Post on 27-Oct-2014
Pharmaceutical Industry: Bangladesh Perspective
The pharmaceutical industry of Bangladesh boasts a production figure that can cater to almost
97% of the internal demand of the country. The other 3% constitutes the demand for life saving
drugs, vaccine and injectibles which are currently not in production within the country. This
necessitates the importation of such medicines. In 2007, the size of the industry was reported to
be exceeding USD 590 million. It had also been a promising industry recording a growth rate of
almost 12% for the five years immediately prior to 2007. In 2008, this growth rate further
accelerated to almost 15% marking the Bangladesh Pharmaceutical industry to be the fastest
growing industry in the South Asian region. This is very impressive considering the fact that the
country has as its competitors India, Pakistan, Vietnam and Sri Lanka.
Bangladesh has made significant progress in the export market. Between 2003 and 2006
pharmaceutical export locations increased to about 61 countries from 51 and quadrupled in
export value from USD 7.9 million to USD 36.5 million. This resulted in an average annual
growth rate of 91.8%. This growth in the export sector can be largely credited to the low-cost
factors of production that exist in Bangladesh in the form of cheap labor, infrastructure and
power costs.
The Bangladesh market in different in the sense that it produces drugs indiscriminately; whether
they be patented drugs or off patented drugs. This kind of market is popularly known as a
Branded Generic Market since any manufacturer can produce the same molecule (either patented
or off-patented) and market it in different brand names. There are currently 450 generics
registered in Bangladesh, out of which 117 are in the controlled category i.e. in the essential
drugs list. The remaining 333 generics are in the decontrolled category. The total number of
brands that are registered in Bangladesh are currently estimated to be 5,300, while the total
number of various dosage forms & strengths are 8,300.
The top 10 companies by sales figures and consequently market share are namely Square
pharmaceuticals, Beximco, Incepta, Acme, Eskayef, Drug Int., Aristopharma, Sanofi Aventis,
ACI and Renata. Square heads the pack with a sales figure of USD 106.5mn in 2007 and a
market share of 18% with Beximco holding the 2nd position with about half the sales and market
share of Square.
The pharmaceutical industry in general requires massive investment to pay for machinery and
the extensive R&D required to produce and market drugs.However, the industry in Bangladesh
has managed to escape a great portion of this cost by holding the LDC status and enjoying the
TRIPS advantage. As Bangladesh is allowed to legally copy patented drugs, the firms don’t have
to invest in R&D for new drug development.
The cost of raw materials is significant to any industry and the pharmaceutical industry is not an
exception. Bangladesh currently imports more than 80% of the API requirements and some
leading companies like Square and Beximco perform the synthesis of some APIs by importing
the intermediaries. However, the size of the local market is too small at the moment to justify
investments in API for individual firms. This is also because of the fact that specific APIs are
required for specific drugs which puts the feasibility of this idea into question. The number of
companies at the moment stands at 245 which is clearly too many for a market of the size that
Bangladesh has. Hence, the market share for individual companies apart from the leading few
stands at too little to justify the size of investments required for proper API facilities or R&D
facilities for new molecules.
Moreover, because the pharmaceutical industry is generic in nature, it eliminates any scope for
product differentiation amongst different companies. Hence, the form of competition is primarily
based on price which further divides the market shares and makes life harder for individual
smaller firms. Thus, it becomes impractical to engage in R&D activities apart from some leading
companies. Thus, the notion of mergers and acquisitions in the post-2016 period is seen as a
realistic possibility especially as MNCs start to enter the market with their existing R&D
activities.
Until now, the MNCs cannot compete with local companies in this market due to some extra
privileges granted them. This translates to some significant cost advantages for local companies.
MNCs are required to comply with all the quality requirements set by global standards whilst
local companies can compromise some qualitative measures thanks to the TRIPS advantage.
Furthermore, local companies apply much more extensive marketing tactics than MNCs. MNCs
do not import the patented drugs that are performing very well in other developed markets as the
local companies will soon copy the drug and the MNC will lose significant price competitiveness
as the local companies do not have to incorporate any R&D cost. The edge that MNCs enjoy is
in the field of vaccines and injectibles which Bangladesh does not manufacture locally.
Some investment opportunities that can be pointed out after assessing the market are:
Investment in Bulk Drug /API Facility
Investment in R&D (for reverse-engineering of patented drugs)
Investment in Plants (for certification in the developed markets)
Investment in Injectibles, Insulin and Vaccine Plants
Investment in R&D Outsourcing Facilities, and Contract Manufacturing
Investment in Outsourced Clinical Testing (CRO Model)
In lieu of the list of opportunities above, it is fair to state that importation on API, vaccines and
injectibles can be replaced by local investment in the production of these medicines. However,
2016 seems to be too short a time period to seem worthwhile for making big investments to
capture TRIPS-specific advantages and as already mentioned, the local market is too small. The
vaccines and injectibles section also lacks the required skill for production and distribution.
Hence outsourcing is a very promising sector for the Bangladeshi industry at the moment.
Bangladesh can be become a promising destination is the future namely in the post TRIPS
scenario as a destination for contract manufacturing. This is due to the fact that costs happen to
be much lower here mainly because of cheap labor. Many local firms have also acquired
international certificates for meeting quality requirements. Hence there exists a marked potential
for the country in the arena of contract manufacturing.
Current market scenario
Bangladeshi pharmaceutical companies are not allowed to do any direct promotion of their
products since the regulatory policies prohibit it. The policy frame work for promotion of
pharmaceutical products is guided by the Directorate of Drug Administration (DDA). DDA
has a detailed Code of Pharmaceutical Marketing Practices (CRMP) regulates the promotion
of pharmaceutical products and this excludes any form of direct marketing through media tools.
To illustrate this, the pharmaceutical companies cannot promote their products or their company
through the Television, Radio, Newspapers or any other form of printed media. The primary
means of promotion for the pharmaceuticals is through personal selling and trade marketing. The
companies try to identify the Key Opinion Leaders namely the reputed doctors and convincing
them to prescribe and promote the companies’ products.
Currently there are 245 registered pharmaceutical companies in Bangladesh out of which 200 are
still in operation. These 245 companies together have 5300 registered brands. The market is
largely dominated by local companies and there are only 5 multi-national companies currently
operating. The table below lists the top ten pharmaceutical companies in Bangladesh in terms of
sales value and market share
The table above shows the different major disease classes. Topping the list is Alimentary and
Metabolism class. The 1st and 2nd disease classes cover more than half the diseases in the
population currently
Dynamics of Marketing of Pharmaceutical Products in Bangladesh
Since the pharmaceutical market of Bangladesh is generic, there is not much difference in the
composition of different products. As a result a consumer will find several brands which will
serve the same purpose. In such a situation, the primary three reasons for a consumer to have any
preference towards any particular brand of drug are:
Price – Being a generic market, the content differentiation of different brands of same
drugs is not very high. Invariably, there will be several drugs that will be able to meet the
needs of a certain problem. In such a case, the price of the different brands becomes an
important decision criterion for the consumer, especially in the case of over-the-counter
(OTC) drugs.
