08 chapter 1 - a reservoir of indian theses @...
TRANSCRIPT
Chapter - 1
ABSTRACT
1.1 INTRODUCTION
1.1.1 Indian Pharmaceutical Industry
The pharmaceutical industry in India had a very humble beginning & has now come a
long way. The turnover of the pharmaceutical industry was just Rs.8 crore p.a. in
1946 and now, it is pegged at Rs. 1,19,000 crore p.a. (including retail & exports).
Figure 1: Indian Pharmaceutical Industry in 1946 & now
Source: Daara B Patel, Indian pharmaceutical industry overview: Challenges &
Opportunities 2nd June 2011, Goa.
The turnover of Indian pharmaceutical industry in 1946 is merely Rs.8Crore, while in
2012, it has grown exponentially to Rs.119,000Crore. This growth has been due to
various factors like increase in populations, increase in the number of doctors &
medical stores, improvement in healthcare, infrastructure, increased governmental
spending on healthcare & overall increased health awareness among Indians.
1.1.2 The healthcare infrastructure of India
The Indian healthcare sector is currently growing at around 18% per annum & it is
poised to reach USD 295 billion (Rs.16,50,000 Crore) by 2025.
HEALTHCARE INFRASTRUCTURE
Population 1.21 billion
Doctors 6,93,000 (0.57%)
Nurses 9,46,000 (0.78%)
Hospitals 18,500
Hospital Beds 9,16,545 (0.75%)
Primary Health Centers/ Community Health Centers 1,66,000
Medical Colleges 250
Chemists (Pharmacies) 5,65,500
Medical Sales Representatives 4,67,000
Total Healthcare Market U.S. $ 38 billion
Government Healthcare Budget U.S. $ 7 billion (1% of GDP)
Per 1000 Population
Table 1: Healthcare infrastructure in India
Source: IDMA 49th Annual Publication 2011, India Census 2011
The Indian population has grown consistently over the last 6 decades & currently is
about 1.21 billion (Census 2011). However the number of doctors in India are still
very low & so is the number of nurses & hospital beds as compared to the developed
countries; for example, while India has 0.57 doctors per thousand of its population,
Germany has 3.7 doctors, Switzerland has 4.1, UK has 2.8 & USA has 2.4 doctors per
thousand of its population.
Drug & Dosage Pack India
(Rs.)
Price in
Pakistan
(Rs.)
Price in
Indonesia
(Rs.)
Price in
USA
(Rs.)
Price in
UK
(Rs.)
Adefovir 10 mg tab 10's 180.00 N.A - 7514.42 7850.00
Alendronate
Sodium 10 mg
10's 46.00 531.9 N. A. 1016.12 623.00
Alprazolam 0.5 mg 10's 6.00 42.59 211.60 1067.84 -
Atenolol 50 mg 5.70 61.43 325.54 804.50 NA
Atorvastatin
10 mg tabs
10’s 23.00 481.35 563.91 1082.52 462.41
Cetirizine 10 mg 10's 7.65 32.05 162.62 936.20 195.02
Ciprofloxacin
500 mg
10's 27.00 365.31 924.76 2551.41 1076.25
Ciprofloxacin
0.3% eye drops
5.84 156.63 251.00 2036.00 374.25
Diclofenac 50 mg 10's 4.36 32.79 162.14 736.41 195.52
Imatinib Mesylate
100 mg caps
10's 960.00 8512.64 9214.92 9217.72 9864.21
Lansoprazole 30mg 10's 34.00 421.16 464.74 2068.06 541.62
HCl 8 mg inj 5 ml 25.00 N.A 663.54 11284.13 914.25
Pioglitazone
15 mg tabs
10's 8.00 N.A - 1621.42 657.13
Ranitidine 150 mg 10's 4.17 64.29 218.34 1013.47 15.49
Salmeterol 25 mcg +
Fluticasone
50 mcg inhaler
120
doses
218.54 524.67 721.64 N.A 1346.64
Tamsulosin
0.4 mg caps
10's 54.12 N.A - 842.12 548.85
Note:
1. Retail prices in India & wholesale prices in other countries considered.
2. Conversion rate of exchange considered: 1 USD = Rs. 44.00, 1 GBP = Rs. 76.00
1 Pak Rs. = Rs. 0.73, 1 Indonesian Rp = Rs. 0.005 and 1 Bht = Rs. 1.04 as on 12-7-
2005
Table 2: Comparison of Indian V/s international prices of some pharmaceutical
products
Source: Indian Drug Manufacturers' Association Bulletin, 30th October 2005,
36(40): 42-51
The prices of drugs in India are one of the lowest in the world & are even much lesser
than the prices in some of the poorer nations.
