1

INDEX

Sr. No. Topics Page No.

1. Acknowledgment 3-3

2. Certificate 4-4

3. Synopsis 5-5

4. Objective 6-6

5. Indian Pharmaceutical Overview 7-12

6. Industry Profile 13-14

7. SWOT Analysis of Pharma Industry 15-19

8. Global Pharma Vs Indian Pharma 19-27

9. Challenges in Pharma Industry 28-29

10. Activities by SALES TEAM 30-31

11. Sales Force Effectiveness 32-40

12. Problem with Sales tool & Measurement 41-47

13. Ways company Market to Doctor 48-53

14. Survey of Sales Force 54-54

15. Data analysis Of Sample Survey 55-61

16. Working & Challenges in Sales Force 62-73

17. Conclusion 74-74

18. Annexure 75-76

2
 Acknowledgment

During the perseverance of this project I was supported by different

people, whose names if not mentioned would be inconsiderate on my
part.

I would like to thank with affection and appreciation and

acknowledge my indebt ness to Oriental Institute of Management,
(Vashi) for initiating in the preparation of a project on Brand
Management in Pharmaceutical Industry. The learning and
knowledge that I have gained in the process of preparation of this
project has been tremendous and I would like to thank Dr. D.R.
Kamraj for providing me with the opportunity to work on this project
and guiding me for the same.

I owe sincere gratitude towards each and everyone who have given a
helping hand in the completion of this project.

SOHAN KUMBHAR

3
 Certificate

I, D.R. Kamraj, hereby certify that Mr. Sohan K Kumbhar, student

of Oriental Institute Of Management, Vashi, Navi-Mumbai,
enrolled in the course of MMS-II (Marketing), Mumbai University,
academic year 2006-2008, have completed his project “Perception
of Sales Force in Pharmaceutical Industry” as per my guidelines.

Dr. D.R. Kamraj

…………………….

4
 SYNOPSIS

¬ For Sales & Marketing in pharmaceutical industry it is important

to have skilled sales force to promote the products because most of
doctors prescribed quality product based on relationship with the
Medical Representative.

¬ For selling a product, relationships with doctors’ are more

important.

¬ Samples are not so important for established brand.

¬ For core doctors, MRs should meet twice or thrice in a month.

¬ For repeat visit with doctors’ sales people should go always with
different promotional tools.

¬ According to sales people visual aid must be change every

quarter.

¬ Most of companies change visual aid twice in year.

¬ Quality is more emphasized while promoting brand.

5
 OBJECTIVE

¬ To Understand the sales force perception in Pharmaceutical

Industry.

¬ How Medical Representative/ Marketing Executive do the

Implementation of the strategies given by company in
pharmaceutical Industry?

¬ SWOT analysis of pharmaceutical industry.

6
Indian Pharmaceutical Industry: An Overview

“The Indian pharmaceutical industry is a success story providing

employment for millions and ensuring that essential drugs at
affordable prices are available to the vast population of this sub-
continent.”

Richard Gerster

The Indian Pharmaceutical Industry today is in the front rank of

India’s science-based industries with wide ranging capabilities in the
complex field of drug manufacture and technology. A highly organized
sector, the Indian Pharma Industry is estimated to be worth $ 4.5
billion. It ranks very high in the third world, in terms of technology,
quality and range of medicines manufactured. From simple headache
pills to sophisticated antibiotics and complex cardiac compounds,
almost every type of medicine is now made indigenously.

Playing a key role in promoting and sustaining development in the vital

field of medicines, Indian Pharma Industry boasts of quality
producers and many units approved by regulatory authorities in USA
and UK. International companies associated with this sector have
stimulated, assisted and spearheaded this dynamic development in the
past 53 years and helped to put India on the pharmaceutical map of
the world.

The Indian Pharmaceutical sector is highly fragmented with more than

20,000 registered units. It has expanded drastically in the last two
decades. The leading 250 pharmaceutical companies control 70% of
the market with market leader holding nearly 7% of the market share.
It is an extremely fragmented market with severe price competition
and government price control.

The pharmaceutical industry in India meets around 70% of the

country's demand for bulk drugs, drug intermediates, pharmaceutical
formulations, chemicals, tablets, capsules, orals and injectables. There
are about 250 large units and about 8000 Small Scale Units, which
form the core of the pharmaceutical industry in India (including 5
Central Public Sector Units). These units produce the complete range
of pharmaceutical formulations, i.e., medicines ready for consumption
by patients and about 350 bulk drugs, i.e., chemicals having

7
therapeutic value and used for production of pharmaceutical
formulations.

Following the de-licensing of the pharmaceutical industry, industrial

licensing for most of the drugs and pharmaceutical products has been
done away with. Manufacturers are free to produce any drug duly
approved by the Drug Control Authority. Technologically strong and
totally self-reliant, the pharmaceutical industry in India has low costs
of production, low R&D costs, innovative scientific manpower, strength
of national laboratories and an increasing balance of trade. The
Pharmaceutical Industry, with its rich scientific talents and research
capabilities, supported by Intellectual Property Protection regime is
well set to take on the international market.

Market Trends
The industry has enormous growth potential. Factors listed below
determine the rising demand for pharmaceuticals.

The growing population of over of a billion

Increasing income
Demand for quality healthcare service
Changing lifestyle has led to change in disease patterns, and increased
demand for new medicines to combat lifestyle related diseases.

India Pharmaceuticals and Healthcare Report Q1 2009

This India Pharmaceuticals and Healthcare Report provide

independent forecasts and competitive intelligence on India's
pharmaceuticals and healthcare industry.

India remains regarded as a moderately attractive proposition, as

illustrated by the fact that it once again holds an unchanged eighth
position in BMI’s Q109 regional Business Environment Rankings for
Asia Pacific. While the fast-growing population in India will represent
one of the main drivers of pharmaceutical growth in the coming years,
low per capita consumption and emphasis on generics hamper the
level of market development. Similarly, an excessive amount of red
tape,

8
underdeveloped infrastructure and the deficient legal framework
remain barriers to investment, although the government is striving to
improve the regulatory environment, with the imminent creation of the
Department of Pharmaceuticals. Nevertheless, in December 2008,
India's drug price regulator decided to lower prices of 46 brands and to
include 254 new medicine brands in the list of

Price-controlled drugs, despite an announced increase of prices of 31

medicine brands.

In the meantime, the domestic generics industry continues to expand,

both locally and abroad, although it has not all been plain sailing. In
late 2008, Indian Zydus Cadila – a unit of Cadila Healthcare –
purchased Italy-based Etna Biotech from Dutch biotechnology firm
Crucell, while Sun Pharm acquired 100% of the US-based narcotic
producer and importer Chattem Chemicals. On the other
hand, Lupin recently became the third drug maker to be accused of
sub-standard manufacturing by the US Food and Drug Administration
(FDA), which will attract greater scrutiny on the sector as a result.
Other Indian companies facing similar problems in the past include
Ranbaxy Laboratories,
Sun’s' US-based subsidiary, Caraco Pharmaceutical Laboratories, as
well as Wockhardt and Granules India.

The above developments will have an impact on Indian generics

exports. According to the recently released figures by news provider
Pharmabiz, the annual growth of India's pharmaceutical export sector
is down by more than half. Key reasons include increased competition
in the highly regulated markets of the US and Europe and the steady
appreciation of the rupee. Nevertheless, BMI believes that the
fundamentals of the sector are sound and we expect high double-digit
growth to be maintained over the medium term. A victory for Barack
Obama and the Democratic Party in the US general election in
November 2008 will increase generic substitution in the world's largest
pharmaceutical market, while the 2011 patent cliff provides yet the
greatest opportunity for Indian generics exports.

On the domestic front, generics are also winning, with the first generic
drugs store reportedly opened by the Department of Pharmaceuticals
at the end of November 2008, as part of an ambitious project to set up
such stores in each district of the country. The use of generics will be

9
further encouraged by the deceleration of India’s GDP growth. In first
quarter of FY08/09 (April- June) – corresponding to Q208 calendar
year – GDP growth hit a four-year low of 7.9% year-onyear (y-o-y), as
decade-high inflation and rising interest rates take the heat out of
India's booming economy, with future risks remaining on the
downside.

ADVANTAGE INDIA

Competent workforce: India has a pool of personnel with high

managerial and technical competence as also skilled workforce. It has
an educated work force and English is commonly used. Professional
services are easily available.

Cost-effective chemical synthesis: Its track record of development,

particularly in the area of improved cost-beneficial chemical synthesis
for various drug molecules is excellent. It provides a wide variety of
bulk drugs and exports sophisticated bulk drugs.

Legal & Financial Framework: India has a 60 year old democracy

and hence has a solid legal framework and strong financial markets.
There is already an established international industry and business
community.

Information & Technology: It has a good network of world-class

educational institutions and established strengths in Information
Technology.

Globalisation: The country is committed to a free market economy

and globalization. Above all, it has a 70 million middle class market,
which is continuously growing.

Consolidation: For the first time in many years, the international

pharmaceutical industry is finding great opportunities in India. The
process of consolidation, which has become a generalized phenomenon
in the world pharmaceutical industry, has started taking place in India.