Physician’s Opinion – As in most situations, the physician’s opinion is of imperative
importance to any consumer. The case is not different for the Bangladeshi market. In fact,
if anything, it is probably even more so. The influence of the physician’s opinion
probably stretches more on people who have limited medical knowledge and thus they
heavily rely on the doctor’s opinion.
Overall brand image of drug/manufacturer – This element is particularly applicable
for over-the-counter (OTC) drugs. The overall brand image of the drug/drug
manufacturer can have significant impact on the consumer’s choices of purchasing drugs.
The consumers might even be willing to incur a cost disadvantage to attain a trusted
product. Such brand equity often provides the consumer with quality assurance.
The current marketing trend
There are different forms of marketing and promotional activities done by pharmaceutical
companies. They are:
Relationship building with doctors: A major part of marketing pharmaceutical products is
building strong relationship with the doctors. The opinion of physicians matters a lot in terms of
deciding consumer preference. Hence, the sales representatives go a long way to build strong
relationships with leading doctors.
Providing samples to doctors: The pharmaceutical companies promote their products indirectly
by supplying physician’s sample to the doctors. This process includes the companies sending
sales representatives to different doctors and providing the doctors with free samples of their
products. This allows the pharmaceutical companies to introduce and expose their products to the
doctors. Due to the absence of any media promotion combined with the fact that the Bangladeshi
market is a generics market, it is imperative to get prescription share of the leading doctors.
Providing doctors with gifts: CRMP strictly regulates the marketing tools and states that any
gift given to the doctors has to benefit the end patients in some way. Any house-hold or
entertainment purpose items cannot be given as gifts. These gifts act as a strong promotional tool
for the pharmaceutical companies. Some examples of these gifts are pens, prescription pads,
cards, etc. These gifts can also include items like refrigerators for storage of drugs in a certain
clinic or hospital. The main function of these gifts is the same as of any other PR gifts – to create
exposure and eventually generate share of mind. The “printed materials” section comprise of
advertisements of medicines in medical journals which are also provided to doctors as gifts from
time to time.
Discounts and other sales promotion: Promotional discounts are given for over the counter
(OTC) products. This is the primary promotion tool used for OTCs to increase consumer
demand. The price plays a very important role as mentioned above in creating consumer
preference and eventually brand loyalty.
Sponsoring events/conferences: Sponsoring conferences and other medical related events and
activities are often done by pharmaceutical companies to improve brand image. For example, a
doctor wants to host a certain event/conference; a company will volunteer to sponsor the event
and thus strengthen the relationship with the doctors and also improve the overall image of the
company.
Innovative and other techniques: Some companies imply other innovative techniques. For
example, Renata once financed cancer treatment for a doctor who in turn regularly prescribed
Renata’s brands.
Nature of the Distribution Chain
The distribution channel is a key aspect for a pharmaceutical company. To ensure the widespread
availability of pharmaceutical products throughout the country, it is necessary to include
effective and efficient channels of distribution within the marketing channels. Because the aim of
most pharmaceuticals is to cover the majority of the geography of a country, the distribution
process becomes a major ground of expenditure. Hence companies should not only focus on their
functioning distribution channels but also on their distribution costs as well.
The circulation of pharmaceutical products is usually handled by the companies themselves,
integrated in their operations; rarely do they outsource their distribution process to contractors.
There are institutions however which perform outsourced distribution for other companies. The
price on average that these distribution agencies charge pharmaceutical companies is 10% - 15%
of sales whereas internally, this cost is generally less than 10%. An example of a distribution
agency is Transcom which charges 12%. The cost of distribution for Renata, which performs the
distribution themselves, is around 6%. The factors that are included in the cost determination of
maintaining an efficient distribution chain are:
Economies of Scale: The predominant system of circulating pharmaceutical products outside
Dhaka involves the following pattern; the small town chemists place orders according to their
requirements of products of a particular company. The same company later supplies the products
to them according to their demands listed. But this does pose a seemingly insignificant but in
reality quite a considerable problem. Quite often, as it happens, the transporting vehicle is not
used to its optimum delivery amount if the order size is too small thus leading to inefficiencies.
Large production volumes help to reduce this problem.
Efficiency of the Staff: As we know, as equally important as the distribution channel is the
quality of the sales personnel. The productivity and efficiency of these very crucial staff
members is essential to the success of a company in semi urban and rural areas. The sales force
generally receives adequate training but it is always difficult to maintain and monitor the
required standard of people employed by the organization. Inefficiencies among the sales force
leads to cost inefficiencies in the distribution chains as well.
PESTL ANALYSIS
Legal 1982 Drug Ordinance only allows import of drugs which are not produced in Bangladesh Plants in Bangladesh must comply with WHO GMP standards There is a price ceiling for drugs sold in Bangladesh Promotion to final consumers is not allowed. Only promotion to physicians and drug stores
allowed Exemption from WTO TRIPS agreement till 2016 allows local companies to manufacture drugs
from abroad without license
Technology Industry is one of the most developed and hi-tech in Bangladesh The most developed pharmaceutical industry among the LDC’s Some plants are equipped to FDA standards Some plants are investing in hi-tech plants which can produce biological formulations R&D is expensive, and therefore virtually absent in Bangladesh The companies have started to export to foreign markets including Europe
Economy The pharmaceutical industry in Bangladesh is worth approximately $858million
The industry is growing at around 20%
Bangladeshi’s spend only $4 out of the $450 of their per capita income on average
As the Indian Rupee and Chinese Yuan is appreciating the raw materials are becoming expensive
Due to recent developments the industry Bangladeshi companies have started exporting to
foreign markets including the European Markets
Pharmaceutical industry has over 12% of total market capitalization in Bangladesh
The pharmaceutical industry turnover is about 14% of the total turnover in the economy, a good
indicator for investment
Social
Total Population: 150,448,339 Age Sructure: 0-14 years:-33.1%
15-64 years:- 63.4%
65 years and over:- 3.5% Popularion Growth Rate: 2.056%
Birth rate: 29.36 births/1,000 population
Death rate: 8.13 deaths/1,000 population
Life Expectancy at Birth: 62.46 years Infant mortality rate: total- 59.12 deaths/1,000 live births
Literacy rate is…..
People of low income is majority
More than 50% live below poverty level
Political
The Government of Bangladesh with the help of international organizations like USAID, WHO, World Bank, ADB etc. has undertaken some strategic and futuristic approach to ensure primary health care for all. Some of them are –
Developing a more balanced perspective on the strengths and weaknesses of the government and NGOs in service delivery.
Moving beyond traditional gender roles in service provision and supervision.
Identifying high-quality community-based primary health care programs and providing support for training and operations research.
Improving the training of service providers.
Reforming the government’s health and family planning services and reassessing the government’s future role.
