MANAGEMENT THESIS ON

A study on the promotional strategies used by medical representative

with respect to Cipla.

A report submitted in partial fulfillment of the requirements of
THE MBA !"#!AM
$ubmitted by% &idhi 'padhyay
TABLE OF Contents
MAIN HEADINGS
PAGENO.
1 | P a g e
(1)ACKNOWLEDGEMENT3
(2)CERTIFICATE.4
(3)INTRODUCTION ....5
(.)"B*ECT+,E "- $T'./0000000000000000000...1
(.2 3+M+TAT+"&0000000000000000000000001
(4)INDUSTRY PROFILE.6
23
(5)COMPANY PROFILE24
33
1.)$4"T A&A3/$+$0000000000000000000...........()5
(2
1.2,+$+"& A&. M+$$+"&000000000000000000.........((
(6)ANALYSIS..34
51
(!)FINDINGS.52
(")CONCLUSION...............................................53
(1#)ANNE$URE.......54
)6.)7'E$T+"&&&A+!E0000000000000000000......18
(11)REFERENCES..55
2 | P a g e
ACKNOWLEDGEMENTS
4e cannot achieve anything worthwhile in the field of technical education unless or until the
theoretical education acquired in the classroom is effectively wedded to its practical approach
that is ta9ing place in the modern industries and research institutes. +t gives me a great pleasure
to have an opportunity to ac9nowledge and to e:press gratitude to those who were associated
with my ro;ect. Constraints are the best source of inspiration and opportunity to e:plore us.
This pro;ect is synergistic product of many minds. The inspiration is drawn from the wor9ing of
team members and their e:periences. Communication is the 9ey towards all the responsibilities
and demands of time< travel< wor9 in competitive wor9. +t is plus to have effective< secures
communication. ro;ect team is grateful to all personalities for stimulating and thought
provo9ing during the entire pro;ect. -or the successful completion of this pro;ect< team
members feel deep senses of gratitude to M%& M'(()&*+'%, faculty +C-A+<*. &agar< for
motivating and inspiring to achieve the best and providing opportunity to e:plore ourselves.
3ast but not the least + would again li9e to e:press my sincere than9s to medical
representatives of Cipla for their constant friendly guidance during the entire stretch of this
report. Every new step + too9 was due to their persistent enthusiastic bac9ing = + ac9nowledge
that with a deep sense of gratitude.
M'>E$H >'MA!
+C-A+5*. &A#A!
8
th
$EME$TE!
.ate%
lace% Bangalore

3 | P a g e
CERTIFICATE
This is to certify that management thesis titled ?A study on the promotional
strategies used by medical representative with respect to Cipla.@
submitted by M-.)&* K-/'% E0%1((/)02 0134N55P#1" during the semester 8
of the MBA programAThe class of 266BC embodies original wor9 done by him.
$ignature of the faculty supervisor
&ame % M%& M'(()&*+'%,
.esignation % F'6-(27 81% 9-'02,2'2,:) /)2*1;&
Campus % ICFAI (<.P NAGAR)

4 | P a g e
INTRODUCTION
Management thesis is a part of our MBA program and gives us the opportunity to 9eep
foreword our views on business. +t is a component that provides an opportunity to the student to
underta9e research into ideas and e:press our opinions after research. $ummer internship
program is a e:tensive opportunity which is really helpful to design the MT. -inancial sector is
the one of the fastest growing which is helping the +ndian economy to increase the pace of the
#.. Hence wor9ing with the bro9erage firm a &B-C really helped me to construct the
management thesis. The report will really help to understand the +ndian equity mar9et and how
does it wor9s. !eport will be also helpful to understand the how the bro9erage firm wor9s and
the different services provided by them. The study was conducted through the primary and
secondary data. !espondents were basically from Bangalore and the customers of !eligare who
invest in the +ndian equity mar9et in the various form of their investment.
Objective OF THE STUDY:
To find out the promotional strategies used by medical representative with respect to
Cipla.
To find out various promotional strategies used by Cipla to acquire the mar9et share
To find out the importance of medical representative in the pharma sector
To find out various roles played by medical representative to enhance the sales
To find out product which are doing well in the mar9et of Cipla.
LIMITATION:
Ma;or of the study is supported by secondary data
5 | P a g e
&o specific data for bribing with respect to the industry.
Bias on the part of respondents will be a ma;or drawbac9.
Analysis of the primary data cant be done by implementing of test

Industry profile
The I0;,'0 P*'%/'6)-2,6'( I0;-&2%7 today is in the front ran9 of +ndiaDs science5based
industries with wide ranging capabilities in the comple: field of drug manufacture and
technology. A highly organiEed sector< the +ndian harma +ndustry is estimated to be worth F
8.1 billion< growing at about G to B percent annually. +t ran9s very high in the third world< in
terms of technology< quality and range of medicines manufactured. -rom simple headache pills
to sophisticated antibiotics and comple: cardiac compounds< almost every type of medicine is
now made indigenously. laying a 9ey role in promoting and sustaining development in the
vital field of medicines< I0;,'0 P*'%/' I0;-&2%7 boasts of quality producers and many units
approved by regulatory authorities in '$A and '>. +nternational companies associated with
this sector have stimulated< assisted and spearheaded this dynamic development in the past 1(
years and helped to put +ndia on the pharmaceutical map of the world.
The +ndian harmaceutical sector is highly fragmented with more than 26<666 registered units.
+t has e:panded drastically in the last two decades. The leading 216 pharmaceutical companies
control H6I of the mar9et with mar9et leader holding nearly HI of the mar9et share. +t is an
e:tremely fragmented mar9et with severe price competition and government price control.
The pharmaceutical industry in +ndia meets around H6I of the countryJs demand for bul9 drugs<
drug intermediates< pharmaceutical formulations< chemicals< tablets< capsules< orals and
in;ectibles. There are about 216 large units and about G666 $mall $cale 'nits< which form the
core of the pharmaceutical industry in +ndia Aincluding 1 Central ublic $ector 'nitsC. These
units produce the complete range of pharmaceutical formulations< i.e.< medicines ready for
6 | P a g e
consumption by patients and about (16 bul9 drugs< i.e.< chemicals having therapeutic value and
used for production of pharmaceutical formulations.
"ver 26<666 registered pharmaceutical manufacturers e:ist in the country. The domestic
pharmaceuticals industry output is e:pected to e:ceed !s2K6 billion in the financial year 2662<
which accounts for merely ).(I of the global pharmaceutical sector. "f this< bul9 drugs will
account for !s 18 bn A2)IC and formulations< the remaining !s 2)6 bn AHBIC. +n financial year
266)< imports were !s 26 bn while e:ports were !sGH bn.
+ndian companies need to attain the right product5mi: for sustained future growth. Core
competencies will play an important role in determining the future of many +ndian
pharmaceutical companies in the post product5patent regime after 2661. +ndian companies< in
an effort to consolidate their position< will have to increasingly loo9 at merger and acquisition
options of either companies or products. This would help them to offset loss of new product
options< improve their !=. efforts and improve distribution to penetrate mar9ets.
The first +ndian pharmaceutical company< Bengal Chemicals and harmaceutical 4or9s< which
still e:ists today as one of 1 government5owned drug manufacturers< appeared in Calcutta in
)B(6. -or the ne:t K6 years< most of the drugs in +ndia were imported by multinationals either
in fully5formulated or bul9 form. The government started to encourage the growth of drug
manufacturing by +ndian companies in the early )BK6s< and with the atents Act in )BH6<
enabled the industry to become what it is today. This patent act removed composition patents
from food and drugs< and though it 9ept process patents< these were shortened to a period of
five to seven years. The lac9 of patent protection made the +ndian mar9et undesirable to the
multinational companies that had dominated the mar9et< and while they streamed out< +ndian
companies started to ta9e their places. They carved a niche in both the +ndian and world
mar9ets with their e:pertise in reverse5engineering new processes for manufacturing drugs at
low costs. Although some of the larger companies have ta9en baby steps towards drug
innovation< the industry as a whole has been following this business model until the present
P%1;-62& '0; =-&,0)&& ;)&6%,>2,10
7 | P a g e
This sector profile covers pharmaceutical end products only. These can be divided intothree
categories%
P%)&6%,>2,10 ;%-?&< based on chemical compounds and prescribed or administered by
healthcare professionals
O:)% 2*) 61-02)% (OTC) ;%-?&< based on chemical compounds and freely sold
@'66,0)&< based on bacteria and viruses
The distinction between branded and generic products is also important. A branded product is
the original version< produced by the innovative company that developed the product. A generic
product is a copy of the original by another company. Many innovative companies have
divisions that pro !=. for new drugs requires high investments. After the discovery of new
chemical compounds with a therapeutic effect< a patent is filed. This protects the potential new
drug against generic competition< usually for 26 years. The drug then still has to be tested in
several phases of clinical trials. The total development process costs several hundred million
dollars and ta9es over )6years. +f the new drug is finally proven safe and effective< it is
approved by a regulatory authority. As long as a branded product is protected by a patent<
companies charge high prices to recover !=. investments and ma9e high profits. After patent
e:piry< competition from cheap generics usually causes a large
drop in prices. duce generics as well.
!=. investments for vaccines are comparable to those for drugs. However< the production
process of vaccines is more complicated and their delivery requires an advanced infrastructure
ALcold chainDC. -urthermore< the new vaccines currently used in high income countries are of a
different type than those recommended for poor countries. They are much more e:pensive< but
are preferred due to the lower ris9 of adverse reactions. The largest pharmaceutical mar9ets are
the '$< Europe and *apan. Together< these account for G8I of the F8K6 billion of global drug
and vaccine sales in 266(. Cardiovascular and central nervous system AC&$C medicines are the
largest selling therapeutic classes.
C1/>'0,)& '0; =-&,0)&& &2%'2)?,)&
8 | P a g e
"ver the last years< there have been many large mergers and acquisitions in the sector <while
many companies have divested non5core activities. Although !=. investment has strongly
increased over the past decade< many large companies do not have promising !=. pipelines
and increasingly pursue growth through enhanced mar9eting. "utsourcing of production and
alliances for !=.< distribution or mar9eting are common business strategies.

4ithin this part of the sector< it important to recogniEe the distinction between branded and
generic producers.
M 5%'0;); 61/>'0,)& are the innovative companies that carry out the !esearch and
.evelopment A!=.C of new drugs Aor contract this processC. +nitially< their products are
protected by patents. The clinical test data< used for the approval of the drugs< is usually
protected as well.
M G)0)%,6 61/>'0,)& produce drugs that they have not developed themselves. &ormally these
drugs are not protected by patents anymore
This report focuses mainly on the branded industry. However< many branded companies have
divisions or subsidiaries that produce generics as well. 4ith regard to the products of these
companies< three categories of drugs are commonly distinguished.
M P%)&6%,>2,10 ;%-?&. These have to be prescribed or administered by healthcare professionals.
MO:)% 2*) 61-02)% (OTC) ;%-?&< also called self5medication drugs. These can be purchased
without a prescription.
