Pharmaceutical Industry: Bangladesh Perspective

The pharmaceutical industry of Bangladesh boasts a production figure that can cater to almost 97% of the internal demand of the country. The other 3% constitutes the demand for life saving drugs, vaccine and injectibles which are currently not in production within the country. This necessitates the importation of such medicines. In 2007, the size of the industry was reported to be exceeding USD 590 million. It had also been a promising industry recording a growth rate of almost 12% for the five years immediately prior to 2007. In 2008, this growth rate further accelerated to almost 15% marking the Bangladesh Pharmaceutical industry to be the fastest growing industry in the South Asian region. This is very impressive considering the fact that the country has as its competitors India, Pakistan, Vietnam and Sri Lanka. Bangladesh has made significant progress in the export market. Between 2003 and 2006 pharmaceutical export locations increased to about 61 countries from 51 and quadrupled in export value from USD 7.9 million to USD 36.5 million. This resulted in an average annual growth rate of 91.8%. This growth in the export sector can be largely credited to the low-cost factors of production that exist in Bangladesh in the form of cheap labor, infrastructure and power costs. The Bangladesh market in different in the sense that it produces drugs indiscriminately; whether they be patented drugs or off patented drugs. This kind of market is popularly known as a Branded Generic Market since any manufacturer can produce the same molecule (either patented or offpatented) and market it in different brand names. There are currently 450 generics registered in Bangladesh, out of which 117 are in the controlled category i.e. in the essential drugs list. The remaining 333 generics are in the decontrolled category. The total number of brands that are registered in Bangladesh are currently estimated to be 5,300, while the total number of various dosage forms & strengths are 8,300. The top 10 companies by sales figures and consequently market share are namely Square pharmaceuticals, Beximco, Incepta, Acme, Eskayef, Drug Int., Aristopharma, Sanofi Aventis, ACI and Renata. Square heads the pack with a sales figure of USD 106.5mn in 2007 and a market share of 18% with Beximco holding the 2nd position with about half the sales and market share of Square. The pharmaceutical industry in general requires massive investment to pay for machinery and the extensive R&D required to produce and market drugs.However, the industry in Bangladesh has

managed to escape a great portion of this cost by holding the LDC status and enjoying the TRIPS advantage. As Bangladesh is allowed to legally copy patented drugs, the firms dont have to invest in R&D for new drug development. The cost of raw materials is significant to any industry and the pharmaceutical industry is not an exception. Bangladesh currently imports more than 80% of the API requirements and some leading companies like Square and Beximco perform the synthesis of some APIs by importing the intermediaries. However, the size of the local market is too small at the moment to justify investments in API for individual firms. This is also because of the fact that specific APIs are required for specific drugs which puts the feasibility of this idea into question. The number of companies at the moment stands at 245 which is clearly too many for a market of the size that Bangladesh has. Hence, the market share for individual companies apart from the leading few stands at too little to justify the size of investments required for proper API facilities or R&D facilities for new molecules. Moreover, because the pharmaceutical industry is generic in nature, it eliminates any scope for product differentiation amongst different companies. Hence, the form of competition is primarily based on price which further divides the market shares and makes life harder for individual smaller firms. Thus, it becomes impractical to engage in R&D activities apart from some leading companies. Thus, the notion of mergers and acquisitions in the post-2016 period is seen as a realistic possibility especially as MNCs start to enter the market with their existing R&D activities. Until now, the MNCs cannot compete with local companies in this market due to some extra privileges granted them. This translates to some significant cost advantages for local companies. MNCs are required to comply with all the quality requirements set by global standards whilst local companies can compromise some qualitative measures thanks to the TRIPS advantage. Furthermore, local companies apply much more extensive marketing tactics than MNCs. MNCs do not import the patented drugs that are performing very well in other developed markets as the local companies will soon copy the drug and the MNC will lose significant price competitiveness as the local companies do not have to incorporate any R&D cost. The edge that MNCs enjoy is in the field of vaccines and injectibles which Bangladesh does not manufacture locally. Some investment opportunities that can be pointed out after assessing the market are:

Investment in Bulk Drug /API Facility Investment in R&D (for reverse-engineering of patented drugs) Investment in Plants (for certification in the developed markets) Investment in Injectibles, Insulin and Vaccine Plants Investment in R&D Outsourcing Facilities, and Contract Manufacturing Investment in Outsourced Clinical Testing (CRO Model)

In lieu of the list of opportunities above, it is fair to state that importation on API, vaccines and injectibles can be replaced by local investment in the production of these medicines. However, 2016 seems to be too short a time period to seem worthwhile for making big investments to capture TRIPS-specific advantages and as already mentioned, the local market is too small. The vaccines and injectibles section also lacks the required skill for production and distribution. Hence outsourcing is a very promising sector for the Bangladeshi industry at the moment. Bangladesh can be become a promising destination is the future namely in the post TRIPS scenario as a destination for contract manufacturing. This is due to the fact that costs happen to be much lower here mainly because of cheap labor. Many local firms have also acquired international certificates for meeting quality requirements. Hence there exists a marked potential for the country in the arena of contract manufacturing.

Current market scenario

Bangladeshi pharmaceutical companies are not allowed to do any direct promotion of their products since the regulatory policies prohibit it. The policy frame work for promotion of pharmaceutical products is guided by the Directorate of Drug Administration (DDA). DDA has a detailed Code of Pharmaceutical Marketing Practices (CRMP) regulates the promotion of pharmaceutical products and this excludes any form of direct marketing through media tools. To illustrate this, the pharmaceutical companies cannot promote their products or their company through the Television, Radio, Newspapers or any other form of printed media. The primary means of promotion for the pharmaceuticals is through personal selling and trade marketing. The

companies try to identify the Key Opinion Leaders namely the reputed doctors and convincing them to prescribe and promote the companies products. Currently there are 245 registered pharmaceutical companies in Bangladesh out of which 200 are still in operation. These 245 companies together have 5300 registered brands. The market is largely dominated by local companies and there are only 5 multi-national companies currently operating. The table below lists the top ten pharmaceutical companies in Bangladesh in terms of sales value and market share

The table above shows the different major disease classes. Topping the list is Alimentary and Metabolism class. The 1st and 2nd disease classes cover more than half the diseases in the population currently

Dynamics of Marketing of Pharmaceutical Products in Bangladesh

Since the pharmaceutical market of Bangladesh is generic, there is not much difference in the composition of different products. As a result a consumer will find several brands which will serve the same purpose. In such a situation, the primary three reasons for a consumer to have any preference towards any particular brand of drug are: Price Being a generic market, the content differentiation of different brands of same drugs is not very high. Invariably, there will be several drugs that will be able to meet the needs of a certain problem. In such a case, the price of the different brands becomes an important decision criterion for the consumer, especially in the case of over-the-counter (OTC) drugs. Physicians Opinion As in most situations, the physicians opinion is of imperative importance to any consumer. The case is not different for the Bangladeshi market. In fact, if anything, it is probably even more so. The influence of the physicians opinion probably stretches more on people who have limited medical knowledge and thus they heavily rely on the doctors opinion. Overall brand image of drug/manufacturer This element is particularly applicable for over-the-counter (OTC) drugs. The overall brand image of the drug/drug manufacturer can have significant impact on the consumers choices of purchasing drugs. The consumers might even be willing to incur a cost disadvantage to attain a trusted product. Such brand equity often provides the consumer with quality assurance.

