Vol 2|Issue 2| 2012 |54-61.
Asian Journal of Pharmaceutical Science & Technology
e-ISSN: 2248 – 9185
Print ISSN: 2248 – 9177
www.ajpst.com
PHARMACEUTICAL INDUSTRY IN INDIA - CURRENT SCENARIO
*A. Elumalai and M. Chinna Eswariah
*Department of Pharmacognosy, Anurag Pharmacy College,
Ananthagiri (v), Kodad (M), Nalgonda (Dt), Andhra Pradesh, India, 508-206.
ABSTRACT
The Pharmaceutical industry in India is the world's third-largest in terms of volume and stands 14th in terms of value.
According to Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, the total turnover of India's pharmaceuticals
industry between 2008 and September 2009 was US$21.04 billion. While the domestic market was worth US$12.26 billion. Sale
of all types of medicines in the country is expected to reach around US$19.22 billion by 2012. Exports of pharmaceuticals
products from India increased from US$6.23 billion in 2006-07 to US$8.7 billion in 2008-09 a combined annual growth rate of
21.25%. According to PricewaterhouseCoopers (PWC) in 2010, India joined among the league of top 10 global pharmaceuticals
markets in terms of sales by 2020 with value reaching US$50 billion.
Key words: Pharmaceutical Companies, Current status, Pharma industry.
INTRODUCTION
The government started to encourage the growth of
drug manufacturing by Indian companies in the early 1960s,
and with the Patents Act in 1970. However, economic
liberalization in 90s by the former Prime Minister P.V.
Narasimha Rao and the then Finance Minister, Dr.
Manmohan Singh enabled the industry to become what it is
today. This patent act removed composition patents from
food and drugs, and though it kept process patents, these
were shortened to a period of five to seven years.
The lack of patent protection made the Indian
market undesirable to the multinational companies that had
dominated the market, and while they streamed out. Indian
companies carved a niche in both the Indian and world
markets with their expertise in reverse-engineering new
processes for manufacturing drugs at low costs. Although
some of the larger companies have taken baby steps towards
drug innovation, the industry as a whole has been following
this business model until the present.
India's biopharmaceutical industry clocked a 17
percent growth with revenues of Rs.137 billion ($3 billion)
in the 2009-10 financial year over the previous fiscal. Biopharma was the biggest contributor generating 60 percent of
the industry's growth at Rs.8,829 crore, followed by bioservices at Rs.2,639 crore and bio-agri at Rs.1,936 crore [1].
Pharmaceutical industry today
The number of purely Indian pharma companies is
fairly low. Indian pharma industry is mainly operated as
well as controlled by dominant foreign companies having
subsidiaries in India due to availability of cheap labour in
India at lowest cost. In 2002, over 20,000 registered drug
manufacturers in India sold $9 billion worth of formulations
and bulk drugs. 85% of these formulations were sold in
India while over 60% of the bulk drugs were exported,
mostly to the United States and Russia. Most of the players
in the market are small-to-medium enterprises; 250 of the
largest companies control 70% of the Indian market. Thanks
to the 1970 Patent Act, multinationals represent only 35%
of the market, down from 70% thirty years ago.
Most pharma companies operating in India, even
the multinationals, employ Indians almost exclusively from
the lowest ranks to high level management. Mirroring the
social structure, firms are very hierarchical. Homegrown
pharmaceuticals, like many other businesses in India, are
often a mix of public and private enterprise. Although many
of these companies are publicly owned, leadership passes
from father to son and the founding family holds a majority
share.
In terms of the global market, India currently holds
a modest 1-2% share, but it has been growing at
approximately 10% per year. India gained its foothold on
the global scene with its innovatively engineered generic
drugs and active pharmaceutical ingredients (API), and it is
now seeking to become a major player in outsourced
Corresponding Author: A. Elumalai E-mail: [email protected]
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clinical research as well as contract manufacturing and
research. There are 74 U.S. FDA-approved manufacturing
facilities in India, more than in any other country outside the
U.S, and in 2005, almost 20% of all Abbreviated New Drug
Applications (ANDA) to the FDA are expected to be filed
by Indian companies. Growths in other fields
notwithstanding, generics are still a large part of the picture.