M @'66,0)&. These are usually regarded as a separate category ne:t to pharmaceuticals.1 +n
contrast to pharmaceuticals< vaccines are not based on chemical compounds but on live bacteria
and viruses. The production process of vaccines is therefore quite different and far more
complicated
T*) =-&,0)&& 18 ;%-? ;):)(1>/)02
Branded companies ma9e high investments in !=. to discover new drugs. +t is estimated that
the development of a ma;or drug costs up to '$F 866 million and requires as long as )6 years
to be introduced into the mar9et. The development of new drugs usually starts with the
discovery of new chemical compounds with a therapeutic effect. This is the first research phase.
9 | P a g e
"nce the basic compounds have been identified< pharmaceutical companies obtain patent
protection for their potential use in new drugs. These patents grant the e:clusive right to sell
and mar9et a specific drug for a specified time period< usually twenty years. After the discovery
of a new compound follows the further development into an effective and safe treatment and
the testing of the new drug candidate in subsequent phases of clinical trials. -inally< a new drug
has to be approved by a regulatory authority< li9e the -ood and .rug Administration A-.AC in
the case of the '$. .rug approval may ta9e )N).1 year. The estimated duration< cost and rate of
success for the various development stages of an average drug are provided in the table below.
A short description of the testing phases is given as well.
Thus< when a pharmaceutical company launches a new drug on the mar9et< it has only a limited
period of time of considerably less than twenty years in which it has e:clusive mar9eting rights.
.uring this period companies charge high prices for the drugs to recover their !=.
investments and ma9e high profits. The production costs of drugs are never disclosed< but they
are only a fraction of the e:clusive mar9eting price of a drug. +t is estimated that average
manufacturing cost are usually in the order of 1I of this price.
Marginal production costs are still considerably lower due to economies of scale.K Apart from
patent protection< there is usually a period of data e:clusivity that protects the clinical testing
data of pharmaceutical companies. This period starts at the moment a product is approved and
may have a duration of five years or more. .uring the data e:clusivity period< other companies
cannot rely on the data of the company that developed the drug for the approval of a generic
version. After the e:piry of patent protection on a pharmaceutical product< other companies
may
legally copy the drug and sell a generic version. -or the approval of a generic< a company has to
proof that its drug is a biological equivalent of the original. This allows a company to rely on
the clinical testing data of the branded company< provided that these are not protected by data
e:clusivity anymore. #eneric producers therefore do not have to ma9e high !=. investments
and generic competition usually causes a large fall in prices. +n the '$< drugs face fierce
competition right after the e:piration of a patent. +n Europe< generics are generally introduced
slowly and at higher prices.H A successful drug can generate enormous revenues for a
pharmaceutical company. $ome drugs< the so5called bloc9busters< have sales of well over '$F
) billion per year. /et after the e:piration of a patent< revenues can quic9ly diminish and
10 | P a g e
companies may be forced to lower their profit margins because of generic competition. -or
e:ample< in 266( the quarterly sales revenue of its three medicines #lucophage +!< Ta:ol and
$erEone of Bristol5 Meyers $quibb dropped by B6I after patent protection e:pired.G
1.3 M'%.)2 &2%-62-%) '0; 2%)0;&
The largest pharmaceutical mar9ets are the '$A< Europe and *apan. The total world mar9et for
pharmaceuticals Asales of pharmaceutical productsC displayed strong growth over the past years
and increased by almost BI in 266(. .ue to the ageing populations in the ma;or mar9ets< drug
use will probably continue to grow. Mar9et siEe estimates of regional pharmaceutical mar9ets
and of the largest selling therapeutic areas are provided in the tables below.
T*) :'66,0)& /'%.)2
The mar9et for vaccines is somewhat different from that of other therapeutic classes. 3i9e
pharmaceuticals< the development of new vaccine products usually ta9es H5)2 years an costs
several hundred million dollars. The development of new vaccines also requires the
construction of new facilities. The strict government regulations that are imposed have
profound implications for the vaccine industry< and vaccine producers have to continue to
invest in production facilities in order to meet production standards. +n addition< vaccines have
to be 9ept at the right temperature during distribution and therefore the delivery of vaccines
requires an advanced infrastructure ALcold chainDC and active support of the producer.
A large ma;ority of vaccines is procured at the national level by public health sector
organiEations. 3arge mar9et segments may be served by a single company. Merc9 is the sole
supplier of measles5mumps5rubella vaccines in the '$< for e:ample. /et the demand for
vaccines is difficult to forecast and may change during the actual production cycle< which is
considerably longer than for pharmaceuticals. .emand for vaccines changes according to for
e:ample the severity of diseases< production lead times< regulations< and actions of competitors.
The vaccines currently used in the '$ and other high income countries are often of a different
type than those used in developing countries. -or e:ample< the '$ use the a celullar pertussis
type and Measles5mumps5rubella AMM!C combination< whereas developing countries use
whole cell pertussis vaccines and measles alone instead of MM!. The &etherlands has recently
decided to start administrating the whole cell pertussis vaccine instead of the a cellular type.
This is because of the higher ris9 of adverse reactions associated with the older vaccine types.
11 | P a g e
-urthermore< high income countries use +nactivated olio ,accine A+,C for routine
immuniEation programmes< whereas developing countries use "ral olio ,accine A",C.)2
", is easier to administrate and much cheaper. +t is also the preferred vaccine when a polio
outbrea9 needs to be contained< because it causes higher immunity in the intestinal tract and is
therefore more effective to interrupt the circulation of the polio virus. However< in e:tremely
rare cases Aless than ) in a million dosesC< the live attenuated virus in ", can cause vaccine5
associated polio. -or this reason high income countries prefer +, for regular immuniEation.
The newer vaccines< used in high income countries< are much more e:pensive. +n some cases
they cost over a hundred times more. A diphteria5tetanus5whole cell pertussis A.TwC vaccine<
for e:ample< costs '$F 6.6H only. By contrast< the diphteria5tetanus5acellular pertussis A.TaC
vaccine that is used in high income countries< in combination with for e:ample +, or hepatitis
B< costs over F)6. $imilarly< a single measles vaccine costs F6.)8d
RAD >,>)(,0)&
+n principle< the quality and the mar9eting potential of the products in the !=. pipeline of a
company determine its potential for future growth. At present< the largest 26 pharmaceutical
companies have almost H66 new drugs in development.26 "ver the past decade< !=.
investments of the pharmaceutical industry have grown faster in the '$ than in Europe. +n
Europe< 2662 investments were Euro 26 billion< compared to G billion in )BB6< whereas !=.
investments in the '$ were at 2G billion in 2662< down from 1 billion in )BB6. As companies
are investing more heavily in the '$< analysts perceive that the European pharmaceutical
industry is in not in a favourable competitive position.2) /et the increase in investment has not
been matched by a comparable increase in new drug approvals< hence the !=. results of most
companies are declining.22 The comple:ity of the investigated treatments has increased and it
has become more difficult to obtain approval for new drugs due to the stricter application of
e:isting regulations in the '$ by the -.A. The most common reasons for not approving a drug
are negative by5effects of the drug that were identified in clinical trials and the limited added
value over e:isting drugs.2( 4orldwide drug approvals hit an all time low in 266(.28 The
largest pharmaceutical companies< which have grown fastly during the )BB6s< do not promising
!=. pipelines while patents on successful drugs are e:piring. -or the period 26625266H< the
drugs on which patent protection e:pires in these years generate combined sales of about '$F
86 billion.21
12 | P a g e
2.3 P%12)62,10 '?',0&2 ?)0)%,6 61/>)2,2,10 '0; ?%1+2* 2*%1-?* /'%.)2,0?
harmaceutical companies have several strategies to reduce or prevent competition form
generic producers< which often greatly reduces the renevues from a drug. "ne strategy is to
obtain additional patents to e:tend the period of patent protection< if possible. Another strategy
is to fight the approval of generic drugs and charge generic producers of infringing patents or
data e:clusivity. -or e:ample< in 266( Mylan< 4atson and !anba:y 3aborories< two generic
producers from the '$ and one +ndia< resectively< sought -.A approval to produce generic
versions of Actos. Actos is a bloc9buster diabetes drug of Ta9eda< *apanJs largest
pharmaceuticals.
Another strategy to protect a drug from competition is to launch a slightly improved version or
more convenient formulation of the same drug. A new patent can be obtained for this improved
drug. The company then tries to persuade doctors and patients to use this improved version. The
effectiveness of this strategy depends to a large e:tent on the mar9eting of the new drug.
E:amples of attempts to curb generic competition in this way include AstraOenecaDs mar9eting
of &e:ium< a slightly improved version of its out5of5patent ulcer drug rilosec<2H and the
release of 4ellbutrin P! by #la:o$mith>line< a sustained release version of its antidepressant
4elbutrin that now faces generic competition.2G +n the '$< the growth of the industry over the
last ten years has been partly based on such slightly improved new drugs< bac9ed by massive
sales and mar9eting operations and T, advertisement. 2B Because of the disappointing results
of their !=. pipelines< pharmaceutical companies increasingly pursue growth through
enhanced mar9eting of their drugs. Especially the large pharmaceutical companies have
developed into mar9eting specialists that are very good at putting products into the mar9et. The
focus on growth through mar9eting is reflected by the high mar9eting e:penses compared to
!=. investment. The $wiss company !oche< for instance< spends ()I of its turnover on
mar9eting against )KI for !=..(6 Corporate philanthropy and corporate responsibility
programmes help to enhance a companyDs identity and hence such initiatives might support
mar9eting efforts. Mar9eting is also a stategy to reduce generic competition in itself. By
promoting the propietary brand names of patented drugs< pharmaceutical companies may be
able to sustain drug sales even if these are no longer protected by patents.
Restructuring and outsourcing
13 | P a g e
$everal companies are restructuring their businesses to cut costs. Among these are Merc9<
which eliminated 8<866 ;obs worldwide< and "rgan on< the human health division of A9Eo
&obel< which cut G66 ;obs in the '$. The contracting of drug manufacturing to low cost
producers is a common business practice in the pharmaceutical industry. These are usually
located in lower cost countries< such as +ndia< China or $outh Africa. +t is not unusual that the
production is contracted to a company that produces generics too. Hence< although the
development of the generic drug
industry in low cost countries may lead to increased competition for branded pharmaceutical
companies< it also creates opportunities for cost5saving through outsourcing of production.
There is a trend towards the outsourcing of !=. towards countries with lower wages too. -or
e:ample< &ovartis established its new !=. facility< the &ovartis +nstitute on Tropical .iseases
A&+T.C< in $ingapore. #la:o$mith>line lin9ed up with the !anba:y< an +ndian producer of
competing generic drugs< for early5stage research of new drugs.() #la:o$mith>line is also
carrying out trials for its !otavirus vaccine in 3atin America< among other reasons because
trials are considerably cheaper there< whereas reasonable infrastructure is readily available.