10
Indian Pharma Companies on the Acquisition :
Aurobindo acquired Milpharm /UK
Dayton HQ /US

Dishman Synprotec /UK

Carbogen Amcis /CH ($ 75 mio)

Dr. Reddy´s Betapharm /DE (€ 480 mio)

API plant from Roche /MX ($ 59 mio)

Glenmark Medicamenta /CZ

Bouwer Bartlett /SA
Servycal /AR

Jubilant Organosys Hollister-Stier /US ($ 122 mio)

Target Research, Clin.CRO /US

NPIL Avecia Pharmaceut. /UK & CA

Pfizer´s Morpeth plant / UK

Ranbaxy Êthimed /BE

Terapia /RO
Allen SpA /IT

Shasun acquired Rhodia Pharma Solutions /FR

Sun Pharmaceut. Valeant Pharmaceut. /HU

Able Labs. /US ($ 23 mio)
Taro /IL

Torrent Heumann Pharma /DE

Wockhardt Esparma /DE

Negma Labs. /FR
Pinewood Labs. /IE

Zydus Cadila Alpharma /FR

Nippon Universal /JP

THE GROWTH SCENARIO

11
India's US$ 3.1 billion pharmaceutical industry is growing at the rate of
14 percent per year. It is one of the largest and most advanced among
the developing countries.

Over 20,000 registered pharmaceutical manufacturers exist in the

country. The domestic pharmaceuticals industry output is expected to
exceed Rs260 billion in the financial year 2002, which accounts for
merely 1.3% of the global pharmaceutical sector. Of this, bulk drugs
will account for Rs 54 bn (21%) and formulations, the remaining Rs
210 bn (79%). In financial year 2001, imports were Rs 20 bn while
exports were Rs87 bn.

STEPS TO STRENGTHEN THE INDUSTRY

Indian companies need to attain the right product-mix for sustained

future growth. Core competencies will play an important role in
determining the future of many Indian pharmaceutical companies in
the post product-patent regime after 2005. Indian companies, in an
effort to consolidate their position, will have to increasingly look at
merger and acquisition options of either companies or products. This
would help them to offset loss of new product options, improve their
R&D efforts and improve distribution to penetrate markets.

Research and development has always taken the back seat amongst
Indian pharmaceutical companies. In order to stay competitive in the
future, Indian companies will have to refocus and invest heavily in
R&D.

The Indian pharmaceutical industry also needs to take advantage of

the recent advances in biotechnology and information technology. The
future of the industry will be determined by how well it markets its
products to several regions and distributes risks, its forward and
backward integration capabilities, its R&D, its consolidation through
mergers and acquisitions, co-marketing and licensing agreements.

Industry Profile

12
Industry Segmentation by Products

Pharmaceutical sales include:

ethical (prescribed) drugs, which can't be dispensed without a

physicians prescription;
over-the-counter (OTC) medications, which are readily
available on drugstore shelves.

Ethical drugs account for about 60% of total industry sales, with
OTC products representing the balance.

The ethical sector can be further segmented into:

¬ Brand-name products;
¬ Generic products.

Generics are less-expensive equivalents of brand-name

prescribed drugs, and may be produced and sold once the original
drug's patent protection expires.

Industry Segmentation by Distribution

Three-quarters of industry sales consist of pharmaceuticals used in

outpatient settings, with the balance administered in hospitals, nursing
homes, and other inpatient facilities. About 70% of prescribed drugs is
distributed through wholesalers to hospitals, health maintenance
organizations (HMOs), and retail pharmacies. The remaining 30% is
sold directly by manufacturers to physicians, hospitals, retailers, and
others.

Industry Living Space

Demand

The demand for medicine is tied to the health of the populace, which is
relatively constant over the years. Drug pricing is also relatively
inelastic, due to the absence of alternate therapies for the most
prescribed drugs.

13
Life cycle of products

The product cycle of nearly all prescribed drugs is fairly stable. After
the average 10- to 15-year period of discovery, development, testing,
and FDA review, a branded ethical drug has about 10 years of
commercial life.

Discovery

New drugs are discovered in scientific laboratories. The process is long

and laborious, with the vast majority of attempts unsuccessful.

Bringing the drug to market

Before a drug can he brought to market, it must undergo years of

testing and receive government approval from the FDA. It takes
several years of sales buildup in major markets in the U.S. and abroad
before a drug reaches its full commercial potential. At that point, new
competition of drugs similar in action may enter the market.

Going generic

Drug's patent expires, typically after fifteen years on the market.

Generic competition usually appears immediately after it, and prices
begin to fall. Branded prescription drugs typically have about 10
years before generic competition erodes their profitability.

Going OTC

Companies sometimes switch a patent-expired product from

prescription-only status to over-the-counter (OTC) status to broaden
its market and extend its economic life. Competition in the market of
OTC products is more straightforward. Margins on products switched
to OTC status are lower than those on the prescription products they
replace, but popular consumer medications can have almost infinite
shelf lives.
SWOT Analysis Of Industry

Strengths

14
The drug industry is one of the most research-oriented sectors of the
U.S. economy. Over the past two decades, the industry's R&D
expenditures have risen sharply, both in dollar terms and as a
percentage of total sales. Its R&D expenditures are equal more than
21% of total industry revenues in 1997, compared with l5.9% in 1990
and l l.7% in 1980. In contrast, the average U.S. manufacturing firm
spends less than 4% of sales on R&D.

Drug Manufacturing in India

The lions share of pharmaceutical manufacturing in
India is for generics.

Figure R&D Expenditures as a Percent of Sales for US Industrial

Sectors

15
Weaknesses

Drug manufacturing is also a high-risk business; only one in 5,000

compounds discovered ever reaches the pharmacist's shelf. Fewer
than a third of marketed drugs actually achieving enough commercial
success to cover their R&D investment.

16
Opportunities

When a drug maker launches a new compound that achieves

widespread acceptance in the marketplace, the economic rewards can
be very high. This is the primary reason for the industry's profit
margins.

Threats: FDA approval

The FDA requires manufacturers to perform extensive testing to prove

that products are safe and effective before it will sanction commercial
sale. All animal and human tests, which often last for years at the cost
of many millions of dollars, are conducted by the manufacturer.

The cycle for the development of a new drug is as follows:

¬ Discovery (searching for innovative products is especially

challenging in pharmaceuticals, because products come from the
highly complex fields of molecular biology and biochemistry.);
¬ Preclinical(animal) testing( hundreds of compounds are tested
before any are identified as promising enough to warrant human
testing);
¬ Clinical (human) testing.

The clinical testing period on humans usually consists of three phases:

¬ Phase I (small number of healthy people to test the drug's safety);

¬ Phase II: (patients suffering from the disease or condition the drug
is intended to treat);
¬ Phase III: (large groups of ill patients to test drug's safety,
effectiveness and optimal dosage).

17
Fugure. Compound Success Rates by Stages of Development

Out of 20 drugs entering clinical testing, average 13 successfully

complete phase I. Of those about nine finish phase II, but only one
likely pass trough the phase III. Only one of 20 will ultimately
approved for marketing.

18
Prohibitive Barriers to Entry

Figure. Cost of Developing a New Drug

Substantial economic, regulatory, legal barriers stand on the way of

new competitors. Development of a new drug takes from 10 to 15
years and costs more than $500 million. Manufactures of new drugs
are protected by the patents on new drugs. However, effective patent
protection is only 15 years given the length of time to bring a product
to market.

Indian Pharma Vs Global Pharma

19
In 2007, the Indian pharmaceutical industry looks ahead at a colourful
horizon, what with contract research and clinical trials businesses
taking wing, and the new patent regime opening new avenues for
players in the country.
Globally the Indian pharmaceutical industry ranks 4th in terms
of volume (with an 8 per cent share in global sales), 13th in terms
of value (with a share of 1 per cent in global sales) and produces 20-
24 per cent of the world’s generic drugs (in terms of value). India is
also one of the top five active pharmaceutical ingredients (API)
producers (with a share of about 6.5 per cent). The sector today is in
the front rank of India’s science-based industries with wide ranging
capabilities in the complex field of drug manufacturing and technology.

Industry Structure

The Indian pharmaceutical industry is estimated to be worth US$ 6

billion, growing at over 13 per cent annually. Indian
pharmaceutical companies now supply almost all the country’s
demand for formulations and nearly 70 per cent of demand for bulk
drugs.
Exports constitute nearly 40 per cent of the production with
formulations contributing 55 per cent and bulk drugs 45 per cent. The
industry ranks 17th in terms of export value of bulk actives and
dosage. It comprises large, medium and small-scale operators out of
which some 300 companies together account for nearly 90 per cent of
the domestic market, while the rest is accounted for by a large
number of small companies which total about 9000 units.

Growth

The domestic Indian pharmaceutical industry is likely to more than

triple to US$ 20 billion by 2015 from the current US$ 6 billion to
become one of the top ten pharmaceutical markets in the next
decade, says a report prepared by global consultancy firm, McKinsey.
Significantly, patented drugs are likely to see increased sales in the
domestic pharmaceutical market, growing from virtually nothing at
present to about US$ 2 billion in seven years.
In fact, the absolute growth of US$ 14 billion will be next only to the
growth potential of the US and China. Echoing similar sentiments,
another report by Goldman Sachs predicts that India will be the

20
fifth largest pharmaceutical market in the world by 2020, with
sales of US$ 43 billion.
Important factors that are expected to make this reality are the
doubling of disposable incomes, increase in numbers of middle-class
households, expansion of medical infrastructure, greater penetration
of health insurance and a gradual shift in disease profile and adoption
of patented products.
Consequently, a number of multinationals have entered the Indian
Pharmaceutical market. Already 15 of the 20 largest pharmaceutical
companies in the world have a presence in India. In fact, drugs and
pharmaceuticals is the eighth largest FDI-attracting sectors in India.