London research company Global Insight estimates that
India’s share of the global generics market will have risen
from 4% to 33% by 2007. The Indian pharmaceutical
industry has become the third largest producer in the world
and is poised to grow into an industry of $ 20 billion in
2015 from the current turnover of $ 12 billion.
Patents
As it expands its core business, the industry is
being forced to adapt its business model to recent changes
in the operating environment. The first and most significant
change was the January 1, 2005 enactment of an
amendment to India’s patent law that reinstated product
patents for the first time since 1972. The legislation took
effect on the deadline set by the WTO’s Trade-Related
Aspects of Intellectual Property Rights (TRIPS) agreement,
which mandated patent protection on both products and
processes for a period of 20 years. Under this new law,
India will be forced to recognize not only new patents but
also any patents filed after January 1, 1995. Indian
companies achieved their status in the domestic market by
breaking these product patents, and it is estimated that
within the next few years, they will lose $650 million of the
local generics market to patent-holders. In the domestic
market, this new patent legislation has resulted in fairly
clear segmentation. The multinationals narrowed their focus
onto high-end patients who make up only 12% of the
market, taking advantage of their newly bestowed patent
protection. Meanwhile, Indian firms have chosen to take
their existing product portfolios and target semi-urban and
rural populations [2].
Product development
Indian companies are also starting to adapt their
product development processes to the new environment. For
years, firms have made their ways into the global market by
researching generic competitors to patented drugs and
following up with litigation to challenge the patent. This
approach remains untouched by the new patent regime and
looks to increase in the future. However, those that can
afford it have set their sights on an even higher goal: new
molecule discovery. Although the initial investment is huge,
companies are lured by the promise of hefty profit margins
and this legitimate competitor in the global industry. Local
firms have slowly been investing more money into their
R&D programs or have formed alliances to tap into these
opportunities.
Small and medium enterprises
As promising as the future is for a whole, the
outlook for small and medium enterprises (SME) is not as
bright. The excise structure changed so that companies now
have to pay a 16% tax on the maximum retail price (MRP)
of their products, as opposed to on the ex-factory price.
Consequently, larger companies are cutting back on
outsourcing and what business is left is shifting to
companies with facilities in the four tax-free states Himachal Pradesh, Jammu & Kashmir, Uttaranchal and
Jharkhand. Consequently a large number of pharmaceutical
manufacturers shifted their plant to these states, as it
became almost impossible to continue operating in non-tax
free zones. But in a matter of a couple of years the excise
duty was revised on two occasions, first it was reduced to
8% and then to 4%. As a result the benefits of shifting to a
tax free zone was negated. This resulted in, factories in the
tax free zones, to start up third party manufacturing. Under
this these factories produced goods under the brand names
of other parties on job work basis.
As SMEs wrestled with the tax structure, they were
also scrambling to meet the July 1 deadline for compliance
with the revised Schedule M Good Manufacturing Practices
(GMP). While this should be beneficial to consumers and
the industry at large, SMEs have been finding it difficult to
find the funds to upgrade their manufacturing plants,
resulting in the closure of many facilities. Others invested
the money to bring their facilities to compliance, but these
operations were located in non-tax-free states, making it
difficult to compete in the wake of the new excise tax [3].
Challenges
All of these changes are ultimately good for the
Indian pharmaceutical industry, which suffered in the past
from inadequate regulation and large quantities of spurious
drugs. They force the industry to reach a level necessary for
global competitiveness. However, they have also exposed
some of the inadequacies in the industry today. Its main
weakness is an underdeveloped new molecule discovery
program. Even after the increased investment, market
leaders such as Ranbaxy and Dr. Reddy’s Laboratories
spent only 5-10% of their revenues on R&D, lagging behind
Western pharmaceuticals like Pfizer, whose research budget
last year was greater than the combined revenues of the
entire Indian pharmaceutical industry. This disparity is too
great to be explained by cost differentials, and it comes
when advances in genomics have made research equipment
more expensive than ever. The drug discovery process is
further hindered by a dearth of qualified molecular
biologists. Due to the disconnect between curriculum and
industry, pharma in India also lack the academic
collaboration that is crucial to drug development in the West
[4].
