Brand booster for pharma

Major Indian drug companies are creating their own identity abroad through direct selling.

Major Indian drug companies such as Ranbaxy Laboratories, Lupin, Dr Reddy's Laboratories and Glenmark have gone off the beaten track in overseas markets.

Unlike in the past when all of them were relying only on wholesalers and distributor network to sell their drugs, the new 'mantra' is to tap overseas markets through direct selling and by creating own brands.

Take the case of Lupin, the first Indian drug company to appoint a large sales force in the US, the world's largest drug market, to directly connect with doctors and hospitals.

The company started off with a brand called Suprax, an antibiotic, which has become its flagship product. Like any other FMCG product, the Suprax basket now has three to four variants in tablets and liquids.

Lupin has now expanded its play with four branded products and has ramped up its sales force in the US from 60 to over 170 people in this financial year.

"Our branded business contributes 37 percent of the overall US revenues with a turnover of $127 million, growing by 72 percent during FY 2010", says Nilesh Gupta, group president and executive director of Lupin.

If Lupin is concentrating on the tough US market for creating patented branded drugs portfolio, players like Dr Reddy's and Glenmark are concentrating on emerging markets like Russia and the CIS region, South Africa and Latin America for selling own branded generics through direct marketing.

Ajit Mahadevan, Partner -- Life Sciences Practice, Ernst & Young, says expenses for direct market selling is at least 15-20 percent more expensive than selling through the traditional route of wholesaler-distributor network. But companies try to protect their margins by selling at a higher price.

But for a long-haul business like pharma, a branded presence is a must, says R B Smarta, managing director of Interlink, a consultancy specialised in marketing of drugs.

He says governments all over the world are now under pressure to reduce health care costs and are promoting generics. It is thus a good strategy to create own branded generics.

Take the case of Dr Reddy's Laboratories, which now has a branded generic portfolio of over 200 products. Several of its brands enjoy leadership positions in countries like Romania, Venezuela, Russia and the CIS countries.

Thanks to the strong brand equity it enjoyed for many years in the Russian market, Dr Reddy's generated $45 million revenue from Russia for the quarter ended June, with a strong year-on-year growth of 44 per cent.

It is the largest Indian pharma company in Russia and today ranks among the top 15 pharma companies in that market. Its top five brands occupy the No 1 spot in their respective therapeutic category and have 12 brands in the top three ranks.

India's largest drug maker Ranbaxy Laboratories, which sells its drugs in over 45 countries, has also begun direct marketing in various markets, either through partners or on its own.

Its drug brands like Ketanov, Cifran, etc have become leading drug brands in Russia and other CIS countries. In South Africa, the company employs a team of over 50 and has established over 27 brands in that market.

Ranbaxy is the largest generics company in the UAE and is amongst top-12 pharma companies.

It has over five brands that sells over $1 million in that market, where products are sold through a distributor with a dedicated sales team of 20 front line staff.

Glenmark is another Indian company trying to sell drugs directly and create an own generic branded portfolio in overseas markets.

The company employs over 100 people each in countries like Brazil and Czech Republic to sell its products, says a spokesperson.

Companies say the job is challenging as drug markets in various countries differ and challenges are more for creating own brands.

For example, only doctors can promote drugs in Russia and medical representatives have to pass an examination every three years to sell drugs in the UK market.

Companies have to rope in local partners to build a team or should create front end marketing sets up through acquisitions, experts say.