CRAMS

India is emerging as the global hub for contract research and

manufacturing services (CRAMs) due to a combination of low cost and
world-class quality standards. The Indian CRAMS market which is
valued at US$ 895 million in 2006 (as against US$ 533 million)
accounts for between 6-7 percent of the global CRAMS market and
many expect India will command at least 15 per cent of the market by
2009-10. Research agency Frost & Sullivan estimates this segment to
reach close to US$ 6.6 billion by 2013.

Contract research--including both drug discovery research and clinical

research--has been growing at a phenomenal rate. While clinical trials
represent 65 per cent of this market and new drug discovery makes
up the remaining 35 per cent. Frost and Sullivan estimates outsourced
contract research in India to reach US$ 2 billion by 2010. Similarly,
according to a McKinsey report, the global clinical trial outsourcing to
India in the pharmaceutical industry is estimated to be worth US$ 1.23
billion by 2010.
Over 15 prominent contract research organizations (CROs) are now
operating in the country which includes names such as Novartis,
Johnson & Johnson, Pliva, Astra Zeneca, Bristol-Myers Squibb and
GlaxoSmithKline among others.
Contract manufacturing is another new opportunity for the Indian
pharmaceutical industry. Already, India has the largest number of US
Food and Drug Administration (US FDA)-approved plants outside the
US, with over 100 facilities. And now even small and medium scale
pharmaceutical companies are setting up new and upgraded high-
quality manufacturing plants to take part in this growing segment.

21
About 40-50 new plants (which are in addition to the plants being set
up by major Indian pharmaceutical companies) are likely to be
commissioned by these companies in the next two years conforming to
the quality standards suggested by the US FDA and the UK Medicines
and Healthcare Regulatory Agency (MHRA), making India one of the
largest drug manufacturers in the world.
The small- and medium-scale companies, which are setting up new
units, include Bangalore-based Bal Pharma, Paras Pharma, Venus
Remedies, Surya Organics and Chemicals, UnijulesLife Sciences,
Centaur Pharma, Flamingo Pharma, Kemwell, Coral Labs among
others.
The Boston Consulting Group estimates that the contract
manufacturing market for global companies in India would touch US$
900 million by 2010.

India Advantage

India offers a huge cost advantage in the clinical trials domain

compared to Western countries. A multinational company moving R&D
to India could save as much as 30 to 50 per cent. For example, while
the cost of hiring a chemist in the US is as high as US$ 250,000-
300,000 per year, Indian discovery research outfits charge global
pharma companies around US$ 60,000 per chemist which is roughly
one fifth of what the pharma companies pay abroad.
Similarly, the comparative cost advantage in India can be seen from
the fact that Indian companies can manufacture pharmaceuticals for
less than half of what it costs in the US, conduct clinical trials at less
than one tenth of US costs, and conduct research at less than one
eighth of what it costs in the US.

Generics

Indian pharmaceutical companies with their reverse-engineering

expertise, abundant investment in research facilities and availability of
skilled manpower are favorably placed in the global generic market.
According to a report by global pharmaceutical market intelligence
company, IMS Health, Indian generic manufacturers will grow by 14-
15 per cent next year, to more than US$ 70 billion as drugs worth

22
approximately US$ 20 billion in annual sales will face patent expiry in
2008. In fact, with nearly US$ 80 billion worth of patent-protected
drugs to go off patent (including 30 of the best selling US patent-
protected drugs) by 2012, Indian generic manufacturers are
positioning themselves to offer generic versions of these drugs.
Already, Indian drug companies account for over 25 per cent of the
total generic drug applications made to the FDA of US, which accounts
for over half of the US$ 60 billion market. Also, India has over 100 US
FDA-approved plants, the highest number outside the US. Indian
companies are also able to build their US generic pipeline with Indian
filings of around 408 products.

Global Company Sales Summary

Rank Company Sales Market Share Sales Growth 2006 $(m) %

1 Pfizer 45,0838.61.8

2 GlaxoSmithKline 36,9477.18.9
3 sanofi-aventis 35,6056.84.9

4 Novartis 28,8685.517.9

5 Roche 26,5605.121.4

6 AstraZeneca 25,7414.910.5

7 Johnson & Johnson 23,2674.44.2

8 Merck & Co 22,6364.32.8

9 Wyeth 15,6833.09.8

10 Eli Lilly 14,8162.87.5

www.p-d-r.com/ranking/ranking.html

Top 10 ethical drugs ranked by sales in 2006, Global

1 Lipitor Pfizer/Astellas 13,736 5.7

23
 2 Advair GlaxoSmithKline 6,097 11.7

3 Plavix BMS/sanofi-aventis 6,054 (4.5)

4 Nexium AstraZeneca 5,182 11.8

5 Norvasc Pfizer 4,866 3.4

6 Enbrel Amgen/Wyeth 4,379 18.4

7 Zyprexa Eli Lilly 4,363 3.8

8 Remicade J&J/Schering Plough 4,253 18.0

9 Diovan Novartis 4,223 14.9

10 Risperdal J&J 4,183 17.8

Source: Wood Mackenzie 2007

TOP FIVE INDIAN PHARMA CEUTICAL COMPANIES

RANKINGS CUM(JAN 07-OCT0 7) MAT OCT 07

CORPORATIONS

12M CUM V(C RS) %MS %G V(C RS) %MS %G

1 1 CIPLA 1311.8 5.1 15 1553.67 5.12 15

2 2 RANBAXY 1262.51 4.91 8 1489.27 4.91 8

3 3 GLAXOSMITHKLINE 1246.54 4.85 5 1471.64 4.85 4

4 4 NICHOLAS PIRAMAL 995.29 3.87 0 1180.37 3.89 0

5 5 ZYDUS CADILA 927.9 3.61 20 1093.46 3.6 19

25707.2 30343.6
TOTAL MARKET 3 100 13 6 100 13

STANDING OF INDIAN PHARMACEUTICAL MARKET IN THE

WORLD, MAT SEPT 2005.

24
 a ney
2 BaB ( * ) BB B
B 60 BB

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m a r s t a n d i n g a t n u m b e r4 i n v ol u m e t e rm s

+7% +7%
US G erm
$249. i $ 3 1 .6 i l
l 10 Key Markets
$ 4 5 6 . 2 B il +7%
+8% F r a nc
C a nad $ 3 0 .7 i l
$ 1 3. 1 il

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J apa n UK
$ 6 0. 8 il M a j o r E u r o p e$ 2 0 . il
$ 1 6B0 i l
+24% 1%
Chi I tal y
n* a * $19 . i l
$8.9 Bil
+9%
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M e x i co * I ndia*
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$7.2 Bi $ 5 . 2B nr e t a
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•
4 S o u r c e : I M S K n ow l e d g e L i n k : M A T S e p t e m b e r 20 0 5

STANDING OF INDIAN PHARMACEUTICAL MARKET IN THE

WORLD, 2006.
25
> $ 8 billion

Ranks No: 13 in global value terms (1.5%)

Ranks No: 4 in global volume terms (8%)

Share of export ~ 40% (thereof 55% as formulated drugs, 45% bulk

actives)

Present growth rate of domestic market ~ 13% p.a.

Estimate for 2010 ~ $ 10 billion

Source: Indo – German First BioMed-BioTech-Partnering MiniExpo

Würzburg June 10-12, 2007

[the figures are not quite reliable, they depend on the definitions]

26
Pharmaceutical Manufacturing Companies

27
 Indian Pharmaceutical Sector:
Challenges and Opportunities under the WTO Regime

The global pharma industry today is faced with two challenges:

1. To develop and utilize scientific knowledge to derive new drugs

and

2. To do it at an affordable cost.

The Indian pharma industry is well-positioned to address these twin

challenges because of the vast availability of talented and skilled
scientific manpower. The Rs.28,000 crore Indian pharma industry has
been operating under a new world order from January 1 2005. From
that date, in compliance with the prior commitment given under the
WTO agreement the country has switched over to the product patent
regime from the process patent regime that was in existence hitherto.

The main challenges facing the sector are the following.

Growth in the domestic formulations market is slowing down.

Domestic bulk drugs industry is facing intense competition due to
cheap imports.
Price wars between regional and local pharma companies are
driving down prices, exerting pressure on margins.
MNC pharma companies are getting more aggressive at
protecting their patents and defending their market share after
patent expiry.
There has been considerable confusion in the grant of EMR,
(Exclusive Marketing Rights) due to lack of transparency in the
process.

The huge domestic market (worth Rs.2,14,000 crore in 2002) with

a billion plus population presents a tremendous opportunity to the
Indian pharma industry though the growth is still in single digits.

A roadmap for growth can be the following.

