The global pharma market is going through major structural changes with significant implications for India and Indian companies. North America continues to be the largest pharma market in the world contributing to about a third of the $1 trillion in annual global pharma sales in value terms. However, with the rapid pace of growth in pharma sales in Asia over the last five years and the expected growth in the medium-term future, the centre of gravity for the pharma market is slowly shifting toward Asia.
Asia is likely to soon overtake North America in terms of overall pharma sales. This is a trend that is likely to continue for the foreseeable future due to broad macroeconomic drivers such as population and income growth. It is true that Japan and China will continue to dominate pharma sales in Asia. For example, with annual pharma sales of over $80 billion, China is already more than five times the size of the Indian domestic pharma market in terms of value. However, rapid annual market revenue growth rates of over 10–12 per cent in countries such as India are likely to see an expanding interest by global pharma companies in other Asian markets including India.
Another factor affecting the global pharma industry is the increasing pace of branded products losing patent exclusivity in developed markets. Much of this phenomenon has impacted mass market small molecule products. Generic companies around the world including Indian companies have and will continue to reap the benefits of this trend. Another opportunity that is opening up for Indian pharma majors is the beginning of the trend of more complex biologic products losing patent exclusivity in developed markets through competition from biosimilars. This phenomenon is likely to significantly expand the opportunities for many Indian pharma companies with strong international operations. Today, pharma exports from India are nearly as large as the domestic pharma market. As this international business for India pharma majors grows, companies are gearing up to further strengthen their internal capabilities to manage these international businesses through a mix of strong local affiliate presence and strong centralised capabilities, often located and/or managed from India.
Even within India, the growing size of the domestic market, the growing scale of Indian pharma companies and the expanding introduction of new products into the market is leading to a significant increase in competitive intensity. Growing scrutiny of promotional tactics by the government is only increasing the pressure for local companies to find out ways to differentiate themselves in the market. Increasingly, companies are focusing on enhancing their internal strategies and capabilities in this hyper-competitive environment.
Emerging needs of the Indian pharma industry
The evolving global and domestic market dynamics are likely to result in significant opportunities and challenges for pharma companies operating in India, both Indian companies as well as Indian affiliates of MNC companies. Some key issue areas are already starting to capture the attention of leadership teams within the industry.
Growth acceleration with sales and marketing excellence
With an increasingly competitive domestic market in India, pharma companies are being faced with the challenge of having to work much harder to drive revenue growth. Companies will need to increasingly develop ways to systematically identify unmet customer opportunities and barriers, identify and prioritise specific promotional strategies to take advantage of the opportunities and execute tactics successfully. Having robust sales and marketing capabilities is going to be critical for pharma companies to differentiate themselves in the market. Developing these capabilities will require people with advanced skills, robust and well-defined processes, and enabling tools and techniques.
Given the evolving market dynamics the traditional sales structure, processes and sales reps skills are not enough to succeed today. Companies are starting to explore ways to assess their current sales capabilities, identify and prioritise gap areas, and invest in ways to systematically upgrade themselves in the prioritised areas through a combination of talent management and enabling tools and processes. Strong investments in CRM and reporting technologies to enable the sales force and sales management are good examples of that.
More and more pharma companies in India are starting to think about the best return from their investments by strengthening their marketing capabilities. Decision-driven analytics to support marketing investment decisions is an area that many companies are taking a serious look at. Evolving customer needs require sharper segmentation, targeting and positioning.
Commercial organisation design
The role of different players within the healthcare space is continuing to evolve in India. Some changes include the expansion of corporate hospitals and pharmacy chains, the increasing importance of medical insurance companies and the growing role of patients in decision making, especially with ready access to information and prevalence of the social media. All these changes along with increasing competition, trend toward consolidation and likelihood of more government scrutiny around pharma promotional tactics will require companies to continuously re-evaluate how to most appropriately structure their commercial organisations. More and more companies are also realising that there is a strong need to strengthen roles such as key account management and medical within their sales organisations.
With the continuous growth of the Indian healthcare market, both multinational pharma companies as well as India pharma companies have had the need to evaluate the potential opportunity to introduce new products and services. Companies cannot afford the downstream implications of poor forecasts including sub-optimal investments, guidance to corporate strategy and sales force attrition. The need for robust methodologies is also increasing as companies invest in more specialty areas such as oncology and immunology.
As Indian pharma companies start work to take advantage of the growth opportunities and appropriately address the challenges to come, there will be a growing demand for best in class ideas around marketing and sales issues.