Overview on pharmaceutical industry

Overview on Pharmaceutical

Industry

Prepared By : Mitesh J Shah

Submitted to : Mr. Pratim Vora

Overview on Pharmaceutical Industry

Stevens Business School, Batch 2009 - 2011

TABLE OF CONTENT

Sl. No. Particular Page No.

1 History of Indian pharmaceutical Industry (IPI) 04

1.1 Indian Pharmaceutical Domestic Market 04

1.2 Growth of Indian Pharmaceutical Market 04

1.3 Reasons for Growing of Pharmaceutical Industry 05

1.4 Type Of Company in India according to their Turnover 05

2 Detail of Customers of Pharmaceutical Industry 05

3 Type of Domestic Marketing 07

4 ORG (Operational Research Group) or IMS ( International

Management Services) 09

5 CMARC (Centre for Management Analysis and Research Consultancy) 09

6 Pharmaceutical Distribution 10

6.1 Medicine Distribution 10

6.2 Surgical Channel of distribution 11

7 Sales Team 12

8 Marketing team or Brand Management Team or PMT 13

9 Policy Maker 14

10 DPCO (Drug Price Control Order) 15

11 Pricing in Pharma Industry 16

12 Changing Playfield and Global Opportunities for Pharma Industry 17

13 Brand Plan 19

14 Conducting Briefing Meeting 21

15 Issues of Pharma Selling 22

16 Role of Various Field Staff 22

17 Tour Program 24

18 Reporting System 24

19 Kind Of Report for Sales Force 25



20 Sales Administration Department 26

21 Budgeting 27

22 Credit Control 28

23 Costing and Finance 28

24 Billing 30

25 Sales Team Division 31

26 Trade Union in India 31



History of Indian pharmaceutical Industry (IPI)

1st pharmaceutical in Indian company was started during 1901 at Kolkata which is “Bengal

chemical”

Than 2nd pharmaceutical industry is Dey’s chemical

1939 – Sarabhai Pharmaceutical

1945 – Cadila Labs (By Mr. Indravadam Modi)

1949 – Alembic

1950 – Alkem

Indian Pharmaceutical Domestic Market

Indian pharmaceutical Domestic Market can be divided into

o Ethical Market

o Ayurvedic Market

o Surgical disposable Market

o Homeopathy

o Disinfectant

Total Allopathic Medicine formulations are around 40,000 crores and it is increasing per year by

16.5%

Total number of registered companies in India are more than 31000

Growth of Indian Pharmaceutical Market

Year MNC Sales Indian Company’s Sales

1980 – 1990 75% 25%

1990 – 2000 60% 40%

Current financial year 2010 30% 70%



Reasons for Growing of Pharmaceutical Industry

Population

New Drugs

New Diseases

Life Style Medicines

Type of Company in India according to their turnover

Type of Company Turnover per Year

Large Indian Company >500 Crores

Medium Indian Company 100 to 500 Crores

Avg. Indian Company 20 to 100 Crores

Small Scale Indian Company 1.5 Crores

Details of Customers of Pharmaceutical Industry

Total Qualified Doctors in India according to 2009 year data – 7 lakh doctors

o 4 lakh are General Practicener – MBBS

o 1 lakh are MD Phycisian

o Specialist Doctors are

Gynecologist

Pediatrics

Surgeons

Dentist

ENT

Orthopedic

Dermatologist

Ophthalmologist

Anesthetics

o Super Specialist

Psychiatrics (around

4000)

Oncologist (around

900)

Cardiologist ( around

3500)



Diabetologist

(Endoscanologist)

(around 900)

Neurologist (around

2000)

Gastrologist (around

3500)

Nephrologists (around

800)

Urologist(around 1500)

Radiologist (around

4000)

Chest Specialist (around

5000)

Interventional

Cardiologist (around

500)

Maxillofacial Surgeon

(around 500)

Plastic Surgeons / Burn

Specialist (around 1200)

Rheumatologist

(around 100)

o Other customer

BAMS for Ayurvedic

BHMS for Homeopathic

RMP – Registered Medical Practicener

LMP – Licensed Medical Practicener

Quacks – Not a doctor but compounder with 10 to 15 year experiences in

medical field under physician



Types of Domestic Marketing

Ethical Marketing

It is Prescription based marketing. Sells by prescription is known as Ethical Marketing.

The main challenge in this kind of marketing is that how to change the pe n habit of

physician to prescribe our brand…

Eg: Job of Medical Representative (MR)

Prescription written by doctors often meet with MR

Generic – Branded Marketing or Replacement of Branding

Not prescription based selling. Push sell by chemist is known as Generic Marketing.

