follows:

1. Michigan among 13 states in suit

BY PATRICIA ANSTETT • FREE PRESS MEDICAL WRITER • February 26, 2009

A New York drug company paid pediatricians consulting fees and treated them to expensive

meals and entertainment to get them to prescribe antidepressants to children, a class action

charged Wednesday.

The U.S. Justice Department and attorney generals from Michigan and 12 other states plus the

District of Columbia filed suit in U.S. District Court in Massachusetts alleging that Forest

Laboratories tried to build sales for Celexa and Lexapro by encouraging their use in children.

The drugs only are approved for adults.

Each carries a warning that the drug may cause suicidal thoughts.

Doctors can prescribe adult drugs to children, but the company's actions violate laws that forbid

drug companies from paying kickbacks to doctors to encourage their prescription of a drug, the

Justice Department said.

49
Michigan Attorney General Mike Cox said the company failed to tell doctors that some studies

have found the drugs are ineffective in children and may have put some kids at risk.

Michigan's Medicaid program paid $3.5 million between 2000 and 2008 for prescriptions of the

two drugs to children under age 16.

2. Big pharma pays billions in fines for bribing doctors

Rema Nagarajan, TNN, Sep 16, 2009, 12.53am IST

In what seems to be a case of giving the fox the job of guarding the henhouse, the government

has decided to curb the practice of bribing doctors for promoting drugs by allowing

pharmaceutical companies to self-regulate rather than have a legislation to tackle the menace. 

This is despite the fact that more than a quarter of the members of the Organisation of

Pharmaceutical Producers of India (OPPI) — an association mainly of multinationals which is

estimated to account for 70% of the drug market in India — are subsidiaries of companies that

have been penalized in the US for illegally promoting various drugs through inducements for

doctors. 

The latest to be penalized is pharma giant Pfizer, which on September 2 shelled out $2.3 billion

in one of the biggest healthcare fraud settlements. 

The charge against Pfizer was that it promoted drugs for usages not approved by the Food and

Drug Administration, by inducing doctors to prescribe the drugs by wining and dining them and

sending them for exotic trips. 

Another big player, Eli Lilly, was fined $1.42 billion at the beginning of the year for illegally

promoting a drug, Zyprexa, by funding continuing medical education of doctors through millions

of dollars in grants to push them to prescribe the drugs for unapproved use.

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Drug companies spend billions of dollars wooing doctors--more than they spend on research or

consumer advertising [all of which contributes to the high cost of health care in the U.S.] Much

of this money is spent on giving doctors free samples, free food, free medical refresher courses

and payments for marketing lectures [using materials prepared by the drug companies]. The

Institute's report recommends that these efforts end.

Last year in a tiny nod designed to appease critics, several big drug companies agreed to stop

giving pens, prescription pads, coffee mugs and other small gifts to doctors, but they defended

the other practices criticized by the Institute of Medicine report.

These have a very bad impact on customer's part. The industry which is meant to serve the

patient has shifted its focus towards making big profits. Steps should be taken to curb these kinds

of marketing strategies.

THE COMPETITIVE ENVIRONMENT

Of all the external environments, in which the firm operates, it is the competitive environment

that has the most immediate impact and is the easiest to understand. Apart from customers,

competitors are the most important determinants of the market share.

It is important to prepare as complete a profile as possible of each of a firm’s major competitors..

The important questions to ask are:

1. Company history of three major competitors for each major product.

2. Plant location.

3. Investment history of the past five years, plant expansion, new licensed capacities,

public issues, etc.

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 4. Financial history of last five years like net sales, cost of sales, inventory, net

income, total assets, operating expenses, gross margin, net margin, inventory

turnover, profitability, return on investment (ROI), etc.

5. Major products of competitors accounting for80% of their sales and their growth in

last five years.

6. Product quality of the competitors: what is the emphasis given by the competitors

for product quality? How do they compare with the firm’s product quality standards

on a ten point-scale?

SUMMARY

Pharmaceutical marketing can be studied from various perspectives. Managerial approach is the

most widely adopted, which essentially consists of assisting the marketing manager in selecting

the best combination of marketing activities for achieving organizational goals.

The major steps involved in any good marketing management are:-

(1) formulation of objectives,

(2) identification of target market by market opportunity assessment, resource and

environment analysis, and by selection of specific segmentation or product

differentiation strategy,

(3) development of an optimal marketing mix, a combination of four controllable marketing

variables --- product, price, place and promotion --commonly known as four Ps, to

achieve marketing through the target market, and

(4) Implementation and evaluation of marketing strategy.

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In effect, management of marketing functions can be described as providing the right product, at

the right price, at the right place, with right information, to the right market, to achieve the

organizational objectives. The Task Force on Prescription Drugs endorsed this approach when it

described rational prescribing as “Prescribing the right drug for the right patient, at the

right time, in right amounts, and with due considerations of relative costs.”

In the formulation of objectives of the management, using this approach, may be guided by

many orientations, such as production, finance, sales, or customer orientation. The customer

orientation, according to the marketing concept, is considered the cornerstone of modern

marketing management. Although its advocates have usually discussed the application of this

approach only from a manufacturer’s perspective, there is nothing inherent in the approach

indicating that it cannot be adopted by parties other than pharmaceutical manufacturers, such as

community pharmacies. In effect, this approach can be successfully adopted by hospital

pharmacies interested in developing reimbursable clinical pharmacy programs.

The major limitation of this approach is that it views marketing as a tool for achieving

organizational objectives (a normative view) and not as a field of investigation (a positive theory

view). Furthermore, emphasis on achievement of organizational goals through the appropriate

identification of target market(s) in the pharmaceutical marketplace may lead to the development

of many “me-to” drugs, and may create a class of many needed “orphan” drugs. In other words,

achievement of organizational goals at the micro level in the pharmaceutical marketplace may

not always be the most beneficial for society.

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REFERENCE

1. Massie Joseph L., “Essentials of Management ”, Fourth edition, Seventeenth Indian

reprint, 2002, Eastern Economy Edition, Pentice-Hall of India Private Ltd., New Delhi.

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2. Prof. Sood A.K., “Cases in Marketing Managrment”, June 2003, Symbiosis Centre for

Distance Learning, Pune.

3. Smith Mickey, “Principles Of Pharmaceutical Marketing”, Third Edition, reprint 2004,

CBS Publishers and Distributors Pvt. Ltd., New Delhi.

4. Kotler Philip and Keller Kevin Lane, “ Marketing Management”, Twelfth edition, Third

impression,2007, Dorling Kinderseley (India) Pvt. Ltd. New Delhi, Licencees of Pearson

Education in South Asia.

5. Chaganti Subba Rao, “Pharmaceutical Marketing In India Concepts Strategies Cases”,

Pharma Book Syndicate, Hyderabad.

6. Internet portal: www.google.com, www.scribd.com, www.wikipedia.com.

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