Brand call is resonating on Pharma Street

MUMBAI: For years, several pharmaceutical companies had tried to eat into Cipla’s share of the asthma medications market. All of them barring one has failed. Cipla has dominated the segment for about 30 years now, with an over 82% market share.

In 2005, Lupin dared to enter and managed to gobble up one-tenth of the spoils. And for the first time, Cipla began feeling the heat when its market share fell to 75%.
Preetish Toraskar, Lupin’s senior general manager, sales and marketing, said the trick was in creating brands.

“We started from zero and grew our brands over 80% year-on-year,”  to arrive at the 10% plus market share,” Toraskar said.

A year ago, when Zydus Cadila was chalking out strategy to attain $1 billion in revenues, it realised that domestic sales needed to be 40% or $400 million of the target. Interlink, the consultant Zydus hired for this, suggested a focus on brands.

Zydus re-structured its drug portfolio and, after an 18-month study shortlisted eight brands to build on. These included Aten, Atorva, Lossatar and Nucoxia.

“When we were approached to grow the domestic business, we suggested that it is possible only through creating and focusing on brands,” said Raja Smarta, managing director of Interlink Consultancy.

More and more pharmaceutical companies are shifting focus to nurturing brands to grow their topline and profits. That’s a big change from a while ago, when the growth goal hinged on maximum launches.

D G Shah, managing director of Vision Consulting Group, which advises pharma firms, said since India started honouring the patents (from 2005) regime, the option of  launching new products has reduced.

:There is a shift to develop brands. The phenomenon has seen big traction this year,” said Shah, who is also the secretary-general of Indian Pharmaceutical Alliance, an association of top domestic pharmaceutical companies.

Smarta agrees. “The entry barriers were low earlier. Domestic companies’ strategy was to introduce cheaper copies of global products. If they launch early, they got the first-mover advantage. Also, the exit barriers were low. If the product did not work, they could easily scrap it,” he says.

Domestic majors have started re-structuring their portfolios since about a year and a half now. Lupin, Wockhardt, Torrent and many smaller companies too have done the same.

“Drugs such as those for lifestyle diseases — including diabetes, cardiovascular disorders and cancer — have been added to portfolios. The time now is to grow what is there in the basket. Brand creation and reaching unserved geographies are their new mantra,” said an industry analyst.

The mindset is changing because of the successes companies have had. “Zydus Cadila’s acquisition of the Aten  brand from Kopran has worked. GlaxoSmithKline’s buyout of Crocin from Duphar Interfran is part of folklore on value acquisition in the industry,” says Smarta.

Out of top 10 brands in the country, only two belong to domestic companies. “Multinationals have been creating brands because they have no choice. They have to launch products from their parent’s portfolio and build on them,” said the marketing head of a leading multinational company.

Others like Elder Pharmaceuticals, which restrained itself from launching copycats, have been successful in building business on brands.

For example, an  ORG-IMS study rates Elder’s Shelcal calcium product as India’s No. 36t pharmaceutical brand.

“We are now trying to emulate Shelcal’s success with our other brands,” said Alok Saxena, promoter and director (international) of Elder.

“We have identified 5-6 brands including Eldervit (a Rs 30 crore brand) and will be focusing on them. We will also take them abroad,” he said.

But with companies today trying to penetrate the massive rural market, can branding still work?

“Branding in rural area can be as successful as in urban geography. In rural areas, branding has worked magic for many fast-moving consumer goods companies, the automobile sector and even with cement companies. Pharma firms can replicate the story. Anacin and Vicks have been two very successful products in rural India,” Shah said.

According to him, it all comes down to the basics of how well a company has designed its communication programme.

Interlink’s Smarta said investing in branding for the rural areas will take a while.
The big chunk of sales still comes from the urbania -- as much as 80%. Then comes cities with lower population, classified as Tier III and Tier IV. Sales from the rural market are minuscule.

A senior official of a domestic pharma firm says it is also difficult to quantify sales in the rural area.

“The numbers given by research agencies are comprehensive due to the methodology they follow. They track movement of goods from stockists. In the rural areas, retailers buy drugs from cities close by, too,”  he said.