Margin for all brands under generic marketing is very low.

Here PTD is 3 to 5% and PTR is 5 to 7%.

Stockiest is different in case of generic marketing.

Sales on chemist table

50% cost of original brand

Eg: Desprine – Brand Name and Aspirine – API (Active Pharmaceutical Ingredient)

PG or PCD Marketing

PCD or PG means Propaganda cum Marketing as well as it can be said Prescription cum

Marketing

20% to 30% commission is given to doctors on business obtain from them.

It is worst form of Marketing

Here dispensing comes from doctors only.

Eg: Doctors buys Medicine and than directly sell to their patients

Doctors have family medical store

Mostly done by

i. Psychiatrist

ii. Dermatologist



Surgical good selling

Hospital and poly clinic are interested in surgical marketing.

Not prescribed products.

It is no separate purchase department of company.

Margin is very thin around 2% only.

Totally unethical business.

Ahmadabad is the largest in India for IV set

Tender Business

Purchase department is there.

Distribution channel to tender selling is different.

Eg: Hospital(Civil) tender to supply medicine for 5 years



ORG (Operational Research Group) or IMS (International Management

Services)

It is world’s largest market survey company

Main centre is placed Baroda

All database of Indian Pharmaceutical Industry

It gives data of Sales

Function of ORG

o Monthly survey

o Survey of Stockiest / Distributor

o Full Database of sales ( 1,60,000 stockiest on their Penal as now)

Format of MAT (Moving Annual Total) o Month wise / Company wise / Brand wise / Area wise / Value wise / Unit sales

o Category wise / Growth figures / Purchase % / Re- Purchase %

If repurchase % is more than purchase % that means it’s the indication of growing of product

sales or brand sales.

They also go for Secondary Stockiest Audit (SSA)

Cost is Rs. 48 lac per year for subscriber.

CMARC (Centre for Management Analysis and Research Consultancy)

It is done at every 2 months.

Here Rx audit is done which give data of prescription.

They have 50000 Doctors in their Panels.

Analysis of CMARC

o Rx / Bimonthly / No. of prescription / Written By which specialist / Indication (For Which

disease) / With co – prescription / Perceived Diagnosis / Prescribed cure

Rs. 62 lac for one year subscription of CMARC



Pharma Distribution

For Medicines

company (Zydus)

C & F agent (Company depo in Indore)

• Carrying and Fowarding Agent,it is company Depo

• Commission is 4 - 6%, It belongs to company

• Bigger the company lesser the commision for C & F

• Bigger the company, Bigger the diposite for C & F

• Owenership is not transfered

• Challen is made . not billed

Stokiest

• Place order to C & F

Chemist, Nursing home, Hospital, Dispensing Doctors



Surgical Channel

Lots of rules and Regulation to Ethical sell

While almost no rule to surgical sell

As company big, commission is decrease for C & F

As company big, Deposit value for C & F agent is increase

Company

Consigne Agents (Not company depo)

• Immediate payment to company

• More consignee in each state

• Goods are sold and bill is made

• 5.5 % to 7.5% commission is charged

• 30 days PDC (Post Dated Cheque) is given

Super Stokiest

• More super stokiest in each consignee

• 30 days PDC is given

Stokiests

Sub Stokiest



Sales Team

Vice Precident or Precident of sales

General Manager (GM)

National Sales Manager (NSM)

• India

Zonal Sals Manager

• North / South / East / West

Regienal State Manager (RSM)

• Minimum 5 ASM reporting to one RSM

Area Sales Manager

5 to 6 MR reporting to one ASM

Medical Representative (MR)



Marketing Team or Brand Management Team or PMT

Responsibility of PMT

o He should be responsible for achievement of top line and bottom line of your allocated

brands or therapy

o Top line is achieving target of sales

o Bottom line is achieving target of profit

Vice Precident or Precident of Marketing

Area General Manager (AGM) / Depuity General Manager (AGM) / General Manager (GM)

Group Product Manager (GPM)

• Most important person,Handle Complete therapy, Minimum 8 - 10 Brand

Product Manager (PM)

Depuity Product Manager (DPM)

Assistant Product Manager (APM)

• After 1 to 2 year of exeperience as P.E

Product Executive (P.E)

• 1 or 2 Brand manage, After 6 months of exeperience as Management Trainee

Management Trainee



Policy Maker

Old Drugs means more than or equal to 4 year in India

o Approval given by State FDA

New Drugs means less than 4 year in India

o Approval given by DCGI

DCGI

• Drug controler general of India

• at DELHI

State DC

• State Drug Controllers

FDA

• Food Drug Administration

• Mostly one FDA / Sate

• Mr. Khoshia in Gujarat

DI

• Drug Inspector



DPCO (Drug Price Control Order)