The Indian Pharmaceutical industry has around 11,500 manufacturing units, with
65,000 formulations, thus making medicines price sensitive in this competitive
market.
The retail Indian pharmaceutical industry is currently valued at around Rs. 65,000
crore p.a. and growing at 12% p.a.
1.2 LITERATURE REVIEW
1.2.1 Role of MNCs in Pharmaceutical Industry
Ajith Mahadevan (2011) says that Pharmaceutical MNCs have had rapid growth
within the domestic market, mostly due to a weak intellectual property setting, where
the Indian pharmaceutical market had years of slow growth until the 1990’s. Over the
past few years they needed amplified investments within the domestic market, but
currently they are set to capture a considerable share of the domestic market.
Compared with twenty-eight percent in 2009, evidently by 2017 pharmaceutical
MNCs are projected to capture a thirty-five percent market share of the market. To
take advantage of the growing potential of the country's pharmaceutical market
through the years, pharmaceutical MNCs have implemented India-focused strategies.
Figure 2: Pharmaceutical industry today and projections for 2015 & 2020.
Source: India Pharma 2015: Unlocking the potential of Indian pharmaceutical
market, McKinsey & Co., IMS World review: analyst projection. Analysis of the
Indian pharmaceutical business with stress on opportunities in 2005, Hemant N.
Joshi. A per the McKinsey report, the Indian pharmaceutical market will touch USD
twenty billion by 2015 & will be among the top ten pharmaceutical markets in the
world.
1.2.2 Role of Indian companies in pharmaceutical industry
Indian pharmaceutical companies have grown tremendously over the last 4 decades &
currently are in consolidation phase. Among the top 10 pharmaceutical companies,
currently 7 are Indian pharmaceutical companies and only 3 are MNCs. By 2020 the
Indian pharmaceutical industry is likely to multiply by 4 times.
1.2.3 Doctor’s prescription behavior:
Weihul et al (2007) say that Besides the modification of economic interests among
Doctors, patients & hospitals, prescription behavior is the key fundamental link,
affecting a variety of medical relations, such as - medical resources, utilization of
management on medical services and the control of medical costs.
Eric De Laat et al (2009) says that Doctors prescription behavior can be strongly
influenced by the promotional activities of the pharmaceutical companies.
Dr. R K Srivastava (2005) in his article - Changing scenario in the pharmaceutical
sector - says that influencing the prescription behavior of Doctors are the emergence
of hospitals & nursing homes that have led to the rise of new hospital/nursing home
consumer market segments and has also increased the value of hospital-attached retail
chemists.
Several factors besides advertising, price & promotion by pharmaceutical companies,
controls a doctor’s prescription behavior.
1.2.4 Impact of global (MNC) brands:
Aaker, David A et al (2009) say brand builders all over assume they require global
brands. However world brand leadership, not international brands, ought to be the
priority. Even if most international brands aren't completely identical from one
country to another.
Eva Moberecker & Adamantios Diamantopoulos (2011) talks about
complementing prior research specifically centering on behavioral implications of
negative affects (especially consumer animosity), as a result of how a positive affect
plays a key role in forming consumer behavior.
George Balabanis & Adamantios Diamantopoulos (2010) say that the importance
of ensuring that consumers are aware of a brand's true country of origin must be
stressed upon and robust brands are not resistant to misclassification.
1.3. STATEMENT OF THE PROBLEM
● To study the Doctors prescription behavior pattern
● To study impact of pricing and country of origin (COO) on Doctors
prescription behavior
● How promotional strategies of MNC V/s Indian pharmaceutical companies
influence the Doctor
● Role of MR & their training and its impact on effectiveness in the Doctors
clinic
1.4. CONCLUSION
Chapter 1 gives a short description on how doctors perceive MNCs & Indian
pharmaceutical companies & its effect on prescription pattern. This is outlined with
the help of tables and figures. The literature review further explains this with the help
of journals along with the discussion on the statement of the problem.
2.1. INTRODUCTION
India is the second highest in terms of population in the world (after China), but is
14th in terms of value in pharmaceuticals sales. However by 2015, India is likely to
jump 4 positions to reach the 10th position.
Figure 3: Position of India in the world pharmaceutical market as in 2005.
Source: IMS World review: analyst projection & India Pharma 2015: Unlocking the
potential of Indian pharmaceutical market, McKinsey & Co.
In 2005, India was ranked 14th in the world pharmaceutical market based on value
sales.
Figure 4: Projected position of India in the world pharmaceutical market as in
2015.