The current marketing trend

There are different forms of marketing and promotional activities done by pharmaceutical companies. They are: Relationship building with doctors: A major part of marketing pharmaceutical products is building strong relationship with the doctors. The opinion of physicians matters a lot in terms of deciding consumer preference. Hence, the sales representatives go a long way to build strong relationships with leading doctors. Providing samples to doctors: The pharmaceutical companies promote their products indirectly by supplying physicians sample to the doctors. This process includes the companies sending sales representatives to different doctors and providing the doctors with free samples of their products. This allows the pharmaceutical companies to introduce and expose their products to the doctors. Due to the absence of any media promotion combined with the fact that the Bangladeshi market is a generics market, it is imperative to get prescription share of the leading doctors.

Providing doctors with gifts: CRMP strictly regulates the marketing tools and states that any gift given to the doctors has to benefit the end patients in some way. Any house-hold or entertainment purpose items cannot be given as gifts. These gifts act as a strong promotional tool for the pharmaceutical companies. Some examples of these gifts are pens, prescription pads, cards, etc. These gifts can also include items like refrigerators for storage of drugs in a certain clinic or hospital. The main function of these gifts is the same as of any other PR gifts to create exposure and eventually generate share of mind. The printed materials section comprise of advertisements of medicines in medical journals which are also provided to doctors as gifts from time to time. Discounts and other sales promotion: Promotional discounts are given for over the counter (OTC) products. This is the primary promotion tool used for OTCs to increase consumer demand. The price plays a very important role as mentioned above in creating consumer preference and eventually brand loyalty. Sponsoring events/conferences: Sponsoring conferences and other medical related events and activities are often done by pharmaceutical companies to improve brand image. For example, a doctor wants to host a certain event/conference; a company will volunteer to sponsor the event and thus strengthen the relationship with the doctors and also improve the overall image of the company. Innovative and other techniques: Some companies imply other innovative techniques. For example, Renata once financed cancer treatment for a doctor who in turn regularly prescribed Renatas brands.

Nature of the Distribution Chain

The distribution channel is a key aspect for a pharmaceutical company. To ensure the widespread availability of pharmaceutical products throughout the country, it is necessary to include effective and efficient channels of distribution within the marketing channels. Because the aim of most pharmaceuticals is to cover the majority of the geography of a country, the distribution process

becomes a major ground of expenditure. Hence companies should not only focus on their functioning distribution channels but also on their distribution costs as well. The circulation of pharmaceutical products is usually handled by the companies themselves, integrated in their operations; rarely do they outsource their distribution process to contractors. There are institutions however which perform outsourced distribution for other companies. The price on average that these distribution agencies charge pharmaceutical companies is 10% - 15% of sales whereas internally, this cost is generally less than 10%. An example of a distribution agency is Transcom which charges 12%. The cost of distribution for Renata, which performs the distribution themselves, is around 6%. The factors that are included in the cost determination of maintaining an efficient distribution chain are: Economies of Scale: The predominant system of circulating pharmaceutical products outside Dhaka involves the following pattern; the small town chemists place orders according to their requirements of products of a particular company. The same company later supplies the products to them according to their demands listed. But this does pose a seemingly insignificant but in reality quite a considerable problem. Quite often, as it happens, the transporting vehicle is not used to its optimum delivery amount if the order size is too small thus leading to inefficiencies. Large production volumes help to reduce this problem. Efficiency of the Staff: As we know, as equally important as the distribution channel is the quality of the sales personnel. The productivity and efficiency of these very crucial staff members is essential to the success of a company in semi urban and rural areas. The sales force generally receives adequate training but it is always difficult to maintain and monitor the required standard of people employed by the organization. Inefficiencies among the sales force leads to cost inefficiencies in the distribution chains as well.

SWOT analysis of Bangladesh ( pharmaceutical industry)

S treng th Weakness Insufficient production of raw materials
Absence of bioequivalence testing and clinical trial facilities Lack of qualified scientist to carry out Reverse engineering to produce API No connection between academic institutions and professional organization Poor knowledge of TRIPs and other related issues, Goods damage, theft and negative hassles in the 'ports, High freight cost, Inferior country image. Government restrictions: -sample and promotional materials - imported raw materials, process of duty draw back is lengthy and cumbersome, Absence of Government incentives: Cash incentives and tax exemption.( RMG sector is enjoying 50% exemption and India is providing 20% cash incentive to Pharma exporters -Export credit period should be extended.

Opportunities
Developing countries are not allowed to produce patented drugs after January 2005 No obligation to provide patent protection until 2016 under TRIPs Advantages of compulsory licensing Parallel imports and Bolar provision

Threat
Cheaper medicines from India and China Developing countries like Brazil is using compulsory licensing India has amended 1970's Patent Act as favorable as possible 97%of the medicines sold in India are offpatented Bangladesh will face tough competition after 2016

NDL favoring local

Pharmaceutical industries

Sufficient local production W cH G O n Md FP S t aD a n r dA d m fa a t n u c ug r p l i a nt n Quality medicines

'Wide range of formulation

contract manufacturing opportunities with multinational companies joint venture and toll manufacturing Highly educated and skill human resources

Nearly self sufficiency in quality API Sufficient production capacity for contract manufacturing Exporting basic chemicals to many countries Developing some other widely used APIs

Abundant and competitive labor force

Manufacture hi-tech lyophilized Anticancer drugs, Hormones, Antiretroviral CAR V), Vaccines etc.

PESTL ANALYSIS Legal

1982 Drug Ordinance only allows import of drugs which are not produced in Bangladesh Plants in Bangladesh must comply with WHO GMP standards There is a price ceiling for drugs sold in Bangladesh Promotion to final consumers is not allowed. Only promotion to physicians and drug stores allowed Exemption from WTO TRIPS agreement till 2016 allows local companies to manufacture drugs from abroad without license

Technology
Industry is one of the most developed and hi-tech in Bangladesh The most developed pharmaceutical industry among the LDCs Some plants are equipped to FDA standards Some plants are investing in hi-tech plants which can produce biological formulations R&D is expensive, and therefore virtually absent in Bangladesh The companies have started to export to foreign markets including Europe

Economy
The pharmaceutical industry in Bangladesh is worth approximately $858million The industry is growing at around 20% Bangladeshis spend only $4 out of the $450 of their per capita income on average As the Indian Rupee and Chinese Yuan is appreciating the raw materials are becoming expensive

Due to recent developments the industry Bangladeshi companies have started exporting to foreign markets including the European Markets

Pharmaceutical industry has over 12% of total market capitalization in Bangladesh

The pharmaceutical industry turnover is about 14% of the total turnover in the economy, a good indicator for investment

Social
Total Population: 150,448,339 Age Sructure: 0-14 years:-33.1% 15-64 years:- 63.4% 65 years and over:- 3.5%

Popularion Growth Rate: 2.056% Birth rate: 29.36 births/1,000 population Death rate: 8.13 deaths/1,000 population Life Expectancy at Birth: 62.46 years Infant mortality rate: total- 59.12 deaths/1,000 live births Literacy rate is.. People of low income is majority More than 50% live below poverty level

Political
The Government of Bangladesh with the help of international organizations like USAID, WHO, World Bank, ADB etc. has undertaken some strategic and futuristic approach to ensure primary health care for all. Some of them are Developing a more balanced perspective on the strengths and weaknesses of the government and NGOs in service delivery.

