I-pill deal shows Cipla’s strategy, Piramal’s challenges

Cipla’s undisputed ability to manoeuvre the Indian medicines market became the talking point two weeks ago as it sold its much-publicised emergency contraceptive brand I-pill to Piramal Healthcare for a princely Rs 95 crore —- over three times the actual sales of the product.

Knowing that the product came to occupy people’s minds for hardly two years at the back of very aggressive commercials on the television, Cipla’s strategy in hindsight looks impeccable.

Like in every deal where the seller justifies a transaction, Cipla said I-pill did not fit into its main objective of being in the prescriptions business. Why then did it at all enter the market for emergency contraceptive drugs a few years ago? Or did it want to cash out by creating enough value through brand visibility? The answers will be important to know if Cipla did have a plan to test the OTC business and scale up.

Piramal Healthcare has always been an anxious suitor for successful companies and brands not just in India but around the globe. It may have been a clever choice for Piramal to drive I-pill as the product has been growing at a fierce pace. Not many Indian pharmaceutical brands reached Rs 30 crore sales two years after the launch!

But the game for market dominance is far from over as Piramal will have the toughest competitor in Mankind Pharma. In a very short time, Mankind has been able to build a no less formidable brand in Unwanted 72. Unlike most Indian companies in the top-ten list, Mankind has a rural base pushed extensively by a bunch of dedicated medical representatives. To a large extent,
Mankind has posed a threat for many Indian and multinational companies that have aspirations of digging deeper into the rural markets.

So, will Piramal manage to take I-pill where Mankind is present or will Mankind take the brand battle into more urban centres? Of course, in a huge market like India, there is sufficient potential for future growth.

Questions are, however, raised on the longevity of the brand awareness created through prolific TV advertisements that are pulled off air now due to moral and ethical issues raised by non-government organisations.

To many, there are just two emergency contraceptive products in the market —- I-pill and Unwanted 72 —- but in reality there are a few other big companies like Cadila Healthcare marketing the same product but branded differently. Among the newer players joining the list is Morepen with its Option 72.

A product manager was of the view that a product’s brand value may suffer a setback if its publicity campaigns are abruptly withdrawn or other similar brands get on to the retail shelves.

Piramal may have defined its plans well for I-pill. With a
rapidly growing OTC market and a large force in the field, it
may not be too tough for the product. The big advantage that
I-pill can be purchased directly without any medical guidance will help Piramal reach out to a large number of stores that are already aware of its other products like Saridon, Lacto-calamine and the newly launched vitamins drug Supractiv.

Some might say that this advantage can turn into a problem if
smaller players start undercutting their brands. Levonorgestrel is not a very complicated process to manufacture and it is felt that a large number of new players may chip off some of the gains that their bigger peers are hoping to make. In India, the regional players are seen to be commanding more reach to the doctors while working on very cost-sensitive organisations.

Going forward, OTC drugs will be worth keeping tabs on. It is known very well that prescription products are not going to give endless profits to Indian companies as they struggle to launch differentiated products. One of the options will be to look at switchover drugs like antihistamines, multivitamins or common cough and cold brands.

The change over for Indian companies from strict prescriptions businesses to consumer products is happening slowly and decisively. More important for the Indian companies will be to build global brands that last for decades if not centuries.

Pillman is an executive closely linked to the global pharma industry.