Strengthening the quality of care provided by local private practitioners
Increasing local-level authority and accountability for the provision of health and family planning services.
Monitoring and Evaluating Local Health and Family Planning Services at the Local, Regional and National Levels
Empowering Local People for Their own Social Development.
The Key Points about Bangladeshi pharmaceutical industry environment:
So, from the over scenario and the PESTL analysis, we can figure out the following findings:
Bangladesh pharmaceutical industry is the largest (in volume) among the LDCs with a
market size of USD 600 million and an average annual growth rate of 12%.
The industry is primarily a generic one. There are about 8,000 different brands which meet
97% of the domestic demand. The local companies have 86% share of the market. Out of 245
registered companies the top ten companies account for almost 70% of the total market.
The LDCs are exempted from “Patent Protection” according to the WTO TRIPS policy. this
agreement allows legal reverse engineering and sale of patented product until 2016.This
gives the local pharmaceutical industry an advantage over India and China who do not come
under the exemption agreement.
After entering the global market Bangladesh pharmaceutical industry has made great
progress in export. Between 2003 and 2006 pharmaceutical exports increased to about 61
countries from 51 and quadrupled in value from USD 7.9 million to USD 36.5 million.
Many Bangladeshi companies have acquired international certifications like USFDA,
UKMHRA and TGA, This allows them to penetrate regulated and unregulated markets.
Bangladesh is in a position to emerge as one of the regional R&D centers for Pharmaceutical
Research as reverse engineering has ended in China and India. There is an opportunity to
emulate the Contract Research and Manufacturing Services (CRAMS) model of India.
Currently 80% of the APIs are imported from abroad. But with the establishment of adequate
reverse engineering and API manufacturing facilities the local demand for raw materials can
be met without import.
Bangladesh can provide a strong platform for off-shoring/outsourcing generic bulk and
formulation drugs due to a cheap labor force and established infrastructure. With more and
more western companies looking to cut cost in their manufacture of bulk drugs as they focus
more on the high-cost patented drugs, Bangladesh can present itself as an attractive
destination for off-shoring.
With the establishment of modern technical facilities, the industry can emerge as a regional
hub for pre-clinical testing and clinical trials. The Contract Research Organization (CRO)
model success of India can act as a template to emulate as subject cost will be very low in
Bangladesh compared to that of Western countries.
There is an opportunity for substituting import of vaccines and injectables through
manufacturing it locally.
Many local entrepreneurs are now looking to expand their operations beyond the country
borders. Some are looking to emulate the buying of distressed companies in the west to gain
immediate market access exemplified by the success of Indian powerhouses like Ranbaxy
and. Some are also venturing into newer horizons like biotechnological drugs.
About the company and the project
Abdul Monem Ltd is one of the biggest conglomerates in Bangladesh with turnover of over Tk.
400 crores. They started business some forty years ago and initially were involved in the roads
and highways construction industry only. At the moment they are the biggest roads and
highways contractor in the private sector in Bangladesh. Over the years they have ventured into
different sectors in Bangladesh including beverage sector (Coca Cola), ice cream (IGLOO),
sugar refinery, power, securities etc. and have been very successful in most of them. The core
value of AML is trust.
Few years ago the senior management in Abdul Monem Ltd thought about starting a business
through which they would be able to interact with and help the general mass directly. To this end
they thought of coming into the pharmaceutical industry. Abdul Monem Ltd acquired a 36 acre
land in Manikganj to build their own plant and produce medicine initially for the local market
and for export in the long run. The plant to be built would be GMP compliant and would have all
the certifications required to export to the US and Europe. The company would be named AM
Pharma. Till date the plans for the construction of the plant are all in place.
But before going through with their plan, Abdul Monem Ltd acquired an already existing
pharmaceutical company, Novus Pharma, which shut down after only a few years of operation.
AML wanted to run Novus Pharma as a pilot project to see how it would do in the
pharmaceutical industry. The operations of Novus Pharma will be restarted in May 2009. The
management at AML is not concerned about why Novus Pharma failed; their only concern is
how to make it successful under their management.
In the beginning Novus Pharma will have a very small budget of about Tk. 25 crores including
new machinery. The company hopes to reach breakeven between three to five years of
operations. It will start of by selling a portfolio of 24 drugs, of which about 10-12 would be over
the counter drugs, while the rest will be prescription drugs. The company hopes that the brand of
IGLOO and Coca Cola will help people be more familiar with AM Pharma. The drugs will be
marketed at the national level, but initially more focus will be placed on the rural market.
Marketing will be done by 120 medical representatives who will be given extensive training and
education regarding the drugs they were going to promote. According to the management of
AML, the main competitors of Novus Pharma are small pharmaceutical companies who have
started business in the last five to ten years and have a similar budget structure.
Novus Pharma will only be the first part of the project. The second part of the project, AM
Pharma, with its larger and entirely new plant will start operations later. The strategies to be
followed by AM Pharma will be developed from the operations and overall performance of
Novus Pharma.
AML has been doing business for almost four decades. The management of Abdul Monem Ltd
does not look at AM Pharma only as a business unit, but also as part of their CSR. Through their
efforts, AML wants to look after the people whom they have served for the last four decades.
The shift in the pharmaceutical business taking TRIPS into count:
After 2015,Bangladesh is not going to get the advantage of TRIPS policy. renowned MNCs are
preparing to enter the market to avail the advantage of low cost of manufacturing. Then, it will
be very tough even for the biggest local pharmaceutical companies to compete with them in the
local market due to the MNCs brand image, advantage of scale of economies, efficient
machineries, huge affordability for RnD etc. so, the big players of the industry who have the
standard factory, larger investment and ability to manufacture world class pharmaceutical
products are planning to shift to new type of business other than fighting with the MNCs who
will enter in a full-fledged way just after 2015. Already companies like Square, Beximco, Eskeyf
are trying to get more and more international certifications to avail the new opportunities to work
as contract manufacturer or as RnD out sourcing agents.
For the small companies, it will be almost impossible to fight against the MNCs with new
molecules due to big RnD constraints, costly factories etc. so one of the options for them is to
find strong niche and operate there to make profit considering the fact of cutting cost.
The new shift of the pharmaceutical business taking the after 2015 period into consideration are
as follows:
Toll Manufacturing
Bangladesh Pharmaceutical Industry is very self-sufficient and can easily cater to the health care
needs of the country. Some of the leading pharmaceutical companies of Bangladesh have made
multimillion dollar investments on new plants and facilities according to USFDA standards.
They have sufficient production capacity for toll manufacturing. Since Bangladesh has abundant
and cheap labor force, the cost of contract manufacturing would be highly favourable compared
to any other countries of the world.
Toll manufacturing has gained popularity in the industry. Some leading pharmaceutical
companies like Square, Eskayef, Popular and Incepta Pharmaceuticals Ltd. have recognized its
potential. All these companies are taking initiatives to increase their exports and take optimum
advantage of the pre – 2016 period.