2.5 C10&1(,;'2,10 '0; &>)6,'(,B'2,10
"ver the last years< many pharmaceutical companies have been involved in large5scale margers
and acquisitions and there is a trend towards further consolidation and concentration in the
sector. !ecent large mergers and acquisitions include the following%
M +n 2668< 'CB is to ta9e over Celltech for '$F 2.H billion< creating the fifth largest
biotechnology company in the world
M +n 2668< $anofi5$ynthQlabo has ta9en over Aventis for Euro 11 billion
M +n 266(< fiEer acquired harmacia for '$F 1K billion(2
M +n 2662< Amgen acquired +mmune: for '$F )K billion
M +n 266)< *ohnson = *ohnson acquired AlEa for '$F )2 billion
M +n 266)< Broistol5Myers $quibb acquired .uont harmaceuticals for '$F G billion
M +n 2666< #la:o 4ellcome and $mith>line Beecham merged to from
#la:o$mith>line((
M +n 2666< fiEer and 4arner53ambert merged to form the new fiEer
M +n )BBB< !hRne5oulenc and Hoechst merged to form Aventis(8
14 | P a g e
At the same time< there is a trend towards concentration on pharmaceutical core5business and
the divestment of non5core activities. !ecent ma;or divestments include the following.
M +n 266(< Merc9 divested Medco Health< a provider healthcare services
M +n 2662< Aventis sold its agrochemical business to Bayer and its animal health division to
C,C Capital artners
M +n 2662< &ovartis divested its agrochemical business to form $yngenta
The consolidation leads to increased concentration of drug portfolios. -or e:ample< when
!hRne5oulenc and Hoechst merged in )BBB< their combined portfolio included three fo the
four medicines against sleeping sic9ness. The present merger between $anofi5$ynthQlabo and
Aventis could also lead to serious competition concerns< and in an effort to head these off
$anofi5$ynthQlabo has already agreed to sell two heart disease drugs and a manufacturing plant
to #la:o$mith>line.(1 Because of the far more complicated production process and a series of
litigation lawsuits in the )BG6s< the number of industrialiEed country vaccine manufacturers has
decreased over the past decades and they have consolidated into five ma;or corporations. These
are Merc9 = Co< #la:o$mith>line< Aventis< 4yeth and Chiron. -or some vaccines the number
of producers is even lower. /ellow fever vaccines< for e:ample< are produced e:clusively
byAventis< #la:o$mith>line and 'CB Aformerly CelltechC.
S2%'2)?,6 '((,'06)&
$trategic alliances are also common in the industry< mainly for combining the strengths of
companies in different areas such as distriubution and mar9eting< manufacturing and !=.. -or
e:ample< distribution or mar9eting agreements provide smaller companies< especially
biotechnology companies< with access to large sales infrastructures. However< the number of
alliances between biotechnology companies themselves has also been increasing< suggesting
that they are becoming less dependent on large pharmaceutical companies for the mar9eting of
their products.(H "n the other hand< biotechnology companies continue to offer interesting
opportunities for large companeis to improve their !=. pipelines. fiEer recently announced a
new strategy to buy biotech companies< for e:ample.(G
2.4 EC>'0&,10 21+'%;& ?)0)%,6 ;%-?&
+n the first section of this report it was already mentioned that many branded companies have
divisions or subsidiaries that produce generics as well. "f the twenty largest pharmaceutical
15 | P a g e
companies listed in this report< only Teva harmaceuticals has the production of generic drugs
as its main activity. However< some of the other companies are important generic producers too.
CSR ,&&-)& 10 '66)&& 21 /);,6,0)& 81% ;):)(1>,0? 61-02%,)&
3.1 R)6)02 ;):)(1>/)02& 10 TRIPS
The protection of intellectual property is an important aspect of access to medicines. As
decribed above< patents and other forms of intellectual property rights protect a innovative
drugs against generic competition. The pharmaceutical industry itself stresses that access to
medicines depends on many more factors than patents< including the infrastucture for the
distribution of medicines.
The potential effects of generic competition on drug prices in developing countries will be
illustrated with a common e:ample of anti5retroviral AA!,C therapy. Before 266)< A!,
treatment would cost more or less the same in Africa as in the '$ and Europe< about F)6<666 a
year. "nly a relatively small number of countries had negotiated prices in the range of F)<666 a
year< after lengthy negotiations with the patent holders< who sometimes required them to 9eep
the lower prices a secret. +n february 266)< prices suddenly dropped when the +ndian generics
manufacturer Cipla offered A!, therapy for '$F (16 a year. +ndia recogniEes patents on drug5
ma9ing processes< not on products< so Cipla can legally produce generics as long as it uses a
slightly different process.86 +n August 266( Aspen harmacare launched the first domestically
produced generic in $outh Africa< a copy of Bristol5Myers $quibbDs Oerit. 8) An important
international framewor9 for the protection of intellectual property is the 4orld Trade
"rganiEation A4T"C agreement on Trade5!elated aspects of +ntellectual roperty !ights
AT!+$C. This agreement was concluded in the 'ruguay round of 4T" negotiations that ended
in )BB8. The T!+$ agreement requires all 4T" members Acurrently )8H countriesC to pass
legislation that protects intellectual property< such as patent protection. +t also states that
signatories must protect patent holdersD data from Lunfair commercial useD< but it does e:plicitly
not oblige data e:clusivity periods. 3east developed countries were given until 266K to comply
16 | P a g e
with these requirements. The articles K< (6 and () of the agreement are of special relevance for
access to medicines in developing countries.
M Article K specifies that countries can decide whether or not to allow international e:haustion
of patents. This is also called parallel importing and means that patented products may be
imported from foreign mar9ets at a lower price.
M Article (6 allows countries to provide e:ceptions to the e:clusive rights conferred by a patent<
provided that they do not unreasonably conflict with a normal e:ploitation of the patent.
I0;-&2%7 (1==7,0? 81% ,02)(()62-'( >%1>)%27 >%12)62,10
harmaceutical companies have been accused of agressively lobbying against the wea9ening of
international patent protection during T!+$ negotiations.8H A large part of the industry lobby
is carried out by the harmaceutical !esearch and Manufacturers of America Ah!MAC. +t is
therefore difficult to determine the lobby positions of individual pharmaceutical companies.
The h!MA is a '$5based organiEation that represents the countryJs leading research5based
pharmaceutical and biotechnology companies.8G +ts members include all ma;or pharmaceutical
companies in the world< not ;ust those based in the '$.
The h!MA pursues a T!+$5plus agenda< that is< provisions on intellectual property
protection that go beyond the requirements of T!+$ agreement. The main issues of this agenda
are the following. 8B
M 3imitations to compulsory licensing.
M The protection of test data by data e:clusivity periods.
M &o approval of generic drugs until the patent on a drug has e:pired< also called lin9age of
regulatory approval with patent status. This delays the launch of generic drugs beyond patent
e:piry< as generic producers typically obtain approval well in advance to prepare the launch of
the generic product.
M &o e:haustion of patent rights and no e:port of generics. This means that patented or generic
products cannot be purchased in foreign mar9ets at lower prices. !ecently the focus of the
industry lobby has shifted towards the establishment and e:tension of data e:clusivity periods.
As e:plained before< this effectively prevents generic competition by not allowing other
producers to rely on the clinical test data of the patent holder for approval of the drug. This may
delay the launch of generic medicines beyond patent e:piry. +n line with these industry
17 | P a g e
interests< the European Commission proposed in 266( an e:tension of the data e:clusivity
period< which could threaten access to cheap generic medicines in accession countries.16
P%,6,0? 18 /);,6,0)&
ricing is one of the areas where pharmaceutical companies can ma9e a ma;or contribution to
enhance access to medicines in developing countries. 3ower medicine prices can considerably
increase their availability to poor populations< regardless from other problems such as the wea9
infrastructure for the delivery of medicines in developing countries. $ales in poor countries<
especially least developed countries< typically generate a very small proportion of the total sales
of a pharmaceutical company. Companies could therefore supply medicines too these countries
at differential< strongly reduced prices< without a substantial loss of profits. This brings two
potential ris9s for pharmaceutical companies. -irstly< the supply of cheaper medicines in
developing countries can result in parallel imports of these medicines into high income mar9ets<
where they can be sold by others for a much higher price. $uch product diversion means that
the medicines will not reach the target population and that the company will suffer reduced
sales in high income countries. Most industrialiEed countries prohibit parallel imports without
the permission of the patent holder. $ome companies have ta9en additional steps to prevent
preferentially priced medicines from being illegally re5sold at higher prices. referentially
priced products from #la:o$mith>line< for e:ample< have different colours and come in
different pac9ages< sothey can be easily recogniEed.
$econdly< the preferential prices may be used as a reference by healthcare providers in high
income countries for negotiating lower prices. This is called reference pricing. Companies
sometimes set preferential drug prices for least developed countries at production cost< which is
normally 9ept secret because it is higly sensitive commercial information. The prevention of
reference pricing requires political commitment from developed countries. The Accelerating
Access +nitiative AAA+C< a partnership that searches to enhance access to A!,s< has
demonstrated that this problem can be overcome. -rom a public health point of view< there are
several concerns about the preferential pricing offers of pharmaceutical companies. +n the past
most pharmaceutical companies used to negotiate preferential prices on a case5by5case basis
with individual countries. $uch negotiations are a lengthy process often yield sub5optimal
outcomes for developing countries. +ndividual negotiations also limit the transparency and
reliability of preferential prices. -urthermore< governments may be required to offer advantages
18 | P a g e
to the company ine:change< such as refraining from resorting to generic drugs< or to 9eep
medicine prices secret. This type of negotiations for A!, prices under the AA+ have caused the
partnership to be heavily criticiEed. -urthermore< price reduction have often been limited to
small numbers of products. .evelopment organiEations therefore stress the need of a
generaliEed global system of differential prices< which covers a broad range of a companyDs
medicines and bases eligibility on ob;ective indicators.K6 $everal companies have recently
adopted preferential pricing schemes for A!,s that meet the criteria of fi:ed prices for groups
of countries< ob;ectve eligibility criteria and transparent offers. /et in some cases negotiations
still ta9e place on a country basis< especially with middle income countries.
RAD 81% ;):)(1>,0? 61-02%,)&D ;,&)'&)&
The ma;ority of !=. e:penditures is aimed at treatments for diseases that are mainly prevalent
in high income countries. +t is estimated that only )6I of !=. investment goes to diseases of
developing countries< whereas these diseases account for B6I of the global disease death
burden. Many poor people suffer or die from diseases that are treatable or curable< but for
which little research is being performed. These include sleeping sic9ness AAfrican
TrypanosomiasisC< diarrhoeal diseases< schistosomiasis< chagas disease and leprosy. Compared
to for e:ample H+,SA+.$ research< !=. investment for leishmaniasis< tuberculosis ATBC and
malaria is also relatively low.K) The reason for this discrepancy is that there are only Lsmall
mar9etsD for these medicines< which means there is little profit to be made< e:cept for
H+,SA+.$ treatments. They will therefore not yield an adequate return on !=. investments.