28
1. Indian CROs (Clinical Research Organizations) have an
opportunity to access the $16 billion (Rs.72,000 crore) global
market for clinical trials which is expected to grow to over $50
billion by 2010. Indian pharma companies can focus on new drugs
for neglected diseases like malaria, kala azar and tuberculosis,
which are big killers in many developing countries.

2. Indian pharma companies should reduce their dependence on

the US market and explore promising markets like Europe and
Japan. At $65 billion, Japan is the world’s second largest
pharmaceutical market after the US.

3. Indian phama companies can profitably tap the huge under-

penetrated Chinese markets. By 2010, China will emerge as the
fifth largest pharmaceutical market in the world with revenues of
over $24 billion – three times its current size.

4. The global herbal market is expected to grow to Rs.25,000 crore

by 2010. India’s share in this market currently is a dismal 5%. The
country with its traditional base has to grab a larger share of the
market.

5. Companies keen on exploiting process patents have an

opportunity to operate in the least developed countries where
product patent regime will not be operational till 2016.

6. The R & D outsourcing market has grown from $5.4 billion in

1997 to $9.3 billion. Indian firms like Dr.Reddy’s, Shasun, Suven &
the Hyderabad based Divi’s laboratories have already undertaken
contract research for foreign majors.

7. In-licensing global brands and selling them in the domestic

market commands higher price margins of 15 to 18%.

8. The US generics market is definitely a high-risk high-reward

game. To succeed, companies should identify products long before
their patent expiry and complete regulatory work.

9. With the advent of the product patent regime, Indian drug

makers should diversify their process re-engineering skills towards
advanced Novel Drug Delivery Systems (NDDS) and further into
New Drug Discovery (NDD).

29
Activities perform by Sales Management Team
In pharmaceutical industry

¬ Sales Management

Plan sales objectives-in market & to market, and monitor the sales
to achieve pre-set sales targets. Implement strategies, identify
new business opportunities & expand the existing market. Look-
after sales and marketing along with several aspect of product
management

Sale s promotion
Designs & implement marketing activities such as medical
educational programs, seminars and conferences for the doctor's ,
camps, doctor's meets/ conferences for enhancing brand visibility/
coverage & reach. Conceptualize and implement sale promotion
activities such as selection/ Targeting the key opinion leaders and
organizing CME'S as a part of market development and brand
building effort.

Conduct Market Research and Campaign to build the brand s.

Relationship Management

Build and strengthen relationship with key accounts, medical

fraternity, opinion leaders there by ensuring high customer
satisfaction by providing with complete product support i.e. CRM
(Customer Relationship Management) activities.

30
¬ Dealer Management

Identifying and networking with financially strong and reliable

dealers, resulting in deepermarket penetration and reach.
Evaluating performance & monitoring distributor sales and
marketing activities.

31
 Sales Force Effectiveness (SFE)

ABSTRACT

With the ever increasing pressure to ensure maximum return on

investment, sales force effectiveness (SFE) is becoming a high
priority area in the global pharmaceutical industry. Sales force
represents the largest spend in sales and marketing and yet study
after study shows that the returns gained from this spend is not
particularly strong and one recent IMS report found that pharma
sales force effectiveness declined by 23% in the recent period of
2004 to 2005. Better metrics must be used to measure both the
effectiveness and financial impact of SFE for this very significant
budget. The startling discovery that this comprehensive report
uncovers is that the very metrics currently being used to assess
sales force effectiveness are in fact themselves aiding its decline.
Traditional pharmaceutical organizations are rigorously tracking and
managing sales activity, but still falling short. Data emerging from
the research concludes that current metrics are more focused on
efficiencies than effectiveness – and do so to their own detriment.

This report dissects current SFE metrics and their limitation for the
pharmaceutical industry in the United States, Europe and Japan.
The report then discusses appropriate metrics to solve these
problems and goes on to demonstrate implementation methods and
issues.

32
Sales force effectiveness is a difficult concept to measure, but doing
so can push pharmaceutical companies past today’s hurdles and
into increased productivity and sales.

Background - The Scale of the Sales Force Effectiveness

Problem
Most pharmaceutical company teams already rigorously track and
manage sales activity. Unfortunately, despite much measurement,
the sales force effectiveness problem remains. Could this be due to
the fact that the currently used metrics are inappropriate,
nsufficient andoftencounterproductive? Many companies
accurately diagnose that the problem is sales force effectiveness
but miss the solution, due to using the wrong metrics. But how can
a pharmaceutical company measure the effectiveness of its sales
team?

To truly grasp the problem, we look at current metrics used, along

with their limitations.

Sales Force Size and Share of Voice

Until recently, the pharmaceutical industry was typified by its ever
growing sales staff, hiring new sales reps at a rate that outstripped
the rate of new physicians (which has remained at a constant rate
of modest increase) and far outstripping the rate of new drugs
released on to the market (which has fallen dramatically over the
last decade). This strategy continued even in the face of falling
profits by pharmaceutical companies.

33
For most of the 1990’s, increased sales force numbers tended to
correlate with increased market share. However, with the high level
of competition, falling returns and squeezed margins which are now
features of the pharma market, the approach of increasing sales
force size has definitely passed the point of diminishing returns.
Indeed, a recent industry survey8 reported that, while 44% of
executives responded that they had increased their sales staff over
the last two years, only 9% of executives thought they would be
hiring more sales staff over the next two years. As a result of such
trends, to maintain market share and profitability, pharmaceutical
companies are now placing more and more pressure on their sales
force to perform effectively within an increasingly fixed marketing
budget. Several industry experts still claim that the only proven
solution to accelerate sales has been adding reps.

But is this really still true? The industry is finally seeing that larger
is not better in all cases. The industry as a whole is aware that the
current model is not working optimally and the sales force ‘arms
race’ is showing signs of subsiding, with the ‘size sells’ mentality
now being abandoned across the industry.
The main reasons for this approach not working any more seem
quite clear:

¬ The dramatic increase in sales reps since 1997, detailed

above, has led to younger, less experienced sales forces.

34
¬ Pharmaceutical companies have ramped up their innovation
and time to market. In the 1970s, the period without
competition for a certain therapy lasted an average of seven
years. Today, this time without competition only lasts 0.1
years.

¬ Increases in targeting technologies in the United States have

allowed reps to call upon those physicians with strong market
volume potential. But everyone has the same targeting data.
These physicians are receiving so many detail calls that they
are saturated and unable to find time for quality calls with the
reps. Doctors report feeling inundated by sales force (a by-
product of the sales force arms race) resulting in the average
time spent with physicians decreasing. Of more concern: the
physicians do not see this decrease in time with reps as a
problem.

¬ Access to physicians is decreasing. Sales people are not able

to count on even scheduled appointments to result in an
actual call any more. Many physicians have closed their doors
to sales reps completely and turn to eDetailing, peer-to-peer
interaction and journals for information. Statistics suggest
that for every 100 sales reps, only 20 meet with the
physicians. Additionally, 78% of phone calls to physicians last
two minutes or less. Most calls result in simply a 30-second
detail and a sample drop.

35
¬ Related to this, the number of personal details received by
office-based US physicians in the US declined by 13% in
200513 following seven years of increases. IMS reported that
this was seen across the majority of the major pharmaceutical
companies and was not entirely due to physicians closing
their doors. In this number, 27% were influenced by
blockbusters going off patent, and 22% were due to
withdrawals of Vioxx and Bextra and the relative shortage of
new launches in the primary care space. Two thirds of new
launches were in the specialist areas, meaning there was
limited need for additional representatives. Different therapy
areas also were found to decrease in detailing volume, with
33% decline in detailing volume for the erectile dysfunction
category, 22% decline in the proton pump inhibitor category,
and 9% decline in the lipid lowering agents category.
Although these changes account for some of the decline in
numbers of details, others came from the fact that some
companies (including Pfizer and Wyeth) altered their sales
structures and removed mirroring from their field forces.

¬ On top of this, physician attitudes around pharmaceutical

sales force are also changing. Where previously they may
have welcomed new data and discussion with sales reps, now
fewer than 40% of physicians feel the pharmaceutical industry
is trustworthy. Physicians actively provide barriers to sales
reps.
¬ In 2003, the number of doctors reporting intentional limited
access for sales reps totalled 60%15. Only 43 percent of reps
get past the receptionist at any given sales visit.

36
 ¬ Lastly, the number of follow up actions required or requested
as a result of each sales call and promotional activity
translates into 10,000 follow up actions per working day and
many companies do not have the resources to capitalise on all
the leads they create.

Sales force size and share of voice are really not key metrics to
examine when attempting to improve sales force efficiency. You can
throw more mud at a wall, but unless it sticks it is a waste of
money.

Sales Calls per day

One of the most common methods of measuring sale force
effectiveness revolves around frequency of calls made by sales reps
to target physicians. The underlying assumption is one that does
not hold up in today’s environment: higher numbers of sales calls
will generate greater product sales.

Current Metrics Used and their Contribution to the Problem

One of the lures of the ‘frequency of calls’ metric is the ease of use.
Such data is relatively easy to collect and can be measured directly
against sales and market share data. A sales rep assigned to a
particular territory with falling sales volumes might then be
encouraged to work harder, increasing his or her frequency of sales
calls to drive the numbers back up.

