“A Critical Analysis of Relationship

Marketing in Indian Pharmaceutical

Industry: Comparative Analysis”
AUTHOR : PROF. B.C. Thimmaiah – Professor ( Assistant ) – Moskovskaya Shkoloo Upraveleniya
Scolkovo , Novaya Ulitsa , 100, SCOLKOVO , MOSCOW OBLAST , RUSSIA ,143025

“A Critical Analysis of Relationship Marketing in Indian Pharmaceutical Industry:

Comparative Analysis”

Abstract

Recently the whole world has gone through the turmoil called global recession leading to huge
economic losses, unemployment, and many more. It was India and only few other countries that
were able to survive during the slump. If we look into the statistics, it was only few industries
that were affected negligibly. The Indian Pharmaceutical Industry is a success story providing
employment for millions and ensuring that the drugs are reasonably priced and are available to
enormous population.

The Indian pharmaceuticals industry has grown from a mere US$ 0.32 billion turnover in 1980
to approximately US$ 21.26 billion in 2009-10.The country now ranks 3rd in terms of volume of
production (10% of global share) and 14th largest by value.

Growth of Indian Pharmaceutical Industry from are given in table below:

Figures in Rs Crore
  2012-03 2013-14 20014-15 2015-16 2016-17 2017-08 2018-09
Domestic
30365 32575 34128 39989 45367 50946 55454
Market
Exports 12826 15213 17857 22216 24942 30760 38433
Imports 2865 2956 3139 4515 5867 6734 8552
Total Market
42326 47332 52029 62566 68442 78610 89335
Size

Source: Annual Report 2008-09, Department of Pharmaceuticals, Government of India

If we look at the above table, it’s clear that even during the economic depression, the growth of
the Pharma Industry was extravagant and which is incredible topic for the researchers to study
or research.

The success story of this Industry is because of the practice of Relationship Marketing and the
Paper titled basically focuses on the general understanding of the Pharmaceutical Industry,
Relationship Marketing in Pharmaceutical Industry, Challenges and Strategies.

Introduction:

Recently the whole world has gone through the turmoil called global recession leading to huge
economic losses, unemployment, and many more. It was India and only few other countries that
were able to survive during the slump. If we look into the statistics, it was only few industries
that were affected negligibly. The Indian Pharmaceutical Industry is a success story providing
employment for millions and ensuring that the drugs are reasonably priced and are available to
enormous population.

The Indian pharmaceuticals industry has grown from a mere US$ 0.32 billion turnover in 1980 to
approximately US$ 21.26 billion in 2009-10.The country now ranks 3rd in terms of volume of
production (10% of global share) and 14th largest by value.

Growth of Indian Pharmaceutical Industry from 2002-03 to 2008-09 are given in table below:

Figures in Rs Crore
  2012-03 2013-14 20014-15 2015-16 2016-17 2017-08 2018-09
Domestic
30365 32575 34128 39989 45367 50946 55454
Market
Exports 12826 15213 17857 22216 24942 30760 38433
Imports 2865 2956 3139 4515 5867 6734 8552
Total Market
42326 47332 52029 62566 68442 78610 89335
Size

Source: Annual Report 2008-09, Department of Pharmaceuticals, Government of India

If we look at the above table, it’s clear that even during the economic depression, the growth of
the Pharma Industry was extravagant and which is incredible topic for the researchers to study or
research. The Indian pharma industry growth has been fuelled by exports which registered a
growth of 25% in 2008-09. Retails sales in the Indian pharmaceutical market grew by 18% in the
month of March 2009, despite fears of stalling industrial growth following the slowdown across
economies.

The value growth of Indian pharma market as per secondary sales for the month of Mar
2009 was higher at 18.4%, as compared to 13.3% growth in the month of Feb 2009, according
the latest data from ORG IMS, a business intelligence firm.

The value growth as per Mar 2009 MAT once again touched the double-digit mark of 10.1%,
with marginally higher growth, as compared to 9.8% as per Feb 2009.

The value growth in the month of Mar 2009 was higher at 16.8%, as compared to 12.5% in the
month of Feb 2009. The value growth as per Mar 2009 (14.1%) was marginally higher as
compared to Feb 2009 (13.6%).

In October 2008, sales in the Rs 35,000-crore drug retail market had dipped by 1.2%, the first
time in many years, due to consumers shifting to cheaper brands and stockists facing a financial
crunch. However, retail sales have gradually strengthened and in February, it rose 13.3%.