This contrasts with treatments
against diseases and disorders such as hypertension< elevated cholesterol levels< depression<
arthritis< allergy and schiEophrenia. These treatments fall in the therapeutic areas that generate
the largest sales worldwide< as indicated earlier in this report
D%-?& ;10'2,10&
Many pharmaceutical companies ma9e drug donations to developing countries. Although these
may help to improve access to medicines< there are some important concerns about drug
donations.
19 | P a g e
M .onations may have an undue influence on the choice of medicines that are used in a recipient
country. +f one drug is available for free and other drugs are not< the first drug might be used
even though it is not the prefered treatment.
M ,arious types of restrictions may apply< such as geographic< quantitative< indication and time
restrictions.
M $ometimes donations require the implementation of a separate donations programme and are
accompanied by high administrative costs for the recipient country.
M !ecipient countries may become dependent on medicine donations.
M .onations may be more costly for donor governments than the procurement of preferentially
priced or generic drugs< because of ta: brea9s that are under certain conditions granted to the
donating companies< especially in the '$. &ot all donation programmes qualify for ta: brea9s<
though.
M .onations may have a negative impact on the development of the generic drugs industry and
therefore cause unfair competition.
M Assuming that ta: brea9s are not a substantial compensation for donating companies< it is
generally considered that offering preferentially priced medicines at production cost is more
sustainable than medicine donations< because it enables companies to recover their e:penses. +n
addition< the decision to donate a certain medicine involves setting priorities for the use of
resources available to enhance healthcare in developing countries. +f companies offer
preferential prices for a wide range of drugs instead< this would allow developing countries
more autonomy to set their own priorities.
M +n the past there have been several cases of medicine donations that were inappropriate and
sometimes even useless for the recipients. -or e:ample< donated medicines were not requested
and could not be used< they could not be identified due to inappropriate labelling< or they had a
remaining shelf5life too short to be used in time.
M .onations may be a disguised form of medicine promotion. +n one case< for e:ample< the
$wiss company &ovartis announced free supplies of its cancer drug #livec to people around the
world that could not afford its costs of '$F 2H<666 per year. $ome estimated that this number
of patients would be as high as K66<666. However< in the end only )<166 patients outside the '$
benefited from these donations< of which ;ust )) in least developed countries. +t became clear
20 | P a g e
that &ovartis had used #livec as part of a mar9eting strategy< and even encouraged patients
benefiting from the donations to press public health systems to pay high prices for the drug.
+n )BBB the 4H" adopted a set of guidelines for drug donations. These guidelines deal mainly
with the last issue< inappropriate donations due to the quality of donations. The guidelines
include the following standards.
M &o donations should be made without consent of the recipient.
M There should be no double standards in quality. -or instance< the donation of drugs that were
returned to pharmacies are not allowed
M After delivery< the donated drugs should have a remaining shelf5life of at least half
a year.
M The declared value of a drug should be based upon the wholesale price of it generic
equivalent< to decrease the burden of customs clearance and import duties. High standards of
medical donations are promoted by the artnership for 7uality Medical .onations A7M.C.
This is an alliance of private voluntary organiEations that develops and promotes sound
donation practices< represents the interests of its members and encourages the study of health
and socioeconomic impacts of donations. +t identified H 9ey components in the comprehensive
management of drug donations< including needs assessment< appropriateness of the donation<
quality standards< and impact evaluation.
These are consistent with the 4H" guidelines< but address a broader range of issues. $ome
pharmaceutical companies have been addressing various types of concerns about medicine
donations on an individual basis. -or e:ample< companies commit themselves to donate a drug
for as long as it is needed and see9 to integrate drug donation programmes into e:isting
healthcare infrastructures.
3.6 G(1='( P-=(,6P%,:'2) I0,2,'2,:)&
#lobal ublic5rivate +nitiatives A#+sC for health are partnerships of public and private actors
that wor9 together to achieve health outcomes. Although this type of collaborations is not new<
they are increasingly regarded as one of the most appropriate ways to improve access to
medicines in developing countries. +n the past )6 years< many new #+s have been
established. There are at present some G6 #+s for health. The +nitiative on ublic5 rivate
artnerships for Health A+HC registers some Abut not allC of these partnerships and maintains
21 | P a g e
a public database with information about the registered partnerships.KH The nature of the
partnerships is diverse. "ften #+s have one or more of the following goals%
M $upport or accellerate !=. for ma;or diseases in developing countries
M .eliver medicines to developing countries for free or at preferential prices
M $trengthen the health care infrastructure in developing countries
M Coordinate the efforts of various individual partners or other partnerships
#+s serve to bring together the e:pertise of different partners and to bring in additional funds
to improve health in developing countries. However< there are a number of concerns about
#+s.KG The inventory below applies mainly to partnerships that see9 to improve access to
medicines. $ome concerns are related to the governance of #+s.
The recipient countries and populations have sometimes very little influence on the goals and
strategy of a partnership. They are often underrepresented in #+ boards.
M There may be conflicts of interest and undue influence of private sector partners on public
health policies. -or e:ample< the participation of pharmaceutical companies in the management
of #+s may enable them to influence public health priorities and technical standards
according to their commercial interests.
M Transparency about the governance of partnerships and the commitments and responsibilities
of various partners is often low.
M +t may not be clear to whom the management of a #+ is accountable.
M The role and responsibilities of the various partners to a #+ may not be clear. +n
addition< it may not be able to hold them accountable for their commitments to the
partnership.
M The impacts of #+s are not always well monitored and evaluated.
+n 2666 the 4H" secretariat adopted internal #uidelines on interaction with commercial
enterprises to achieve health outcomes to deal with potential conflicts of interests. They
recommend that the 4H" Lshould always consider whether a proposed relationship might
involve a real or perceived conflict of interestsD and call for a Lstep5by5step evaluation of the
commercial enterpriseD.KB However< these guidelines were not always followed when new
#+s were initiated.
"ther concerns are related to the strategies and impact of #+s.
22 | P a g e
M #+s may create parallel structures in developing countries that are an additional burden on
the health sector in developing countries< instead of integrating with local healthcare
infrastructures. Coordination between different #+s is often lac9ing too.
M #+s may not deliver sustainable results< because they do not strengthen the local health
sector and commitments from commercial partners are usually for a ma:imum period of five
years.
M #+s may not be lin9ed to sector5wide approaches and national poverty reduction strategies.
M #+s may have a narrow focus and medicaliEe health problems. An integrated approach<
including prevention of a disease< may be lac9ing. -urthermore< many #+s are focused at the
enhanced delivery of medicines but do not address the underlying causes of health problems<
such as unsafe drin9ing water< malnutrition and inadequate sanitation.
D%-? &'8)27
The safety of drugs is heavily regulated and companies have the responsibility to ensure that
healthcare wor9ers understand how their drugs can be safely used. -urthermore< companies
have to ensure drug quality and traceability of drugs during manufacturing and distribution. +n
the case of production errors or contamination< unsafe production batches have to be withdrawn
from the mar9et. HK -or products that are sold in the '$ mar9et< the -.A requires companies to
observe current #ood Manufacturing ractices Ac#MC< a process standard for drug
manufacturing. $ometimes companies have failed to comply with such standards< which has
resulted in fines< litigation claims< lost contracts and the suspension of production.
23 | P a g e
COMPANY PROFILE
C,>('< originally founded as The Chemical< +ndustrial = harmaceutical 3aboratories is a
prominent +ndian pharmaceutical company< best59nown outside its home country for producing
low5cost anti5A+.$ drugs for H+,5positive patients in developing countries. C,>(' ma9es drugs
to treat cardiovascular disease< arthritis< diabetes< weight control< depression and many other
health conditions< and its products are distributed in more than )G6 countries worldwide.
T)U
Among the hundreds of generic medications it produces for international distribution are
atorvastatin< amlodipine< fluo:etine< venlafa:ine hydrochloride and metformin
>hwa;a Abdul Hamied< the founder of Cipla< was born on "ctober ()< )GBG. The fire of
nationalism was 9indled in him when he was )1 as he witnessed a wanton act of colonial
highhandedness. The fire was to blaEe within him right through his life. +n college< he found
Chemistry fascinating. He set sail for Europe in )B28 and got admission in Berlin 'niversity as
a research student of VThe Technology of Barium CompoundsV. He earned his doctorate three
years later. +n "ctober )B2H< during the long voyage from Europe to +ndia< he drew up great
plans for the future. He wrote% V&o modern industry could have been possible without the help
of such centres of research wor9 where men are engaged in compelling nature to yield her
secrets to the ruthless search of an investigating chemist.V His plan found many supporters but
no financiers. However< .r Hamied was determined to being Va small wheel< no matter how
small< than be a cog in a big wheel.V
C,>(' '0; 2*) F,?*2 '?',0&2 HI@EAIDS ,0 2*) D):)(1>,0? W1%(;%
24 | P a g e
Today A266HC< C,>(' is the worldJs largest manufacturer of antiretroviral drugs AA!,sC to fight
H+,SA+.$< as measured by units produced and distributed Amultinational brand5name drugs are
much more e:pensive< so in money terms Cipla medicines are probably somewhere down the
listC. !oughly 86I of H+,SA+.$ patients undergoing antiretroviral therapy worldwide ta9e
Cipla drugs. !an9ed third in #eneric mar9et share statistics in $outh African rivate
$ector.Because +ndian law from )BH2 has allowed no Aend5productC patents on drugs< and
provided for compulsory licensing< Cipla was able to manufacture medicines which en;oy
patent monopoly in certain other countries Aparticularly those where large< multinational
pharmaceutical companies are basedC. By doing so< as well as by ma9ing an e:ecutive decision
not to ma9e profits on A+.$ medication< Cipla reduced the cost of providing antiretrovirals to
A+.$ patients from F)2<666 and beyond Amonopoly prices charged by international pharma
conglomeratesC down to around F(66 per year. Today they are able to do so for under F)16 per
patient per year. 4hile this sum remains out of reach for many millions of people in Third
4orld countries< government and charitable sources often are in a position to ma9e up the
difference for destitute patients.The customary treatment of A+.$ consists of a coc9tail of three
drugs. Cipla produces an all5in5one pill called Triomune which contains all three substances
A3amivudine< stavudine and &evirapineC< something difficult elsewhere because the three
patents are held by different companies. "ne more popular fi:ed dose combination is there<
with the name .uovir5&. This contains 3amivudine< Oidovudine and &evirapine.
Cipla was officially opened on $eptember 22< )B(H when the first products were ready
for the mar9et. The $unday $tandard wrote% VThe birth of Cipla which was launched into
the world by .r > A Hamied will be a red letter day in the annals of Bombay +ndustries.
The first city in +ndia can now boast of a concern< which will supersede all e:isting
firms in the magnitude of its operations. +ndia has lagged behind in the march of science
but she is now awa9ening from her lethargy. The new company has mapped out an
ambitious programme and with intelligent direction and s9illful production bids fair to
establish a great reputation in the East. V
)B(1% .r > A Hamied sets up VThe Chemical< +ndustrial and harmaceutical
3aboratories 3td.V in a rented bungalow< at Bombay Central.