Joint Venture
Although Bangladesh pharmaceutical industry is self-sufficient in drug formulation meeting 97%
of the country’s demand, it still depends heavily on import of raw materials. Around 80% of total
Active Pharmaceutical Ingredients (API) need is fulfilled through import. So Bangladesh has a
market for manufacturing APIs and meeting local needs. Under TRIPS agreement Bangladesh
will enjoy manufacturing patented drugs rights until 2016. Since most of the countries of the
world are not be able to manufacture patented drugs since 2005, there exists an excellent
opportunity for foreign investors in bulk drug manufacturing in Bangladesh. Bangladesh will be
an excellent destination for global pharmaceuticals companies to form JVs with local companies
for contract manufacture and also to relocate R&D set-ups for reverse engineering for patent
expired drugs especially in the light of the patent exemption expiry of countries like Brazil, India
and China.
Also, since India and China have very good expertise in API and formulation R&D, they may
like to manufacture the APIs outside their countries as they cannot manufacture these ‘patented’
APIs in their countries after 2004. Because of cost advantage, large pharmaceutical companies of
highly regulated markets are now opting for joint venture projects. There are several potential
contracts with companies of India and China. There are good opportunities for Bangladesh to go
for manufacturing pharmaceutical finished products in joint venture with these large global
companies.
Investment in RnD (for reverse engineering of patented drugs)
In India & China, all the Universities are involved in pharmaceutical R&D. In Bangladesh, there
is no such R&D facility. But in order to take full advantage of the Post-2005 Opportunities, the
country has to invest in R&D for reverse-engineering of patented drugs. Investment in such an
R&D facility would also enable the country to develop its own molecules /drugs once the ‘patent
exemption period’ is over (after 2016). The investment requirement for R&D (for reverse-
engineering of patented drugs) would be around USD 2.9 million.
Investment in Outsourced Clinical Testing
Clinical drug and laboratory testing is another area where Bangladesh can prove to be a
favorable outsourcing destinations for many foreign companies. The factors that make
Bangladesh attractive are low skilled labor costs, subsidized power, strong manufacturing base
etc. The quality of the drug testing laboratories at the moment does not meet the extreme
international standards. Hence investment is required in order to establish state-of-the-art testing
facilities which have huge potentials of attracting much outsourced clinical testing projects
worldwide.
Investment in RnD outsourcing facitities and contract manufacturing
Bangladesh has an advantage as a location for possible outsourced R&D due to low skilled labor
costs and other factors such as subsidized power, Even if Bangladesh is not perceived to have the
expertise to carry out sophisticated R&D, certain steps of the process can be outsourced.
Bangladesh might collaborate with global players and perform outsourced R&D activities for
them. Considering the large number of medium and small sized pharmaceutical firms in
Bangladesh requiring funds to setup production units for specific drugs, a potential investment
opportunity lies in establishing such plants. Bangladesh could become a contract manufacturing
venue for global players. The toll manufacturing industry in India was worth USD 350 million in
2007.
Investment in Injectable, Insulin and Vaccine plants
Bangladesh also has an opportunity to invest in Injectable plants, which is a highly profitable
sector. As the country is fully import based in Insulin and Vaccines, investment in this sector will
provide import substitution and thus cost reduction as well. The investment requirements for
Injectable, Insulin and Vaccine Plants would be around USD 14.5 million each.
Investment in Plants (for certification in the developed markets)
There are very good export opportunities for Bangladesh pharmaceutical industry in the
developed & regulated markets in the form of
i) Contract /Toll Manufacturing and
ii) Under-License Manufacturing.
But in order to capitalize these export opportunities, the pharmaceutical manufacturers of
Bangladesh need to upgrade their manufacturing plants and apply for certification (GMP,
USFDA, UKMHRA, TGA etc) in the regulated markets. The investment requirement for such an
Oral Solid Dosage (OSD) Facility with a Capacity of 2 Billion Tablets would be around USD 29
million. It should be noted that between 2003 and 2006, pharmaceutical exports has increased to
about 61 countries from 51 and the volume has more than quadrupled from USD 7.9mn to USD
36.5mn.
So, AML can increase their investment and create competitiveness and effectiveness for the
above alternatives as we recommend them to do so.
But since the company is not going to invest in a large scale and rather willing to operate in
the local market creating own niche, we are focusing to find
- Effective niche
- Suitable product line
- Creating blue ocean through exclusive positioning in the local market
- Cost cutting strategies to earn profitability
An overview of raw materials, product, place, plant and process:C a p a c i t y o f th e P l a nt
Proposed Plant Capacity in year 1 based on one shift operation, 297 working days and equipments to be
procured in first phase.
Non Penicillin Solid-Liquid
SI Activity/Area Output/year 1 Granulation 61.2 MT 2 Compression 200 MT 3 Encapsulation 62 MT 4 Tablet Coating 100 MT 5 Powder Fill 1.3 MT 6 Blister Packing 27 MT 7 Tube Fill & Seal 0.23 MT 8 Liquid Fill 1.8 MT 9 Liquid Manufacturing 72 ML
Cephalosporin
SL Activity/Area Output/year
1 Dry blending 50 MT
2 Compression 18 MT
3 Encapsulation 8 MT
4 Tablet coating 6 MT
5 Powder fill 1.3 MT
6 Blister packing 3.3 MB
Raw Materials
Most of the raw materials of the project will be imported from india, China, Italy, France etc. Few raw materials,
which are produced in Bangladesh, will also be used.
N ovel D ru g D e l ive r y Sy s tem
Novus wishes to play in all segments of pharmaceuticals field in order to be a major player in the industry. It
has a wide range of products from almost all therapeutic categories and of various dosage forms including
Novel drug Delivery System (NODS). This will help Novus achieving a major market share with good sales
revenue and profit.
Tablet
Oral liquid
Liquid SVP-ampoule
Capsule
SVP-vial
LVP
Prefilled Syringe
Ointment
Sachet
Inhalers
Ophthalmic
Re se ar c h & Deve l o pm e nt
The R & D laboratory of Novus will be equipped with the most modern and sophisticated machineries
and equipments which will help its scientists to develop products of international standard. Our R & D
Department focuses on:
Formulation Development
Formulation Improvement
Process Improvement
Accelerated stability study & shelf life prediction
In-vitro bioavailability compliance
Process simplification
Method development & validation
F a c t o r y Pr o f ile
The factory facilities of Novus is a modest one with 4 dedicated buildings. It is on 4 big has of land. There
are oral solid as well as oral liquid buildings. There are dedicated Cephalosporin facilities with separate
man material entry and exit according to GMP guide lines. The existing facilities are as follows which can
be increased by several folds with appropriate BMRE.
Total Factory area : 57,164 sft
Factory space covered area : 15000 sft
Dedicated Buildings : 4 (Four)
Capacity (per Annum):
Tabletting : 300 millions tablets
Capsulling : 60 million capsules
Powder Filling : 2.4 million bottels
Sachet : 3 Million Pieces
Ointment Filling : 3 Million Pieces
Oral Liquid : 3 Million Pieces
Business Line
Novus Pharma is engaged in Manufacturing and marketing of life saving formulation drugs from
various therapeutic classes. Based in Bangladesh its marketing operation spans all over the
world. It also offers contract manufacturing services along with formulation development,
analytical method development, validation etc.
