Tag Archives: Strategic

Differentiating Seven ‘Ps’ of Marketing-Mix for Health Food Products – A strategic overview

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As estimated by Nicholas Hall the health food products market in India is currently around U.S.$ 1.3 Billion with a huge marketing potential. However, the marketing-mix for such groups of health food products will need to be crafted in an innovative way and carefully tailored to suit the need of individual brands, by an astute marketer.
Definition of Health Food Products:In my view, the health food products are those, which have a favorable impact on human health, their physical performance or state of mind. Such products include various types of food substances, dietary supplements with medical benefits and are used mostly for the prevention of various types of diseases.

The global market:

The global market for health food products is projected to be around U.S.$ 190 Billion by 2010 with a CAGR of 6.1% during 2000 – 2010. In 2007 its market size was reported to be U.S.$ 166 Billion.

Categories of health food products:

Before we delve into the space of marketing-mix, let me try to categorize these products under the following six categories:

• Functional Foods:

- These are dietary components, which provide health benefits beyond basic nutrition, like
isabgool or psyllium husk, whey proteins, bran or oats

• Medicinal Foods:

- These are functional foods with more medicinal value, for e.g. cranberry juice, anti-diabetic/anti-obesity health
bars with added medication etc.

• Nutraceuticals:

- This category comprises of substances which are foods or part of a food with usually preventive health benefits
like vitamins, minerals, gingko biloba, coenzyme Q10, carnitine, ginseng, garlic, tulsi, kalmegh, brahmi, saffron,
ashwagandha, green tea, karela powder etc.

• Phytochemcials:

- These products are like lycopene found in tomatoes or flavanoids in fruits. Such substances usually do not
possess any nutritive value but offer some disease preventive properties.

• Ayurvedic and Herbal Medicines:

- These are derived from plants and are used as such or in form of extracts and possess disease preventive
properties.

• Other health related products are like sports nutrition and various types of organic foods.

Key Drivers:

In my view following are the four key drivers of the health food products market in India:

• Consumer awareness:
- Increasing consumer health consciousness will increase the popularity of health food products

• Changing lifestyle:
- Incidence of lifestyle diseases like hypertension, diabetes, obesity, cardiovascular diseases has been
increasing with fast changing consumer lifestyle. Moreover, increasing cost of serious medical treatment is
also encouraging people to go for preventive health care.

• Ageing population:
- Ageing population in India is expected to contribute significantly to increase the demand for health foods
supplements and functional foods to address various types age related health conditions.

• New scientific evidence of various health foods:
- Ongoing scientific research studies to establish health benefits of various food substances and dietary
supplements will help expanding the ambit health food products at a faster speed.

Key challenges for Herbal Food Products:

Herbal products taken from two or more different sources may not necessarily have the same potency, leading to concerns of batch to batch product quality variations in terms of efficacy, which depends on the potency of the material used.

Differentiating the marketing-mix:

For health food products, instead of conventional four Ps of marketing, one will need to consider the following seven Ps:

1. Product :

Health food products will need to have the following:

• Scientifically documented health benefits
• Innovative product development targeting different consumer segments
• Clear brand differentiation
-Without this ‘Horlicks Vs Viva’ story is expected to be repeated more often than in the past with enlightened consumer base.
• Reasonable standardization

2. Place:

Innovative use of this ‘P’ will play a critical role in the success of any health food product.

The following distribution outlets for the health food products are important:

• Kirana / Grocery stores
• Supermarkets

However, equally important is the availability of these products in pharmacies as many consumers will perceive these products as important as medicines and may enquire at the pharmacy outlets for their availability.

• Multi Level Marketing (MLM)
- MLM can be used innovatively for health food products marketing, as is being done currently by Amway, Herbal Life etc.

3. Price:

Price of a health food product like many other products is a function of values that the brand will offer and will also depend on:

• Differential brand features and benefits
• Product life cycle

However, pressure on margin for health food products will be more due to:
• Strong bargaining power of distributors’ chain / supermarket stores, unlike pharmaceutical products where retail and wholesale margin is fixed in India
• High promotional expenditure due to usage of both mass media and relatively intensive personal selling.

4. Promotion :

For health food promotion following common tools just like any consumer product marketing will help:

• Advertising through mass media
• Point of Purchase Promotion (POP)
• Sampling

In addition, following campaigns may prove to be highly beneficial for such products:

• Awareness campaign for usefulness of disease prevention measures
• Medical promotion
- This will be important especially for health food products designed for children where the parents usually seek a doctor’s opinion about the product benefits. Doctors may not necessarily prescribe the product but their ‘yes’ or ‘no’ answer in reply to parents’ questions on the product may prompt whether the parents will continue with this product for the child or not.