25 | P a g e
)B8)% As the $econd 4orld 4ar cuts off drug supplies< the company starts producing
fine chemicals< dedicating all its facilities for the war effort.
)B12% $ets up first research division for attaining self5sufficiency in technological
development
)BK6% $tarts operations at second plant at ,i9hroli< Mumbai< producing fine chemicals
with special emphasis on natural products
)BKG% Cipla manufactures ampicillin for the first time in the country.
)BH2% $tarts Agricultural !esearch .ivision at Bangalore< for scientific cultivation of
medicinal plants.
)BHK%Cipla launches medicinal aerosols for asthma.
)BG6% 4ins Cheme:cil Award for E:cellence for e:ports
)BG2% -ourth factory begins operations at atalganga< Maharashtra
)BG8% .evelops anti5cancer drugs< vinblastine and vincristine in collaboration with the
&ational Chemical 3aboratory< une. 4ins $ir C !ay Award for developing inhouse
technology for indigenous manufacture of a number of basic drugs.
)BG1% Cipla wins &ational Award for $uccessful Commercialisation of ublicly -unded
!=..
)BB)% 3auches etoposide< a brea9through in cancer chemotherapy< in association with
+ndian +nstitute of Chemical Technology.
The company pioneers the manufacture of the antiretroviral drug< Eidovudine< in
technological collaboration with +ndian +nstitute of Chemical Technology< Hyderabad
)BB8% CiplaJs fifth factory begins commercial production at >ur9umbh< Maharashtra
26 | P a g e
)BBH% 3aunches transparent !otahaler< the worldJs first such dry powder inhaler device
now patented by Cipla in +ndia and abroad. The palliative cancer care centre set up by
the Cipla -oundation< begins offering free services at 4ar;e< near une.
)BBG% 3aunches lamivudine< becoming one of the few companies in the world to offer all
three component drugs of retroviral combination therapy AEidovudine and stavudine
already launched
)BBB% 3aunches &evirapine< antiretroviral drug< used to prevent the transmission of
A+.$ from mother to child
2666%Cipla became the first company< outside the '$A and Europe to launch C-C5free
inhalers N ten years before the deadline to phase out use of C-C in medicinal products
2662% -our state5of5the5art manufacturing facilities set up in #oa in a record time of less
than twelve months.
266(% 3aunches T+",A ATiotropium bromideC< a novel inhaled< long5acting
anticholinergic bronchodilator that is employed as a once5daily maintenance treatment
for patients with chronic obstructive pulmonary disease AC".C. Commissioned second
phase of manufacturing operations at #oa.
2661% $et5up state5of5the5art facility for manufacture of formulations at Baddi< Himachal
radesh
B"A!. "- .+!ECT"!$ %
-"'&.E! % .r. >.A. Hamied
A)GBG5)BH2C
CHA+!MA& A&. MA&A#+&# .+!ECT"! % .r. /.>. Hamied
*"+&T MA&A#+&# .+!ECT"!$ % Mr. M.>. Hamied< Mramar lulla
&"& EPEC'T+,E .+!ECT"!$ %
27 | P a g e
Mr. ,.C. >otwal
.r. H.!. Manchanda
Mr. $.A.A. into
Mr. M.!. !aghavan
Mr. !amesh $hroff
Mr. an9a; atel
C".E "- C"&.'CT% As required under revised Clause 8B of the 3isting Agreement
the following code of conduct has been approved by the Board of .irectors and is
applicable to the .irectors and $enior Management of the Company
ETH+CA3 C"&.'CT% All directors and senior management employees shall deal on
behalf of the Company with professionalism< honesty< integrity as well as high moral
and ethical standards. $uch conduct shall be fair and transparent and be perceived to be
as such by third parties
C"&-3+CT "- +&TE!E$T% Any director or senior management employee of the
Company shall not engage in any business< relationship or activity< which might
detrimentally conflict with the interest of the Company
T!A&$EE!E&C/% All directors and senior management employees of the Company
shall ensure that their actions in the conduct of business are totally transparent e:cept
where the needs of business security dictate otherwise. $uch transparency shall be
brought about through appropriate policies< systems and processes.
3E#A3 C"M3+A&CE% All directors and senior management employees of the
Company shall at all times ensure compliance with all the relevant laws and regulations
affecting operations of the Company. They shall abreast of the affairs of the Company
and be 9ept informed of the CompanyJs compliance with relevant laws< rules and
regulations. +n the event that the implication of law is not clear< the course of action
chosen must be supported by eminent legal counsel whose opinion should be
documented
28 | P a g e
S*'%)*1(;,0? P'22)%0
The company has an equity capital
base of !s. K6.2 crore and the number
of shares outstanding amount to K.62
crore. The face value per share is !s.
)6 and the current mar9et price is
hovering around !s. )<6H1. The
mar9et capitalisation as on May )8<
266) was !s. K8KG.2H crores. The
promoters are holding 8).2I sta9e in
the company. The free float available
in the mar9et is 8K.GI.
Business Overview


The present businesses of Cipla can be broadly classified into%
.omestic branded formulation sales AH8I of total salesW )B526I operating profit marginC
.omestic unbranded formulation sales AHI of total salesW over )6I operating profit marginC
E:ports A)BI of total salesW around (G586I operating profit marginC. Brea9up of e:ports is as
follows%
o Europe A21IC
o '$ A(2IC
o Africa A)HIC
o Middle East A)8IC
o Asia AHIC and
o Australia A1IC
29 | P a g e
Cipla has been relatively low profile on its !=. initiatives compared to the domestic peers< all of whom
have set their sights on discovering new chemical entities A&CEsC. But lately< !=. spend of Cipla has
increased by 21I to !s. (66 mn A8I of salesC and the company has an !=. team of 266 people. +n future
the !=. e:penditure is e:pected to grow at a faster pace compared to sales and might rise to over 1I of
sales.

The business environment for Cipla has become highly competitive in the last few years. The ma;or factors
affecting Cipla are as folows%
&ew .rug !=. costs are prohibitive< which has made M&Cs to spread their !=. costs through
Mergers S Acquisitions.
+n +ndian harmaceutical $ector prices of over K6I of the .rugsS-ormulations is controlled by the
government through .C". -or Cipla .C" coverage is around 11I
3ow entry barriers in the bul9 drugs mar9et has led to a situation of over5capacity< which has made
ma;or domestic players< shift their focus towards formulations segment. As a result Cipla < which is
earning nearly G65G1 percent of its sales from formulations is facing increasing competition.
4ith the focus on post 2661 era< M&Cs are strengthening their position in +ndia through mar9eting
tie5ups with local ma;ors and fully owned subsidiaries. This can lead to even higher degree of
competition.

The management of Cipla has consistently demonstrated its vision in bac9ing the right strategy and
consistently de5ris9ing the business. This is reflected in the choice of therapeutic groups and the individual
products that it has focussed on< the mar9eting route adopted for its e:port business and the 9ind of !=.
pro;ects ta9en up by the company. All this has translated into superior topline growth< higher profit margins
and one of the most impressive returns on equity among its peers.
EC>1%2& +,(( =) 2*) .)7 ?%1+2* ;%,:)% ,0 2*) 61/,0? 7)'%& The e:ports of the company are e:pected to
move up from )BI of sales in -/66 to 86516I of sales by -/61.
I06%)'&) ,0 2*) RAD )881%2& 5 !=. spend of Cipla increased by 21I to !s. (66 mn A8I of salesC and the
company has an !=. team of 266 people. #oing forward< the !=. spend will grow at a faster pace
compared to sales and rise to over 1I of sales.
30 | P a g e
Swot analysis of cipla
S2%)0?2*&
). 3ow cost of production.
2. 3arge pool of installed capacities
(. Efficient technologies for large number of #enerics.
8. 3arge pool of s9illed technical manpower.
1. +ncreasing liberaliEation of government policies.
O>>1%2-0,2,)&
). Aging of the world population.
2. #rowing incomes.
(. #rowing attention for health.
8. &ew diagnoses and new social diseases.
1. $preading prophylactic approaches.
K. $aturation point of mar9et is far away.
H. &ew therapy approaches.
G. &ew delivery systems.
B. $preading attitude for soft medication A"TC drugsC.
)6. $preading use of #eneric .rugs.
)). #lobaliEation
31 | P a g e
)2. Easier international trading.
)(. &ew mar9ets are opening.
W)'.0)&&
). -ragmentation of installed capacities.
2. 3ow technology level of Capital #oods of this section.
(. &on5availability of ma;or intermediaries for bul9 drugs.
8. 3ac9 of e:perience to e:ploit efficiently the new patent regime.
1. ,ery low 9ey !=..
K. 3ow share of +ndia in 4orld harmaceutical roduction A).2I of world production but
having )K.)I of worldJJs populationC.
H. ,ery low level of Biotechnology in +ndia and also for &ew .rug .iscovery $ystems.
G. 3ac9 of e:perience in +nternational Trade.
B. 3ow level of strategic planning for future and also for technology forecasting.
T*%)'2&
). Containment of rising health5care cost.
2. High Cost of discovering new products and fewer discoveries.
(. $tricter registration procedures.
8. High entry cost in newer mar9ets.
1. High cost of sales and mar9eting.
K. Competition< particularly from generic products.
H. More potential new drugs and more efficient therapies.
G. $witching over form process patent to product patent.
32 | P a g e
VISION AND MISSION
@ISION 3
T1 *)'( I0;,' '0; 21 =)61/) 2*) =,??)&2 '0; 2*) /1&2 ';/,%); >*'%/'6)-2,6'( 61/>'07
,0 I0;,'.
MISSION3
C,>(' 61//,2& ,2&)(8 21 )0;)':1-% 21 &'2,&87 1-% 6-&21/)%&F 0));& ,0 ):)%7 /'00)%
>1&&,=()3 2*%1-?* )C6)(()02 &)%:,6)G =7 ;):)(1>,0? '0; /'%.)2,0? '0 )88)62,:)G %)(,'=() '0;
&'8) >%1;-62 '0; =7 188)%,0? 1-% >%1;-62 '2 ' >%,6) '881%;'=() 21 '(( >'2,)02&.
W) 8-%2*)% 61//,2 1-%&)(:)& 21 6102%,=-2,0? 21 6102,0-); /);,6'( );-6'2,10 '0; %)&)'%6*
,021 0)+ ;%-? ;)(,:)%7 &7&2)/& ,0 2*) =)(,)8 2*'2 2*,& 6102%,=-2,10 +,(( ,/>%1:) 2)6*0,6'(
.01+*1+ '0; -(2,/'2)(7 =)0)8,2 '(( >'2,)02& ,0 I0;,'.
W) ,02)0; 21 =) 2*) )/>(17)% 18 6*1,6) ,0 2*) >*'%/'6)-2,6'( &)621% ;):)(1>,0? 1-% /1&2
:'(-'=() '&&)2G *-/'0 6'>,2'(G ,%%)&>)62,:) 18 %'6)G 61(1-% 1% 6%)); &1 2*'2 2*)7 /'7
%)'(,&) 2*),% 8-(( >12)02,'( '0; '/=,2,10&. W) >();?) >)%&10'( %)&>)62G 8',% 61/>)0&'2,10
'0; ' 6()'0 '0; &'8) +1%.,0? )0:,%10/)02.