Corporate Catalyst
Multinational Pharmaceutical Companies ranked as per
active presence of sales, marketing and business in India.
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1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
Pfizer
GlaxoSmithKline
Sanofi Aventis
Merck
Johnson and Johnson
Amgen
Novartis
Roche
Bristol-Myers Squibb
Wyeth
Eli Lilly
Schering-Plough
Abbott
Takeda
Boehringer Ingelheim
Astellas
Relationship
between
pharmaceuticals
and
biotechnology
Unlike in other countries, the difference between
biotechnology and pharmaceuticals remains fairly defined
in India. Bio-tech there still plays the role of pharma’s little
sister, but many outsiders have high expectations for the
future. India accounted for 2% of the $41 billion global
biotech market and in 2003 was ranked 3rd in the AsiaPacific region and 11th in the world in number of biotechs.
In 2004-5, the Indian biotech industry saw its revenues
grow 37% to $1.1 billion.[2,9] The Indian biotech market is
dominated by biopharmaceuticals; 75% of 2004-5 revenues
came from biopharmaceuticals, which saw 30% growth last
year. Of the revenues from biopharmaceuticals, vaccines led
the way, comprising 47% of sales. Biologics and largemolecule drugs tend to be more expensive than smallmolecule drugs, and India hopes to sweep the market in
biogenerics and contract manufacturing as drugs go off
patent and Indian companies upgrade their manufacturing
capabilities.
Most companies in the biotech sector are extremely
small, with only two firms breaking 100 million dollars in
revenues. At last count there were 265 firms registered in
India, over 75% of which were incorporated in the last five
years. The newness of the companies explains the industry’s
high consolidation in both physical and financial terms.
Almost 50% of all biotechs are in or around Bangalore, and
the toop ten companies capture 47% of the market. The top
five companies were homegrown; Indian firms account for
62% of the biopharma sector and 52% of the industry as a
whole. The Association of Biotechnology-Led Enterprises
(ABLE) is aiming to grow the industry to $5 billion in
revenues generated by 1 million employees by 2009, and
data from the Confederation of Indian Industry (CII) seem
to suggest that it is possible [5].
Comparison with the U.S.
The Indian biotech sector parallels that of the U.S.
in many ways. Both are filled with small start-ups while the
majority of the market is controlled by a few powerful
companies. Both are dependent upon government grants and
venture capitalists for funding because neither will be
commercially viable for years. Pharmaceutical companies in
both countries have recognized the potential effect that
biotechnology could have on their pipelines and have
responded by either investing in existing start-ups or
venturing into the field themselves. In both India and the
U.S., as well as in much of the globe, biotech is seen as a
hot field with a lot of growth potential.
Relationship with IT
Many analysts have observed that the hype around
the biotech sector mirrors that of the IT sector. Biotech
colleges have been popping up around the country eager to
service the pools of students that want to take advantage of
a growing industry. The International Finance Commission,
the private investment arm of the World Bank, called India
the centerpiece of IFC’s global biotech strategy. Of the
$110 million invested in 14 biotech projects investment
globally, the IFC has given $43 million to 4 projects in
India. According to Dr. Manju Sharma, former director of
the Department of Biotechnology, the biotech industry
could become the single largest sector for employment of
skilled human resource in the years to come. British Prime
Minister Tony Blair was similarly impressed, citing the
success of India’s biotech industry as the reason for his own
country’s own biotech opportunities. Malaysia is also
looking to India as an example for growing its own biotech
industry [6].
Government support
The Indian government has been very supportive.