Despite the brief slowdown in growth in 2008, ORG had projected the Indian pharmaceutical
industry to grow at 15-20% over the next few years. The industry has been growing at 14-15%
over the last few years. Due to economic prosperity, a lot more customers are entering organised
healthcare, antibiotics and acute therapies are normally the first line of defence, say analysts.
While India’s metros and class I cities drive the growth tier II cities and rural market add to the
growth momentum. Rising disposable income, improving health infrastructure such as the
government’s incentives to set up 100-bed hospitals in non-metro towns, and the general increase
in health awareness due to deep penetration of the electronic media are the corner stone’s of sales
expansion. To promote excellence in pharmaceutical education and research, 6 new National
Institute of Pharmaceutical Education & Research (NIPERs) have been set up, in addition to the
existing one at Mohali(http://www.dancewithshadows.com/pillscribe/indian-pharma-market-
zooms-to-us-21-83-billion-rs-100611-cr-in-2009-10). The major players in the Indian
Pharmaceutical Market are Dr Reddy, Cipla, GSk, sun Pharma, Zydus Cadilla, Novartis, Panacea
Biotech, AstraZeneca, Ranbaxy etc.

Conceptualisation (Theoretical Background):

The Conceptualisation or Theoretical background focuses the understanding of the Concepts and
the theory based on which the research is carried out. Since the research topic is all about the
Relationship Marketing in Pharmaceutical Industry, we are going to discuss more about the
Concept “Relationship marketing”.
The Relationship Marketing aims at building of mutually satisfying long-term relationships-
Customers, Suppliers, Distributors, and marketing partner in order to earn profits and retain their
business. Relationship marketing involves cultivating the right kind of practices which helps firm
maintaining healthy relationships with the customers and all other partners. Hence the
relationship marketing focuses mainly on the CRM+PRM. Marketing is all about creating value
to the customers by providing them with the product or service etc. But the Relationship
Marketing is to create different or superior value to the customers and CRM programs which
may be in terms of Value, Value additions, Innovation, Satisfaction of the Customer, Promotion
programs to enhance customer awareness and convert them into repeat buyers and thus
converting them into the Advocates. It is all about the strategies which are used by the firms to
retain and build healthier relationships with the Customers and all other Partners.

In case of Pharma Industry, the customers are not the normal consumers. The customers include,
Physicians, Dealers, Distributors, Retailers and the patients. The study basically focuses on the
customers like Physicians and the Retailers.

Research Design: Since the study is Descriptive in nature, the research design is also
Descriptive in nature.

Objectives;

 The primary objective is to study the Relationship Marketing practices in Pharmaceutical

Industry.
 To study the impact of Relationship Marketing.
 To do the Comparative Analysis of Relationship Marketing Strategies used by the firms
Dr Reddy, Panacea Biotech, Ranbaxy and Zydus Cadila.

Scope:

The Indian pharmaceuticals industry has grown from a mere US$ 0.32 billion turnover in 1980 to
approximately US$ 21.26 billion in 2009-10.The country now ranks 3rd in terms of volume of
production (10% of global share) and 14th largest by value. If we look at the growth of this
industry, it’s clear that even during the economic depression, the growth of the Pharma Industry
was extravagant. Irrespective of the industries, businesses, firm has to focus on the customers to
create value, deliver value, and sustain the value which is possible through the long-term
relations with the customers/consumers and hence it’s an incredible topic for the researchers to
study or research.

Limitations:
 The limitations of the study includes, authenticity of the data collected due to biases and study is
restricted only to the concept of Relationship Marketing and the geographical area Bangalore
only.

Methodology:

The methodology used for the research includes deciding upon the Sample, Sample size,
sampling techniques which are used for the study. The sample items include the physicians and
the chemists. The sample size of the study is 25 physicians and 25 chemists and the sampling
technique used is Simple Random Sampling. The data collection includes the collection of the
primary data from the primary sources i.e. Physicians and Retailers which is in turn supported by
the secondary data collected through the secondary source like Pharma magazines, Journals,
Thesis, books etc. The method used to collect the data is survey method with a structured
questionnaire. Thus collected data is analysed using simple percentage methods to draw
inferences and conclusion.

Profiles of the firms:

Dr.Reddy’s Laboratories

Established in 1984, Dr. Reddy’s Laboratories (NYSE: RDY) is an emerging global

pharmaceutical company.