Source: IMS World review: analyst projection & & India Pharma 2015: Unlocking
the potential of Indian pharmaceutical market, McKinsey & Co.
The ranking of India among the top 14 countries will improve by 2015 due to the
faster growth of the Indian pharmaceutical industry.
The top 10 pharmaceutical companies in India (as per their retail sales) are mentioned
below.
1. Abbott
2. Sun Pharma
3. Cipla
4. Zydus Cadila
5. GSK Pharma
6. Ranbaxy
7. Mankind
8. Alkem
9. Pfizer
10. Lupin
Table 3: Top 10 pharmaceutical companies in India by retail sales
Source: AIOCD AWACS, June 2013. Among the top 10 pharmaceutical companies, 3
are MNCs & 7 are Indian pharmaceutical companies.
2.1.1 Indian and MNC players in the pharmaceutical industry
Today, in India the pharmaceutical industry is one of the fastest growing industries.
This industry was governed by product patent law till 1970 and MNCs ruled the
Indian pharmaceutical market then. When the process patent came into effect (1972-
2005), the domestic pharmaceutical industry grew rapidly and multinational
companies stagnated. The pharmaceutical industry today is valued at over Rs.
1,17,000 crore per annum (domestic sales & exports). Growing at a rate of over
twelve percent per year, India is one of the fastest growing pharmaceutical markets
worldwide.
During the 1970s (product patent regime) 75% market share of pharmaceutical
industry was held by MNCs. However with Indian pharmaceutical players gaining
strength, this market share came down to about 25% by 2005. With the product patent
regime from 2005, MNCs have renewed their interest in the Indian market, due to
good growth in Indian pharmaceutical market and also due to poor growth in world's
largest pharmaceutical markets like USA(+4%), Europe(+2-3%) etc. It is likely that
by 2020, MNCs will again capture a market share of more than 50% in the domestic
market (owing to launch of new products & mergers & acquisitions.)
Rapid growth in per capita income, availability of information about new therapies is
creating more awareness & better availability of drugs is resulting in increased
consumption of drugs. Besides the increasing population, increasing government
spending on healthcare, higher expenditure on lifestyle and increasing penetration of
health insurance will further the Indian pharmaceutical market.
2.1.2 Doctor profile and their prescription behavior
Factors responsible for doctors prescribing a pharmaceutical product are
● Quality
● Safety
● Side effect profile
● Price
● Service & information provided by the company
● Availability of the product at the chemist level
2.1.3 Global brands V/s Indian brands
Most of the products prescribed by Doctors today are original research molecules of
European or American pharmaceutical companies (though most of these products
have now lost their patent protection). Indian companies have ventured into basic
research [New Chemical Entity (NCE)] only recently & are yet to come up with any
remarkable drug discovery.
Since Doctors are well educated and well informed they are aware of this and
therefore generally prefer MNC products over Indian pharmaceutical products.
However now that Indian pharmaceutical companies too have invested heavily in R &
D9 & are exporting products to developed markets, Doctors have developed
confidence in Indian companies. But even now, global brands continue to have better
acceptance among Indian Doctors.
2.1.4 Figures & Facts about the Indian Pharmaceutical Industry
● The title of being one of the largest pharmaceutical industries in the world
belongs to India.
● By its sales volume it ranks fourth worldwide.
● The Indian Pharmaceutical Industry is estimated to be worth Rs.1,19,000
crore.
● The industry grows at a rate of twelve percent annually.
● The Indian Pharmaceutical Industry caters to approximately seventy percent of
the domestic demand for bulk drugs.
● Almost twenty percent to twenty-four percent of world-wide generic drugs are
produced by India’s pharmaceutical industry.
● The title of being one of the biggest producers of (API) the active
pharmaceutical ingredients in the international arena, belongs to India’s
pharmaceutical industry.
● India’s pharmaceutical industry possesses the technology and capacity relating
to complex drug manufacturing.
● Approximately forty percent of the total pharmaceutical produce is exported
● Fifty-five percent of the total exports are made up of formulations and forty-
five percent is made up of bulk drugs.
2.2 PREVIOUS REVIEW OF LITERATURE
To update, educate and provide samples of their drugs their companies produce,
pharmaceutical companies employ medical representatives to visit healthcare
practitioners & doctors in clinics and hospitals. Medical representatives confidently
present the drugs with assurance and the ability to answer questions on their
indications, side effects, dosage and more as they are specialists on these medicines.
It’s necessary to ask - with the knowledge that pharmaceutical firms play active roles
in marketing their products - the proportion of influence that these firms exert on
healthcare practitioners’ prescribing habits.
