Marketing Plan for Hetero Drugs

Executive Summary Hetero is preparing to launch Asthma and COPD products, in the growth market Indonesia. Despite the dominance of many local companies and presence of many multinational companies, there is a lot of scope to capture decent market share as products would be offered at a value-added price. We are targeting market segments of all age groups in consumer and business markets, taking advantage of opportunities indicated by demand for low cost drugs is set to increase, expansion of healthcare market and huge rise in exports. The primary marketing objectives of this plan are to achieve first-year Indonesian market share of 2 to 3.5% percent and sales between US$ 4.4 7.4 million. Situation Analysis Hetero is about to enter the Asthma market which is dominated by Glaxo Smith Kline, AstraZeneca, darya varia, Otsuka, Boehringer Ingelheim. Overall Asthma and COPD sales have increased. The emergence of generics and counterfeit drugs has increased competitive pressure. Estimated market size for Asthma and COPD is 60 million US$, with CAGR of 11.7%. To gain market share in this environment, Sonic must carefully target specific market segments.
MARKET SUMMARY

Hetero market consists of patients; medical representatives, and physicians. Respiratory market in Indonesia is worth US$221million in which 40% share is occupied by OTC medicines, 35% by patented products and 25% by generic drugs. Local companies invest 12% on R&D where as MNCs invest 15-16% of their annual sales on R&D. Two third of the market is controlled by domestic companies. We see Indonesia continue to occupy 12th place, out of the 16 regional markets surveyed in the Asia Pacific region. The countrys pharmaceutical rating has risen to 47.2, marking a slight increase over the previous quarter. However, it is still lower than the average for the region. The main drawbacks to investment in Indonesia include corruption, low per-capita spending on pharmaceuticals and a small proportion of the elderly in the country. On the other hand, factors such annual growth of its pharmaceutical market, coupled with rising population numbers and a relatively solid political and economic base are expected to encourage multinationals to invest in the country despite a risky operating environment.

SWOT ANALYSIS OF HETERO:

Strengths Hetero has several strengths on which to build, but our major weakness is lack of brand awareness and image in Indonesia. The major opportunity is growing demand for Asthma and COPD products. We also face the threat of ever-greater competition and downward pressure on pricing. 1. Large number of APIs to its name, can secure supply of APIs at low price 2. Variety of formulations on offer 3. Strong product portfolio covering wide range of therapeutic areas 4. Our pricing would be value based and would opt for penetration pricing which gives us an edge over others

Weakness: 1. Lack of brand awareness. Hetero has not yet established a brand or image in Indonesia. This is an area we will address with promotion.

Opportunities: 1. Well positioned for a general increase in demand for medicines due to healthcare sector modernization, rising health awareness and increased access to medicines 2. Easy access to large number of consumers and patients through expanding distribution and retail network 3. Potential removal of pharmaceutical industry from the negative investment list

Threats: 1. More companies are entering the Indonesian market in the Respiratory segment in all forms. Therefore, Heteros marketing communications must stress our clear differentiation and value-added pricing 2. Increased competition and market-share strategies are pushing drug prices down, so lower margins in the Asthma market

3. Asthma products seem to be reaching the maturity stage of their life cycle more quickly because of a lot of counterfeit drugs and faster introduction of generics by competitors. We have contingency plans to keep sales growing by adding services, targeting additional segments, and adjusting prices.

2.3 COMPETITION Increased entry of established pharmaceutical companies has pressured industry participants to continually generate quality products and cut prices. Competition for Asthma products from foreign companies plays a major role. Key Competitors are:
GlaxoSmithKline

It produces Advair, also branded as Seretide, the second highest selling drug in the world, for asthma and chronic obstructive pulmonary disease, and Flixotide [Flovent], an inhaled steroid for the treatment of asthma related inflammation. It also sells Serevent for asthma treatment. In Indonesia, GSK markets a range of human medicines, including both prescription and OTC drugs. The company provides strong support for public health programmes targeting asthma. AstraZeneca It produces Symbicort for the maintenance treatment of asthma. It also produces Pulmicort for the treatment of asthma, and is one of the top 80 best selling drugs.

Sanofi-Aventis It has the drug Alvesco used for the treatment of asthma. Boehringer Ingelheim It produces drugs such Spiriva and Respimat whose generic version is tiotropium bromide. Menarini Menarini has for years been engaged in the therapy of respiratory diseases, particularly Asthma and Chronic Obstructive Pulmonary Disease (COPD). Otsuka It markets Budesonide under the brand name Budenofalk, a nasal inhaler which is used to prevent Asthma attacks. Roche It produces Xolair for the treatment of asthma. XOLAIR helps reduce the number of asthma attacks in people with allergic asthma who still have asthma symptoms even though they are taking inhaled steroids. Schering Plough It produces Foradil and Asmanex for the treatment of asthma. Pfizer Given that it has direct manufacturing facilities in the country, the company is well positioned to weather the changes brought about by the recent legislation requiring foreign players to have local production or to leave the country. Pfizer also conducts

some clinical research in Indonesia. Pfizer has purchased another leading US drug maker, Wyeth, subject to regulatory approvals in various markets. In Indonesia, Wyeth markets a number of prescription products, but has no direct manufacturing presence. Spiriva is marketed by Pfizer which is used Merck Given that it has no direct manufacturing presence in the country, the company is vulnerable to the enforcement of the requirement that foreign players either set up domestic production or leave the country. It produces the popular drug Singulair, the 15th best-selling drug in the world, which is a leukotriene receptor antagonist for the treatment of asthma.