37
Unfortunately there are a number of problems with this sort
of metric:

¬ Focus on call frequency could encourage inappropriate or non-

optimal behaviours in sales staff. Irrelevant calls to non-
target physicians or non-prescribing staff, while doing nothing
to further the company’s goals and sales, can still be counted.
Since career success is built on meeting company standards,
sales reps are encouraged to focus their behaviours towards
metrics16. But measures counting the number of calls to a
physician or the number of minutes spent with a physician are
encouraging quantity over quality. Sales reps may do well
when it comes to bonus or yearly review time, but the
company is pushed down the path of decreasing productivity.

¬ By focusing on sales call quantity, reps are encouraged to

make as many calls a day as they can to meet their targets.
The focus becomes accessibility of physicians rather than
their value as a target. Accessibility is indeed an issue, as the
industry becomes more competitive and physicians limit or
block access to sales reps17. But contact should be about
more than access. Consider this: IMS reported that decile
analyses in Europe often find little difference in the call levels
achieved by high-decile doctors and low-decile doctors. This
means reps will spend time with doctors who are easy to see,
rather than those who will actually provide value and
generate sales. The result is the calls do not seem effective
and yet the calls per day target is being met or exceeded.

38
¬ Focusing on sales call quantity necessarily means less focus
on sales call quality. A sales call merely to enquire over the
physician’s golf handicap, or the state of health of the
physician’s loved-ones, is clearly not going to result in a
product sale. Likewise, sales call frequency measures favour
irrelevant contacts, such as physicians who might be easy to
talk to but do not actually have many patients who fit the
profile of the drug being marketed.

¬ By focusing on sales call numbers, the company implies that

the only sales tool worth considering is the sales call. When it
comes down to actual sales, this is often not the primary
method of success. In this highly competitive environment, a
physician might be faced with a veritable barrage of requests
for “just moments of their time.” While good working
relationships between the sales rep and customer are vital,
much can be gained by adequate back-ups to the sales call,
such as call centres and websites. Thus, actual sales of a drug
might not necessarily be directly related to the amount of
calls made.

39
 ¬ Sales call frequency measures encourage sales reps to focus
on the calls at the expense of all else, including those
activities that may assist them in the performance of their
job. It becomes difficult to justify taking time away from sales
calls in order to take advantage of opportunities for training,
or participating in medical conventions or conferences. But as
we saw in the previous pages, the majority of today’s sales
Pharmaceutical marketers spend a lot of time and money
planning and creating messages, sales aids for use in the
sales call, technological tools to assist the sales force
(including CRM), and training for salespeople. Unfortunately,
for many of these categories, it’s quite difficult to measure
return on investment when using the majority of
measurement tools available.

However, tools to help promote sales are a necessity for

sales forces. Consider the current state of sales forces

40
 The Problem With Sales Tools

Pharmaceutical marketers spend a lot of time and money planning

and creating messages, sales aids for use in the sales call,
technological tools to assist the sales force (including CRM), and
training for salespeople. Unfortunately, for many of these
categories, it’s quite difficult to measure return on investment when
using the majority of measurement tools available.

However, tools to help promote sales are a necessity for sales

forces. Consider the International current state of sales
forces:

¬ The American Mar ke ting Assoc iation r eport s tha t up t o 90%

of what marke ting c r eates for sales support goes unused in
the field. This is backe d up by our analys is from literally
thous and of pharmac eutic al brands ’ field for ce activities.

¬ ASTD journal reported a s tudy demons tratin g tha t

salespeople for get 85% of content and s kills within four
week s of training.

¬ B-to-B Online r eport ed res ults of a s urvey in which 70% of

market er s give thems elves a “D” or “F” for the quality of
sales support .

41
 ¬ The CMO Council found tha t salespeople spend 40% of their
time creating their own mess aging and tools .

These are disturbing statistics, especially considering that the sales

force is one of the largest spends in the marketing budget in a
pharmaceutical company, second only to R&D. Sales forces are
tasked with supporting the company’s productivity and bottom line,
but they aren’t getting the support they need.

Here are a few areas that appear to be problematic.

Sales reps are responding to the needs of the Doctors. The content
of the messages and tools they have been given do not adequately
reflect these needs.

A Medical Representative’s Statement

“My Doctors want me to help them with increasing their knowledge

so they can better manage their Patients - or in some cases,
assisting them managing their practice. They don’t like to feel I am
selling to them. The materials I use should be researched properly
so they reflect the key brand messages in terms of the customer
needs before the marketing team give them to us to use or
otherwise they won’t be effective or used.” - Sales Rep

42
Comment: To ensure firstly usage of detail aids, as well as
‘effective’ usage of detail aids, messaging must be based on the
Doctor’s most pressing patient or practice objectives and
challenges, and must lead into how your brand can help address
that need. Pharmaceutical companies must understand their
customers’ perspectives and then map how to best respond to their
needs.

Effectiveness Measurement

Moving Beyond ‘Recall’ and ‘Intent to Prescribe’

How does this change happen? Behaviours are key. There are core
sales and marketing behaviours that correlate with sales
performance. Behaviours that drive prescriptions in one type of
therapy category aren’t necessarily going to be successful in
another. In addition, behaviours that drive prescriptions in early life
cycles aren’t necessarily going to be successful in mid or late
lifecycle. Finally, this will also be different for primary care
practitioners versus specialists. Sales management needs to
understand what sales and marketing behaviours are really
influencing different types of doctors to prescribe one brand over
another. The bottom line is they need to know what works
and what does not during sales calls.

43
Measurement of sales force behaviours has been limited to
numbers of calls, building on the assumption that enough calls will
yield sufficient prescriptions to drive the pharma company’s
success. But this won’t do. To find out if a rep is effective, the best
way is to move beyond static call metrics and analyse physicians’
minds. Of course, much market research is devoted to uncovering
whether the physician recalled a pharmaceutical product message,
whether the physician ‘intends to prescribe’, and what the physician
thinks they think. All of this, while useful and interesting, is very
superficial if we are trying to get to the core of the real influencers.
Physicians do not necessarily know why they do what they do.
Many factors come into play in the decision process – many they
are not consciously aware of but they are influencers. We need to
know what is influencing them, even if they do not. What matters is
finding out how a rep can provide the most perceived value and
influence the physicians’ prescribing decisions. Although this is not
a precise science, there are tools that are accurate in assisting
sales managers to do this task with a high degree of confidence.
Eularis (www.eularis.com ) has developed just such a tool – the
Sales force 94.8 Analytics Tool. This metrics system helps
companies know how much their sales force is contributing to their
brand growth and overall company growth, as well as identifying
territories with the highest business potential.

44
It also helps analyse what messages and what rep behaviours have
positive financial impact, and how these behaviours and messages
should be time-allocated in a sales call. This tool collects vast
quantities of data from physicians and then validates this data
against prescribing to uncover real, rather than perceived,
influencers. Then powerful analytics are applied that help sales
managers identify what is needed and how to change for maximum
sales growth. This type of analytics is critical to ensuring that sales
force efforts actually increase sales and market share, and
demonstrating sales force return on investment. By limiting metrics
to those that measure only call volume, calls per day and market
share, companies are limiting the provable results and return they
will achieve with their sales force.

Sales Force Resource Optimisation

Real sales force optimisation will only happen when companies

successfully integrate eff iciencies and effectiveness to
provide an approach that improves strategic planning, as well as
sales forces productivity and measurable financial return on
individual activities. To really succeed there needs to be more
focus on ensuring the right.

45
 Learning Management System- Informetica

Pharmaceutical Companies
The Informetica Learning Management System is a popular choice
among Pharmaceutical companies to efficiently train their staff no
matter where they work or live.
Pharmaceutical companies can use the Informetica System
to evaluate new recruits to ensure they're hiring smart. The job is
highly competitive and intense so finding the right people is
significant. Each pharmaceutical company creates their own
unique weights on education, skills, and experience.

46
The Informetica learning management system has a unique set
of tools to weight, assess, and grade prospective employees. Using
this method ensures that your hiring practices are documented so
that you can recruit the best qualified employees.

Once a pharmaceutical company has developed an employee

it is very costly to replace him/ her. Therefore, ensuring
employees with excellent records are receiving ongoing training and
development is imperative if pharmaceutical companies are to
retain these highly talented people. The Informetica System is a
flexible, robust learning management system with tailor-made
talent management tools to ensure your company is hiring smart
and providing ongoing develoment tools to satisfy this need.
Rating systems in assessments provide invaluable information to
ensure each representative knows the material needed in order to
work with customers. Also included are tools to ensure that career
paths and skills development are addressed to continue to keep
your most talented employees. Collaboration and communicaiton
tools provide incredible efficiencies and connectivity.

The reports include creating your own adhoc reporting system, easy
to use without any need for specialized training.
Hiring smart, developing smart, and retaining your best are the key
benefits of using the Informetica learning management system. So

why is this improtant? Refer below:

47
" Pharmaceutical companies don't look for one standard profile in
their sales forces. Generally, companies require sales reps to have
at least a bachelor's degree, and some prefer MBAs . Employers
don't necessarily require degrees in areas such as chemistry or
biology , but reps must be willing to learn -- and be able to master
-- science. "An aptitude in science is a prerequisite," says Nahman,
a former pharmacist. "If you don't like science, this job will be a
living hell."