Moving beyond traditional gender roles in service provision and supervision. Identifying high-quality community-based primary health care programs and providing support for training and operations research. Improving the training of service providers. Reforming the governments health and family planning services and reassessing the governments future role. Strengthening the quality of care provided by local private practitioners Increasing local-level authority and accountability for the provision of health and family planning services.

Monitoring and Evaluating Local Health and Family Planning Services at the Local, Regional and National Levels Empowering Local People for Their own Social Development.

The Key Points about Bangladeshi pharmaceutical industry environment:

So, from the over scenario and the PESTL analysis, we can figure out the following findings:

Bangladesh pharmaceutical industry is the largest (in volume) among the LDCs with a market size of USD 600 million and an average annual growth rate of 12%. The industry is primarily a generic one. There are about 8,000 different brands which meet 97% of the domestic demand. The local companies have 86% share of the market. Out of 245 registered companies the top ten companies account for almost 70% of the total market. The LDCs are exempted from Patent Protection according to the WTO TRIPS policy. this agreement allows legal reverse engineering and sale of patented product until 2016.This gives the local pharmaceutical industry an advantage over India and China who do not come under the exemption agreement.

 After entering the global market Bangladesh pharmaceutical industry has made great progress in export. Between 2003 and 2006 pharmaceutical exports increased to about 61 countries from 51 and quadrupled in value from USD 7.9 million to USD 36.5 million. Many Bangladeshi companies have acquired international certifications like USFDA, UKMHRA and TGA, This allows them to penetrate regulated and unregulated markets. Bangladesh is in a position to emerge as one of the regional R&D centers for Pharmaceutical Research as reverse engineering has ended in China and India. There is an opportunity to emulate the Contract Research and Manufacturing Services (CRAMS) model of India. Currently 80% of the APIs are imported from abroad. But with the establishment of adequate reverse engineering and API manufacturing facilities the local demand for raw materials can be met without import. Bangladesh can provide a strong platform for off-shoring/outsourcing generic bulk and formulation drugs due to a cheap labor force and established infrastructure. With more and more western companies looking to cut cost in their manufacture of bulk drugs as they focus more on the high-cost patented drugs, Bangladesh can present itself as an attractive destination for off-shoring. With the establishment of modern technical facilities, the industry can emerge as a regional hub for pre-clinical testing and clinical trials. The Contract Research Organization (CRO) model success of India can act as a template to emulate as subject cost will be very low in Bangladesh compared to that of Western countries. There is an opportunity for substituting import of vaccines and injectables through manufacturing it locally. Many local entrepreneurs are now looking to expand their operations beyond the country borders. Some are looking to emulate the buying of distressed companies in the west to gain immediate market access exemplified by the success of Indian powerhouses like Ranbaxy and. Some are also venturing into newer horizons like biotechnological drugs.

About the company and the project Abdul Monem Ltd is one of the biggest conglomerates in Bangladesh with turnover of over Tk. 400 crores. They started business some forty years ago and initially were involved in the roads and highways construction industry only. At the moment they are the biggest roads and highways contractor in the private sector in Bangladesh. Over the years they have ventured into different sectors in Bangladesh including beverage sector (Coca Cola), ice cream (IGLOO), sugar refinery, power, securities etc. and have been very successful in most of them. The core value of AML is trust. Few years ago the senior management in Abdul Monem Ltd thought about starting a business through which they would be able to interact with and help the general mass directly. To this end they thought of coming into the pharmaceutical industry. Abdul Monem Ltd acquired a 36 acre land in Manikganj to build their own plant and produce medicine initially for the local market and for export in the long run. The plant to be built would be GMP compliant and would have all the certifications required to export to the US and Europe. The company would be named AM Pharma. Till date the plans for the construction of the plant are all in place. But before going through with their plan, Abdul Monem Ltd acquired an already existing pharmaceutical company, Novus Pharma, which shut down after only a few years of operation. AML wanted to run Novus Pharma as a pilot project to see how it would do in the pharmaceutical industry. The operations of Novus Pharma will be restarted in May 2009. The management at

AML is not concerned about why Novus Pharma failed; their only concern is how to make it successful under their management. In the beginning Novus Pharma will have a very small budget of about Tk. 25 crores including new machinery. The company hopes to reach breakeven between three to five years of operations. It will start of by selling a portfolio of 24 drugs, of which about 10-12 would be over the counter drugs, while the rest will be prescription drugs. The company hopes that the brand of IGLOO and Coca Cola will help people be more familiar with AM Pharma. The drugs will be marketed at the national level, but initially more focus will be placed on the rural market. Marketing will be done by 120 medical representatives who will be given extensive training and education regarding the drugs they were going to promote. According to the management of AML, the main competitors of Novus Pharma are small pharmaceutical companies who have started business in the last five to ten years and have a similar budget structure. Novus Pharma will only be the first part of the project. The second part of the project, AM Pharma, with its larger and entirely new plant will start operations later. The strategies to be followed by AM Pharma will be developed from the operations and overall performance of Novus Pharma. AML has been doing business for almost four decades. The management of Abdul Monem Ltd does not look at AM Pharma only as a business unit, but also as part of their CSR. Through their efforts, AML wants to look after the people whom they have served for the last four decades.

The shift in the pharmaceutical business taking TRIPS into count:

After 2015,Bangladesh is not going to get the advantage of TRIPS policy. renowned MNCs are preparing to enter the market to avail the advantage of low cost of manufacturing. Then, it will be very tough even for the biggest local pharmaceutical companies to compete with them in the local market due to the MNCs brand image, advantage of scale of economies, efficient machineries, huge affordability for RnD etc. so, the big players of the industry who have the standard factory, larger investment and ability to manufacture world class pharmaceutical products are planning to shift to new type of business other than fighting with the MNCs who will enter in a full-fledged way just after 2015. Already companies like Square, Beximco, Eskeyf are trying to get more and more international certifications to avail the new opportunities to work as contract manufacturer or as RnD out sourcing agents.