It established the Department of Biotechnology in 1986
under the Ministry of Science and Technology. Since then,
there have been a number of dispensations offered by both
the central government and various states to encourage the
growth of the industry. India’s science minister launched a
program that provides tax incentives and grants for biotech
start-ups and firms seeking to expand and establishes the
Biotechnology Parks Society of India to support ten biotech
parks by 2010. Previously limited to rodents, animal testing
was expanded to include large animals as part of the
minister’s initiative. States have started to vie with one
another for biotech business, and they are offering such
goodies as exemption from VAT and other fees, financial
assistance with patents and subsidies on everything ranging
from investment to land to utilities.
Foreign investment
The government has also taken steps to encourage
foreign investment in its biotech sector. An initiative passed
earlier this year allowed 100% foreign direct investment
without compulsory licensing from the government. In
April, a delegation headed by the Kapil Sibal, the minister
of science and technology and ocean development, visited
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five cities in the U.S. to encourage investment in India, with
special emphasis on biotech. Just two months later, Sibal
returned to the U.S. to unveil India’s biotech growth
strategy at the BIO2005 conference in Philadelphia. 100%of
FDI is allowed in India [7].
Challenges
The biotech sector faces some major challenges in
its quest for growth. Chief among them is a lack of funding,
particularly for firms that are just starting out. The most
likely sources of funds are government grants and venture
capital, which is a relatively young industry in India.
Government grants are difficult to secure, and due to the
expensive and uncertain nature of biotech research, venture
capitalists are reluctant to invest in firms that have not yet
developed a commercially viable product. As previously
mentioned, India hopes to solve its funding problem by
attracting overseas investors and partners. Before these
potential saviors will invest significant sums in the industry,
however, there needs to be better scientific and financial
accountability. India is slowly working towards these goals,
but it will be a while before they are up to the standards of
Western investors.
India’s biotech firms share another problem with
their pharmaceutical cousins: a lack of qualified employees.
Biotech has the additional disadvantage of competing
against IT for ambitious, science-minded students but not
being able to guarantee the same compensation. An aspiring
researcher in India needs 7–10 years of education covering a
range of specialties in order to qualify to work in biotech.
Even if a student does choose to go on the biotech path, the
ineffectual curriculum at many universities makes it
doubtful as to whether he will be qualified to work in the
field once finished. One estimate shows that 10% of upperechelon biotech recruits have come from foreign countries.
While this is not a problem, per se, it drives up cost in a
country whose competitive advantage is based on cheap,
high-quality labor. Far from ending with scientists, there is
also a shortage of people with knowledge of biotechnology
in related fields: doctors, lawyers, programmers, marketing
personnel and others.
While little has been done about the latter half of
the employee crunch, the government has addressed the
problem of educated but unqualified candidates in its Draft
National Biotech Development Strategy. This plan included
a proposal to create a National Task Force that would work
with the biotech industry to revise the curriculum for
undergraduate and graduate study in life sciences and
biotechnology. The government’s strategy also stated
intentions to increase the number of PhD Fellowships
awarded by the Department of Biotechnology to 200 per
year. These human resources will be further leveraged with
a Bio-Edu-Grid that will knit together the resources of the
academic and scientific industrial communities, much as
they are in the U.S [8].
Pharmaceutical marketing
Pharmaceutical marketing, sometimes called
medico-marketing or pharma marketing in some countries,
is the business of advertising or otherwise promoting the
sale of pharmaceuticals or drugs. There is some evidence
that marketing practices can negatively affect both patients
and the health care profession. Many countries have
measures in place to limit advertising by pharmaceutical
companies.
Pharmaceutical company spending on marketing
far exceeds that spent on research. In Canada, $1.7 billion
was spent in 2004 to market drugs to physicians; in the
United States, $21 billion was spent in 2002. In 2005 money
spent on pharmaceutical marketing in the US was estimated
at $29.9 billion with one estimate as high as $57 billion.
When the US number are broken down 56% was free
samples, 25% was detailing of physicians, 12.5% was direct
to user advertising, 4% on hospital detailing, and 2% on
journal ads.
History
The marketing of medication has a long history.