Some companies weigh previous marketing or healthcare -

industry experience heavily, although clinical skills alone won't get
you hired. "The most important qualifications are people skills, such
as tact and diplomacy," Nahman explains. "Science can be learned,
but people skills can't be learned."

Ways Phar mac eutical Companies Mar ket to

Doctor

How Drugs Are Sold to Doctor

Even when it was illegal for pharmaceutical companies to advertise

treatments for erectile dysfunction to the public, they had
enormous amounts of cash invested in marketing programs. Your
medical providers - doctors, nurse practitioners, and others -- are
literally bombarded by drug

48
M etho ds Pharmaceutical Companies Use

49
1. Classes on off-label uses of a drug - While a drug approved
by the FDA to tre at depression may be very effe ctive, that
may not be wher e its re al value lies. A little-kno wn fact is
that off-label use, or using a drug for a non - FDA-
approved tre atment, is complete ly legal and very
common. These off-label uses are n't publicised; it's
illegal. But in a necessa ry loo pho le, they can be taught in
class es. Your physician may be attending drug class es
where he is learning that sildenafil (Viagra) may be used
for, say, treating certain types of hyper tension.

Off-label uses are goo d because they allow

circumvention of the FDA to provide seriously- ill people
treatments that have bee n shown save. Still, they don't
alway s work the way preliminary pharmaceutical
re search indicates. They are great news for the
pharmace utical industry, though, bec ause it allows a
single drug to double, triple, or further increase the
people who will use it.

2. Little "premiums" - look at the no tepads, magnets,

pens, clipboards, even posters in your doctor's office.
M ost will have the imprint of a pharmace utical company
on them. Sales staff leave these in doctors' off ices to
k eep their names and brands fresh in the physician's
mind.

3. Free sampl es - When prescribing a new drug, your

doct or usually has blister pack s of pills ready to hand to

50
 you. He doesn't get those by ordering them or buying
them at the pharmacy; instead, pharmaceutical
sal espeople leave these at his office.

Doct ors are re luctant to switch prescriptions when they have

bee n started. This means if you start taking Levitr a using
sampl e packs and it works, the doctor will
continue prescribing it to you. And they are much more
likely to prescribe medications that they have available
free samples for.

This isn't all bad by any means. Those free samples can save the
life of someone who can't afford a necessary prescription; and if a
doctor asks a salesman to do it, he'll leave large supplies of any
given sample with the doctor. But you should be aware that once
you take that sample, you may be locking into using that
medication.

51
4. Free magazine subscriptions t o their public ations prom oting their
own produc ts - All the large pharm aceutical c ompanies have their
own online and/or print publications wit h c hatty arti c les about
as thm a and diabet es, new discoveries tha t their cutting-edge
s cientist s have made, and even details on new off-label us es for
drugs they'v e developed.

I' m not going to lie -- I love these magazines . They are well-writt en
and have absolute cutting-edge information. However, they do
s howcase the drugs developed by the pharm ac eutic al company tha t
produc es them , and ignore any better drugs by other
pharm aceutical companies .

(Note: If your doc tor has m agazines like this in his offic e, you
s hould be able to get him to get you samples or even a free
s ubscription of your own by jus t as king.)

5. Traditional mark eting to c ons um ers, whic h gets you to ask your
doctor about new drugs - All thos e s tupid er ectile- dysfunc tion,
bladder control, and depression commer c ials do have a purpos e.
Yes, you can't just walk into the store and get them . But they make
it muc h more likely tha t you will ask your doctor for these produc ts
by nam e.

Studies by phar mac eutic al m arket ers have shown tha t if a patient
as ks for a drug by nam e tha t m ay prove effi cacious for his or her
dis ease, a doctor us ually will prescribe it.

6. Direc t- m ail mark eting - This is less useful than m any mark eting

52
t ec hniques, but phar maceutical c ompanies s till will dir ect-m ail
doctor s wit h samples , inform ational shee ts , premiums , and other
fr ee bies to get them to pay att ention to their produc ts . Oft en, this
is done by a new salespers on who is trying t o build a niche up.

7. Visits by salespeople who educate on on- and off-label drug us es,

oft en at a dinner out or other free treat - Som e 93% of doc tors,
acc ording to a JAMA study, admit to acc epting dinner s out and
sm all entertainm ent gifts from a pharm ac eutic al sales person. This
is typically just a wa y to get the doctor to lis t en to a sales pit ch or
educational information, as well as developing a fri endly
r elationship with a new m edic al provider .

Ways Pharmaceutical Companies Market to Your Doctor

53
8. Payments for consulting or giving lectures - This used to be fairly
egregious, with doctors getting a substantial amount of their
incomes from these sorts of kickbacks -- for they were kickbacks.
Today, new pharmaceutical organizations like PhRMA have
instituted guidelines that their members voluntarily follow,
preventing these abuses from happening.

Mos t payments for these things now ar e for time, and provide
about the same or les income to the doc tor tha t he or she would
gain fro m regular m edic al prac tice.

However , ther e is still a real danger. Mos t pharm aceutical

c om panies hire their very well-paid scientis ts and resear chers from
thr ee differ ent sector s: r esearc h institution s, the FDA (a whole
nother conflic t of inter es t story ), or private practic e. This m eans
doctor s who build up a reputation for consulting and lec turing can
inc r ease the chances a pharm aceutical c ompany will hire them.

How much is tha t worth ? When I worked at Pfizer in southeast ern

Connecticut, there was one r es earcher who flew his privat e plane t o
wor k from his farm in souther n New Hamps hire, at least thr ee days
a week. You have t o make pretty good m oney to do that.

9. Enrolling their patients in c linic al trial s - this is one of the mos t

altrui stic m arketing m ethods . Es pec ially with c ancer drugs,
pharm aceutical companies ar e hungry for c linic al trial subje c ts;
doctor s ar e hungry for new treat m ents for their t erm inal patients
tha t m ight buy t ime or even s ave their lives. I t ver y much work s t o
the advantage of both for doc tor s t o rem ain very awar e of what the

54
pharm aceutical companies ar e doing in this area.

10. Direct mark eting of all thes e types to m edical s chool and
nursing professors -- the people who trai n your m edic al providers -
All nine of the above m ethods, when us ed t o mark et t o medical
s chool profes s ors, ar e ver y effective in training new doc tor s t o us e
the drugs mark eted. You tru s t your teacher s t o get it right. I f the
pharm aceutical salesperson can convince them of the effic acy of a
drug, they have not jus t gained a single not-that -lucrative
c us tom er, but rather dozens of cus tomer s in his or her s tudents,
who will go on t o private and public practic e everywhe r e.

Yes, doc tors are human. Many claim that thes e littl e - and big perks
do not influence them or their prac tice, that though they may get
s om e ver y nice gifts thes e things don't encourage them to prescribe
m ore m edications.

55
Survey of Sales force in Pharmaceutical
Industry

56
SAMPLE SIZE

Sr Name Company Designation Speciality

.
No.
1 yogesh Magar Cadila F. O. Card/diab
2 Omprakash Chaturvedi Dr. Reddy's SBU Diabetic
3 Nitin Gaikwad Lupin MR Neuro
4 Shilpa Patange Novartis MR General
5 Nagesh Mishra Novartis MR General
6 S. M Kangane Novartis MR General
7 Omprakash zydus Area manager gynae
8 Suraj Soni Emcure MR Card/diab
9 Rajesh Singh Novartis MR General
10 Bhaskar Naik Alkem MR Bergen
11 Ranjit Sigma MR General
12 Prabhat ICPA MR General
13 Prafful Systopic MR General
14 Ashish Tiwari Meridian MR General
15 Pravin DRL SBU General
16 Nilesh UCB MR General
17 Sachin Glenmark Area manager General
18 Parag J Emcure MR General
19 Rajesh Ajanta MR opthal
20 Manish Tab. India MR General

57
Param eter 1. Total number of Doctors’
comparison

Tot al number of Doct

10 0% 10 20

120-1
1 20-1
30 150-1
1 50-1
30 176-2
2 01-2 40
2 26-2 226-2
50

Tot al Number of Doctor

58
As in above case we found that there is slight mismatch between the
company’s requirement & the suggestion of MR’s.

Almost 50% of MR’s want the Dr List of 150-175, where as the majority of
the companies’ strategy is to have 175-200 doctors.

Parameter 2. Co re Docto r

TL DR. Company MRCore

Dr. Company MR
120-149 0 2
150-175 4 10 20-24 0 2
176-200 8 6
25-30 7 9
201-225 6 2
226-250 2 0 31-35
2 2

36-40 5 1

50-60 4 4

100-101 2 2

59
 100 -10 20-2
1 0% 10 %

50-6
20% 20 -24
25 -30
31 -35
36-4 25 - 36 -40
5% 3 50 -60
31-3 45
% 10 0-1 0
10%

T o ta l n u m b e r o f c o r e D o c to r a s

100-101 20-
10% 24
0%
50-60 25-
30 20-24
20%
35%
25-30
31-35
36-40
50-60
36-40
25% 31-35 100-101
10%

Total number of core Doctor as per company

In both the graphs we can analys e that both the categories have the cons ent
at the core Doctors r equirement. And majority of them sug gest to have 25-30
core doctors in list

Freq
60 Company
MR
 2
0
2
12
14
3
Param eter 3. Frequency of Core Doctors 6
6
4 1 4
0% 10% 0
3 0
30%

1
2
3
4

2
60%
Fr equenc y of Core DR. as per Compa

14
0%

3
30%

1
2
3
4
2
70%

Frequenc y of Core DR. as per M

This is the parameter, there is exact match

between strategy of the company & the
suggestions of the MRs.
The below graphs represents the same.