For the small companies, it will be almost impossible to fight against the MNCs with new molecules due to big RnD constraints, costly factories etc. so one of the options for them is to find strong niche and operate there to make profit considering the fact of cutting cost. The new shift of the pharmaceutical business taking the after 2015 period into consideration are as follows:

Toll Manufacturing
Bangladesh Pharmaceutical Industry is very self-sufficient and can easily cater to the health care needs of the country. Some of the leading pharmaceutical companies of Bangladesh have made multimillion dollar investments on new plants and facilities according to USFDA standards. They have sufficient production capacity for toll manufacturing. Since Bangladesh has abundant and cheap labor force, the cost of contract manufacturing would be highly favourable compared to any other countries of the world. Toll manufacturing has gained popularity in the industry. Some leading pharmaceutical companies like Square, Eskayef, Popular and Incepta Pharmaceuticals Ltd. have recognized its potential. All these companies are taking initiatives to increase their exports and take optimum advantage of the pre 2016 period.

Joint Venture
Although Bangladesh pharmaceutical industry is self-sufficient in drug formulation meeting 97% of the countrys demand, it still depends heavily on import of raw materials. Around 80% of total Active Pharmaceutical Ingredients (API) need is fulfilled through import. So Bangladesh has a market for manufacturing APIs and meeting local needs. Under TRIPS agreement Bangladesh will enjoy manufacturing patented drugs rights until 2016. Since most of the countries of the world are

not be able to manufacture patented drugs since 2005, there exists an excellent opportunity for foreign investors in bulk drug manufacturing in Bangladesh. Bangladesh will be an excellent destination for global pharmaceuticals companies to form JVs with local companies for contract manufacture and also to relocate R&D set-ups for reverse engineering for patent expired drugs especially in the light of the patent exemption expiry of countries like Brazil, India and China. Also, since India and China have very good expertise in API and formulation R&D, they may like to manufacture the APIs outside their countries as they cannot manufacture these patented APIs in their countries after 2004. Because of cost advantage, large pharmaceutical companies of highly regulated markets are now opting for joint venture projects. There are several potential contracts with companies of India and China. There are good opportunities for Bangladesh to go for manufacturing pharmaceutical finished products in joint venture with these large global companies. Investment in RnD (for reverse engineering of patented drugs) In India & China, all the Universities are involved in pharmaceutical R&D. In Bangladesh, there is no such R&D facility. But in order to take full advantage of the Post-2005 Opportunities, the country has to invest in R&D for reverse-engineering of patented drugs. Investment in such an R&D facility would also enable the country to develop its own molecules /drugs once the patent exemption period is over (after 2016). The investment requirement for R&D (for reverseengineering of patented drugs) would be around USD 2.9 million. Investment in Outsourced Clinical Testing Clinical drug and laboratory testing is another area where Bangladesh can prove to be a favorable outsourcing destinations for many foreign companies. The factors that make Bangladesh attractive are low skilled labor costs, subsidized power, strong manufacturing base etc. The quality of the drug testing laboratories at the moment does not meet the extreme international standards. Hence investment is required in order to establish state-of-the-art testing facilities which have huge potentials of attracting much outsourced clinical testing projects worldwide. Investment in RnD outsourcing facitities and contract manufacturing

Bangladesh has an advantage as a location for possible outsourced R&D due to low skilled labor costs and other factors such as subsidized power, Even if Bangladesh is not perceived to have the expertise to carry out sophisticated R&D, certain steps of the process can be outsourced. Bangladesh might collaborate with global players and perform outsourced R&D activities for them. Considering the large number of medium and small sized pharmaceutical firms in Bangladesh requiring funds to setup production units for specific drugs, a potential investment opportunity lies in establishing such plants. Bangladesh could become a contract manufacturing venue for global players. The toll manufacturing industry in India was worth USD 350 million in 2007. Investment in Injectable, Insulin and Vaccine plants Bangladesh also has an opportunity to invest in Injectable plants, which is a highly profitable sector. As the country is fully import based in Insulin and Vaccines, investment in this sector will provide import substitution and thus cost reduction as well. The investment requirements for Injectable, Insulin and Vaccine Plants would be around USD 14.5 million each. Investment in Plants (for certification in the developed markets) There are very good export opportunities for Bangladesh pharmaceutical industry in the developed & regulated markets in the form of
i) ii) Contract /Toll Manufacturing and Under-License Manufacturing.

But in order to capitalize these export opportunities, the pharmaceutical manufacturers of Bangladesh need to upgrade their manufacturing plants and apply for certification (GMP, USFDA, UKMHRA, TGA etc) in the regulated markets. The investment requirement for such an Oral Solid Dosage (OSD) Facility with a Capacity of 2 Billion Tablets would be around USD 29 million. It should be noted that between 2003 and 2006, pharmaceutical exports has increased to about 61 countries from 51 and the volume has more than quadrupled from USD 7.9mn to USD 36.5mn.

So, AML can increase their investment and create competitiveness and effectiveness for the above alternatives as we recommend them to do so. But since the company is not going to invest in a large scale and rather willing to operate in the local market creating own niche, we are focusing to find
Effective niche Suitable product line Creating blue ocean through exclusive positioning in the local market Cost cutting strategies to earn profitability

An overview of raw materials, product, place, plant and process:

Capacity of the Plant Proposed Plant Capacity in year 1 based on one shift operation, 297 working days and equipments to be procured in first phase.

Non Penicillin Solid-Liquid

SI 1 2 3 4 5 6 7 8 9 Cephalosporin SL 1 2 3 4 5 6

Activity/Area Granulation Compression Encapsulation Tablet Coating Powder Fill Blister Packing Tube Fill & Seal Liquid Fill Liquid Manufacturing

Output/year 61.2 MT 200 MT 62 MT 100 MT 1.3 MT 27 MT 0.23 MT 1.8 MT 72 ML

Activity/Area Dry blending Compression Encapsulation Tablet coating Powder fill Blister packing

Output/year 50 MT 18 MT 8 MT 6 MT 1.3 MT 3.3 MB

Raw Materials
Most of the raw materials of the project will be imported from india, China, Italy, France etc. Few raw materials, which are produced in Bangladesh, will also be used.

Novel Drug Delivery System Novus wishes to play in all segments of pharmaceuticals field in order to be a major player in the industry. It has a wide range of products from almost all therapeutic categories and of various dosage forms including Novel drug Delivery System (NODS). This will help Novus achieving a major market share with good sales revenue and profit.