Products and Average Prices of Major competitors:

Molecules/Drug Brand name Manufacturer/Innovator Dosage Average price US$ Salmeterol Fluticasone propionate Tritopium Bromide Spiriva Spiriva respimat Budesonide (nasal inhaler) Budenofalk Inflammide Boehringer-Ingelheim and Pfizer Boehringer-Ingelheim Otsuka 100mcg X 300 11.70 puffs 200mcg 300puffs Obucort swinghaler Pulmicort turbuhaler Rhinocort aqua AstraZeneca 200mcg X 200 doses X1s 100mcg 200s 200mcg 100s 200mcg Formeterol fumerate budesonide & Symbicort 6+200mcg 28.40 X 16.60 16.00 X 14.80 X 16.50 18mcg X 10s 15.20 & Seretide GSK 25/125mcg 28.50

Salmeterol and fluticasone propionate, formeterol fumerate and budesonide and Tritropium bromide are the molecules having less competition in the Indonesia pharmaceutical Asthma market. They can be sold at the same price as their competitors or can go for Premium pricing if company is technically strong. Budesonide is the molecule having more competition with large number of brands so it is better to enter market with penetration pricing. Drugs and prices at which Hetero can quote:
Drug Dosage Average price US$ Penetration Price

which can be quoted by Hetero Drugs Salmeterol & 25/125 mcg 25/250mcg 18mcg 200mcg X 100(DPI) 200mcg X 100(MDI) 400mcg X 100 (MDI) Formeterol fumerate & 6+200 mcg budesonide 6+400mcg 28.40 27.00 15.20 16.50 15.40 14.45 15.65 14.60 28.50 27.00

Fluticasone propionate Tritopium Bromide Budesonide

STRATEGIES: Marketing strategies need to be broken down into strategies in specific areas such as product, pricing, distribution, and marketing communications.

Product Asthma and COPD products like MDIs, DMIs and Nebulizers, atomizers, inhalation formulations, vaporizers, compounded powders including all the features described in the Product Review section will be sold. Building the Hetero brand is an integral part of our product strategy. The brand and logo will be displayed on the product and pack-aging, and reinforced by its prominence in the introductory marketing campaign.

1. Quick relief medications for rapid relief i. ii. Short acting beta agonists Anti inflammatory drugs

iii.

anticholinergics

2. Long term control medications to prevent asthma symptoms i. ii. iii. Anti inflammatory drugs Long acting beta- agonists Leukotriene modifiers

3. Inhalation Therapy i. ii. iii. iv. Powder inhalers Spray inhalers Spacer devices Nebulizers

Pricing When compared to competitors prices for various drugs Hetero should introduce products at or below the average price of the market. Penetration pricing is used by new entrants. Three types of pricing methods are followed by new entrants: i. ii. iii. Value based pricing - ( price setting based on consumer perception) Good value pricing ( fair price setting based on right quality and quantity) Cost based pricing ( price based on cost)

Product prices are usually finalized after several make ups such as markup price, export/import taxes, competitors price, logistics, retail and wholesale markup price, VAT.

Column1
14 25 Manufacturing price

Import taxes
30 24 transportation wholesale markup retail markup VAT

20

General pricing strategies vary with product life cycle characteristics. Some companies start with high pricing (price skimming) as a technique to enter the market and reduce price as market matures. Companies change prices at various stages of product life cycle. Characteristic Price Introduction Use cost plus Growth Price to penetrate Maturity Decline

Price to match or Cut down price beat competitors

Distribution Our channel strategy is to use selective distribution to have Asthma and COPD products sold through well-known pharmacy retail store distributors. During the first year, we will add channel partners until we have coverage in all major Indonesian markets and the product is included in the major pharma catalogues and Web sites. We will also investigate distribution through hospitals. In support of our channel partners, Hetero will provide sample products, detailed specification hand-outs featuring the product. We will also arrange special trade terms for retailers that place volume orders.

Marketing Communications By integrating all messages in all media, we will reinforce the brand name and project our products in a different way, especially our after sales services. Research about media consumption patterns will help our advertising agency choose appropriate media and timing to reach prospects before and during product introduction. The agency will also coordinate public relations efforts to build the Hetero product brand and support the differentiation message. To attract market attention and encourage purchasing, we will offer as a reimbursement scheme. To attract, retain, and motivate channel partners for a push strategy, we will use trade sales promotions and personal selling to pharmacy stores.