Drugs which are come under DPCO are as mentioned below…

o Life Saving Drugs / Commonly used Drugs

o Epidemic Drug

Tuberculosis Drugs

AIDS Drugs

o Oligopolistic Drugs

Here only few sellers but lots of buyer

Only 2 to 3 sellers or players have cover 80% market share

Example:

Ranitidine

o Total market is Rs. 180 crores annually

o Zyentak ( Glaxo ), Rantac (J B Chemical), Acilock (Cadila Pharma)

have cover around Rs. 160 crores market out off Rs. 18- crores

market of Ranitidine

Life saving Drugs / Commonly used drugs

o Drugs which used for treatment of Acute life saving condition

o Acute drugs

o Not for chronic illness drugs

o For Example

ICCU – Intensive

Urokiness

Streptokinase

Insulin – Elli lily , Novo Nordisk, Biochem

USV – for oral Anti – diabetic



Pricing in Pharma Industry

Company : charge PTD (Price to Distributor) or NRV (Net Realise Value)

o From NRV company deduct all costs like marketing, production, distribution, manpower

cost and get Gross Profit (GP)

o If GP is more than and equal to 50% than management allow you to launch product.

Stockiest : Charge 10 % Margin

o PTR (Price to Retailer) : PTD + 10% Margin

Retailer : Earn 20%

o MRP (Maximum Retail Price) : PTR + 20% Margin



Changing Playfield and Global Opportunities for Pharma Industry

New Technological Development like novel Drug Delivery System (NDDS)

Increase Exports and CRAM (Contract Research and Manufacturing)

o Export is increase due to good quality level of Indian medicines

o Regulated market

License is require for export

Example : US – FDA

o Non Regulated Market

No License is require for Export

o India has maximum US – FDA plans after USA

o Around 62 US FDA approved plant in India as per December 2009

All are only Domestic Indian Manufacturing units

o China has 80 US FDA approved plant as per December 2009

o Hypothetical Example for making plant US FDA

According to Schedule M Rs. 1 crore require for pharmaceutical manufacturing

plant. But it can not go for export

According to WHO, GMP guideline, it require Rs. 2 to 2.5 Crores

Export allowed to

o Russia

o Africa

o South Asia

According to US –FDA guideline, it require Rs. 7 to 8 crores and than it can

export to anywhere in the world

But before US –FDA audit , following audit must be require

Audit from

o MHRA – U.K Approval

o MCC – South Africa

o ANVISA – Brazil

o TGA - Australia

Maximum US – FDA approval plants are in Gujarat and Maharashtra

More Patented Drugs available and Indian companies go for patent



o Minimum 10 to 20 years and around 5 to 7 billion $ require for one molecule to come in

the market and still lots of risk is attached with its success

Increase clinical Trials and new research companies are opened.

o CRO – Clinical Research Organization

o VEEDA – At Ahmadabad is the biggest CRO in India

Increase in competition

Stringent law in pipeline

More segmentation and niche marketing

o It could be according to

Geographically

Disease wise

Population wise

Therapy wise

o For example :

Some company has only 15 members to promote its product – Niche Marketing

Some company has more than 5000 members to promote its product – Mass

Marketing. But sometime it create SNOB EFFECT

Companies are going to become more customer centric

Increase in advertisement

Increase in out sourcing

Changes in government policies

Increase in R & D

Increase in DTP (Direct to Patient) which is not allow in India except OIC (Over the counter

product)



Brand Plan

Main Component of Brand Plan o Executive Summary

o Qualitative and Quantitative

objective

o Situational Analysis

o Competition Analysis

o SWOT Analysis

o Key issues / Critical success

factor

o Strategies

o Tactics

o Sales Plan

o Contingency Plan

o Co – Promotion considerations

– Product Bundling

Outline of Brand Plan o Objective

Qualitative

Quantitative

o SWOT Analysis

o Current Status and Future Prospectus

o Brands available in the market

Current brands

Future brands (Drugs are divided into 3 phase for launching)

Phase one : launch

Phase two : launch

Phase three ; launch

o Prospects

Who are our customers?