Product Mix
The product mix is consisted of two wings of line.
1. Pharmaceutical drugs
2. Non-medicine products
Novus Pharmaceutical offers formulation products from the following therapeutic classes for
local as well as global marketing.
Anti-Retroviral Anti-asthma
Anti-malarial Anti-psychotic
Cancer Adjuvant Lipid Lowering
Cardiovascular Gastrointestinal
Anti-ulcerant Antibiotic
NSAIDs Antifungal
Vitamins and Minerals Anti-diabetic
Immunosuppressant
Also some non-medicine products like
- Oral care products viz. toothpaste, toothache relief powder and liquids, mouth wash, mouth
spray etc.
Loca t io n of t he P r o j ect
The location of the project is at Tetuljhora, Rajfulbaria, Savar, Dhaka. The Plant is situa ed beside Dhaka-
Aricha Road and have good communication by roads. Power, Gas and water etc. are easily available in
the site. The location is very much suitable for production and distribution of pharmaceutical products.
The area of the project is about 4 bighas.
Prod u ction Process
The processes to be adopted for manufacturing are Dispensing, Granulation, Compression,
Encapsulation, Coating, Filling and Packaging.
New Market Entrants Entry barriers –very low for the local companies, industry growth good, Drug rule of 1982 discourages the MNC to dominate. And as a common consequence new entrants are coming.Geographical factors: very important factor for a new entrant. For example, a new small range investment pharmaceutical cannot be very successful if they target urban area to challenge the existing brands of the market leaders, the company is not likely to succeed. Because, here the selling is mainly done by pulling through the prescriptions prescribed by the doctors.On the other hand, they can push their products in a rural or semi rural area more easily by sales and promotional strategies. Incumbents’ resistance – There are already 5 to 6 established market leaders and number of companies in this industry is not a small one, to be specific , it is around 210. The company ranges from large investment to low investment and also the mergers. So a new entrant will face fierce competition from them, and hence it will be harder for the new entrant to get an established foothold in the market until and unless they don’t find and manage their own niche. A threat for a new entrant is whatever existing product they come up with, it will find out that the product is included in the large companies’ product line. That means, by huge line of product, the large and strong companies automatically resist the new entrants mainly in those markets where they are dominant.The existing incumbents appoint huge medical representative force to visit the doctors very frequently which makes very tough for a new comer to enter those market and challenge incumbents’ products.Another thing is, branding is gradually becoming a strong factor in this industry and the large companies are giving efforts on it. So it might be tough for the new entrant to beat this issue.
New entrant strategy: if the new comer is a large-investment one then it is likely to sell almost the same products launched by the market leaders with some different new products. This type of companies establish their factories with a very standard quality keeping export as an important option in their mind.( according to Square and ACI)If the new comer is a medium or small size one, then it is more likely to serve its own niche which is commonly a semi rural or semi urban market. ( according to General pharma, Radiant pharma and ADRUC pharma)
Supplier Power Brand reputation – AML is well reputed and has a better brand reputation. Not only that, AML is a well established business company and hence suppliers are likely to prefer to work with AML because they perceive that having a better brand reputation will mean providing better services and quality products. Geographical coverage – 6 to 7 depots to cover the target regions.
Suppliers- Most of the raw materials of the project will be imported from india, China, Italy, France etc. Few raw materials, which are produced in Bangladesh, will also be used
Product/Technology development: Buyer propensity to substitute: generally very low until and unless they are forced by the sellers to buy the substitute. Willingly very low number of customers prefer substitute because they are more product sensitive than price sensitive.But in rural areas, still there are many customers who easily get influenced by the sellers.Pricing of product: the consumers are less price sensitive. Under the Drug (Control) Ordinance government fixes the maximum retail prices (MRP) of 117 essential drug chemical substances. Drugs other than these essential ones are priced through a system of indicative prices. Over all the prices are standardized.Physical distribution: Physical distribution of pharmaceuticals in Bangladesh has evolved in a unique way. Unlike other countries Bangladesh pharmaceutical industry is more retail oriented and bulk of distribution is done by the companies themselves. Pharmaceutical companies distribute their products from their own warehouses located in different parts of the country, as no professional distribution house is available. Wholesalers play a limited role in this regard since companies supply goods to both retailers and wholesalersLegislative effects – the government's drug testing laboratories (DTL) and the Directorate of Drug Administration (DDA) have the monitoring and supervising role. There are two government drug testing laboratories. DTL at Dhaka is in the Institute of Public Health and the regional DTL at Chittagong is under DDA. Not only that, MRP is fixed by the government.
Buyer Power: Buyer choice – In this case, actual consumers choice is not a factor. In our strategy, we recommend AML to launch such products which to some extent associated with buyer choice. It is discussed in the strategy part.The bargaining power of customers: very low ( price is standardized)Buyer price sensitivity: very low in urban area and low in rural area. Overall not price sensitive.Degree of dependency upon existing channels of distribution- High as the channels are very specific and basically only one channel. That is being prescribed by the doctors the go to medicine stores. So doctors play the major role here though a very small portion of OTC in urban area and many other products in rural are sold mainly through the influence of the sellers.
Buyer information availability: almost same for all companiesBuyers size/number - The number of buyers is pretty huge, because every individual can be the buyer. But the company will target such market which is half of the population.Product/service importance – the products are very much important to the buyers and they try to get these anyway. The ones prescribed by the doctors are the most preferred.Volumes, JIT scheduling: it is very important to maintain a regular shelf space for this products to be sold and the expiry date of the products are strictly followed. If customers do not find the
product in shelf it might shift to substitute (chances are low for most of the products in urban areas). So, regular monitoring of inventory is very important and so is forecasting. Forecasting is partly done by the pharmacists too.
Competitive Rivalry: • Number and size of firms - 210 licensed firms. 6 to 7 are big players. Most of the market share is taken these companies.• Industry size and trends – The industry itself is pretty big( 5000 core tk.) and growing very well (growth rate increasing and it is 18-19% for last 5 years)• price competition : Under the Drug (Control) Ordinance government fixes the maximum retail prices (MRP) of 117 essential drug chemical substances. Drugs other than these essential ones are priced through a system of indicative prices. This rule applies on the locally manufactured products only. For imported finished products, a fixed percentage of markup is applied on the C&F price to arrive at the MRP, regardless of whether they are within the list of essential 117 molecules or not. It is interesting to note that, even with withdrawal of price control from many products, prices have not shot up; healthy competition has been keeping the prices within affordable levels.• Product ranges : a large investment company on an average holds a product line of 300 to 400 products while a medium one holds 100 to 150 and a small or new one is likely to hole a line of 20 to 30 products.• differentiation & strategy : the large companies infact differentiates less but approaches more to their target doctors with higher quality and more number of products. So automatically differentiation becomes the main strategic part of the small and new companies. They differentiate their market and also launch new products.