Tablet Oral liquid Liquid SVP-ampoule Capsule

SVP-vial LVP Prefilled Syringe Ointment Sachet Inhalers Ophthalmic

Research & Development

The R & D laboratory of Novus will be equipped with the most modern and sophisticated machineries and equipments which will help its scientists to develop products of international standard. Our R & D Department focuses on:

Formulation Development Formulation Improvement Process Improvement Accelerated stability study & shelf life prediction In-vitro bioavailability compliance Process simplification Method development & validation

Factory Profile

The factory facilities of Novus is a modest one with 4 dedicated buildings. It is on 4 big has of land. There are oral solid as well as oral liquid buildings. There are dedicated Cephalosporin facilities with separate man material entry and exit according to GMP guide lines. The existing facilities are as follows which can be increased by several folds with appropriate BMRE. Total Factory area Factory space covered area Dedicated Buildings Capacity (per Annum): Tabletting Capsulling Powder Filling : : : 300 millions tablets 60 million capsules 2.4 million bottels : : : 57,164 sft 15000 sft 4 (Four)

Sachet Ointment Filling Oral Liquid

: 3 Million Pieces : 3 Million Pieces : 3 Million Pieces

Business Line

Novus Pharma is engaged in Manufacturing and marketing of life saving formulation drugs from various therapeutic classes. Based in Bangladesh its marketing operation spans all over the world. It also offers contract manufacturing services along with formulation development, analytical method development, validation etc.

Product Mix The product mix is consisted of two wings of line.

1. Pharmaceutical drugs 2. Non-medicine products

Novus Pharmaceutical offers formulation products from the following therapeutic classes for local as well as global marketing.

Anti-Retroviral Anti-malarial Cancer Adjuvant Cardiovascular Anti-ulcerant NSAIDs

Anti-asthma Anti-psychotic Lipid Lowering Gastrointestinal Antibiotic Antifungal

Vitamins and Minerals Immunosuppressant

Anti-diabetic

Also some non-medicine products like

Oral care products viz. toothpaste, toothache relief powder and liquids, mouth wash, mouth spray etc.

Location of the Project The location of the project is at Tetuljhora, Rajfulbaria, Savar, Dhaka. The Plant is situa ed beside Dhaka-Aricha Road and have good communication by roads. Power, Gas and water etc. are easily available in the site. The location is very much suitable for production and distribution of pharmaceutical products. The area of the project is about 4 bighas. Production Process

The processes to be adopted for manufacturing are Dispensing, Granulation, Compression, Encapsulation, Coating, Filling and Packaging.

New Market Entrants

Entry barriers very low for the local companies, industry growth good, Drug rule of 1982 discourages the MNC to dominate. And as a common consequence new entrants are coming. Geographical factors: very important factor for a new entrant. For example, a new small range investment pharmaceutical cannot be very successful if they target urban area to challenge the existing brands of the market leaders, the company is not likely to succeed. Because, here the selling is mainly done by pulling through the prescriptions prescribed by the doctors. On the other hand, they can push their products in a rural or semi rural area more easily by sales and promotional strategies. Incumbents resistance There are already 5 to 6 established market leaders and number of companies in this industry is not a small one, to be specific , it is around 210. The company ranges from large investment to low investment and also the mergers. So a new entrant will face fierce competition from them, and hence it will be harder for the new entrant to get an established foothold in the market until and unless they dont find and manage their own niche.

A threat for a new entrant is whatever existing product they come up with, it will find out that the product is included in the large companies product line. That means, by huge line of product, the large and strong companies automatically resist the new entrants mainly in those markets where they are dominant. The existing incumbents appoint huge medical representative force to visit the doctors very frequently which makes very tough for a new comer to enter those market and challenge incumbents products. Another thing is, branding is gradually becoming a strong factor in this industry and the large companies are giving efforts on it. So it might be tough for the new entrant to beat this issue. New entrant strategy: if the new comer is a large-investment one then it is likely to sell almost the same products launched by the market leaders with some different new products. This type of companies establish their factories with a very standard quality keeping export as an important option in their mind.( according to Square and ACI) If the new comer is a medium or small size one, then it is more likely to serve its own niche which is commonly a semi rural or semi urban market. ( according to General pharma, Radiant pharma and ADRUC pharma)

Supplier Power
Brand reputation AML is well reputed and has a better brand reputation. Not only that, AML is a well established business company and hence suppliers are likely to prefer to work with AML because they perceive that having a better brand reputation will mean providing better services and quality products. Geographical coverage 6 to 7 depots to cover the target regions. Suppliers- Most of the raw materials of the project will be imported from india, China, Italy, France etc. Few
raw materials, which are produced in Bangladesh, will also be used

Product/Technology development:
Buyer propensity to substitute: generally very low until and unless they are forced by the sellers to buy the substitute. Willingly very low number of customers prefer substitute because they are more product sensitive than price sensitive. But in rural areas, still there are many customers who easily get influenced by the sellers. Pricing of product: the consumers are less price sensitive. Under the Drug (Control) Ordinance government fixes the maximum retail prices (MRP) of 117 essential drug chemical substances. Drugs other than these essential ones are priced through a system of indicative prices. Over all the prices are standardized. Physical distribution: Physical distribution of pharmaceuticals in Bangladesh has evolved in a unique way. Unlike other countries Bangladesh pharmaceutical industry is more retail oriented and bulk of distribution is done by the companies themselves. Pharmaceutical companies distribute their products from their own warehouses located in different parts of the country, as no professional distribution house is available. Wholesalers play a limited role in this regard since companies supply goods to both retailers and wholesalers Legislative effects the government's drug testing laboratories (DTL) and the Directorate of Drug Administration (DDA) have the monitoring and supervising role. There are two government drug

testing laboratories. DTL at Dhaka is in the Institute of Public Health and the regional DTL at Chittagong is under DDA. Not only that, MRP is fixed by the government.

Buyer Power:
Buyer choice In this case, actual consumers choice is not a factor. In our strategy, we recommend AML to launch such products which to some extent associated with buyer choice. It is discussed in the strategy part. The bargaining power of customers: very low ( price is standardized) Buyer price sensitivity: very low in urban area and low in rural area. Overall not price sensitive. Degree of dependency upon existing channels of distribution- High as the channels are very specific and basically only one channel. That is being prescribed by the doctors the go to medicine stores. So doctors play the major role here though a very small portion of OTC in urban area and many other products in rural are sold mainly through the influence of the sellers. Buyer information availability: almost same for all companies Buyers size/number - The number of buyers is pretty huge, because every individual can be the buyer. But the company will target such market which is half of the population. Product/service importance the products are very much important to the buyers and they try to get these anyway. The ones prescribed by the doctors are the most preferred. Volumes, JIT scheduling: it is very important to maintain a regular shelf space for this products to be sold and the expiry date of the products are strictly followed. If customers do not find the product in shelf it might shift to substitute (chances are low for most of the products in urban areas). So, regular monitoring of inventory is very important and so is forecasting. Forecasting is partly done by the pharmacists too.