As a fully integrated pharmaceutical company, purpose is to provide affordable and innovative

medicines through our three core businesses:
 Pharmaceutical Services and Active Ingredients, comprising our Active Pharmaceuticals
and Custom Pharmaceuticals businesses;
 Global Generics, which includes branded and unbranded generics; and
 Proprietary Products, which includes New Chemical Entities (NCEs), Differentiated
Formulations, and Generic Biopharmaceuticals.
Reddy’s products are marketed globally, with a focus on India, US, Europe and Russia. Dr.
Reddy’s conducts NCE research in the areas of metabolic disorders, cardiovascular indications,
anti-infectives and inflammation. Reddy’s strong portfolio of businesses, geographies and products
gives them an edge in an increasingly competitive global market and allows us to provide
affordable medication to people across the world, regardless of geographic and socio-economic
barriers.
Panacea Biotech ltd

Panacea Biotec is India’s highly progressive research based health management company
involved in research, manufacturing and marketing of branded pharmaceutical formulations,
vaccines and natural products. The product portfolio includes highly innovative prescription
products in important therapeutic areas like pain management, diabetes & cardiovascular
management, renal disease management, osteoporosis management, anti-tubercular, gastro-
intestinal care products and vaccines. The flagship brands of the company- Willgo for pain
management; Glizid & Glizid-M for diabetes; Panimun Bioral & Mycept for kidney transplant
occupy leadership positions in their therapeutic segments.  This is in pursuit of marketing
strategies to build brands and drive the growth of the company

Zydus Cadila

Zydus Cadila is an innovative global pharmaceutical company that discovers, develops,

manufactures and markets a broad range of healthcare products. The group’s operations range
from API to formulations, animal health products and cosmeceuticals.

Headquartered in the city of Ahmedabad in India, the group has global operations in four
continents spread across USA, Europe, Japan, Brazil, South Africa and 25 other emerging
markets. In its mission to create healthier communities globally, Zydus Cadila delivers wide
ranging healthcare solutions and value to its customers. With over 10,000 employees worldwide,
a world-class research and development centre dedicated to discovery research and eight state-
of-the-art manufacturing plants, the group is dedicated to improving people’s lives.

Ranbaxy Laboratories ltd

Ranbaxy Laboratories Limited (Ranbaxy), India's largest pharmaceutical company, is an

integrated, research based, international pharmaceutical company, producing a wide range of
quality, affordable generic medicines, trusted by healthcare professionals and patients across
geographies. Ranbaxy today has a presence in 23 of the top 25 pharmaceutical markets of the
world. The Company has a global footprint in 46 countries, world-class manufacturing facilities
in 7 countries and serves customers in over 125 countries.

In June 2008, Ranbaxy entered into an alliance with one of the largest Japanese innovator
companies, Daiichi Sankyo Company Ltd., to create an innovator and generic pharmaceutical
powerhouse. The combined entity now ranks among the top 20 pharmaceutical companies,
globally. The transformational deal will place Ranbaxy in a higher growth trajectory and it will
emerge stronger in terms of its global reach and in its capabilities in drug development and
manufacturing.

Findings and Inferences of the study

Doctors:

Amongst the doctors surveyed

Most of the respondents rate that the sources of information under this context are effective.
 32% of doctors opined that medical reps are highly effective where as 64% opined that
they are effective, 4% said ineffective and none said highly effective.
 18% of doctors responded that printed literature is highly effective whereas 77% opined
they are effective, 5% said ineffective and none of them said they are highly ineffective.
 24% of doctors listed audiovisuals highly effective, 73% said effective, 2% said
ineffective and 1% said highly ineffective.
 33% of doctors reported that symposia/conferences guest lectures / are highly effective,
64% said effective, 3% said ineffective and none of them said highly ineffective.
 27% of doctors opined that journals are highly effective, 66% said effective, 6% said
ineffective whereas 1% said highly effective.
 22% of doctors rated internet as highly effective, 55% said effective, 16% said ineffective
and 7%rated it as highly ineffective.
 25% of doctors listed physicians’ samples as highly effective, 61% said effective, 10%
said ineffective and 4% listed it as highly ineffective.
 25% of doctors reported illness awareness promotion as highly effective, 54% said
effective, 20% said ineffective and 1% reported it as highly ineffective.
 64% of doctors reported that information provided by medical reps about promoted drug is
accurate, 29% said neutral where as 7% said inaccurate.
 21% of doctors reported that information provided by medical reps about competitors’ drug
accurate, 44% said neutral and 35% responded that it is inaccurate.
 74% of doctors responded that printed literature about promoted drug is accurate, 22% said
neutral and 4% responded that it is inaccurate.
 29% of doctors opined that printed literature about competitors’ drug is accurate, 54% said
neutral and 17% responded that it is inaccurate.
 71% of doctors opined that audiovisuals about is promoted drug are accurate, 25% said
neutral and 4% opined that they are inaccurate.
 33% of doctors reported that audiovisuals about competitors’ drug are accurate, 51% said
neutral and 16% said they are inaccurate.
 74% of doctors opined that information in the journals about promoted drug is accurate,
21% said neutral and 5% said it is inaccurate.
  38% of doctors said that information in the journals about competitors’ drug is accurate,
49% said neutral and 13% said it is inaccurate.
 The survey reveals that medical reps are the most preferred source for brand recall with
81% of respondents ranking it as number 1.
 The other significant sources are reading material with 56% of doctors ranking it as number
2, audiovisuals with 29% ranking it as number 3.
 However 38% of doctors ranked physicians’ samples as no.4 and 72% of them ranked gifts
as no 5.
 64% of the surveyed doctors opined that the gifts given by the company had a utility value,
20% didn’t have fixed opinion and 16% said that they had no use at all.
 40% of them ranked new studies conducted by companies as no.1 and 34% no.2.
 38% of them reported panel discussion as no.1 and 23% as no.2.
 33% of them reported sponsored conferences as no.3 and 40% as no.4.
 20% of them ranked product launch programmes as no.2 and 29% ranked it as no.3.
 52% of them ranked patient education programmes as no.5, 21% no.4, 11% no.3.
 Among the doctors surveyed 66% said that companies are not adopting ethical methods of
promotion, 18% said only some companies are following ethical methods and 16%
reported that the methods are ethical.