These factors contribute to the competitive rivalry. Healthy growth is likely to encourage the pharmaceutical companies to introduce newer drugs and newer research products, while at the same time maintaining a healthy competitiveness in respect of the most essential drugs.
Substitute HighSubstitute HighThe 245 companies have 5,300 brands many firms offering similar products and services because of the absence of patent protection. Cost of switching is relatively low.
Suppliers StrongSuppliers StrongCurrently API are imported. Too small size of the most of the players makes it unattractive for investment in API production.
Entry HardEntry Hard
A capital intensive industry requiring huge fixed costs in machinery and extensive R&DGovernment policy makes it hard for the MNCs to enter the market.
Rivalry IntenseRivalry IntenseAbout 245 firms operate with only 5 MNCs. Top 10 players hold about 64% of the total market.Square and Beximco together holds 25% market
Buyer StrongBuyer StrongDue to restriction on direct promotion of drugs cos’ have to market through key opinion leader i.e. the doctors by inducing them to suggest a particular drug. This often results in unfair practice.
SWOT Analysis
Strengths:
AML ADRUC Radiant General
FactorsWeights
RawWeighted
RawWeighted
RawWeighted
RawWeighted
Product Quality 0.15 3.5 0.525 3 0.45 5 0.75 4 0.60
Distribution Channels and better geographic knowledge about different regions of Bangladesh
0.10 3.5 0.35 3 0.30 4 0.40 3 0.30
Scope of Promotion 0.10 4 0.40 3.5 0.35 4 0.40 4 0.40
Medical Representatives(in terms of no, skill, coverage)
0.10 3 0.30 3 0.30 3.5 0.35 3.5 0.35
Pricing 0.05 3 0.15 3 0.15 3 0.15 3 0.15
Packaging Process 0.15 4 0.60 3 0.45 3.5 0.525 3 0.45
Physical Evidence (environment inside organization & in drug store
0.10 3.5 0.35 2.5 0.25 3.5 0.35 3 0.30
Management 0.05 3 0.15 2 0.10 3 0.15 3.5 0.175
Brand reputation 0.05 2.5 0.125 1.5 0.075 4 0.20 3 0.15
Product Lines and Width 0.05 2.5 0.125 2 0.10 3 0.15 3.5 0.175
Standard Factory with Latest Equipment
0.10 3 0.30 2.5 0.25 4 0.40 4 0.40
Total (out of 5) 1.0 3.375 2.775 3.825 3.45
Weakness:
AML ADRUC Radiant General
FactorsWeights
RawWeighted
RawWeighted
RawWeighted
RawWeighted
Scale of Production 0.25 3 0.75 3 0.75 2 0.5 2 0.50
Market Share 0.25 3.5 0.875 3 0.75 3 0.75 3 0.75
Low number of depot 0.15 3 0.45 3 0.45 1.5 0.225 3 0.45
Very limited product line 0.15 2.5 0.375 3 0.45 1.5 0.225 3 0.45
Financing 0.10 2.5 0.25 4 0.40 1.5 0.15 2 0.20
Accessibility in the rural market
0.10 2 0.2 2 0.2 2 0.2 3 0.30
Total (out of 5) 1.0 2.9 3.0 2.25 2.65
Opportunities:
AML ADRUC Radiant General
FactorsWeights
RawWeighted
RawWeighted
RawWeighted
RawWeighted
WTO TRIPS Policy 0.10 3 0.30 3 0.30 3 0.30 3 0.30
Export 0.10 2 0.20 1.5 0.15 4 0.40 4 0.40
Less approached rural market
0.20 3.5 0.70 2 0.40 2.5 0.50 3.5 0.70
Government is supportive 0.15 3 0.45 3 0.45 3 0.45 3 0.45
to local companiesContract manufacturing with international clients
0.05 3 0.15 3 0.15 3.5 0.175 3 0.15
Market Growth 0.20 3.5 0.70 3 0.60 4 0.80 4 0.80
Brand Image of the company
0.10 3.5 0.35 2.5 0.25 4 0.40 4 0.40
Products through which the company can brand
0.10 3.5 0.35 2.5 0.25 3 0.30 4 0.40
Total (out of 5) 1.0 3.20 2.55 3.325 3.60
Threats:
AML ADRUC Radiant General
FactorsWeights
RawWeighted
RawWeighted
RawWeighted
RawWeighted
Major market share occupied by few large co. making industry tough to penetrate
0.15 4 0.60 4 0.6 3 0.45 3 0.45
Increasing competition 0.20 3 0.6 3.5 0.7 2.5 0.5 2.5 0.5
Price hike of raw materials
0.10 3.5 0.35 3 0.3 2.5 0.25 3 0.3
Incumbents’ resistance 0.20 3 0.60 2 0.4 2.5 0.50 2 0.4
WTO trips policy after 2016
0.15 3.5 0.525 3 0.45 3 0.45 3 0.45
Buyers’ current brand preference
0.20 2.5 0.50 4 0.8 1 0.20 3 0.60
Total (out of 5) 1.0 3.175 3.25 2.35 2.7
Reasons for selection:
Strengths: AML can give free samples to doctors and some sort of sales promotion to the pharmacies. Besides, they can display the advertisements of their drugs in the pharmacies and in medical
journals to create awareness among the general people. They can give gift tokens like pen, writing pads etc to the doctors. They can provide training. AML can send their medical representatives to the doctors and pharmacies to let them know
about AML’s drugs. It is part of personal selling. Pricing is not a huge strength since there is a standard pricing for drugs (government has
price floors and ceilings) AML can cut costs on packaging. Packaging is of three types – Primary, secondary and tertiary. Primary packaging is to preserve the product itself. Secondary packaging is for promoting and keeping the shape of the product while transportation. This increases packaging efficiency. Tertiary packaging is for protection and shipment of the product. Physical evidence includes the environment of the organization, drug stores and even the
shelves where the drugs are kept.
Weakness: Narrow product line is less able to cater to the needs of large number of customers The company is less likely to reach economies of scale Smaller product line means AML will have less ability to compete (in case of smaller line,
they should identify a niche or have a specialized product). Any change in law and regulations can decrease sales of their SBU, unlike companies with large product line who can adjust it with other products.
Opportunities: Pharmaceuticals market is a generic market; the potential for patented products is very
limited Bangladesh is best suited to high volume low cost low priced products.
With the gradual withdrawal of government funding in family planning products and reduction of subsidies by USAID to the Social Marketing segment, the scope for the private sector in the contraception segment is brighter now than at any time in past
Threats:
Price Hike of Raw materials.
Recently few new industries have been established with hi tech equipments and professionals
Patent Law, which is valid up to 2016 for Least Developed Countries like Bangladesh.