The sale of miracle cures, many with little real potency, has
always been common. Marketing of legitimate nonprescription medications, such as pain relievers or allergy
medicine, has also long been practiced, although, until
recently, mass marketing of prescription medications has
been rare. It was long believed that since doctors made the
selection of drugs, mass marketing was a waste of
resources; specific ads targeting the medical profession
were thought to be cheaper and just as effective. This would
involve ads in professional journals and visits by sales staff
to doctor’s offices and hospitals. An important part of these
efforts was marketing to medical students [9].
To health care providers
Marketing to health care providers takes four main
forms: gifting, detailing, drug samples, and sponsoring
continuing medical education (CME). Of the 237,000
medical sites representing 680,000 physicians surveyed in
SK&A's 2010 Physician Access survey, half said they prefer
or require an appointment to see a rep (up from 38.5%
preferring or requiring an appointment in 2008), while 23%
won't see reps at all, according to the survey data. Practices
owned by hospitals or health systems are tougher to get into
than private practices, since appointments have to go
through headquarters, the survey found. 13.3% of offices
with just one or two doctors won't see reps, compared with a
no-see rate of 42% at offices with 10 or more docs The most
accessible physicians for promotional purposes are
allergists/immunologists – only 4.2% won't see reps at all –
followed by orthopedic specialists (5.1%) and diabetes
specialists (7.6%). Diagnostic radiologists are the most rigid
about allowing details – 92.1% won't see reps – followed by
pathologists and neuroradiologists, at 92.1% and 91.8%,
respectively.
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Edetailing is widely used to reach no see physicians;
approximately 23% of primary care physicians and 28% of
specialists prefer computer-based edetailing, according to
survey findings reported in the April 25, 2011, edition of
American Medical News (AMNews), published by the
American Medical Association (AMA).
New pharma code & guidelines
The Pharmaceutical Research and Manufacturers
of America (PhRMA) released updates to its voluntary
Code on Interactions with Healthcare Professionals on July
10. The new guidelines take effect January 2009.
In addition to prohibiting small gifts and reminder
items such as pens, notepads, staplers, clipboards, pill
boxes, etc., the revised Code: Prohibits company sales
representatives from providing restaurant meals to
healthcare professionals outside their offices, but allows
them to provide occasional meals in healthcare
professionals’ offices in conjunction with informational
presentations.
Prohibits company sales representatives from
providing restaurant meals to healthcare professionals, but
allows them to provide occasional meals in healthcare
professionals’ offices in conjunction with informational
presentations. Includes new provisions requiring companies
to ensure their representatives are sufficiently trained about
applicable laws, regulations, and industry codes of practice
and ethics. Provides that each company will state its
intentions to abide by the Code and that company CEOs and
compliance officers will certify each year that they have
processes in place to comply. Includes more detailed
standards regarding the independence of continuing medical
education. Provides additional guidance and restrictions for
speaking and consulting arrangements with healthcare
professionals.
Free samples
Free samples have been shown to affect physician
prescribing behaviour. Physicians with access to free
samples are more likely to prescribe brand name medication
over equivalent OTC medications. Other studies found that
free samples decreased the likelihood that physicians would
follow standard of care practices.
Receiving pharmaceutical samples does not reduce
prescription costs. Even after receiving samples, sample
recipients remain disproportionately burdened by
prescription costs. It is argued that a benefit to free samples
is the try it before you buy it approach. Free Samples give
immediate access to the medication and the patient can
begin treatment right away. Also, it saves time from going
to a pharmacy to get it filled before treatment begins. Since
not all medications work for everyone, and many do not
work the same way for each person, free samples allows
you to find which dose and brand of medication works best
before having to spend money on a filled prescription at a
pharmacy.
Continuing medical education
Hours spent by physicians in industry-supported
CME are greater than that from either medical schools or
professional societies.
Pharmaceutical representatives
Currently, there are approximately 81,000
pharmaceutical sales representatives in the United States
pursuing some 830,000 pharmaceutical prescribers. A
pharmaceutical representative will often try to see a given
physician every few weeks. Representatives often have a
call list of about 200-300 physicians with 120-180 targets
that should be visited in 1-2 or 3 week cycle.