Other types of promotion for health food products may be the following:

• Multi level marketing
• Promotion in schools, sports clubs etc.
• Telemarketing of brand services
- These are especially important for health food products meant for children. In such cases, a telemarketing cell consisting of trained nurses or dieticians, will enquire about the progress of the child with the product and give various advices to the mothers for the child, as required by them. Such types of telemarketing services through specialists will help adding a premium image to the brand to indirectly boost up the sales.
• Internet / social forums
- These tools can also be innovatively used for health food brand promotion.

5. People :

For health food products marketing, people with the following skill sets have been found immensely beneficial:

• Sales person with additional training inputs on concerned health related subjects
• Telemarketing of services with people having nursing or a dietician’s background

6. Process :

- All other ‘P’s’ may work with absolute efficiency, but if the marketing process remains inefficient, the branding exercise may be adversely impacted. Thus following areas need to concentrated upon with equal zest:

• Process efficiency
• Process speed
• Process innovation
• Efficiency of IT interface within the marketing process

7. Physical Evidence :

Now a day’s individual enlightened consumer usually wants to know the ability of the manufacturer and the environment in which a product is manufactured, along with the quality of services that is delivered for the brand. Hence, while considering the marketing-mix for health food products the ‘P’ of ‘physical evidence’ is expected to play an increasingly important role.

Conclusion:

It is therefore of immense importance for the marketers to consider the differentiated marketing-mix of seven ‘Ps’ for health food products in their branding exercise.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Envisaging ‘five emerging key strategic changes’ in the Indian Pharmaceutical Industry

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In India, the domestic pharmaceutical market has clocked a CAGR of around 13% to 14% since the last five years. Currently, the market is dominated by the drugs for mass ailments. However, such trend has already started showing a shift towards ailments related to the life-style of patients. This emerging trend is expected to fast accelerate in future.All such factors put together, driven by the following key drivers for growth backed by strong logistics support and hopefully improving healthcare delivery system are expected to contribute significantly towards faster growth of the Indian pharmaceutical industry, as we move on.Key growth drivers:

The growth drivers may primarily be divided into two categories:

- Local and
- Global

Local:

• Rapidly growing more prosperous middle class population of the country.

• High quality, cost effective, domestic generic drug manufacturers who will have increasing penetration in both local and emerging markets.

• Rising per capita income of the population and in-efficiency of the public healthcare system will encourage private healthcare systems of various types and scales to flourish.

• Expected emergence of a robust healthcare financing/insurance model for all strata of society.

• Fast growth in Medical Tourism.

• Evolving combo-business model of global pharmaceutical companies with both patented and generic drugs boosting local outsourcing opportunities.

Global:

Global pharmaceutical industry is going through a rapid process of transformation. Cost containment pressures due to various factors are further accelerating this process. Some of the critical effects of this transformation process like Contract Research and Manufacturing Services (CRAMS) will drive growth of many Indian domestic pharmaceutical players.

Expecting the need for ‘New Strategic Changes’ of radically different in nature:

The impact of many of these evolutionary changes is being felt in India already. However, some more radically different types of changes, which the industry has not experienced, as yet, are expected to be felt as the country moves on to satisfy the desired healthcare needs of its population while fully encashing the future growth opportunities of the Indian pharmaceutical industry.

Five ‘New Strategic Changes’ envisaged:

Five new key strategic changes, in my view, will be as follows:

1. As the country will move towards an integrated and robust healthcare financing system:

• Doctors will no longer remain the sole decision makers for the drugs that they will prescribe to the patients and the way they will treat the common diseases. Healthcare providers/ medical insurance companies will start playing a key role in these areas by providing to the doctors well thought out treatment guidelines.

• For a significant proportion of the products that the pharmaceutical companies will sell, tough price negotiation with the healthcare providers/ medical insurance companies will be inevitable.

• Health Technology Assessment (HTA) or outcome based pricing will play an important role in pricing a healthcare product.

2. An integrated approach towards disease prevention will emerge as equally important as treatment of diseases.

3. A shift from just product marketing to marketing of a bundle of value added comprehensive disease management processes along with the product, will be the order of the day

4. Patents will be granted on truly innovative medicines and incremental innovation to be protected within the patent life of the original product only or separately for a much lesser period.

5. Over the counter medicines, especially originated from natural products for common and less serious illness, will curve out a larger share as the appropriate regulations will be put in place.

Conclusion:

With the above changes in the ball game of the Indian pharmaceutical industry, it may not be easy for the local players to adapt to such changes sooner and compete with the global players on equal footing. Those Indian Pharmaceutical companies who are already global players on their own rights, will be well versed with the nuances of this new game, within the country. These domestic companies, in my view, will offer a tough competition to the global players, especially, in the generic space.

However, so far as other domestic players are concerned, the new environment could prove to be a real tough time for them, further accelerating the process of consolidation within the Indian pharmaceutical industry. So the ‘writing on the wall’ appears to be ‘prepare now’ or ‘perish’.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Changing pharmaceutical marketing environment demands a change in mindset for a new strategic direction.