Lack of Hi tech Quality control Laboratory, establishment of API Park by the Govt, necessary action for Process Loss of API by the Govt.
After 2016 the advantage enjoyed by Bangladesh will evaporate.
GE Matrix
Business Strength:
Factors Weights Rating Value
Product Quality 0.15 3.5 0.525
Distribution Channels and better geographic knowledge about different regions of Bangladesh
0.10 3.5 0.35
Scope of Promotion 0.10 4 0.40
Medical Representatives (in terms of no, skill, coverage) 0.10 3 0.30
Pricing 0.05 3 0.15
Packaging process 0.15 4 0.60
Physical Evidence (environment inside organization and in drug store
0.10 3.5 0.35
Management 0.05 3 0.15
Brand reputation 0.05 2.5 0.125
Product Lines and Width 0.05 2.5 0.125
Standard Factory with Latest Equipment 0.10 3 0.30
Total (out of 5) 1.0 3.375
Market Attractiveness:
Factors Weights Rating Value
WTO TRIPS Policy 0.10 3 0.30
Export 0.10 2 0.20
Less approached rural market 0.20 3.5 0.70
Government is supportive to local companies 0.15 3 0.45
Contract manufacturing with international clients 0.05 3 0.15
Market Growth 0.20 3.5 0.70
Brand Image of the company 0.10 3.5 0.35
Products through which the company can brand 0.10 3.5 0.35
Total (out of 5) 1.0 3.20
Business Strength
Strong Medium Weak
*Selectivity/Manage
for Earnings
5.00
Fig:
Classification of GE Model
From the GE model, it is shown that:
Business Strength is 3.375 out of 5.
Market Attractiveness is 3.20 out of 5.
Therefore, the suggested strategy for AML should be to become selective and manage for
earnings.
So the strategies be :
1. Manage to protect the existing program
2. Focus on segments where profitability is higher and risk is comparatively low
Medium
W
eak
3.67
2.33
1.00
Strong
5.00 3.67 2.333.375
3.20
1.00
So, from the above analysis we see that, the company should find and target segments
profitable and they should also take less riskier project. In this case, they can arrange
their product line taking products from the existing line and selecting only those which
are projected to be profitable. So we recommend the company to take the following
product line as we saw these were profitable previously and has demand in the existing
market.
ADL MATRIX (Novus Pharmaceutical)
INDUSTRY LIFE CYCLE STAGE
COMPETITIVE POSITION
The pharmaceutical industry is in its growth stage (18-19% now) and AML will enter the market to place them in a tenable competitive position.So, the company should find a particular niche for this product and protect it. Here we recommend the company to operate in such a niche in which they can position themselves as unique and after 2016, they can make profit from this niche. Because, after 2016, it will be
Find niche and protect it
Embryonic Growth Mature Aging
Dominant
Strong
Favorable
Tenable
Weak
almost impossible for a pharmaceutical with small size investment to operate without finding a particular niche
Creating niche and type of product line:AML has a small size of investment and having the post 2015 scenario in mind, they will have to operate in the local market finding a strong niche. Here the possible niche market can be of tow type.
1. Local generic drug business ( less saturated segment like rural market)
2. Creating niche through creating unique positioning like ‘providing exclusive oral care’ or ‘herbal care of all categories’.
So, the product line of AML will be containing products of two types.1. Medicines existed in the previous product line which have existing demand. The detail of
this kind of product is given in the company profile.
2. Positioning differently by the products through which the company can promote through advertisements. Suggested products for this kind can be-
- Oral care products: toothpaste, mouth wash, mouth spray, toothache relief powder or drops etc.
SegmentationSegmentation is dividing the market by identifying distinct groups of buyers who might require
varying product or service mixes. Usually the market is segmented using Demographic,
Geographic, Psychographic and Behavioral differences between buyers. Not all kinds of
segmentation can be relevant for all companies. Segmentation should be on the basis of certain
criteria. Segments should be Measurable, Substantial, Accessible, Differentiable and Actionable.
The Abdul Monem Pharmaceutical Company is yet to come into operation. As a pharmaceutical
it will focus on Geographic and Demographic segmentation.
Since AML has two different type of products in the product line ( medicine and non-medicine),
the segmentation will be different.
Segmentation for medicine products
For the Abdul Monem Pharmaceutical Company, the following segmentations will be effective
for medicine products in order to identify target segments.
1. Geographic Segmentation
Geographic segmentation calls for dividing the market into different geographical units.
It is not unnatural to imagine at first glance that this kind of segmentation should have no
immediately understandable influence on a pharmaceutical company as the need for
medicines and the illnesses that warrant them are more or less the same everywhere.
However, if we delve deeper then it will be clear that geographical segmentation is
warranted here to measure accessibility to a geographical location. In this light
Bangladesh can be classified into two types of geographic regions. They are
Easily Accessible Regions: These are metropolitan and urban regions with
established road transportation frameworks. The company may also have
establishments in the regions hence they are Easily Accessible Regions.
Remote Regions: These are remote areas which are not quite so easily accessible.
Normally the rural regions of our country without a proper land transportation
framework or establishments of pharmaceutical companies can be classified as
Remote Regions.
2. Demographic Segmentation
In demographic segmentation, the market is divided into groups of people on the basis of
certain variables such as age, gender, occupation and income. By occupation, the
segmentation would be as follows
Physicians: Physicians treat the ill and promote certain brand names through their
prescribed medicine. They are the key variable in the creation of brand image in
the pharmaceutical industry.
Pharmacists: People who run pharmacies and allow shelf space to different
pharmaceutical products. They often recommend certain pharmaceutical brands
themselves. They invariably conduct push sales to customers and are hence very
important in reaching end consumers.
In the future, the role of pharmacists may not be ignorable because as long as the
market is becoming more and more generic, the pharmacists are gaining some sort
of advantage to suggest or push a specific brand to the customer. At present, in
many cases, the pharmacists pushes some OTC drugs as they are getting more
incentives for selling those products.
General People: People are driven and influenced by mainly doctors and
pharmacist recommendations. They are also motivated to opt for products of a
certain company due to the brand image or perception of a pharmaceutical
company in the mind of the consumer.
Targeting
The process of identifying market segments with the most potential and proposing a value
offering is known as targeting. The groups or segments intended to attract are called target
markets. In the previous pages, we have discussed various segmentation methods which might be
relevant for pharmaceutical companies. In light of this printed discussion, we have identified the
segments with the most potential and have dubbed them our target markets. These segments and
the reasons behind choosing them are discussed at length below:
a) Remote Regions: Remote areas are a prime target group for the newly established Abdul
Monem Pharmaceutical Company. The target here would be doctors and pharmacists.
The remote regions have been chosen as our target for the following reasons.
1. Abdul Monem Pharmaceutical Company is a concern of Igloo which is the
leading ice cream brand in the company with a structured and efficient
distribution channel across the country. They can use this distribution channel to
reach the targeted doctors and pharmacists.