Marketing Strategy
OBJECTIVES:

Create and increase brand awareness of Hetero drugs Capture 2 to 4% of market share in one year

3.2 TARGET MARKETS Target Market & Segment Marketing efforts should be put towards customers who are having Asthma. They are divided into three categories in the age group of i. Under 15 years ii. 15 to 64 years iii. 65 plus years
65+ yrs 7804 4685 3119 15 64 yrs 6486 3914 2572 <15 yrs 333 204 129

Total (No.) Males Females

9000 8000 7000 6000 5000 4000 3000 2000 1000 0

65+ yrs 15 64 yrs <15 yrs

Total (No.)

Males

Females

Asthma market in Indonesia has is in its growth stage of its life cycle thereby creating ample opportunities for foreign companies to explore and invest heavily.

Our primary business target is physicians, hospitals, consumers. A secondary business target is entrepreneurs and pharmacy retail chain owners. We are also targeting medical users who want to reduce paperwork and update or access patients medical records.

MARKETING RESEARCH Using research, we will identify specific features and benefits our target market segments value. Feedback from market tests, surveys, and focus groups will help us develop the Asthma and COPD products. We will also measuring and analyzing customers attitudes toward competing brands and products. Brand awareness research will help us determine the effectiveness and efficiency of our messages and media. Finally, we will use customer satisfaction studies to gauge market reaction.

FINANCIAL ANALYSIS: There are 2.6 million people suffering from Asthma and 14,600 deaths are occurring annually due to Asthma. Asthma contributes to 1% of deaths annually. The Respiratory market is worth US$ 221million expected to grow at CAGR of 12.7% from 2010 to 2015. Its sales account for 7.9% of entire market segments. Out of 200 companies in Indonesia 40 are MNCs and rest are domestic ones. There are approximately 13 companies who have presence in Asthma segment. The major share is occupied by only top 6 companies who occupy approximately 70% 75% of Asthma market. They are in the market since quite some time and heavily promote their products and spend extensively on R&D. On an average the remaining companies share 3 3.5% market each. Taking Hetero into consideration if it follows aggressive promotional strategies and work out on its opportunities and recommendations it can capture a market share of 2 3.5% i.e. between US$ 4.4 million to US$7.4 million within the first year. Respiratory Market CAGR: ( 2009-2014)
3000000
2500000 2000000 1500000 1000000 500000 0 1 2

CAGR = 10.7% mdi, cagr - 15.7%

dpi, cagr - 12.3%

cagr of drug market expenditure = 10.1% (2013-19)

IMPLEMENTATION

We will plan tight control measures to closely monitor quality and customer service satisfaction. This will enable us to react very quickly in correcting any problems that may occur. Other early warning signals that will be monitored for signs of deviation from the plan include monthly sales (by segment and channel) and monthly expenses.

RECOMMENDATIONS/SUGGESTIONS 1. Hetero should choose to export finished products through established channels, thereby minimizing resource commitments to the markets. A scale up later could then follow with either setting up a pharmaceutical plant fed through raw materials produced abroad or by establishing a basic ingredient plant that feeds the domestic industry and markets outside of Indonesia. 2. Hetero can penetrate into the market using penetration pricing strategies and shifting to local production and make limited, but effective and appropriate product localization. 3. It is suggested that Hetero should build a network of supplier and production lines in Indonesia. This will both keep the local customers satisfied with Hetero offerings, by pushing prices lower. 4. Though there are options of entering new market through Franchising, 100% subsidiary, Joint venture/Partnerships. Agents or Distributors, Hetero should go for 100% subsidiary and have an own local agent or distributor as they will be well versed with domestic market, government policies, rules/regulations. 5. Hetero must choose an appropriate agent or distributor. Appointment of a representative requires care, since it is difficult to get out of a bad relationship. Patience and presence are key success factors. 6. Key factors affecting purchasing decisions in Indonesia are pricing, financing, technical skills, and after-sales service. Firms should be prepared to invest capital and manpower into making their local representative a first-class service provider. 7. Although it may be possible in some cases to sell directly to the government or stateowned companies, local services of agents, local offices or distributors are often critical to successful project development and to assure timely delivery, installation and follow up service needs. Most government procurement decisions favor proven providers or assurance of service based on long-established relationships. 8. As high as 95% of the raw materials are imported to Indonesia and also APIs. Hetero should make arrangements such that the sourcing of APIs is done locally saving time.

Timing and supply of raw materials and APIs plays a crucial role in winning the market share. 9. People of Indonesia pay 100% fee for medicines. Hetero should concentrate on private insurance and reimbursement policy such that it can gain edge over its competitors. 10. Hetero is required to appoint an Indonesian agent or distributor. Appointment of an Indonesian agent (or distributor) requires care, since it is difficult to get out of an ineffective relationship. A trial agency period of at least six months is generally written into agency contracts. As in many countries, the Indonesian agents network of contacts and personal power affects costs and ability to exit an unsuccessful agreement. The services of an aggressive, active Indonesian agent or distributor can be an important means of expanding sales in Indonesia because of experience with cultural minefields and systemic processes that foreigners often need years to comprehend.
11. As a practical matter, a local joint venture partner is often essential for success in this market, for the same reason that an active Indonesian agent or distributor has advantages over a foreign trade representative office. The choice of an Indonesian joint venture partner is critical for many reasons, especially for knowledge of the local scene and contacts, which are important for successful operations in Indonesia.