61
Parameter 4. Call Averages
0%
8
20%

8
10
12
13
14

10
80%
Call Average Suggeste by MR

14 8
10% 0%

13
10% Call
Average Company MR
8
10
10
8 0 4
50%
12
13
10 10 16
14
12 12 6 0
30%

13 2 0
Call Average required by
Company 14 2 0

This parameter is always at contrast to each others requirement. In

this case Companies always needs some standards of call average &
MRs suggest to lower it down.

62
Parameter 5. No of Retailer

12
10 0%
20%

4
8 4
5
0% 40%
6
8
6 10
20% 12

5
20%
No of retailers/day as per M

12
10%

10
10%
4
40% 4
No of
5
8 retailer Company MR
10% 6

6
8 4 8 8
0% 10
12 5 6 4

6 0 4
5
30% 8 2 0
No of retailers/day as per
Company
10 2 4

12 2 0

As visiting number of retailers is also field activity. So it also

have some conflict in the match.

Majority of the MRs want to have less number of retailers/day

to visit, as desired by the company

No of
Lit.

Company
63 MR
0
4
 2
0
6
3
3
Parameter 6. No. of literature distribution/ day 2
4
15
0%
2
10
22%
0 2
22%
5
0 4
5 2 0
0%
3
10
4 4
11% 5
4
10 4
15 15
3 2
11 34% 2
% 0
Number of Literature/month as per MR

15
11% 0
20%

10 0
2
21%
0% 2
3

3 4
16% 5
10
15

5 4
21% 11%
Number of Literature/month as per Company

Distribution of literatures requires reading and understanding

of the latest updates about the product.

So companies find it important to be discuss with Doctor,

where as MRs find it more complicated to manage with other
detailing aids while making a call.

64
Parameter. 7 Important Activities According to MRs for making
good relation or to make sales

Most Averag Less

Activit IMP IMP e IMP
y IMP
Visit 12 6 2 0
samples 0 4 6 8
Gifts 2 2 4 6
CME/Sponseship 7 6 2
other 3 1 1 0

14
12
12
10
8 Most
8 7
6 6 6 6 IMP IMP
6 Average
4 4
4 3 IMP Less
2 22 2
2 1 IMP
0
1

0
Visit samples CME/S
Gifts
other
p
onseshi
Most IMP 12 2 3
IMP 6 4 2 7 1
Average IMP 2 6 4 6 1
Less IMP 0 8 6 2

This parameter of this survey is has some additional importance,

because in this crux of the total sales and marketing can be seen

In this most of the MRs feels that for making good relationship with
Doctors Regular Visits are of Utmost important.

Here “OTHER” means Doctor meet, Strategy Implementation,

communication, CRM/ WIIFM etc
65
Pharmaceutical Sales Representative
A Day in the life of a Pharmaceutical Sales Representative

66
Pharmaceutical sales is a fast-paced, high-turnover business that
rewards assertiveness, persistence, and knowledge.
Pharmaceutical sales representatives spend most of their business
time on the road, talking with pharmacists, hospital personnel,
physicians, patient advocacy groups, and even retirement homes,
increasing the visibility of their company’s products and the
volume of their sales. “Sell sell sell learn learn learn sell sell sell,”
wrote one sales rep, who included his business card with his
survey, in case we wanted to purchase any pharmaceutical
supplies. Many other sales reps agreed that the best reps follow
any lead, making every possible effort to sell their product. A
number attend meetings where contact with purchasing
professionals is rich, such as an association of pharmacists or a
convention of hospital administrators. This territory-oriented
business can be a hard life, particularly for those trying to
maintain their family life as well. The need to sell extends to social
functions and free time, and the already precious family moments
can erode further to the point where many reps are forced to
reevaluate their commitment to their profession. This difficult
balancing act is complicated by the additional pressure of being in
a commission-based occupation. For many, a significant portion of
their income is riding on their ability to get the product into the
hands of the consumer. So, why is this job so addictive? Perhaps
because the excessive profit margins of many brand-name
pharmaceutical products can mean enormous commissions. In
addition, products are generally consumed fairly quickly and not
stored, so old markets rarely disappear; they need regular
servicing. The second most attractive job feature that the sales
reps mentioned was the intellectual challenge the job imposed.

67
Education is the norm in this field; learning about a company’s
product line is like taking an advanced course in pharmacology
(which many do take during their initial years in the industry).
They have to be familiar with data, statistics, and issues in the
health community to be able to communicate successfully with
businesspeople and doctors. Although this job has some aspects
that are unquestionably grueling-one sales rep said he put in 184
days on the road in 1994-many love it, and “love” is the only term
that accurately describes their zeal, dedication, and willingness to
make sacrifices for their job.

Paying Your Dues

68
Pharmaceutical sales representatives with a science background
have an advantage in this profession, in terms of both their
credibility and their ability to educate themselves about product
lines. A college degree is standard for this job, with many
employers looking favorably on graduate work. Useful courses
include biology, chemistry, biochemistry, biophysics, organic
chemistry, English, public speaking, finance, and negotiation
techniques. Professional education is the norm for all sales
representatives, both on their own products and on other
companies’ product lines. The ability to read a scientific study and
examine its assumptions is critical to a PSR’s success. Licensing is
available through professional organizations, but it is not required
to advance to managerial positions.

Associated Careers
Pharmaceutical sales representatives go into sales positions in
other professions-as systems marketers or service sales
representatives, for example-where their selling skills are valued,
but where scientific knowledge is less important. Some PSRs are
willing to give up the scientific element of their job in order to go
into a profession where it is easier to advance and easier to
maintain a satisfying family life.

Challenges for Pharmaceutical Sales Forces

Pharmaceutical sales forces can overcome their challenges by
learning how companies from other sectors have dealt with similar
challenges.

69
Sales force, the main communication channel of the
pharmaceutical industry, faces many challenges: lower perceived
product differentiation, great heterogeneity in the needs of
customers and the value of customers to the company, pressure to
find more efficient communication channels, restricted physician
access, tighter regulatory constraints, the growing power of non-
physician customers, and adversarial relationships with payers and
other non-physician customers.

Are these challenges unique to the pharmaceutical industry?

Companies in other sectors have successfully addressed challenges
similar to what the pharmaceutical industry faces today.

Changing the sales force structure to compensate for the

loss of product differentiation
Many primary care physicians are visited by different
representatives from the same company. While this makes it more
difficult to obtain a holistic understanding of physician needs and
respond to them, it allows a sharp promotional focus on individual
products. However, in many primary care categories competing
brands are perceived to be only weakly differentiated, and the
promotional focus on products has become less effective.

70
Xerox was facing analogous issues in the 1980s. Many of their
customers received visits from five different Xerox representatives,
each promoting a different product line. However, intense
competition-especially from Japanese competitors in the copier
category-had reduced perceived product differentiation. This led
Xerox to abandon its product-based sales force structure in favour
of a market segment-based structure.

Customers were assigned to segments on the basis of size (large,

mid-sized, small businesses) and other characteristics (two
additional segments comprised distributors, and "institutional"
customers respectively). Sales representatives were responsible for
the sales of all of Xerox's products to all customers in their
designated segment, within a geographic area. The new sales force
structure allowed Xerox's sales representatives to better
understand their customers, tailor the offerings to their needs and,
thereby, compensate for the loss of product differentiation.
Together with other initiatives, the restructuring of the sales force
resulted in a significantly improved market position for Xerox.

Confronted again with a loss of differentiation in the 1990s, Xerox

further sharpened its customer focus by sub-segmenting the
largest business segment into several industry segments (e.g.
financial, manufacturing, graphic arts and others), and
restructured the sales force by industry segments.

Tailoring the communication channels to differences in

customer needs

71
The sales force is a very effective communication channel, allowing
face-to-face, interactive communication of a considerable amount
of information. But, considering the high cost of a sales
representative's call, do all physicians have a similar need for the
extensive information that can be provided in a face-to-face visit?
Similar to the pharmaceutical industry, the traditional stock market
investment firms such as Merrill Lynch and Morgan Stanley
employed highly-paid professionals who provided customers with
sophisticated advice, often based on proprietary research.
However, the growing availability of stock market information in a
variety of media enabled motivated investors to form their own
preferences about where to invest. Targeting these "self-directed"
investors, who preferred to manage their investments on their
own, Charles Schwab's low-price "discount brokerage" firm
eliminated the high-cost information services and concentrated on
making stock market transactions easy.

After having successfully penetrated the "self-directed" investor

segment, Charles Schwab defined two other segments-"validators,"
who also wanted to manage their own portfolios but required some
consultation, and "delegators," who wanted someone else to
manage their portfolio for them-and designed communication
channels that responded to the different needs of these segments.