2. Because of geographical barriers and nonexistent road transportation frameworks,
many established brands do not operate in remote areas. Since this company can
easily reach pharmacies there, shelf space will be reactively easy to acquire. The
widespread availability of the products along with the absence of certain brands
will help to establish the brand name in the minds of the target market.
b) Doctors: Doctors will be a crucial target segment for the company for the following
reasons.
1. Doctors are the key to capturing the pharmaceutical industry. The demand of
brands depends on doctor recommendations and prescriptions. The
pharmaceutical should seek to attract and impress doctors through creation of
awareness of this new company and promotional campaigns.
2. AM Pharmaceutical Limited will also aspire to produce a few obscure
medications in the country. Since doctors can promote these latest medications to
the population, they are the most important target segment of all.
3. AML will be initially looking for focusing 1000 to 1500 doctors most of whom
are well informed about the company and its reputation and build strong
relationship with them and thus expand the channel.
c) Pharmacists: Pharmacists are another important target segment because of the following
reasons. Because the market is becoming more and more generic and the role of
pharmacists is not ignorable.
1. Pharmacists control shelf space and hence control the distribution of the
company’s products to the mass population. Pharmacists have to be motivated
through promotional campaigns and other benefits to allow shelf space to the
company’s products.
2. Pharmacists often use the push strategy to sell the products of a new company to
final consumers. Hence pharmacists have to be convinced to promote the
medicines of AM Pharmaceutical Limited. This is an effective strategy to create
brand recognition and brand preference for the Abdul Monem Pharmaceutical
Company.
Segmentation For non medicine products,
This segmentation is a bit different from the medicines of AML.
The company is focusing of oral care as non- medicine consumer products. Their segmentation is
geographic and also demographic.
Geographic: the oral care products basically consumer goods and AML will be segmenting its
market in the following category
1. Urban
2. Semi urban
3. rural
Demographic-
AML has oral products which are different for different age and gender . For example, mouth
wash with different flavor preferred by different gender, toothache solution sensitive for different
age, tooth paste for the whole family but of different size and price for people of different range
of income.
So the segments here are-
1. Based on gender- mouth wash and spray of different flavor
2. Based on age-Toothache solution- for 5-10 yrs and above 10yrs
3. Based on income-Toothpaste of different size- mini pack (for bottom of the
pyramid) and family pack
Targeting: For these products, AML will select all the segments.
positioning
Since AML will be having two different kinds of products in their product line as recommended, (medicine and non-medicine consumer products), the positioning for each kind is mentioned below
Positioning for medicine products:The positioning of Novus Pharma Limited will be aimed at designing this new company’s
offering and image to occupy a distinctive place in the mindset of the target market. As we have
seen in the previous section, the proposed target market segments for the medicine products of
the company are as follows:
a) Remote regions
b) Poor/Price Sensitive
c) Doctors
d) Pharmacists
The positioning strategies presented in this section will aim at creating a customer focused value
proposition. This means that the target market will have a convincing reason to buy the products
of the company. However it should be noted that it is fairly hard for an emerging midsized
pharmaceutical company to compete with its well established peers. The company should focus
on POD or Points of Difference to set itself apart from larger, more recognized brand names.
The PODs Novus Pharma focus on are noted below:
Positioning for medicine products:
1. Widespread Availability
The company should create a moderate portfolio of products and make it available
throughout the country. This will help to create customer recognition of the brand. Since
advertisements and promotion campaigns of medicines targeting the mass population is
banned, accessibility to the products of the company will help the newcomer to compete
with largely recognized brands. Widespread availability can be achieved through the
following steps.
The medicinal products of AM Pharmaceutical can use the already established
distribution channel of Igloo products to reach remote areas. As availability is a
key factor in remote, rural areas; the distribution channel of Igloo will help to
establish an image in the minds of consumers that will translate to “Readily
Available at all Times”.
To ensure widespread availability, it is required that the medicines occupy shelf
space at local pharmacies at all times to remind consumers constantly of the brand
name. This can be achieved through efficient sales personnel. The Pharmaceutical
will seek to train and recruit a taskforce of highly efficient sales personnel who
will work to motivate pharmacists to grant shelf space to its products. This will be
done through a series of promotional campaigns and interpersonal relationships
with the pharmacists.
2. Low Priced Brand Image
The pharmaceutical will attempt image differentiation through its pricing strategies as
well. Since the company will target consumers of rural areas where income is generally
lower, it will aim to mass produce medicines at slightly lower prices by modifying
packaging and hence cutting down on packaging costs. The cost cutting details have been
elaborated in subsequent chapters of this report. Cost cutting will ensure low priced
medicine or “Economic Medications” which will readily capture the price sensitive rural
markets.
3. Preference of Doctors (prescription products)
Ultimately the biggest variable in the popularity of pharmaceuticals is the
recommendation of doctors. Doctors recommend their choice brand of medicine to
patients who in turn purchase the same brands from the market. Hence AM
Pharmaceuticals has an underlying aim to become the approved and recommended brand
of doctors. It should be noted here that competing with well established brand names will
not be easy. Some of these brands have existed and operated successfully for years thanks
to the recommendation of doctors. Furthermore, AM Pharmaceuticals will not have a
large portfolio of products rather some widely used molecules and a few obscure
medicines. Lastly it will not be easy to change the mindset of doctors who already prefer
other brands. So the company will have to conduct promotional campaigns to initially
attract the interest of doctors and then motivate them to prescribe the company’s
products. This will be done through mainly promotional advertisements in medical
journals, free sampling promotion and other benefits to physicians. The unique medicines
of the company will initially have to be pushed to doctors as well although it is expected
that these will capture the attention of physicians faster. Even if a few of AM
pharmaceutical products become doctor preferences, the company can enjoy their
targeted success. So if the company’s limited products can command a perception in the
mind of the consumer as “Preferred by Doctors”, the image of the AM brand will be
likewise.
4. Non Prescription Products
Non prescriptions products will help to strengthen the brand name in the mind of
customers. Moreover, since the advertisement of these products is allowed, the brand
name will be popularized. Product ranges such as Oral Hygiene or
Antiseptics/Antibacterial products can help strengthen the image of the pharmaceutical
for the following reasons.
They are products related to healthcare and often occupy shelf space at a
pharmacy. Hence, there will be no such perception that the company is digressing
from its actual business and can be positioned as “a company in the Healthcare
Industry”.
The promotion and advertisement of these products to the mass population is
allowed meaning this will translate to free exposure of medicinal products of the
company. This will help to further strengthen the brand image in the eyes of
consumers
Basically AML will try to position the pharmaceutical in terms of “doctors’
recommendation and availability in the targeted regions”
Positioning for non-medicine products:
Positioning through consumer products:
AML can position them as “oral care manufacturer” by providing solution of an specific type of
problem. In these case, the products can be kind of consumer products for example they can
select oral care products like mouth wash, toothache relief powder, toothpaste etc. and thus
position themselves as best provider of oral care. This kind of products can be promoted through
advertisements since these products are non-medicine products.