Competitive Rivalry:
Number and size of firms - 210 licensed firms. 6 to 7 are big players. Most of the market share is taken these companies. Industry size and trends The industry itself is pretty big( 5000 core tk.) and growing very well (growth rate increasing and it is 18-19% for last 5 years) price competition : Under the Drug (Control) Ordinance government fixes the maximum retail prices (MRP) of 117 essential drug chemical substances. Drugs other than these essential ones are priced through a system of indicative prices. This rule applies on the locally manufactured products only. For imported finished products, a fixed percentage of markup is applied on the C&F price to arrive at the MRP, regardless of whether they are within the list of essential 117 molecules or not. It is interesting to note that, even with withdrawal of price control from many products, prices have not shot up; healthy competition has been keeping the prices within affordable levels. Product ranges : a large investment company on an average holds a product line of 300 to 400 products while a medium one holds 100 to 150 and a small or new one is likely to hole a line of 20 to 30 products. differentiation & strategy : the large companies infact differentiates less but approaches more to their target doctors with higher quality and more number of products. So automatically

differentiation becomes the main strategic part of the small and new companies. They differentiate their market and also launch new products. These factors contribute to the competitive rivalry. Healthy growth is likely to encourage the pharmaceutical companies to introduce newer drugs and newer research products, while at the same time maintaining a healthy competitiveness in respect of the most essential drugs.

Entry Hard
A capital intensive industry requiring huge fixed costs in machinery and extensive R&D
Government policy makes it hard for the MNCs to enter the market.

Suppliers Strong
Currently API are imported. Too small size of the most of the players makes it unattractive for investment in API production.

Rivalry Intense
About 245 firms operate with only 5 MNCs. Top 10 players hold about 64% of the total market. Square and Beximco together holds 25% market

Buyer Strong
Due to restriction on direct promotion of drugs cos have to market through key opinion leader i.e. the doctors by inducing them to suggest a particular drug. This often results in unfair practice.

Substitute High
The 245 companies have 5,300 brands many firms offering similar products and services because of the absence of patent protection. Cost of switching is relatively low.

SWOT Analysis
Strengths: AML
Factors Product Quality Wei ghts 0.15 Raw 3.5 Weigh ted 0.525

ADRUC
Raw 3 Weigh ted 0.45

Radiant
Raw 5 Weigh ted 0.75

General
Raw 4 Weight ed 0.60

Distribution Channels and better geographic knowledge about different regions of Bangladesh Scope of Promotion Medical Representatives(in terms of no, skill, coverage) Pricing Packaging Process Physical Evidence (environment inside organization & in drug store Management Brand reputation Product Lines and Width Standard Factory with Latest Equipment Total (out of 5)

0.10 0.10 0.10 0.05 0.15 0.10 0.05 0.05 0.05 0.10 1.0

3.5 4 3 3 4 3.5 3 2.5 2.5 3

0.35 0.40 0.30 0.15 0.60 0.35 0.15 0.125 0.125 0.30 3.375

3 3.5 3 3 3 2.5 2 1.5 2 2.5

0.30 0.35 0.30 0.15 0.45 0.25 0.10 0.075 0.10 0.25 2.775

4 4 3.5 3 3.5 3.5 3 4 3 4

0.40 0.40 0.35 0.15 0.525 0.35 0.15 0.20 0.15 0.40 3.825

3 4 3.5 3 3 3 3.5 3 3.5 4

0.30 0.40 0.35 0.15 0.45 0.30 0.175 0.15 0.175 0.40 3.45

Weakness: AML
Factors Scale of Production Market Share Low number of depot Wei ghts 0.25 0.25 0.15 Raw 3 3.5 3 Weigh ted 0.75 0.875 0.45

ADRUC
Raw 3 3 3 Weigh ted 0.75 0.75 0.45

Radiant
Raw 2 3 1.5 Weigh ted 0.5 0.75 0.225

General
Raw 2 3 3 Weigh ted 0.50 0.75 0.45

Very limited product line Financing Accessibility in the rural market Total (out of 5)

0.15 0.10 0.10 1.0

2.5 2.5 2

0.375 0.25 0.2 2.9

3 4 2

0.45 0.40 0.2 3.0

1.5 1.5 2

0.225 0.15 0.2 2.25

3 2 3

0.45 0.20 0.30 2.65

Opportunities: AML
Factors WTO TRIPS Policy Export Less approached rural market Government is supportive to local companies Contract manufacturing with international clients Market Growth Brand Image of the company Products through which the company can brand Total (out of 5) Wei ghts 0.10 0.10 0.20 0.15 0.05 0.20 0.10 0.10 1.0 Raw 3 2 3.5 3 3 3.5 3.5 3.5 Weigh ted 0.30 0.20 0.70 0.45 0.15 0.70 0.35 0.35 3.20

ADRUC
Raw 3 1.5 2 3 3 3 2.5 2.5 Weigh ted 0.30 0.15 0.40 0.45 0.15 0.60 0.25 0.25 2.55

Radiant
Raw 3 4 2.5 3 3.5 4 4 3 Weigh ted 0.30 0.40 0.50 0.45 0.175 0.80 0.40 0.30 3.325

General
Raw 3 4 3.5 3 3 4 4 4 Weigh ted 0.30 0.40 0.70 0.45 0.15 0.80 0.40 0.40 3.60

Threats: AML
Factors Major market share occupied by few large co. making industry tough to penetrate Increasing competition Wei ghts 0.15 0.20 Raw 4 3 Weigh ted 0.60 0.6

ADRUC
Raw 4 3.5 Weigh ted 0.6 0.7

Radiant
Raw 3 2.5 Weigh ted 0.45 0.5

General
Raw 3 2.5 Weigh ted 0.45 0.5

Price hike of raw materials Incumbents resistance WTO trips policy after 2016 Buyers current brand preference Total (out of 5)

0.10 0.20 0.15 0.20 1.0

3.5 3 3.5 2.5

0.35 0.60 0.525 0.50 3.175

3 2 3 4

0.3 0.4 0.45 0.8 3.25

2.5 2.5 3 1

0.25 0.50 0.45 0.20 2.35

3 2 3 3

0.3 0.4 0.45 0.60 2.7

Reasons for selection:

Strengths: AML can give free samples to doctors and some sort of sales promotion to the pharmacies. Besides, they can display the advertisements of their drugs in the pharmacies and in medical journals to create awareness among the general people. They can give gift tokens like pen, writing pads etc to the doctors. They can provide training. AML can send their medical representatives to the doctors and pharmacies to let them know about AMLs drugs. It is part of personal selling. Pricing is not a huge strength since there is a standard pricing for drugs (government has price floors and ceilings)

 AML can cut costs on packaging. Packaging is of three types Primary, secondary and tertiary. Primary packaging is to preserve the product itself. Secondary packaging is for promoting and keeping the shape of the product while transportation. This increases packaging efficiency. Tertiary packaging is for protection and shipment of the product. Physical evidence includes the environment of the organization, drug stores and even the shelves where the drugs are kept. Weakness: Narrow product line is less able to cater to the needs of large number of customers The company is less likely to reach economies of scale Smaller product line means AML will have less ability to compete (in case of smaller line, they should identify a niche or have a specialized product). Any change in law and regulations can decrease sales of their SBU, unlike companies with large product line who can adjust it with other products. Opportunities: Pharmaceuticals market is a generic market; the potential for patented products is very limited Bangladesh is best suited to high volume low cost low priced products. With the gradual withdrawal of government funding in family planning products and reduction of subsidies by USAID to the Social Marketing segment, the scope for the private sector in the contraception segment is brighter now than at any time in past

Threats:
Price Hike of Raw materials. Recently few new industries have been established with hi tech equipments and professionals Patent Law, which is valid up to 2016 for Least Developed Countries like Bangladesh. Lack of Hi tech Quality control Laboratory, establishment of API Park by the Govt, necessary action for Process Loss of API by the Govt. After 2016 the advantage enjoyed by Bangladesh will evaporate.