o Major players

o National opportunity snapshot from ORG

o National Brand opportunity snapshot from ORG

o Division nomenclature

o Team nomenclature

o Manpower deployment – summary

o Zone wise Head quarter detail



o Area coverage of Regional manager

o Reporting pattern

o Promotional tools

o Salary structure

o Target : Productivity wise

o Phase wise Brand Budget

o New brand’s budget - 3 years Road Map

o Pricing

o Consumption pattern

o Sales promotion plan

o Marketing Strategies

o Pre launch activity

o Actual launch activity

o Options for market strategies

o Venues

o Budget Expenditure



Conducting Briefing Meetings

Every 2 to 3 months means 4 times per year

Entire state teams are invited

They all called at one place which is RSM HQ

Meeting for two days

o Day one

Entire marketing for current and new launch product

o Day second

Half day for sales review of last 3 months

Other half day of sales planning

Tricks to handle sales people in meeting

o Ask for

Call average

Chemist average

POB (Personnel Order Booking)

Product Mix

New Product sales

Growth as compare to last sales

Last quarter strategies

MR Working pattern which help in meeting to control them

o Per day 12 calls for MR

o 25 Working days per month

o 5 chemist per day

o At least Rs. 1000 to Rs 2000 POB (Personnel Order Booking)

o Last two days of the month are allocated for closing of sales

o MR go to stockiest and C & F offices.

o Main Division

Contain cream of Brand and manpower and doctors

They have around 500 to 700 MR

o Speciality Division

Around 20 – 120 marketing executive (ME)



7 to 10 ME under one Area Manager

Speciality division of some companies are

US Vitamin – Oral anti diabetic

Intas – GT track, Neuropsychiatric

Sunpharma - Neuropsychiatric

Torrent – Neuropsychiatric

Issues of Pharma selling

Ethical issues

o Promotion overload

o Too many companies

Doctors issues

o Fixed day and time of meeting to MR

o Fixed No. of MR

o Visit regulated once in 3 months

o Time of giving cards & time of actual calls

o Fixed No. of company’s MR to meet

o Waiting to MR

Role of Various field staff

Medical Representative (MR)

o Implementation of promotional strategy

o Contact doctors , N/h , Co – hospital

o To give info about product

o Convince doctors to give Rx

o Make a network with retailers & chemist

o Make a network with stockiest

o Reporting

o Generation of order ( Retailer – POB – Stockiest )



o Questions asked to MR:

Primary sales

Order given by the stockiest to C & F is known as primary order.

Secondary sales

From the market any order which gives business to MR is known as

secondary sales. Which include

o Rx orders

o Retailer orders

o Nursing home Order

o Hospital and POB orders

o Dispensing doctors order

Stockiest place order = (Primary order – secondary order) x 1.5 times

Personal order booking ( POB )

It helps to maintain relationship with chemist.

MR gets competitive feedback from retailers

Frequency of POB is important, not the Value of POB

Call average

How many calls MR have per day is known as Call Average.

Coverage

How many doctors you meet from your list in month is known as

Coverage.

List of doctors of one MR is known as MCR (Master call Record)

Repeat calls

How many repeat call you made is known as Repeat calls.

Repeating format is called as DCR (Daily call Record).

Role of Area Manager (AM), state manager, Regional manager, zone manager, National

manager, VP of Sales

o All the faction of MR is also perform by them at their level.



Tour Program

Reporting System

• Submitted on 25th of monthMR - TP

• AM Approved MR – TP

• AM – TP Submitted on 26th of monthAM - TP

• RM approved AM -TP

• RM – TP submitted on 27th of monthRM - TP

• ZSM approved RM – TP

• ZSM – TP submitted on 31st of monthZSM – TP

MR

ASM

RSM

ZSM

VP OF SALES



Kind of Reports for sales force

DCR : Daily call report

o Report is submitted up to 25th of month by MR

Expenses Detail report

o Up to 1st of month expenses detail report is submitted.

Place HQ Ex Station working Out station

Daily Allowance Rs 100 per day

- Rs 110 to 120 per day

- If > 50 km than MR

gets Rs 1.5 to 2 / km

extra

- Rs 175 to 200

- Local rickshaw

transportation + Bus /

2nd Class Train are

TP : Tour program

o Up to 28th of month TP is submitted

Weekly reporting

o Mostly submission is on Wednesday

Monthly reporting

Basic tool program ( BTP )

o It is a blue print for monthly Tour Program

Sr.

no Day Place Category Kms Charges Allowance(Rs)

Fare

(Rs)

Local

(Rs)

Total

(Rs)

1 1 Ahmedabad HQ - - 100 - - 100

2 2 Dhodaka Ex 80+5 30+5 110 - - 145

3 3 Idar Out

Station 160 - 150 80 30 260



DWP : Daily work plan

o Only prepared once per year

Sr. No Day Dr. Name Business Expected

Monthly

Products to be

Promoted

All of above six reports are common for MR as well as ASM.