Because of the large size of the pharmaceutical
sales force, the organization, management, and
measurement of effectiveness of the sales force are
significant business challenges. Management tasks are
usually broken down into the areas of physician targeting,
sales force size and structure, sales force optimization, call
planning, and sales forces effectiveness. A few
pharmaceutical companies have realized 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
knowledge, can make a difference in sales force
effectiveness. Specialist physicians are relying more and
more on specialty sales reps for product information,
because they are more knowledgeable than primary care
reps.
The United States has 81,000 pharmaceutical
representatives or 1 for every 7.9 physicians. The number
and persistence of pharmaceutical representatives has
placed a burden on the time of physicians. As the number of
reps went up, the amount of time an average rep spent with
doctors went down—so far down, that tactical scaling has
spawned a strategic crisis. Physicians no longer spend much
time with sales reps, nor do they see this as a serious
problem [8].
Marketers must decide on the appropriate size of a
sales force needed to sell a particular portfolio of drugs to
the target market. Factors influencing this decision are the
optimal reach (how many physicians to see) and frequency
(how often to see them) for each individual physician, how
many patients suffer from that disease state, how many sales
representatives to devote to office and group practice and
how many to devote to hospital accounts if needed. To aid
this decision, customers are broken down into different
classes according to their prescription behavior, patient
population, and of course, their business potential.
Marketers attempt to identify the set of physicians most
likely to prescribe a given drug. Historically, this was done
by measuring the number of total prescriptions (TRx) and
new prescriptions (NRx) per week that each physician
writes. This information is collected by commercial
vendors. The physicians are then deciled into ten groups
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based on their writing patterns. Higher deciles are more
aggressively targeted. Some pharmaceutical companies use
additional information such as:
 Profitability of a prescription (script),
 Accessibility of the physician,
 Tendency of the physician to use the pharmaceutical
company's drugs,
 Effect of managed care formularies on the ability of the
physician to prescribe a drug,
 The adoption sequence of the physician (that is, how
readily the physician adopts new drugs in place of older
treatments), and
 The tendency of the physician to use a wide palette of
drugs
 Influence that physicians have on their colleagues.
 Data 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.
Physicians are perhaps the most important
component in sales. They write the prescriptions that
determine which drugs will be used by people. Influencing
the physician is the key to pharmaceutical sales.
Historically, this was done by a large pharmaceutical sales
force. A medium-sized pharmaceutical company might have
a sales force of 1000 representatives. The largest companies
have tens of thousands of representatives around the world.
Sales representatives called upon physicians regularly,
providing clinical information, approved journal articles,
and free drug samples. This is still the approach today;
however, economic pressures on the industry are causing
pharmaceutical companies to rethink the traditional sales
process to physicians. The industry has seen a large scale
adoption of Pharma CRM systems that works on laptops
and more recently tablets. The new age pharmaceutical
representative is armed with key data at his fingertips and
tools to maximize the time spent with physicians [9].
Key opinion leaders
Key opinion leaders (KOL), or thought leaders, are
respected individuals, such as prominent medical school
faculty, who influence physicians through their professional
status. Pharmaceutical companies generally engage key
opinion leaders early in the drug development process to
provide advocacy and key marketing feedback. Some
pharmaceutical companies identify key opinion leaders
through direct inquiry of physicians. Recently,
pharmaceutical companies have begun to use social network
analysis to uncover thought leaders; because it does not
introduce respondent bias, which is commonly found in
primary research; it can identify and map out the entire
scientific community for a disease state; and it has greater
compliance with state and federal regulations; because
physician prescribing patterns are not used to create the
social network.
Alternatives to segmenting physicians purely on the basis of
prescribing do exist, and marketers can call upon strategic
partners who specialize in delineating which characteristics
of true opinion leadership, a physician does or does not
possess. Such analyses can help guide marketers in how to
optimize KOL 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 [10].
Colleagues
Physicians acquire information through informal
contacts with their colleagues, including social events,
professional affiliations, common hospital affiliations, and
common medical school affiliations. Some pharmaceutical
companies identify influential colleagues through
commercially available prescription writing and patient
level data. Doctor dinner meetings are an effective way for
physicians to acquire educational information from
respected peers. These meetings are sponsored by some
pharmaceutical companies.