GE Matrix
Business Strength:

Factors Product Quality Distribution Channels and better geographic knowledge about different regions of Bangladesh Scope of Promotion Medical Representatives (in terms of no, skill, coverage) Pricing Packaging process Physical Evidence (environment inside organization and in drug store Management Brand reputation Product Lines and Width Standard Factory with Latest Equipment Total (out of 5)

Weights 0.15 0.10 0.10 0.10 0.05 0.15 0.10 0.05 0.05 0.05 0.10 1.0

Rating 3.5 3.5 4 3 3 4 3.5 3 2.5 2.5 3

Value 0.525 0.35 0.40 0.30 0.15 0.60 0.35 0.15 0.125 0.125 0.30 3.375

Market Attractiveness:
Factors WTO TRIPS Policy Export Less approached rural market Government is supportive to local companies Contract manufacturing with international clients Market Growth Brand Image of the company Products through which the company can brand Weights 0.10 0.10 0.20 0.15 0.05 0.20 0.10 0.10 Rating 3 2 3.5 3 3 3.5 3.5 3.5 Value 0.30 0.20 0.70 0.45 0.15 0.70 0.35 0.35

Total (out of 5)

1.0

3.20

Business Strength 5.00 Strong Medium Weak

*Selectivity/Manage
for Earnings

Fig:

Strong
3.67

Market Attractiveness

Medium Weak

3.20

2.33

1.00 5.00

3.67

3.375

1.00 2.33

Classification of GE Model

From the GE model, it is shown that: Business Strength is 3.375 out of 5. Market Attractiveness is 3.20 out of 5. Therefore, the suggested strategy for AML should be to become selective and manage for earnings. So the strategies be : 1. Manage to protect the existing program 2. Focus on segments where profitability is higher and risk is comparatively low So, from the above analysis we see that, the company should find and target segments profitable and they should also take less riskier project. In this case, they can arrange their product line taking products from the existing line and selecting only those which are projected to be profitable. So we recommend the company to take the following product line as we saw these were profitable previously and has demand in the existing market.

ADL MATRIX (Novus Pharmaceutical)

Embryonic Dominant Strong Favorable Tenable Weak

Growth

Mature

Aging

INDUSTRY LIFE CYCLE STAGE

Find niche and protect it

COMPETITIVE POSITION

The pharmaceutical industry is in its growth stage (18-19% now) and AML will enter the market to place them in a tenable competitive position. So, the company should find a particular niche for this product and protect it. Here we recommend the company to operate in such a niche in which they can position themselves as unique and after 2016, they can make profit from this niche. Because, after 2016, it will be almost impossible for a pharmaceutical with small size investment to operate without finding a particular niche

Creating niche and type of product line:

AML has a small size of investment and having the post 2015 scenario in mind, they will have to operate in the local market finding a strong niche. Here the possible niche market can be of tow type. 1. Local generic drug business ( less saturated segment like rural market) 2. Creating niche through creating unique positioning like providing exclusive oral care or herbal care of all categories. So, the product line of AML will be containing products of two types. 1. Medicines existed in the previous product line which have existing demand. The detail of this kind of product is given in the company profile.

2. Positioning differently by the products through which the company can promote through advertisements. Suggested products for this kind can beOral care products: toothpaste, mouth wash, mouth spray, toothache relief powder or drops etc.

Segmentation Segmentation is dividing the market by identifying distinct groups of buyers who might require varying product or service mixes. Usually the market is segmented using Demographic, Geographic, Psychographic and Behavioral differences between buyers. Not all kinds of segmentation can be relevant for all companies. Segmentation should be on the basis of certain criteria. Segments should be Measurable, Substantial, Accessible, Differentiable and Actionable. The Abdul Monem Pharmaceutical Company is yet to come into operation. As a pharmaceutical it will focus on Geographic and Demographic segmentation. Since AML has two different type of products in the product line ( medicine and non-medicine), the segmentation will be different. Segmentation for medicine products For the Abdul Monem Pharmaceutical Company, the following segmentations will be effective for medicine products in order to identify target segments. 1. Geographic Segmentation Geographic segmentation calls for dividing the market into different geographical units. It is not unnatural to imagine at first glance that this kind of segmentation should have no immediately understandable influence on a pharmaceutical company as the need for medicines and the illnesses that warrant them are more or less the same everywhere. However, if we delve deeper then it will be clear that geographical segmentation is warranted here to measure accessibility to a geographical location. In this light Bangladesh can be classified into two types of geographic regions. They are

Easily Accessible Regions: These are metropolitan and urban regions with established road transportation frameworks. The company may also have establishments in the regions hence they are Easily Accessible Regions.

Remote Regions: These are remote areas which are not quite so easily accessible. Normally the rural regions of our country without a proper land transportation

framework or establishments of pharmaceutical companies can be classified as Remote Regions.

2. Demographic Segmentation In demographic segmentation, the market is divided into groups of people on the basis of certain variables such as age, gender, occupation and income. By occupation, the segmentation would be as follows

Physicians: Physicians treat the ill and promote certain brand names through their prescribed medicine. They are the key variable in the creation of brand image in the pharmaceutical industry.

Pharmacists: People who run pharmacies and allow shelf space to different pharmaceutical products. They often recommend certain pharmaceutical brands themselves. They invariably conduct push sales to customers and are hence very important in reaching end consumers.

In the future, the role of pharmacists may not be ignorable because as long as the market is becoming more and more generic, the pharmacists are gaining some sort of advantage to suggest or push a specific brand to the customer. At present, in many cases, the pharmacists pushes some OTC drugs as they are getting more incentives for selling those products.

General People: People are driven and influenced by mainly doctors and pharmacist recommendations. They are also motivated to opt for products of a certain company due to the brand image or perception of a pharmaceutical company in the mind of the consumer.