I2 ,& 1-% +,&* 2*'2 +) =) %)61?0,&); '& ,001:'21%& ,0 2*) 8,)(; 18 >*'%/'6)-2,6'( /'%.)2,0?
%'2*)% 2*'0 H-&2 81((1+)%&G =) 2*) ,0:)&21%& >,6. '0; '6*,):) &-&2',0'=() '=1:) ':)%'?)
%)2-%0& 21 2*) ,0:)&21%.
I2 ,& 1-% ;%)'/ 2*'2 2*%1-?* 1-% >1(,67 18 ;);,6'2,10 '0; 61//,2/)02 +) +,(( 6%)'2) '0
33 | P a g e
)0:,%10/)02 +*)%)=7 C,>(' M);>%1 +,(( 61/) 21 =) %)61?0,&); '& 2*) >%)8)%%); >'%20)%
,0 /);,6,0).

ANALYSIS
DIFFERENT PROMOTIONAL TOOLS
P%1/12,10'( /,C
+t is helpful to define the five main elements of the promotional mi: before considering their
strengths and limitations.
A;:)%2,&,0?
Advertising is any paid form of non5personal communication of ideas or products in the Vprime
mediaV% i.e. television< newspapers< magaEines< billboard posters< radio< cinema etc. Advertising
is intended to persuade and to inform.
The two basic aspects of advertising are the message Awhat you want your communication to
sayC and the medium Ahow you get your message acrossC
D,%)62 /'%.)2,0?
.irect mar9eting creates a direct relationship between the customer and the business on an
individual basis.
P)%&10'( S)((,0?
34 | P a g e
ersonal selling refers to oral communication with potential buyers of a product with the
intention of ma9ing a sale. The personal selling may focus initially on developing a relationship
with the potential buyer< but will always ultimately end with an attempt to Vclose the saleV.
S'()& P%1/12,10
$ales promotion refers to the provision of incentives to customers or to the distribution channel
to stimulate demand for a product.
P-=(,6 R)('2,10&
ublic relations is the communication of a product< brand or business by placing information
about it in the media without paying for the time or media space directly
F'621%& 2*'2 ;)2)%/,0) 2*) 27>) 18 >%1/12,10'( 211(& -&);
Each of the above components of the promotional mi: has strengths and wea9nesses. There are
several factors that should be ta9en into account in deciding which< and how much of each tool
to use in a promotional mar9eting campaign%
(1) R)&1-%6) ':',('=,(,27 '0; 2*) 61&2 18 )'6* >%1/12,10'( 211(
Advertising Aparticularly on television and in the national newspapers can be very e:pensiveC.
The overall resource budget for the promotional campaign will often determine which tools the
business can afford to use.
(2) M'%.)2 &,B) '0; 6106)02%'2,10
+f a mar9et siEe is small and the number of potential buyers is small< then personal selling may
be the most cost5effective promotional tool.
A good e:ample of this would be businesses selling software systems designed for supermar9et
retailers. "n the other hand< where mar9ets are geographically disperse or< where there are
substantial numbers of potential customers< advertising is usually the most effective.
35 | P a g e
(3) C-&21/)% ,081%/'2,10 0));&
$ome potential customers need to be provided with detailed< comple: information to help them
evaluate a purchase Ae.g. buyers of equipment for nuclear power stations< or health service
managers investing in the latest medical technologyC. +n this situation< personal selling is almost
always required 5 often using selling teams rather than ;ust one individual.
THE VALUE OF THE REPRESENTATIVE
EMPLOYED BY THE CIPLA TO THE HEALTH
CARE PROFESSIONAL
INTRODUCTION
The definition of our customer is changing and it is necessary for the pharmaceutical industry to
refine its vision of the behaviour driving each influencer in the networ9 in which a variety of
sta9eholders participate. E:clusively targeting only doctors is no longer acceptable and other
health care professionals< payers< administrators and patients are becoming increasingly
important.
THE ROLE OF THE MEDICAL REPRESENTATI@E
Medical representatives perform several valuable services for the health care professional and
in so doing contribute to the success of the health care professional and his or her practice. They
ensure that doctors and pharmacists are introduced to new and improved medicines and
reminded of other products available for the treatment of different diseases and conditions. The
medical representative provides the health care professional with detailed scientific and clinical
information. $ervices are provided free of charge as part of the value provided by the research
based pharmaceutical industry. "ther health care professionals e.g. physiotherapists and nurses
may also be visited in the future as new prescribing requirements of the Medicines Act are
implemented.
Medical representatives are well trained and possess adequate medical and technical 9nowledge
to detail their companyDs products in an accurate< responsible and ethical manner as prescribed
by individual companyDs ethos< the Code of Mar9eting ractices to be published in terms of
36 | P a g e
$ection )GC of the Medicines Act AAct )6)S)BK1C and sub;ect to approval of the regulations to
this Act.
The pharmaceutical representative channel medical doctorsD evaluation of< and enquiries about
the medicines to the manufacturer< including any reports of adverse events associated with the
companiesD products.
The medical representative is an important partner in improving the health status of the patient
and the most important ob;ective is to build a relationship of trust between all the health care
sta9eholders and the pharmaceutical company.
@ALUE OF THE MEDICAL REPRESENTATI@E
Mar9eting of pharmaceuticals serves an essential function in the health care delivery system.
Many doctors< pharmacists and other health care professionals learn about new medicines< and
about ongoing research in their areas of specialisation< largely through effective and
personalised interaction with prescribers and dispensers and ensuring that individual
preferences are catered for. The medical system benefits significantly from this form of
education< e.g.%
X to enable doctors and other health care professionals to learn timely and accurately about new
therapies and diagnostic toolsW
X to 9eep up with medical advancesW
X to provide a mechanism for doctors to get prompt answers to their questions about medical
research and the proper use of medicinesW
X to provide doctors the opportunity to learn about new indications for e:isting products and
updates on side effects< warnings and other essential prescribing informationW
X to provide accurate and balanced clinical data based on approved comparative clinical studies
on medicines regarding safety and efficacy against standard treatment regimens and placebo.
+f an appointment with a medical representative is used correctly the representative could assist
in ma9ing the most efficient use of the health professionalDs time. This is done by stating a clear
ob;ective for the interviewW for e:ample any one or more of the following%
X +ntroduction of a new product or indicationW
X "btaining more clinical and cost effective information about established productsW
X .iscussing other services available such as C. trainingW
37 | P a g e
X robing for e:periences with the companyDs products< particularly the newer ones< and
implement the standard operating procedure in the event of a complaint or adverse eventW
X rovide solutions to problems by networ9ing with various resources
O2*)% &)%:,6)& 188)%); =7 2*) R)>%)&)02'2,:)
Being a ma;or lin9 between the pharmaceutical industry on the one hand and the doctor and
pharmacist on the other< the pharmaceutical representative can arrange a number of services<
such as to%
Y provide additional technical< clinical and scientific information about productsW
Y arrange literature searches about company products and comparative clinical studiesW
Y advise< when appropriate< on the reporting of adverse reactionsW
Y initiate liaison on proposed clinical trialsW
Y discuss clinical data or issues of concern regarding the pharmaceutical company andSor its
products and servicesW
Y provide information to the prescriberSdispenser on the national or international
pharmaceutical industryW
Y provide facts on diseases and the pharmaceutical product development processW
Y discuss applicable pharmaco5economic dataW
Y provide support in practice management and issue resolutionW
Y help doctors to interact with payers.
TRAINING OF THE MEDICAL REPRESENTATI@E
A medical representative is a well trained person with a bac9ground in life sciences< often at
degree level< such as in a pharmacy< nursing< pathology< laboratory< or other paramedical
disciplines. Medical !epresentatives must acquire a full 9nowledge of the companiesD products<
pass internal company e:aminations which normally comprises of anatomy physiology< disease
processes< microbiology< pharmacology< and information on the pharmaceutical industry.
The training of medical representatives is a continuous process and individuals will undergo
company training when new products are introduced. Attending in5company conferences is
mandatory to allow interaction between representatives to e:change views on improved
customer support.
38 | P a g e
PROMOTION AND MARKETING OF PHARMACEUTICAL PRODUCTS
harmaceutical mar9eting is an essential part of the !=. process that brings new products into
medical practice. More importantly< it serves a critical educational role in our health care
delivery system and is a vital e:tension of the process of searching for and developing new and
better means of preventing and treating illness. romotion and the dissemination of educational
information ensures that the full benefits of the years of wor9< and enormous e:penditure in
terms of s9ills and money to discover and develop a new medicine< will be made available
timely to patients. Currently the estimated cost to discover and develop a medicine is
appro:imately !1 billion and it requires about )6 N )2 years to develop and register a new
chemical entity< leaving appro:imately G5)6 years for product e:clusivity to provide the
necessary funding for future innovation.
The medical representativeDs services are an important part of the process of ensuring that
patients benefit from current and new medicines. romotion is a useful element in the process
whereby physicians and pharmacists become aware of and allow them to evaluate and decide
on the selection of medicines. +t is well 9nown truism that no matter what the investment cost of
a new medicine< it means absolutely nothing if the patient is not treated with it.
Claims and comments made by manufacturers are based on medical and scientific evidence<
approved by regulatory authorities< and conform to legal and ethical standards
39 | P a g e
Promoting Medical Products in a Changing
Healthcare Environment BY CIPLA
.uring the past few years< several medical product sponsors have acquired or entered into
agreements with healthcare organiEations or pharmacy benefits management companies
ABMsC. Cipla often use such healthcare organiEationsSBMs to promote their products<
including the dissemination of promotional labeling and advertising. -.A generally does not
e:ercise ;urisdiction over materials disseminated by individuals or entities that are not in any
way affiliated with a medical product sponsor. However< when a medical product sponsor is
involved in promotional activities performed by healthcare organiEationsSBMs< the sponsor
should not be permitted to avoid regulation by changing the form through which their
communications are accomplished. Accordingly< this document provides guidance to medical
product sponsors by describing circumstances in which they may be held responsible for
promotional activities performed by healthcare organiEationsSBMs that violate the -ederal
-ood< .rug< and Cosmetic Act Athe ActC and regulations promulgated there under #enerally< a
medical product sponsor will be held responsible for promotional activities performed by its
healthcare organiEation or BM subsidiary that violate the Act or regulations Ae.g.< the
dissemination of false or misleading labeling or advertisingC. romotional labeling and
advertising disseminated by the subsidiary are sub;ect to the e:isting post mar9eting reporting
requirements
'nder certain circumstances< a medical product sponsor may ?$ubsidiary@ used herein is to be
interpreted in its broadest sense to include any corporate relationship< in whole or in part< and a
company unit< division< subsidiary company< or any other entity within or attached to a
corporation. be held responsible for promotional activities performed by other persons Aother
than subsidiariesC that violate the Act or regulations. +n determining whether violative
promotional activities performed by non subsidiary healthcare organiEations or BMs are
attributable to a medical product sponsor< the agency will consider a number of factors<
including< among others< the relationship between the sponsor and the healthcare
organiEationSBM< and whether the sponsor has control of or influence over the activities of the
40 | P a g e
healthcare organiEationSBM or the content of the violative material disseminated by the
healthcare organiEationSBM. These factors are described below%
1. R)('2,10&*,>
The agency will consider the nature of the sponsorDs relationship with the healthcare
organiEationSBM Ae.g.< whether that relationship is defined by a contract or other agreementC.