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Will the Tsunami of change hit India too?
In the matured markets of the global pharmaceutical industry, individual doctors are no longer the prime target customers. Healthcare providers, patient advocacy groups, pharmacy benefit managers, clinical assessment authorities etc have already emerged as key decision makers for use of various branded or generic medicines and other kind of healthcare facilities/ support for the patients.In India even today individual doctors are the prime target customers for the pharmaceutical companies as, by and large, they are the key decision makers for usage of medicines and other healthcare facilities for the patients.

However, a distinct change, albeit slowly though, is now noticeable within healthcare financing system in India. Slow but gradual emergence of healthcare providers with medical insurance and other related products, patient advocacy groups, standard treatment guidelines etc, are expected to bring in a radical change the way current pharmaceutical marketing strategy is formulated, which continue to revolve round the doctors, mainly. The small ripples of change, blessed by adequate dose of the Government’s financial policy reform measures, may soon get converted into a Tsunami of change, destroying the current pharmaceutical business strategy directions of majority of the companies. Rapid increase in the number of healthcare providers and other related stakeholders with attractive schemes for various strata of the civil society, will herald the emergence of very powerful groups of negotiators for products’ price and other healthcare related services. These groups will be capable to very strongly and significantly influence doctors’ products and other treatment choices.

Marketing will be a ‘composite value delivery system’:

In addition, during the coming years of post product patent regime in the country, pipelines of the domestic Indian companies for new ‘copycat’ versions of patented products are expected to completely dry up, making the price competition in the market place even more ‘cut throat’. In such type of environment Indian pharmaceutical companies will be under tremendous pressure to provide additional composite value, not just the physical products, as differential offerings to the patients, doctors, healthcare providers and other stakeholders, in and around the related disease areas. Ability to deliver such composite differential value along with the product will enable a company to acquire the competitive cutting edge.

Required leadership and managerial skill sets will be quite different:

In the new environment required skill sets of both the leaders and the managers of the Indian pharmaceutical companies will be quite different from what it is today. This will not happen overnight though, but surely gradually.

Skill requirements:

Leaders and managers with only individual functional expertise like, R&D, manufacturing, marketing, regulatory, finance etc will no longer be successful in the new paradigm. To handle new types and groups of customers, the leaders and managers will need to ensure:

• Multi-functional expertise by rotating right people across the key functional areas

• Knowledge of ‘Pharmaco-economics’ and/or ‘health technology assessment’ (HTA)

• Ability to interpret patients’ clinical benefits against cost incurred by the payors to achieve the targeted clinical outcome, especially in the areas of new products

• Insight about the thought pattern of the healthcare providers and other customers or influencers groups

• Speed in decision making and more importantly ability to take ‘first time right’ on the spot decision, which can make or mar a commercial deal.

Managing the phase of transition:

During the ensuing phase of transition in India, pharmaceutical companies should:

• Clearly identify, acquire and hone the new skill sets, which would drive the changing scenario

• Get strategically engaged with the existing public/private healthcare providers and health insurance companies like, Mediclaim, ICICI Lombard, large corporate hospital chains, retail chain chemists and others, proactively

• Drive the change, instead of waiting for the change to take place

• Ensure that appropriate balance is maintained in both types of marketing strategies, in innovative ways.

Conclusion:

Indian pharmaceutical industry has been trapped in a difficult to explain ‘strategic inertia’, as it were, since long. It is high time now to come out of it and face the change upfront boldly and squarely to translate this challenge into a possible growth opportunity. Global pharmaceutical companies are now gaining expertise in the new ball game in the developed markets of the world. If majority of the Indian pharmaceutical companies, who are not yet used to handling such change, are caught unaware of this possible future trend, the tsunami of change could spell a commercial disaster to them. However, I strongly hope that this new and yet another challenge of change will be met with a clear and well thought out strategic initiatives to give a further boost to the growth engine of the industry.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

New Drug Policy 2009 – suggesting key elements for a strategic shift in the policy framework

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The new drug policy of the Government of India (GoI) is long overdue. Despite so many reform measures taken by various Governments over last two decades, Indian Pharmaceutical Industry has not seen a new ‘drug policy’since 1995.As an individual who has been closely observing the pharmaceutical industry during this period, I would expect the new UPA Government to work out a new ‘drug policy’, without further delay, after having a fresh look at the current policy, which has outlived its time. The new ‘drug policy’should be aimed at achieving inclusive growth, keeping pace with the progressive outlook and aspirations of young India.Broad policy objectives:

The broad objective of the new ‘Drug Policy’ should undoubtedly be ‘ensuring access to affordable modern medicines to all’, clearly addressing the following key elements, in detail:

1. Affordability:

• The new policy should ensure adequate availability of all ‘National List of Essential Medicines’ (NLEM) at affordable prices.