Journal articles
Recent legal cases and US congressional hearings
have provided access to pharmaceutical industry documents
revealing new marketing strategies for drugs. Activities
once considered independent of promotional intent,
including continuing medical education and medical
research, are used, including paying to publish articles about
promoted drugs for the medical literature, and alleged
suppression of unfavorable study results.
Private and public insurers
Public 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.
Not only can the insurer affect drug sales by including or
excluding a particular drug from a formulary, they can
affect sales by tiering, or placing bureaucratic hurdles to
prescribing certain drugs. In January 2006, the U.S.
instituted a new public prescription drug plan through its
Medicare program. Known as Medicare Part D, this
program engages private insurers to negotiate with
pharmaceutical companies for the placement of drugs on
tiered formularies.
To users
Only two countries as of 2008 allow direct to users
advertising (DTCA): the United States and New Zealand.
Since the late 1970s, DTCA of prescription drugs has
become important in the United States. It takes two main
form: the promotion or creation of a disease out of a nonpathologic physical condition or the promotion of a
medication. Many people will inquire about, or even
demand a medication they have seen advertised on
television. In the United States, recent years have seen an
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increase in mass media advertisements for pharmaceuticals.
Expenditures on direct-to-users advertising have more than
quintupled in the seven years between 1997 and 2005 since
the FDA changed the guidelines, from $700 million in 1997
to more than $4.2 billion in 2005, according to the United
States GAO (Government Accountability Office, 2006).
The mass marketing to users of pharmaceuticals is
banned in over 30 industrialized nations, but not in the US
and New Zealand, which is considering a ban. Some feel it
is better to leave the decision wholly in the hands of medical
professionals; others feel that users education and
participation in health is useful, but users need independent,
comparative information about drugs. For these reasons,
most countries impose limits on pharmaceutical mass
marketing that are not placed on the marketing of other
products. In some areas it is required that ads for drugs
include a list of possible side effects, so that users are
informed of both facets of a medicine. Canada's limitations
on pharmaceutical advertising ensure that commercials that
mention the name of a product cannot in any way describe
what it does. Commercials that mention a medical problem
cannot also mention the name of the product for sale; at
most, they can direct the viewer to a website or telephone
number operated by the pharmaceutical company.
Drug coupons
In the United States, pharmaceutical companies
often provide drug coupons to consumers to help offset the
copayments charged by health insurers for prescription
medication. These coupons are generally used to promote
medications that compete with non-preferred products and
cheaper, generic alternatives by reducing or eliminating the
extra out-of-pocket costs that an insurer typically charge a
patient for a non-preferred drug product.
Economics
Pharmaceutical company spending on marketing
exceeds that spent on research. In 2004 in Canada $1.7
billion a year was spent marketing drugs to physicians and
in the United States $21 billion were spent in 2002. In 2005
money spent on pharmaceutical marketing in the US was
estimated at $29.9 billion with one estimate as high as $57
billion. When the US numbers are broken down 56% was
free samples, 25% was detailing of physicians, 12.5% was
direct to users advertising, 4% on hospital detailing, and 2%
on journal ads. In the United States approximately $20
billion could be saved if generics were used instead of
equivalent brand name products.
Although pharmaceutical companies have made
large investments in marketing their products, overall
promotional spending has been decreasing over the last few
years, and declined by 10 percent from 2009 to 2010.
Pharmaceutical companies are cutting back mostly in
detailing and sampling, while spending in mailings and print
advertising grew since last year.
In the United States, marketing and distribution of
pharmaceuticals is regulated by the Federal Food, Drug, and
Cosmetic Act and the Prescription Drug Marketing Act,
respectively. Food and Drug Administration (FDA)
regulations require all prescription drug promotion to be
truthful and not misleading, based on substantial evidence
or substantial clinical experience, to provide a fair balance
between the risks and benefits of the promoted drug, and to
maintain consistency with labeling approved by the FDA.