-or e:ample< if a contract between the sponsor and the healthcare organiEationSBM to promote
the sponsorDs productAsC e:ists< the sponsor will generally be responsible for promotional
activities performed by the healthcare organiEationSBM that are violative.
2. C102%1( '0; I08(-)06) 18 I081%/'2,10 C102)02 '0; D,&2%,=-2,10
The agency will consider whether the sponsor has control of or influence over the
promotional activities of the healthcare organiEationSBM. -or e:ample< the agency will
e:amine whether the sponsor scripted the disseminated information< targeted points for
emphasis< or otherwise acted to control or influence the content of the informationW whether
individuals involved in designing or disseminating promotional materials are also involved in
advising or otherwise assisting the sponsor with respect to sales or mar9eting of the sponsorDs
productW whether similar messages are contained in promotional materials disseminated by the
sponsor directlyW whether the targeted audience was determined by the sponsorDs sales or
mar9eting departmentW and whether any complaints have been raised regarding attempts by the
sponsor to influence the content of disseminated information.
41 | P a g e
Pharmaceutical marketing in cipla
P*'%/'6)-2,6'( /'%.)2,0? is the business of advertising or otherwise promoting the sale of
pharmaceuticals or drugs. Evidence show that mar9eting practices can negatively effect both
patients and the health care profession
.
Many countries have measures in place to limit
advertising by pharmaceutical companies. The mar9eting of medication has a long history. The
sale of miracle cures< many with little real potency< has always been common. Mar9eting of
legitimate non5prescription medications< such as pain relievers or allergy medicine< has also
long been practiced. Mass mar9eting of prescription medications was rare until recently<
however. +t was long believed that since doctors made the selection of drugs< mass mar9eting
was a waste of resourcesW specific ads targeting the medical profession were thought to be
cheaper and ;ust as effective.This would involve ads in professional ;ournals and visits by sales
staff to doctorDs offices and hospitals. An important part of these efforts was mar9eting to
medical students. hysicians are perhaps the most important players in pharmaceutical sales.
They write the prescriptions that determine which drugs will be used by the patient. +nfluencing
the physician is the 9ey to pharmaceutical sales. Historically< this was done by a large
pharmaceutical sales force. A medium5siEed pharmaceutical company might have a sales force
of )666 representatives. The largest companies have tens of thousands of representatives
around the world. $ales representatives called upon physicians regularly< providing information
and free drug samples to the physicians. This is still the approach todayW however< economic
pressures on the industry are causing pharmaceutical companies to rethin9 the traditional sales
process to physicians.
harmaceutical companies are developing processes to influence the people who influence the
physicians.There are several channels by which a physician may be influenced< including self5
influence through research< peer influence< direct interaction with pharmaceutical companies<
patients< and public or private insurance companies. There are also web based instruments that
can be used to determine the influencers and buying motives of physicians.
Cipla specialiEe in data and analytics for pharmaceutical mar9eting.
42 | P a g e
I0;,:,;-'( %)&)'%6*
hysicians discover pharmaceutical information from such sources as the hysicianJs .es9
!eference and online sources such as .!.net< as well as via .As with applications.
They also rely upon pharmaceutical5branded e5detailing sites< pharmaceutical sales and non5
sales representatives< and scholarly literature. $cholarly literature can be in the form of medical
;ournal article reprints< often delivered by sales representatives at their place of employment or
at conference e:hibitions.
P))% ,08(-)06)
>ey opinion leaders
>ey opinion leaders A>"3C< or Vthought leadersV< are respected individuals< such as prominent
medical school faculty< who influence physicians through their professional status.
harmaceutical companies generally engage 9ey opinion leaders early in the drug development
process to provide advocacy and 9ey mar9eting feedbac9
.
$ome pharmaceutical companies
identify 9ey opinion leaders through direct inquiry of physicians Aprimary researchC.
Colleagues
hysicians acquire information through informal contacts with their colleagues< including social
events< professional affiliations< common hospital affiliations< and common medical school
affiliations. $ome pharmaceutical companies identify influential colleagues through
commercially available prescription writing and patient level data

.octor dinner meetings are
an effective way for physicians to acquire educational information from respected peers. These
meetings are sponsored by some pharmaceutical companies.
D,%)62 >*7&,6,'0 6102'62 +,2* >*'%/'6)-2,6'( &'()& %)>%)&)02'2,:)&
Currently< there are appro:imately 266 pharmaceutical sales reps in the in Bangalore pursuing
some G(6<666 pharmaceutical prescribers. A pharmaceutical representative will often try to see
43 | P a g e
a given physician every few wee9s. !epresentatives often have a call list of about 266
physicians with )26 targets that should be visited in )52 wee9 cycles.
Because of the large siEe of the pharmaceutical sales force< the organiEation< management< and
measurement of effectiveness of the sales force are significant business challenges.
Management tas9s are usually bro9en down into the areas of physician targeting< sales force
siEe and structure< sales force optimiEation< call planning< and sales forces effectiveness. A few
pharmaceutical companies have realiEed that training sales representatives on high science
alone is not enough< especially when most products are similar in quality. Thus< training sales
representatives on relationship selling techniques in addition to medical science and product
9nowledge< can ma9e a difference in sales force effectiveness. $pecialist physicians are relying
more and more on specialty sales reps for product information< because they are more
9nowledgeable than primary care reps.
P*7&,6,'0 2'%?)2,0?
Mar9eters attempt to identify the universe of physicians most li9ely to prescribe a given drug.
Historically< this was done by measuring the number of total prescriptions AT!:C and new
prescriptions A&!:C per wee9 that each physician writes. This information is collected by
commercial vendors. The physicians are then VdeciledV into ten groups based on their writing
patterns. Higher deciles are more aggressively targeted. $ome pharmaceutical companies use
additional information such as%
profitability of a prescription AscriptC<
accessibility of the physician<
tendency of the physician to use the pharmaceutical companyJs drugs<
effect of managed care formularies on the ability of the physician to prescribe a drug<
the adoption sequence of the physician Athat is< how readily the physician adopts new
drugs in place of older< established treatmentsC< and
the tendency of the physician to use a wide palette of drugs
44 | P a g e
influence that physicians have on their colleagues.
.ata for drugs prescribed in a hospital are not usually available at the physician level.
Advanced analytic techniques are used to value physicians in a hospital setting.
O>,0,10 L)';)% I08(-)06) M'>>,0?
Alternatives to segmenting physicians purely on the basis of prescribing do e:ist< and mar9eters
can call upon strategic partners who specialiEe in delineating which characteristics of true
opinion leadership< a physician does or does not possess. $uch analyses can help guide
mar9eters in how to optimiEe >"3 engagements as bona fide advisors to a brand< and can help
shape clinical development and clinical data publication plans for instance< ultimately
advancing patient care.
S'()& 81%6) &,B) '0; &2%-62-%)
Mar9eters must decide on the appropriate siEe of a sales force needed to sell a particular
portfolio of drugs to the target universe. .esign the optimal reach Ahow many physicians to seeC
and frequency Ahow often to see themC for each individual physician. .ecide how many sales
representatives to devote to office and group practice and how many to devote to hospital
accounts. Additionally< the customers are brea9 into different classes< each classes are
differtiate from their prescription behaviour and of course< their business potential.
P%,:'2) '0; >-=(,6 ,0&-%)%&
ublic and private insurers affect the writing of prescriptions by physicians through formularies
that restrict the number and types of drugs that the insurer will cover. &ot only can the insurer
affect drug sales by including or e:cluding a particular drug from a formulary< they can affect
sales by tiering< or placing bureaucratic hurdles to prescribing certain drugs.
Direct marketing to patients
$ince the late )BH6s< direct5to5patient mar9eting of prescription drugs has become important.
Many patients will inquire about< or even demand to receive< a medication they have seen
45 | P a g e
advertised on television. +n the +ndia< recent years have seen an increase in mass media
advertisements for pharmaceuticals. E:penditures on direct5to5consumer A.TC pharmaceutical
advertisingC have more than quintupled in the last seven years since the -.A changed the
guidelines< from FH66 million in )BBH to more than F8.2 billion in 2661.
'se of medical representatives for mar9eting products to physicians and to e:ert some
influence over others in the hierarchy of decision ma9ers has been a time5tested tradition.
Typically< sales force e:pense comprises an estimated )1 percent to 26 percent of annual
product revenues< the largest line item on the balance sheet. .espite this mammoth e:pense< the
industry is still plagued with some very serious strategic and operational level issues.
$TA#E$ "- MAT'!+T/ "- ME.+CA3 !E!E$E&TAT+,E
46 | P a g e
Pharma Marketing Process and its Challenges IN
CIPLA
4hile many pharmaceutical companies have successfully deployed a plethora of strategies to
target the various customer types< recent business and customer trends are creating new
challenges and opportunities for increasing profitability. +n the pharmaceutical and healthcare
industries< a comple: web of decision5ma9ers determines the nature of the transaction
AprescriptionC for which direct customer AdoctorC of pharma industry is responsible . Essentially<
the end5user ApatientC consumes a product and paysthe cost .
'se of medical representatives for mar9eting products to physicians and to e:ert some
influence over others in the hierarchy of decision ma9ers has been a time5tested tradition.
Typically< sales force e:pense comprises an estimated )1 percent to 26 percent of annual
product revenues< the largest line item on the balance sheet. .espite this other e:pense< the
industry is still plagued with some very serious strategic and operational level issues.
-rom 1%?'0,B'2,10'( >)%&>)62,:) the most prominent performance related issues are
enlisted below%
aC .+ncreased competition and unethical practices adopted by some of the propaganda base
companies.
bC. 3ow level of customer 9nowledge A.octors< !etailers< 4holesalersC.
cC. oor customer Aboth e:ternal = internalC acquisition< development and retention strategies
dC. ,arying customer perception.
eC. The number and the quality of medical representatives
dC. ,ery high territory development costs.
fC. High training and re5training costs of sales personnel.
gC.. ,ery high attrition rate of the sales personnel.
hC. Busy doctors giving less time for sales calls.
iC. oor territory 9nowledge in terms of business value at medical representative level .
;C. 'nclear value of prescription from )'6* ;1621% in the list of )'6* &'()& >)%&10.
9C. 'n9nown value of revenue from each retailer in the territory
lC. Absence of ideal mechanism of sales forecasting from field sales level< leading
47 | P a g e
to huge deviations
mC. Absence of analysis on the amount of time invested on profitable and not5soprofitable
customers and lac9 of time5share planning towards developing customer base for future and un5
tapped mar9ets.