To conduct the review of literature for this study, journals & books, etc. were used.
Gönül et al. (2001) says that the probability of the medicine being prescribed (other
things being equal), appeared to be increased due to exposure to personal selling
related to a medicine (visits from sales representatives and samples). It also showed
that Doctors who saw a high proportion of Health Maintenance Organization or
Medicare patients were less influenced by promotion and samples or excessive
detailing failed to additionally increase sales.
Dr Rajan et al (2005) says that a name isn't all what it takes to get into the mind of a
busy doctor. Each product, old or new, needs in depth marketing. Any busy advisor
can vouch that if a specific company’s medical representative (MR) fails to show up
for over a month, he suspects the supply of the merchandise of that manufacturer.
Therefore, it is absolutely necessary for the manufacturer to ensure that MRs make
regular calls to physicians.
Dande & Srivastav (2013) say that the regularity of a medical representative’s visit
to the doctors plays an important role in influencing prescription behavior of doctors.
2.3 GAP ANALYSIS
Dr. R K Srivastava (2005) says that factors which influence Doctors prescription
pattern are
● Image of the brand
● Brand efficacy
● Brand innovation
● Side effect profile
● Price & other factors
Brand personality is what differentiates a brand.
Doctor’s prescription behavior may be influenced by CRESS model
C - Competent
R - Ruggedness
E - Excitement
S - Sincerity
S - Sophistication
This needs to be studied further
The gaps existing are in the form of:
● Qualitative Doctor specific research – Current data is available for other
customer and product categories but no specific data is available on
pharmaceutical products
● Effect of various indigenous factors affecting prescription behavior of Indian
Doctors.
3.1 OBJECTIVES
● To study the Indian doctors’ prescription behavior pattern based on whether
the product is manufactured &/or marketed by an Indian or a MNC
pharmaceutical company.
● To study impact of pricing and country of origin (COO) on Doctors
prescription behavior.
● How promotional strategies of MNC V/s Indian pharmaceutical companies
influence the Doctor.
● Role of MR & their training and its impact on effectiveness in the Doctors
clinic.
3.2 HYPOTHESIS
● Indian Doctors perceive Indian & MNC products differently when they
prescribe.
● Indian Doctors get influenced by global nature of the brand (availability under
the same brand name across the world) while prescribing
● Image of the company does not influence the Doctors but the product range of
the company affects prescription behaviour of the Doctor
3.3 METHODOLOGY
Target Population: Doctors – General practitioners & consultants
Research design:
● Descriptive Research – By checking doctor prescription pattern at the chemist
level.
● Questionnaires – By seeking answers to queries through questionnaires
whereby doctors and medical representatives were asked to reply to questions
(copy of the questionnaires is enclosed in the annexure).
● Interviews – Some of the doctors and medical representatives were also
interviewed personally for their views.
Sampling Technique: Convenience Sampling
Sample Size:
● 300 Medical Doctors from Mumbai and Pune as per details given in the table
below
No. of Doctors Selected in Mumbai No. of Doctors Selected in Pune
255 45
Table 4: No. of doctors selected for filling up questionnaires in Mumbai and
Pune
● 50 Medical Representatives
Contact method: sampling units have been personally taken by the researcher with
the help of conducting a survey of one-to-one interaction research.
Research Area : The location considered by researcher is Mumbai & Pune.
Analysis of Data
● For data analysis - SPSS method will be used.
● Primary data will be collected on source which has not been subjected to
processing or any other manipulation.
● Secondary data will involve the data that has been already collected by and
readily available from other sources.
3.4 Research instruments:
Method of data analysis:
The data is going to be collected primarily based upon the type and target section,
with the suitable statistical methods and inferences. The response set of 1 variable
data is going to be compared with another set of variables for making certain of the
detailed analysis of data.
After the respondents have filled in the questionnaires, the data will be entered into
the software and analyzed by SPSS software that will be used for analyzing the data
accurately.
IMPORTANT RESULTS & DISCUSSION
4.1 RESULTS
According to the sample survey results and analysis, it’s found that:
● The most important factor is considered to be the quality of the product when
a doctor prescribes a particular brand. Regular visits by the medical
representative are the next most important influence. Price of the product and
scientific data provided by the company are not considered a major reason for
prescribing a brand by most doctors.
● According to doctors, the company’s image and reputation is a very important
factor while deciding upon a brand they prescribe.
● Around 60% of doctors perceive products marketed by MNCs to be superior
to products marketed by Indian pharmaceutical companies.
● Doctors don’t have any specific preference between Indian and MNC brands
while prescribing a product in chronic or acute cases.