Finding the most efficient communication channel for each

function

72
A face-to-face sales representative visit operates as a multi-
function communication channel, which can carry many types of
communications from the firm to physicians and other types of
customers (e.g. information about diseases, products, patients,
other physicians), and from customers back to the firm (e.g.
customer needs, perceptions, preferences and behaviours;
competitor activities). But face-to-face visits are expensive, and
some of the functions performed by such visits might be carried
out with equal or greater effectiveness at lower costs by some
other channels.

Traditional thinking in the copier market had it that copiers,

especially large ones, could be sold only through face-to-face
visits, particularly to key accounts. Like at other copier companies,
the doctrine at Rank Xerox, Xerox's European subsidiary, was that
sales representatives should spend as much time as possible on
the road seeing customers face-to-face, and minimise the time in
the office. But Rank Xerox discovered that salespeople in Colombia
and Dubai interacted with customers mainly by telephone, for
different reasons: to avoid the risk of being shot while driving in
Colombia, and to avoid the sizzling heat in Dubai. Dubai was
especially successful. They used the telephone for clients of all
sizes and all types of copiers, small to large, visiting customers
face-to-face only as required (e.g. to provide a demonstration),
and achieved an average revenue-per-salesperson three times that
of Europe. When introduced in Europe, the new channel strategy
was rapidly adopted throughout the region, boosting Rank Xerox's
market share and revenue-per-salesperson.

73
Matching customer value and the cost of communication
channels
Physicians differ in their value to pharmaceutical companies.
Indicators of value include actual and potential revenue
generation, influence (e.g. opinion leadership) and knowledge (e.g.
advisory board members selected for their knowledge of
physicians' needs). Communication channels differ in their cost,
e.g. face-to-face sales representative visits are more expensive
than other channels such as the telephone, fax, and e-mail. The
greater a customer's value, the greater can be the cost of the
communication channel.

For example, Dell in the U.S. assigned its customers to nine

different segments varying in their value to Dell, and provided a
channel mix that matched each segment's value. Customers in the
highest-value segment were connected to Dell through all
conceivable channels including dedicated account teams
comprising field and telephone sales personnel, program managers
and technical support, and customer-specific websites with
extensive functionality. Individual consumers, on the other
extreme, could reach Dell only via telephone and Dell's website.
Segments in between these two extremes were served by a
channel mix in which the availability of costly channels such as
field salespeople increased with the value of the segment.

Creating new channels to increase customer access

74
Not all physicians receive visits by pharmaceutical sales
representatives. Some refuse to see pharmaceutical sales
representatives. Others are not visited by pharmaceutical sales
representatives for a variety of reasons: they may not show up on
the list of physicians, live in remote areas, or may not prescribe
enough to be worth a visit.

Avon, which sold beauty products directly to consumers in one-to-

one meetings in the consumer's home, also was confronted with
problems of consumer access. As more and more women entered
the workforce, they were not at home during the day and,
therefore, not available to meet with Avon representatives.
Realising that many representatives sold Avon products as a
second job, the company encouraged Avon representatives with
other jobs to sell the Avon products at work. By 1998, the at-work-
sales accounted for about 28 percent of all Avon sales.

More recently, Avon discovered that the company's sales model

kept it away from almost 60 percent of its target consumers; 18
percent of the women in Avon's target group were willing to buy
from Avon but not through an Avon representative, and 40 percent
had no access to a representative. In order to increase access to
both of these groups, Avon decided to add a web channel to its
traditional face-to-face channel. Women who like to be in contact
with an Avon representative can now use the personalised websites
of Avon representatives while the women who dislike the sales
representative channel can buy directly from Avon's online store.

Creating new channels to overcome regulatory constraints

75
Pharmaceutical promotion is subject to a growing number of
constraints, arising from laws, regulations and industry codes such
as the International Federation of Pharmaceutical Manufacturers
and Associations (IFPMA) Code of Pharmaceutical Marketing
Practices and company-specific promotion codes. This should
stimulate companies to search for novel promotion channels that
are both compliant and effective.

Like the pharmaceutical industry, the tobacco industry is subject to

many constraints on promotional practices. In fact, the industry
has been engaged in a race of adaptation with regulators; every
time regulators impose a constraint, the industry invents novel
promotional methods, which trigger new regulations, which in turn
stimulate new promotional practices, and so on. For example, the
ban on TV advertising led to a surge in sports sponsorships (e.g.
Formula 1 races), until sports sponsorship was banned. Other
novel promotional methods invented by the industry over the years
include the promotion of non-tobacco products with the same
brand name as tobacco products (e.g. Salem music stores, Camel
clothing stores, Peter Stuyvesant Travel outlets, and Benson &
Hedges bistros), overt and covert bar and nightclub promotional
events (e.g. models and actresses place a pack of the sponsored
cigarette brand on the bar and get men to bum a smoke), and
product placement in films.

Targeting new types of customers

76
Pharmaceutical promotion has traditionally targeted primarily
physicians. However, the influence of non-physician customers
such as pharmacists, patients, and payers is rising in many
countries. Pharmaceutical companies need to allocate more
promotional efforts towards these new target audiences.

The success of Federal Express in the small package airfreight

industry resulted in part from its decision to target non-traditional
customers. Prior to the emergence of Federal Express, in most
organisations the responsibility for selecting a carrier to handle a
specific shipment rested with individuals whose title typically was
traffic manager, mailroom supervisor, shipping clerk, or
dispatcher. The individuals who originated most of the shipments-
executives and their assistants-and who had most to lose from a
shipment which arrived late or in poor condition, were rarely
involved in shipping decisions for lack of information about the
options. Research comparing delivery speeds for Federal Express
and its main competitors showed that Federal Express delivered 93
percent of packages the next day compared to 42 percent by the
best competitor. Federal Express used this result as the basis for a
television and business magazine campaign targeted at executives
and their assistants. The campaign sensitised them to the risk of
late arrival of shipments, increased awareness of Federal Express
and its superior performance, and empowered them to increase
their influence over shipping decisions. This resulted in a
significant increase in Federal Express's sales and market share.

Transforming an adversarial into a collaborative relationship

77
With the rise in power of non-physician stakeholders comes the
risk of heightened conflict, for the interests of the pharmaceutical
industry may not be perceived to be aligned with the interests of
pharmacists, payers and others. Each party's attention may be
focused on value appropriation. For example, the price of each
individual product may become the main focus of discussions, with
pharmaceutical companies always insisting on a high price, and
pharmacists and payers always demanding a lower price.

Relationships between many fast-moving consumer goods

companies and large retailers were similarly focused on price
negotiations for each individual product. For example, Procter &
Gamble (P&G) and Wal-Mart were in an adversarial relationship
whereby each of P&G's salespersons, representing one of P&G's
twelve product divisions, was negotiating independently with one
of Wal-Mart's purchasing agents. P&G's representatives were
wedded to a "load 'em and leave 'em" strategy: "If I can swap
more of my product for more of your dollars, I will 'control' the
store" (Lou Pritchett, former Vice President for Sales, P&G). Wal-
Mart's purchasers, naturally, pursued the opposite goal, namely to
minimise Wal-Mart's inventory and the price paid to P&G.

78
Discussions between senior managers at both companies led to the
recognition that their adversarial relationship destroyed
opportunities for mutually beneficial value creation. This paved the
way for a collaborative partnership, in which the two companies
saw themselves as members of a common team with the following
mission: "The mission of the Wal-Mart/P&G Business team is to
achieve the long-term business objectives of both companies by
building a total system partnership that leads our respective
companies and industries to better serve our mutual customer-the
consumer." P&G assigned 300 full-time staff to its global Wal-Mart
team, more than 200 close to Wal-Mart's headquarters alone.
Sharing a great deal of information, the team and Wal-Mart
cooperated to develop new profitable products and services,
allocate resources to in-market products and services and optimise
the supply chain. The partnership has served both companies well
not only in their relationship with one another but also in making
each of them a more valuable partner in other relationships. In an
annual survey, in which manufacturers rate the performance of
retailers and retailers rate manufacturers, both P&G and Wal-Mart
have held the number one spot for many years in a row.

79
 Conclusion

Pharmaceutical companies are facing many challenges in relation to

their primary communication channel, namely the sales force. But
these challenges are not unique to the pharmaceutical industry.
Companies in various other sectors have been confronted with
analogous challenges, and some have addressed them successfully.
The specific solutions at which they arrived may not be transferable
to the pharmaceutical industry. What is transferable, however, is
the need to challenge the status quo, the need for creativity,
ingenuity and an open mind in the search for solutions, and the
need for courage and skill in managing the necessary
organisational transition.

80
 Annexure

Name: Specialty:

Designatio Company’s name:

n

Company’s As per your

requirement suggestion

No of doctors in list

81
No of core doctors

Frequency of core
doctors visit

Call average

No. of retailers/day

Number of
literatures
distribution /month

The most important thing/activity/strategy for making good relation

with customer, according to you is (e.g. Visits, cme, sponsorship etc.)

1.

2.

3.

4.

5.

82
The best marketing activity/strategy for launching a new product (e.g.
Symposia, gifts)

1.

2.

3.

The thing which you don’t like or you would like to change it

1.

2.

3.

The best marketing strategy according to you:

( )

83