Marketing seeks to maximize the return on investment in the production and sales of a product or service. Product, Price, Promotion, and Place are the four elements that are traditionally included in what is called the Marketing Mix.
Here the product, or service, is something that meets a particular market demand or requirement. The product must be available in the right place through proper distribution. It must be priced at a rate that the customer is willing to pay. Lastly, it has to be promoted through the optimum use of various marketing channels utilizing many strategies. Together, these are the 4 Ps of marketing.
Marketing Mix Modeling is a tool that studies the effectiveness of marketing campaigns and strategies in increasing the product's business performance. It acts as an indicator using which decisions are made on the marketing initiatives of an organization.
Pharmaceutical Industry is engaged in the research and development, commercial production, and distribution of drugs and medical products. In India, the pharmaceutical industry rides on the low production cost and high-quality research knowhow that makes it a $20.83 billion industry (January 2020 – ibef.org). It meets 50% of the global vaccine demand, 40% of the US generic drug requirement, and a fourth of all British pharmaceutical requirements. To understand the marketing mix model of the pharmaceutical industry in India, we have to revisit the 4 Ps from an industry and governance perspective.
Marketing Mix Modeling in the Indian Pharmaceutical Industry
When a successful pharmaceutical company engages in marketing mix modeling, the weightage to be given to each marketing element is critical. The manufacturer’s base drivers help it build its brand equity, organically. The marketing mix modeling, on the other hand, optimizes the use of marketing-driven incremental drivers.
Product in the pharmaceutical industry is subject to the regulations of the Drugs and Cosmetics Act. Therefore, medicine packaging in India, particularly prescription drugs, must follow specific guidelines. This includes price control, composition declaration, the direction of use, warnings, etc.
The product's importance in the pharmaceutical marketing mix can be driven by a flagship product or brand equity. Many small and medium-sized firms bank on the popularity of a particular product and can be quite commercially successful while doing so. But for large successful companies, it is their product diversity and presence across different drug segments that help them leverage the product part of their marketing mix.
The downstream supply chain of the pharmaceutical industry is unique due to the doctors. Apart from the hierarchy of manufacturer, distributor, wholesale and retail chemists, the healthcare professionals are crucial for the product to reach its end-user.
For domestic players, carving a presence in the regional supply chains is the key to a pan-Indian success. For a successful company, the place component of the marketing mix means a heavy reliance on an aggressive sales force. In the case of international sales, successful companies accelerate their distribution through strategic tie-ups with overseas pharmaceutical partners.
Price is an important USP of the Indian pharmaceutical industry. The National Pharmaceutical Pricing Authority governs the price fixation of most scheduled drugs and formulations.
Price, although an important part of the marketing mix, is somewhat dependent on the disease. Customers may choose not to compromise preference over price in case of major illnesses. In the case of over-the-counter products, pricing is of significance. Successful companies, particularly those with a global market, often engage in competitive pricing to ensure an edge in the market.
The Organisation of Pharmaceutical Producers of India (OPPI) Code of Pharmaceutical Practices outlines the various aspects regarding promotion within the pharma industry. This includes defining the platforms that can be used for promotion and the prohibitions.
Printed promotional materials, including advertisements, is a promotion of choice in the pharma industry. Apart from the brand's name, these materials contain information like active ingredients, dosage, date of production, precautions, side-effects, manufacturer information, etc.
When it comes to electronic promotional materials and audiovisuals, compliance with Drugs & Magic Remedies (Objectionable Advertisements) Act, 1954, Drugs and Cosmetics Rules, 1945, and other applicable laws is expected.
Events and meetings are also popular in this industry as a promotional tool. These can be sponsored scientific or professional meetings and symposia organized for healthcare professionals.
Gifts to healthcare professionals is another marketing tool that is unique to the pharma industry. There are prohibitions on the gifting of cash or cash equivalents and personal effects to healthcare professionals. Items of medical utilities and items that enhance patient care are encouraged by the OPPI, provided these are of modest value. Similarly, medical samples are also allowed as a means of marketing initiative.
Apart from these marketing mechanisms, successful pharmaceutical companies are also active in visual marketing campaigns through endorsements, sponsorships, and other pharma brand promotional activities.
The unique hierarchy of the industry and the inherent marketing guidelines make pharma marketing an interesting challenge. At the same time, this eco-system provides a level playing field for all competitors. As such, old and new players, small and large corporations manage to market themselves in the pharma industry, maintaining or even improving their presence.
At Amura Marketing Technologies, we have successfully implemented various growth marketing driven market mix models for our clients. You can check some of our work for a few premium Pharma brands. To discuss the same marketing models for your business, get in touch at firstname.lastname@example.org