The most of the physicians said the knowledge, detailing and presentation of the Medical
representatives have a greater role to play in maintaining the good relationships with them.
The clinical reports and the Continuous medical education also play an important role in
promoting and having good relations with physicians.

Chemists:

 The survey revealed that the most significant factor influencing the stocking of a
particular brand by the chemists is the number of prescriptions received for the brand. 80%
of the surveyed chemists ranked this factor as number 1.
 Brand availability was ranked number 2 with 52% of the chemists opting for it.
 The other two significant factors that influence the stocking of a particular brand are
discounts/schemes/gifts and regular visits by the MR.
  Factors like product price, relationship with the MR and company reputation are not major
factors influencing the stocking of a brand.
 The other factors that influence the chemists’ loyalty are relationship with the MR and
gifts/discounts which have been ranked number 3 and number 4 respectively
 64% opined that information regarding the product should be provided to the patient as it
could improve compliance.36% opined that patients need not be provided with information.
 A thorough knowledge of the company’s products was the most preferred quality in a MR
according to the surveyed chemists with 48% of them ranking it as no.1.
 The other significant qualities desired in a MR by the chemists are punctuality and
commitment ranked as no.1 and no 2 by 36% and 38% chemists respectively.
 The external appearance of the MR didn’t not play any significant role as this factor was
ranked 5th by 66% of the chemists.
 All the chemists said that the offers, schemes for them attract them more compared to
others.

Discussion about the Comparison between the strategies of the firms to maintain long-term
relationship with the customers:
80% of the physicians are opined that the Dr.Reddy’s lab MRs are well trained and have very
good knowledge about the molecules, dosage, drug interactions, side effects compared to zydus
cadila, Panacea biotec, and Ranbaxy lab.Most of the physicians are opined that the CME’s
conducted by the Ranbaxy are more effective than the rest of the firms. The chemists find the
offers of the Zydus cadila are more attractive. Similarly when it comes to the gifts and
sponsorships, Dr.Reddy’s lab is leading.
Suggestions:
 Since most of the physicians feel that the traditional detailing is very effective, the firms
should train their Medical representatives very well about the molecules, drug
interactions, side effects and dosage. The detailing should be done effectively and the
detailing kit should have all the relevant information about the molecules.
 The physicians should be given an opportunity to attend and lead the continuous medical
education and should be provided with the platform to discuss the success story of the
cases handled by them.
 The doctors are more interested in the research and innovation taking place in the
industry. They should be provided with clinical research reports, journals which help
 them to understand the molecules in a better way. The firm should provide them an
opportunity to attend the medical conferences to enhance their knowledge and discuss
their knowledge with the other physicians.
 According to the chemists the MR should be well trained and should be aware of the
schemes and offers and should see to that drug are available on tome.
 The MR should act as the facilitator between the stockist and physicians.

Conclusion:

The pharmaceutical industry is one of the biggest industry which is entirely different from the
other industries. The customers are not normal consumers but the doctors and the chemists. The
pharma industry basically gives lot of importance to the long-term relationship with its
customers. The firms should focus on the above mentioned suggestions to manage the good
relationships with the physicians and chemists.

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