The FDA Office of Prescription Drug Promotion enforces
these requirements.
Antipsychotic drugs are now the top-selling class
of pharmaceuticals in America, generating annual revenue
of about $14.6 billion. Large pharmaceutical companies got
behind the development of the drugs in the 1990s, when
they were still seen as treatments for the most serious
mental illnesses, like hallucinatory schizophrenia, and recast
them for much broader uses. Drugs such as Abilify and
Geodon were given to a broad range of patients, from
preschoolers to octogenarians. In 2010, more than a halfmillion youths took antipsychotic drugs, and one-quarter of
nursing-home residents have used them. Yet the
government warns that the drugs may be fatal to some older
patients and have unknown effects on children.
Every major company selling the drugs — BristolMyers Squibb, Eli Lilly, Pfizer, AstraZeneca and Johnson &
Johnson — has either settled recent government cases,
under the False Claims Act, for hundreds of millions of
dollars or is currently under investigation for possible health
care fraud. Following charges of illegal marketing, two of
the settlements set records last year for the largest criminal
fines ever imposed on corporations. One involved Eli
Lilly’s antipsychotic Zyprexa, and the other involved
Bextra. In the Bextra case, the government also charged
Pfizer with illegally marketing another antipsychotic,
Geodon; Pfizer settled that part of the claim for $301
million, without admitting any wrongdoing.
The following is a list of the four largest
settlements reached with pharmaceutical companies from
1991 to 2012, rank ordered by the size of the total
settlement. Legal claims against the pharmaceutical industry
have varied widely over the past two decades, including
Medicare and Medicaid fraud, off-label promotion, and
inadequate manufacturing practices [11].
CONCLUSION
The emergence of new media and technologies in
recent years is quickly changing the pharmaceutical
marketing landscape in the United States. Both physicians
and users are increasing their reliance on the Internet as a
source of health and medical information, prompting
pharmaceutical marketers to look at digital channels for
opportunities to reach their target audiences.
In 2008, eighty-four percent of U.S. physicians
used the Internet and other technologies to access
pharmaceutical, biotech or medical device information – a
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twenty percent increase from 2004. At the same time, sales
reps are finding it more difficult to get time with doctor’s
for in-person details. Pharmaceutical companies are
exploring online marketing as an alternative way to reach
physicians. Emerging e-promotional activities include live
video detailing, online events, electronic sampling, and
physician customer service portals such as PV Updates,
MDLinx, Physicians Interactive and Epocrates.
Direct-to-users marketers are also recognizing the
need to shift to digital channels as audiences become more
fragmented and the number of access points for news,
entertainment and information multiplies. Standard
television, radio and print direct-to-users (DTC)
advertisements are less relevant than in the past, and
companies are beginning to focus more on digital marketing
efforts like product websites, online display advertising,
search engine marketing, social media campaigns, and
mobile advertising to reach the over 145 million U.S. adults
online for health information.
REFERENCES
1. Pharma to topple IT as big paymaster. The Economic Times, 2010.
2. India Calling for global pharmaceutical companies, Price water house Coopers report, 2010.
3. A brief report Pharmaceutical Industry in India, 2010.
4. Anonymous. http://www.ircc.iitb.ac.in/IPcourse/patent.html
5. Indian biotech industry grew 17 percent in 2009-10: Survey. Economic Times, 2010.
6. Indian Life Sciences Sector statistics in 2010 as per Biospectrum survey. Biospectrum. Retrieved December, 2011.
7. Anonymous. http://www.pharmaceutical-drug-manufacturers.com/
8. Anonymous. The Indian pharmaceutical industry. Engineeringfromindia.com.
9. Anonymous. Indian Biotech Sector Surges to US $4 bn in 2011 as per Biospectrum ABLE survey. Biospectrum, 2011.
10. Anonymous. Understanding the WTO - Intellectual property: protection and enforcement. WTO, 2010.
11. Anonymous. http://www.cci.in/pdf/surveys_reports/indias_pharmaceutical_industry.pdf
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