P'2)02&
atents are a vital aspect of the global pharma industry. atent protection is essential to spur
basic !=. and ma9e it commercially viable. But< only the developed nations endorse product
patents. Most third world countries have patent laws but enforcement is totally la:.
N)+ D%-? A>>%1:'( (NDA)
rior to launching its products in any country< a pharma company underta9es patent registration
to protect its own interests. To protect the interests of the consumers< it is necessary that the
product be approved by the drug authorities in that country. Mostly the process for see9ing
approval is initiated alongside the patent registration process.
WTO
.ue to pressure from the developed countries< across the world uniformity in patent laws is
being implemented under 4T" A4orld Trade "rganiEation 5 earlier #ATT i.e. #eneral
Agreement on Tariffs = TradeC. resently< different countries have different patent types and
life period. 4T" has decided upon a product patent life of 26 years in all countries.
RESEARCH A DE@ELOPMENT (RAD)
The pharmaceutical industry is characteriEed by heavy !=. e:penditure. +t is only the large
pharmaceutical companies who can allocate significant resources for !=. to introduce new
products. As the products are an outcome of significant !=. e:penditures incurred by these
companies< they have their products patented. The patent allows the companies concerned to
wield immense pricing power for their new products.
THE COMPETITION
The level of competition on day to day basis in very *,?* in A6-2) &)?/)02 however the
degree of competition in not as much as high in C*%10,6 2*)%'>7 area. As doctor has to
prescribe drug for a long time in chronic cases and patient is suppose to consume it without any
change of brand. 4hile in acute cases doctor is changing brands on day to day basis. +n acute
area however there is a large competition from local and propaganda companies.
48 | P a g e
CIPLA 5-&,0)&& S2%'2)?,)&
4hatDs the secret behind successesZ -or one< the company operates in niche formulations
A6*%10,6) segments such as psychiatry< cardiovascular< gastroenterology and neurology.
4hile most of the top +ndian companies have focused on antibiotics and antiNinvectives
A'6-2)C< C+3A focused on therapeutic areas such as depression< hypertension and cancer. The
company has introduced the entire range of products and has gained leadership position in each
of these areas. Being a specialty company insulates C+3A harma from the industry growth.
The first quarter results for -/62 e:plain this to some e:tent. 4hile the industry was affected
to a large e:tent by a slowdown in the domestic formulations mar9et< C+3A logged a growth
of 2KI in revenue.
T*) ='&)& 18 /'%.)2,0? &2%'2)?,)& 6'0 =) =)&2 ;)&6%,=); ,0 2*)&) 2+1 /1;)(& ,0 =12*
'6-2) '0; 6*%10,6 &)?/)02&3
AiC S->)% C1%) M1;)( involving the search for< and distribution of a small number of drugs
from C*%10,6 T*%)'>7 A%)' that achieve substantial global sales. The success of this model
depends on achieving large returns from a small number of drugs in order to pay for the high
cost of the drug discovery and development process for a large number of patients. Total
revenues are highly dependant on sales from a small number of drugs. This model incorporates
highly specialiEed approach in all the manner . +nitially the competition is seems more at entry
level but since growth is stable and more in this area W every company is striving very hard to
enter in this area. The ma;or strategy in this model involves right focus to highly specialiEed
customer by well trained team.
AiiC C1%) M1;)( in which a larger number of drugs from A6-2) T*%)'>7 A%)' are mar9eted to
big diversified mar9ets. The advantage of this model is that its success is not dependant on sales
of a small number of drugs. Here presenting a large number of product and ta9ing the
advantage of opportunity cost is one of the important strategy. "ther strategy includes daily
reminders to cross the perceptual filter and get the brand name in to the sub5conscious state of
mind .
.
49 | P a g e
M'%.)2,0? '>>%1'6*)& 18 S->)% C1%) M1;)(
+n pharmaceutical mar9et there has been a significant shift from Acute towards Chronic
Threapy area. Chronic segments are driving the growth of the mar9et as leading prescribers in
these segments are specialists as opposed to general practioners. This is evident from high
growth rates achieved by firms li9e C+3A < .r.!eddy 3aboratories and .abur harma 3td.
4ho have focused on these segments The doctorJs prescription has become ;ust the starting
point in determining what drug the retailer dispenses. .uring last five years pharma companies
have started identifying the hidden potential of oncological mar9et also. A number of drugs
have been launched into the oncological mar9et by pharmaceutical companies< including new
biological drugs and drugs that can be used as a support for patients undergoing cytoto:ic
chemotherapy. As a matter of fact< pharmaceutical companies are merging< and< through the
merging process<
the portfolio of the new companies changes. Medical representatives are rearranged throughout
the new companies.
-ield force also required to ensure good availability of their products to convince doctors and
PUSH their products i.e. from to $toc9ist to !etailer to .octor. +t has been observed that
sometimes there are more than fifteen or si:teen representatives in a day are meeting with their
customer and requesting for same type of products. Although field force visits are important for
an update on drugs and their use. The doctors are< in general< snea9ing away< trying to hide
from sales representatives< since there are too many and they are too pushy and there is too little
time< and the representatives probably have noticed that the reluctant doctors have always less
time for short meetings and less interest and tend to reduce the time of the visit.
$EC"&.A!/ $A3E$ [ 2 N "E&+&# $T"C>\ "!.E!
The relationship between clinicians and representatives has always been good and
pharmaceutical companies have provided< and still provide< the ma;or economical support
for customersJ continuous medical education. $omething needs to be done to find a
solution to this problem that ta9es into account the needs of both pharmaceutical companies and
their representatives on one side and physicians on the other< for a better professional
interaction.
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CIPLA PRODUCT DOING WEE IN THE MARKET
PRODUCT FOR
-arobact Hiv disease
pruflo: "ral anti bacterial agent
+ pill Contraceptive pill
viatran #ram negative bacteria
levoEon !epiratory tract
6%,&'02' regnancy
ma:iflo Asthama
MAJOR COMPETITOR OF CIPLA
). !A&BAP/
2. #3AP" $M+TH >3+&E
(. 3'+&
8. $E!.+A
1. &",A!T+$
K. $'& HA!MA
H. A'!B+&." HA!MA
G. CA.+33A
B. B+"C"&
)6.T"!!E&T
)) AB"TT
)2 HA!ME.
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FINDINGS
Indian companies are putting their act together to tap the retail generic markets in the
regulated high margin markets of the developed countries. Due to its size, the US
market will remain the most lucrative market for the Indian companies
Indian drug makers, with their chemistry skills and low-cost manufacturing, have an
edge in the business. Indian firms are arguably the worlds best in drug development (of
both APIs and finished dosages). With their superiority established in process
development, they are refining their legal skills to fight the innovator companies in
patent challenges The other important ingredient is marketing/ distribution
Cipla Ltd holds its strength in Active Pharmaceutical Ingredients(APIs) and
formulations development and manufacturing in both the domestic and international
markets. Cipla is also a major exporter of technology, which is presently sold to
companies in Canada, Germany, UK, and USA, among others
Medical representative play an important role to enhance the sale of a pharma company.
Medical representatives are the 9ey contacts between the pharmaceutical industry and
the medical profession. They have the responsibility of promoting their companies
ma;or products directly to #Js and hospital doctors. They do this via face to face
meetings or medical presentations at various types of meetings.
All representatives tend to wor9 what is a called a JterritoryJ. A territory is your area< or
you and your territory team area. As sometimes companies have double manned
territories rather than single manned territories.
The territory siEe< geography etc varies according to companies. The day to day wor9 of
the representative tends to be target based around< sales< call rates and other ob;ectives
set around individual personal development plans
The image of the product and the company that a doctor forms is directly related to the
degree of professionalism of the medical representative.
Hospital doctors have an appointment system for seeing medical representatives. As so
many other companies are trying to see the same customers< M! should be well
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organiEe.
CONCLUSION
There can be various ways through which a business organiEation can achieve success in the
mar9et< but all those ways can be comprised into as above< then it can be rightly said that it
revolves specifically around three parties or moreW the triangular lin9ages or the relationship
between these three parties Acompany< customers and competitorsC determine the success and
failure of business organiEation. +n the medium to long run< the domestic pharmaceutical
mar9et will be largely driven by the increasing prevalence of chronic segment. The domestic
industry is principally being driven by the chronic segment which has grown by 17.8% this
year. The basis of success in any competitive conte:t can be< at the most< elemental level
commercial successW and commercial success can be derived either from a cost advantage or a
value advantage or ideally from a combination of both. +n other words< the organiEation with
Competitive Advantage tends to be the cost leader in the industry or a seller of most
differentiated products amongst all the players. At last the role of supply chain is very
prominent in both the phases Ain acute as well as in chronicC. But the successes of any
pharmaceutical industryW when a company changes its concentration from ?Acute@ to ?Chronic@
therapy mar9et depend on competitiveness of supply chain. $upply Chain Managers can
provide considerable value to their companies by understanding the customersJ delivery
requirements. A very powerful tool for understanding these requirements is account
segmentation. A company can use account segmentation to identify mar9et segments $uch as
Acute = Chronic therapy mar9et. which is well positioned to serve and then organiEe its
product range and even $>'Ds and service in a superior way.
.oing the management thesis was quite fruitfull and informative which made me understand
the +ndian pharma sector and understand the wor9 of a medical representative in detailed
manner.
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ANNEXURE(QUESTIONNAIRE)
&AME%
A#E%
#E&.E!%
.E$+#&AT+"&%
/EA!$ "- EPE!+E&CE%
7). How many doctors do you visit in a single dayZ
). )51 2. 15)6 (. )65)1 8.)1526
72. How many chemist do you visit in a single dayZ
). )51 2. 15)6 (. )65)1 1. )1526
7(. 4ho is the ma;or customers for youZ
). .octors 2. Chemist (.both
78. How do you e:plain your products to doctorsZ
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). ,erbally 2. rint bouchers (.articles proofs
71. .o you provide samples of medicine to your doctors for new productZ
). !egularly 2. $ometimes (. !arely 8. &ever
7K. .o you provide samples of medicine to the chemistZ
).!egularly 2.sometimes (. !arely 8.&ever
7H. How many products do you have to promote in a single dayZ
). )to1 2. 15)6 (.)65)1 8. )1526
7G. /our company invests ma;orly to promote their product on which toolZ
).T, 2. rint (.newspaper 8. ublic relation 1.publicity K.9eeping more M!
7B. How many doctors demands fringe benefits to promote your productsZ

).G65)66I 2. K65G6I (. 865K6I 8.26586I 1.)526I

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REFERENCES
WEBSITE REFFERED
http://www.cipla.com/
http://en.wikipedia.org/wiki/Cipla
http://www.bharatbook.com/detail.asp?id=44690
http://www.iitk.ac.in/infocell/announce
http://www.news.pharma-mkting.com/
http://www.pharmabiz.com/article/detnews
www.allabout medical sales.com
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