• ‘Jan Aushadhi’ initiative of the Department of Pharmaceuticals (DoP) should be strengthened further through public-private-partnership (PPP) initiatives, using strong public distribution outlets like ration shops and post offices for effective rural penetration of the scheme.

2. Access:

• Around 65% of the Indian population does not have access to affordable modern medicines even today, against 47% in Africa and 15% in China.

• GoI should make effective use of its existing initiatives, take some new initiatives and dovetail them as follows:

- ‘National Rural Health Mission’ (NRHM): to create rural healthcare infrastructure.

- ‘Jan Ausadhi’ scheme: to extend the reach of affordable medicines to a vast majority of
rural population.

- Innovative ‘Health Insurance Schemes’ to be worked out for all sections of the society through PPP, like for example, ‘Yashasvini’, pioneered by Dr. Devi Shetty of Bangalore and the Government of Karnataka, which is possibly the world’s cheapest comprehensive Health Insurance scheme, at Rs.5 (11 cents) per month, for the poor farmers of the state.

3. Research & Development:

• Patents (Amendment) Act, 2005 ushered in a new paradigm for the pharmaceutical industry of India. There is a great opportunity for the domestic Indian pharmaceutical companies to discover, develop and market their own New Molecular Entities (NMEs) throughout the world. The new policy should plan to provide adequate fiscal incentives for R&D initiatives taken by the pharmaceutical industry of India.

• R&D in India costs almost a fraction of equivalent expenditure incurred in the west. Because of availability of highly skilled manpower with proficiency in English together with cost advantages, the country has the potential to become the largest global hub for ‘Contract Research’ and other R&D related work being outsourced by the global Pharmaceutical Companies.

• As India is poised to be a global hub for Clinical Trials, the new policy should extend adequate support to companies carrying out clinical studies in India not only to help them record a healthy growth, but also to attract more ‘foreign direct investments’ (FDI) for the country.

4. Exports:

• The Ministry of Chemicals & Fertilizers reported in its ‘Annual Report of 2006-07′ that exports of Drugs & Pharmaceuticals have doubled during the last four years. To give greater boosts to exports PHARMEXIL should be further strengthened to act as an effective nodal centre for all pharmaceutical exports, together with the responsibilities for conducting extensive promotional activities to accelerate growth for this sector.

• It is estimated that in the next three years sales of over U.S.$ 60 billion being generated by some blockbuster pharmaceutical products patented in the western countries and not in India, will go off patent. This will open the door of significant opportunities for Indian pharmaceutical exports. GoI should help the domestic pharmaceutical companies to encash this opportunity through adequate financial measures and other support, wherever required.

5. Employment generation:

• Indian pharmaceutical industry with its encouraging pace of growth is making good contribution towards employment generation initiatives of the country, both within skilled and unskilled sectors of the population.

• With projected CAGR of around 14%, the employment opportunity, especially for the qualified professionals is expected to increase significantly in the coming years, across the industry, from core pharmaceutical sectors, right through to contract research, manufacturing services (CRAMS) and clinical trials space.

• Recommendations to be provided in the new drug policy should further accelerate such employment generation opportunity by the industry.

6. Contribution to Economic Growth of the Country:

• The new ‘drug policy’ should also address how will the pharmaceutical industry in India contribute more to the economic development of the country through various reform measures, in areas like, R&D, CRAMS, Clinical Trial (CT) and also towards health insurance, for all strata of society.

Innovative new ‘drug policy’ initiative of the new government will not only ensure a stimulating inclusive growth for the industry, but also will help attract adequate FDI for the country.

Broad Strategic shift towards ‘Access to affordable modern medicines for all’:

Ensuring ‘access to affordable modern medicines for all’ should be made one of the key objectives of the DoP. Resorting to populist measures like ‘drugs price control’ may sound good. Unfortunately at the ground level, it has not helped a vast majority of 650 million population of India, thus far.

Therefore, ‘Drugs Price Control’ since 1970 has not been able to ensure ‘access to affordable modern medicines’ to more than just 35% of Indian population. The new ‘drug policy’ should, therefore, shift its focus from ‘Price Control’ to ‘Price Monitoring’, which has been proved to be of great success to keep medicines affordable to the common man, as indicated by the ‘National Pharmaceutical Pricing Authority’ (NPPA). However, for government purchases, made to address the healthcare needs of the ‘common man’ there should always be room for price negotiation with the concerned companies, as is being practiced in many countries of the world.

Conclusion:

To achieve the proposed ‘new drug policy objective’ of ‘ensuring access to affordable modern medicines for all’, the policy makers should try to think ‘outside the box’. ‘The old wine in a new bottle’ policy will just not be enough.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.