● There is no major preference while prescribing an MNC product just because
it is available under the same brand name across the globe.
● Majority of the doctors would prefer to prescribe a MNC brand over the
Indian one if both the products have everything same including the price.
● Indian doctors do not feel that quality of MNC products is very superior as
compared to the Indian products.
● Doctors do not considerer MNC brands to have better availability at retail
counters as compared to Indian brands.
● Even though many Indian pharmaceutical companies today export their
formulation to developed countries (including USA), doctors still do not
consider them MNCs.
● Medical representatives strongly feel that doctors prefer to prescribe MNC
brands over Indian brands.
● Like doctors, medical representatives to feel that quality is the most important
consideration for the doctor while prescribing the product, followed by visits
of a medical representative & price.
● Most of the Medical representatives feel that doctors feel the MNC products
are of better quality than Indian ones.
● Medical representatives feel that MNCs provide better scientific inputs on
their products to doctors.
● Majority of the medical representatives that price is a very important factor
that influences a doctor’s decision to prescribe a particular product.
4.1.1 DISCUSSION
● Indian pharmaceutical Marketeers must focus on improving the product
knowledge and communication skills of Medical Representatives to gain
competitive advantage – leading to more aid in influencing a physicians’
prescription behavior.
● It is necessary for physicians to be updated regularly on the new MNC &
Indian drugs; hence the companies need to have medical exhibitions at least
once in 3 months.
● Gifts are a factor which has failed to influence the Physicians in prescribing
the drugs. So the company must focus on trying to find a solution for it.
● The companies should focus more on the factors which influence the
prescribing behavior of the Physicians, so that it may improve the Indian
pharmaceutical company’s performance level.
● The Pharmaceutical Companies should provide samples of their drugs on a
regular basis to Physicians to make them aware about their products and also
develop a good relationship with the physicians which will increase the
company’s profits.
● The companies which are not in the top 5 rank of the physician’s mindshare
should try to improve in the areas where they are lagging behind.
5.1 CONCLUSION
The title of being one of the most competitive industries belongs to the Indian
pharmaceutical industry. With over 10,000 companies vying for the doctors’
attention, it is a very difficult choice a doctor has to make from amongst the several
brand options available for prescriptions. On an interesting note, seventy percent of
the market share is controlled by the top 250 companies.
The Indian pharmaceutical industry has evolved in a major way since independence.
Until 1970, majority of the drugs were imported from abroad. It was in 1970 that the
Indian parliament passed the patent act to develop the domestic pharmaceutical
industry to produce pharmaceuticals for the Indian people. Product patent for
pharmaceuticals was abolished by this act. This gave a big boost to domestic
pharmaceutical players and many Indian pharmaceutical companies developed
strongly over the next two decades. Many companies used reverse engineering
techniques and brought in the latest research molecules of multinational companies to
India at a fraction of the cost. This led to a huge jump in sales of Indian
pharmaceutical products and many multinational pharmaceutical companies either left
India or slowed down their Indian operations.
However in 1995, India became a signatory to the international patent law (TRIPS)
and on the 1st of January, 2005, India became a country which followed the product
patent act. This has again led to many MNCs coming back to India & MNCs which
were dormant have now become active. Numerous Indian pharmaceutical companies
today, have become multinational corporations with global operations, due to their
robust state of the art manufacturing and research & development (R&D) capabilities.
Medical representatives too feel the same way and the general perception of medical
representatives is that doctors generally prefer MNC brands over the Indian ones.
5.2 LIMITATIONS OF THE STUDY
● The small sample size of 245 doctors and 45 medical representatives is small,
considering that there are over 6 lakh doctors and around 3 lakh medical
representatives in India.
● The scope of the project was limited only to Pune and Mumbai.
● This study is based on the factors affecting a doctor’s prescription based on
the current market situation. This may change with time, technology,
development, etc.
The present study highlights the factors that influence the doctor’s prescription pattern
based on the country of origin of the product. Today a medical representative gets not
more than 2-3 minutes on an average for detailing his product range to the doctor. In
such a short time he has to communicate his story. A doctor today meets around 10
medical representatives (average) per day. It is very important therefore to understand
in detail why a doctor prescribes a particular brand. This study was carried out among
doctors and medical representatives to understand how doctors perceive MNC v/s
Indian pharmaceutical companies and how this impacts a doctor’s decision to
prescribe a particular brand.
The results of this study show that the quality of a product, the company’s image,
frequency of a visit of a medical representative are the critical issues for the doctor
while deciding to prescribe a product. However, doctors prefer prescribing a
multinational company’s brand if all the other factors remain the same.