RSM : Prepared TP and reporting will be weekly / monthly / TP / Expenses

ZSM and SM : TP, Weekly report, monthly report, expenses report

Sales Administration Department – Head Quarter (Sales admin

Hierarchy) Do compilation of all reports of sales.

Zone wise 3 to 4 people do this job and so on an average one person per state is required

They give

o summary report

o Incentive calculation

o All India – state wise – Unit wise – Value wise sales report for product manager for his

product.

o All India last three months sales of same brand.

o All average and coverage report

o Utilization of inputs like gifts, samples, skims, Bonanza for retailer etc.



Budgeting

Marketing Department

o Make sales budget

Give guideline for sales budget

Give data

Example: Company decided to make 15% growth in next year

In 7 main product , 30% growth

Old Product only for 2 to 3 % growth

New 5 Product – value of X Rs.

Sales Budget Sheet

Sr. No Brand Packets NRV +

ED January February

Total

Sales

Total

Unit

Total

Value

Unit Value Unit Value

o Marketing Budget

Marketing budget include proper management and utilization of

Gifts

Samples

Sponsorship

Schemes

Bonanza

CME (Continuing

medical education)

Advertisement

Printing Expenses

Meeting Expenses

Incentives

Transportation

Expiry and good

returns

o Finance Budget made by finance department

o Factory department made production budget and make own budget

o Sales administration department mad e their budget

o Purchase department make their own budget



Credit Control

C & F agent gives stock to Stockiest and they will give 21 days PDC to C & F.

Type of Credits

o Credit period

o Credit limit

o Mode of payment

o Stockiest profile

o PDC

o Cash Discount

o Special Cases

o No PDC

Costing and Finance

Each type of marketing needed different kind of costing

Different types of cost

o R & D as well as F & D cost

o Production cost

o Inventory Cost

o Transport Cost

o Marketing Cost

o Regulatory Cost

o T & D Cost

o PM Cost

o Overhead

How Unit fix MRP?

o It Is one of the great Strategic Decision which includes

Competition Pricing

New Marketing / Scientific gimmick

Example:

o Ampicillin launch in mid 1970

o Amoxicillin launch in 1982 which is 2nd larhet selling drug

o Cloxacillin launch in 1989

o Now combination of Amoxicillin + Cloxacillin launch in 1994

which has side effect of Diherria and for that SPOROLAC brand

lauch which contain Lactobacillas sparogenes also.

o New Launch brand is SYMBIOTIK of Cadila Pharmaceutical which

contain Amoxicillin + cloxacillin + Sporalac



Monopolistic MRP

Mostly on oncology department

Example: Monoclonal Antibodies

o Company : E.Merch (German)

Brand Name : Citaximab for Brest Cancer

Price : Rs. 55000 per tablet

o Company : Roche (Germen)

Brand Name : Rituximab for lung cancer

Price : Rs 1,25,000 per 10 ml vial

Example: Nimesulide

o Brand : Nise –Rs. 35 per 10 tablet

o Brand : Nimel – Rs. 45 per 20 tablet

What kinds of Marketing company DO means depend on type of marketing

company choose.

% of Gross contribution

Fixed Cost

o R & D and F & D Cost

o Manufacturing Cost

o RM / PM

o Regulatory cost

o Finance / Administration Cost

o Overheads

Variable Cost

o Marketing Cost (up to 20%)

Sampling Cost (3%)

Transportation Cost (In India than 4%)

Inventory cost

Return Goods (1%)

T & D Cost

HR Cost

Incentive (2%)



Billing

Billing cycle

From the time bill is raise to the payment received

Normally billing cycle is of 21 day

Payment cycle is 60 days for 1st deal for stockiest

Billing for C & F

o Transfer of stock

o Transfer challen

o F – Form

o taken from sales tax department

o 0.5% sales tax has to pay

Billing for CA

o Billing

o Bill is Made

o C – Form

o Outside state 2% central sales tax (CST) + add 5 % VAT

o Within state only 5% VAT

Billing Format

Sr No. Items Description Quantity Unit Value Total

Quantity Total Value



Sales Team Division

Pharma division

o Old / big brand

o Less promotion

o Less expenses (CASH COW)

o According to Sub therapy

o Because of more products in product line

Speciality division

o Gastro division

o Cardio / diabeto division

o Psycho / neuro division

o Ortho division

o Opthal division

o Dermato division

Trade union in India

Many Pharmaceutical union in India are established which has their own norm and rules for

working. They have member which includes medical representative, area sales manager, and

other marketing people.

E.g. Chandigarh medical representative associates

Overview on pharmaceutical industry

Documents

Transcript of Overview on pharmaceutical industry