Targeting The process of identifying market segments with the most potential and proposing a value offering is known as targeting. The groups or segments intended to attract are called target markets. In the previous pages, we have discussed various segmentation methods which might be relevant for pharmaceutical companies. In light of this printed discussion, we have identified the segments with the most potential and have dubbed them our target markets. These segments and the reasons behind choosing them are discussed at length below: a) Remote Regions: Remote areas are a prime target group for the newly established Abdul Monem Pharmaceutical Company. The target here would be doctors and pharmacists. The remote regions have been chosen as our target for the following reasons. 1. Abdul Monem Pharmaceutical Company is a concern of Igloo which is the leading ice cream brand in the company with a structured and efficient distribution channel across the country. They can use this distribution channel to reach the targeted doctors and pharmacists. 2. Because of geographical barriers and nonexistent road transportation frameworks, many established brands do not operate in remote areas. Since this company can easily reach pharmacies there, shelf space will be reactively easy to acquire. The widespread availability of the products along with the absence of certain brands will help to establish the brand name in the minds of the target market.

b) Doctors: Doctors will be a crucial target segment for the company for the following reasons. 1. Doctors are the key to capturing the pharmaceutical industry. The demand of brands depends on doctor recommendations and prescriptions. The pharmaceutical should seek to attract and impress doctors through creation of awareness of this new company and promotional campaigns.

2. AM Pharmaceutical Limited will also aspire to produce a few obscure medications in the country. Since doctors can promote these latest medications to the population, they are the most important target segment of all. 3. AML will be initially looking for focusing 1000 to 1500 doctors most of whom are well informed about the company and its reputation and build strong relationship with them and thus expand the channel. c) Pharmacists: Pharmacists are another important target segment because of the following reasons. Because the market is becoming more and more generic and the role of pharmacists is not ignorable. 1. Pharmacists control shelf space and hence control the distribution of the companys products to the mass population. Pharmacists have to be motivated through promotional campaigns and other benefits to allow shelf space to the companys products. 2. Pharmacists often use the push strategy to sell the products of a new company to final consumers. Hence pharmacists have to be convinced to promote the medicines of AM Pharmaceutical Limited. This is an effective strategy to create brand recognition and brand preference for the Abdul Monem Pharmaceutical Company.

Segmentation For non medicine products, This segmentation is a bit different from the medicines of AML. The company is focusing of oral care as non- medicine consumer products. Their segmentation is geographic and also demographic. Geographic: the oral care products basically consumer goods and AML will be segmenting its market in the following category 1. Urban

2. Semi urban 3. rural DemographicAML has oral products which are different for different age and gender . For example, mouth wash with different flavor preferred by different gender, toothache solution sensitive for different age, tooth paste for the whole family but of different size and price for people of different range of income. So the segments here are1. Based on gender- mouth wash and spray of different flavor 2. Based on age-Toothache solution- for 5-10 yrs and above 10yrs 3. Based on income-Toothpaste of different size- mini pack (for bottom of the pyramid) and family pack Targeting: For these products, AML will select all the segments.

positioning
Since AML will be having two different kinds of products in their product line as recommended, (medicine and non-medicine consumer products), the positioning for each kind is mentioned below Positioning for medicine products: The positioning of Novus Pharma Limited will be aimed at designing this new companys offering and image to occupy a distinctive place in the mindset of the target market. As we have seen in the previous section, the proposed target market segments for the medicine products of the company are as follows: a) Remote regions b) Poor/Price Sensitive

c) Doctors d) Pharmacists

The positioning strategies presented in this section will aim at creating a customer focused value proposition. This means that the target market will have a convincing reason to buy the products of the company. However it should be noted that it is fairly hard for an emerging midsized pharmaceutical company to compete with its well established peers. The company should focus on POD or Points of Difference to set itself apart from larger, more recognized brand names.

The PODs Novus Pharma focus on are noted below: Positioning for medicine products:

1. Widespread Availability The company should create a moderate portfolio of products and make it available throughout the country. This will help to create customer recognition of the brand. Since advertisements and promotion campaigns of medicines targeting the mass population is banned, accessibility to the products of the company will help the newcomer to compete with largely recognized brands. Widespread availability can be achieved through the following steps. The medicinal products of AM Pharmaceutical can use the already established distribution channel of Igloo products to reach remote areas. As availability is a key factor in remote, rural areas; the distribution channel of Igloo will help to establish an image in the minds of consumers that will translate to Readily Available at all Times. To ensure widespread availability, it is required that the medicines occupy shelf space at local pharmacies at all times to remind consumers constantly of the brand

name. This can be achieved through efficient sales personnel. The Pharmaceutical will seek to train and recruit a taskforce of highly efficient sales personnel who will work to motivate pharmacists to grant shelf space to its products. This will be done through a series of promotional campaigns and interpersonal relationships with the pharmacists. 2. Low Priced Brand Image The pharmaceutical will attempt image differentiation through its pricing strategies as well. Since the company will target consumers of rural areas where income is generally lower, it will aim to mass produce medicines at slightly lower prices by modifying packaging and hence cutting down on packaging costs. The cost cutting details have been elaborated in subsequent chapters of this report. Cost cutting will ensure low priced medicine or Economic Medications which will readily capture the price sensitive rural markets. 3. Preference of Doctors (prescription products) Ultimately the biggest variable in the popularity of pharmaceuticals is the recommendation of doctors. Doctors recommend their choice brand of medicine to patients who in turn purchase the same brands from the market. Hence AM Pharmaceuticals has an underlying aim to become the approved and recommended brand of doctors. It should be noted here that competing with well established brand names will not be easy. Some of these brands have existed and operated successfully for years thanks to the recommendation of doctors. Furthermore, AM Pharmaceuticals will not have a large portfolio of products rather some widely used molecules and a few obscure medicines. Lastly it will not be easy to change the mindset of doctors who already prefer other brands. So the company will have to conduct promotional campaigns to initially attract the interest of doctors and then motivate them to prescribe the companys products. This will be done through mainly promotional advertisements in medical journals, free sampling promotion and other benefits to physicians. The unique medicines of the company will initially have to be pushed to doctors as well although it is expected that these will capture the attention of physicians faster. Even if a few of AM pharmaceutical products become doctor preferences, the company can enjoy their targeted success. So if the companys limited products can

command a perception in the mind of the consumer as Preferred by Doctors, the image of the AM brand will be likewise. 4. Non Prescription Products Non prescriptions products will help to strengthen the brand name in the mind of customers. Moreover, since the advertisement of these products is allowed, the brand name will be popularized. Product ranges such as Oral Hygiene or Antiseptics/Antibacterial products can help strengthen the image of the pharmaceutical for the following reasons. They are products related to healthcare and often occupy shelf space at a pharmacy. Hence, there will be no such perception that the company is digressing from its actual business and can be positioned as a company in the Healthcare Industry. The promotion and advertisement of these products to the mass population is allowed meaning this will translate to free exposure of medicinal products of the company. This will help to further strengthen the brand image in the eyes of consumers Basically AML will try to position the pharmaceutical in terms of doctors recommendation and availability in the targeted regions

Positioning for non-medicine products: Positioning through consumer products: AML can position them as oral care manufacturer by providing solution of an specific type of problem. In these case, the products can be kind of consumer products for example they can select oral care products like mouth wash, toothache relief powder, toothpaste etc. and thus position themselves as best provider of oral care. This kind of products can be promoted through advertisements since these products are non-medicine products.