Top pharma firms have recently launched over-the-counter products like sanitary pads and body washes. They’re even poaching FMCG talent to market them.
New Delhi: Deodorants, sanitary napkins, digestive pills, wipes, milk powders, and body washes may have nothing in common with medicines for deadly diseases such as HIV/AIDS, hepatitis, and cancer but pharma companies who are into manufacturing such prescription drugs are branching out into fast-moving consumer goods or FMCGs.
Reason: These over-the-counter (OTC) products are proving to be a financial safe haven as revenues from the sale of prescription medicines decline and are also helping build the brand.
Latest figures show that the growth rate of India’s pharma sector dipped to 5.5 per cent in 2017, the lowest in eight years, due to a range of reasons – drug price controls in the domestic market, a fall in exports to the US due to lapses at US Federal Drug Administration-approved labs, and increasing competition in the international generic market from countries such as China and Vietnam.
Pharma companies have also been hit by the NDA government’s move that makes it mandatory for doctors to prescribe medicines with their generic compound names, instead of brand names. This, industry experts said, takes the power away from doctors and places it in the hands of chemists and consumers, increasing the scope for brand connect and recall.
And it helps that OTC products are a lucrative market. According to business intelligence firm Euromonitor, India’s OTC drugs market was worth Rs 40,898 crore in fiscal year 2016 and is estimated to grow at a compound annual growth rate of 14.6 per cent. It is likely to clock Rs 80,860 crore by 2021.
The pharmaceutical sector, on the other hand, recorded sales of Rs 1.16 lakh-crore in fiscal 2017, which was 5.5 per cent higher than the previous year.
But how many consumers connect with pharma companies by their names? This is why popularising a brand through the FMCG route is important, according to industry veterans such as Mankind Pharma CEO R.C. Juneja.
“The best way to connect with the consumer is to launch daily use products. We want consumers to be aware of our product or identify us as a company,” Juneja said.
“The pharma industry’s brand recall is not as strong as, say, Dettol in antiseptic solutions or Maggi in noodles or Colgate in toothpastes. So, when it comes to winning over consumers and retailers, following in the footsteps of FMCG firms is the best bet.”
Adopting modern trade formats
Glenmark, the country’s seventh-largest drug-maker by revenue, known for research-based prescription products, has launched a range of sanitary napkins – making a foray into the local ‘brick-and-mortar’ shops, malls and hypermarkets. Competition is tough, as the company now faces FMCG majors Procter & Gamble (makers of the Whisper brand) and Unicharm (makers of the Sofy brand).
Sujesh Vasudevan, president of India formulations, Middle East & Africa at Glenmark, said: “We are now learning the importance of product placement on shelves. For instance, we have strategically placed a range of sanitary napkins at malls. It is adjacent to the shelves carrying our other range of feminine hygiene products under the brand, Vwash.”
Moreover, in the coming years, shelf space for OTC products sold by drug makers is expected to increase manifold.
At the Big Bazaar chain of hypermarkets, the OTC category is relatively small at present, but the company expects it to become the next big thing.
“Pharma players are undertaking branding, communication and packaging lessons from FMCG companies to sell OTC products in modern trade formats. We expect this category to grow three or four-fold in terms of sales in next two years,” said Kamaldeep Singh, group food business head of Future Group, the company that owns Big Bazaar.
More ads, featuring top stars
As per data released by AdEx India, a division of TAM Media Research, pharma companies have increased the volume of their advertisements.
In the television ads category, pharma companies went from the 209th rank in 2015 to 149 in 2017, in terms of ad volume. Similarly, in 2015, print and radio advertisements by pharma corporations stood at the 209th and 117th ranks respectively, but grew to rank 146 and 77 last year.
All this just means that pharma companies are investing aggressively in branding and advertisement – the area led by FMCG firms.
Star brand ambassadors have also started coming into the equation. For example, actor Anil Kapoor is endorsing Lupin’s first OTC product Softovac, a bowel regulator powder. The firm is India’s second largest pharma company, and has converted its 35-year-old prescription product for bowel regulation into an OTC, taking the plunge into the segment as well as the world of TV ads.
Meanwhile, Abbott India, which withdrew its premium stents due to price control measures, is now using social media to get into sub-therapies, and recently launched a YouTube video starring former cricketer Virender Sehwag. The campaign reportedly received 1.5 million unique views, while on Twitter, the company claimed it was among the top five trends with 35 million impressions.
‘Give us a missed call and get a chance to meet Sania Mirza in New York’. This is not a cola brand’s advert, it’s the opening line of Sun Pharma’s promotional campaign, which goes on to offer Rs 100 in Paytm cash-back every day to its customers.
E-pharmacies are another new focus area for these companies; they are pushing their products by offering discounts as high as 70 per cent, on top of benefits like doorstep delivery and the option to return the product.
Product pitch and packaging
Research firm Kantar Worldpanel, in a report, noted that the FMCG trend of single-use packages encourages shoppers to try new products and brands.
Taking a cue, pharma giants are launching variants under their matured brands with a sharper focus on small, sachet-sized, single-use packs to create consumer connect at both chemist and non-chemist outlets. For instance, Sun Pharma has added variants to its age-old pain relieving brand, Volini. The humble ointment is now available in spray, gel and herbal formats, while the company has also launched single-use pack for just Rs 4.
“We have been seeing the drug-makers giving demonstrations and samples at our outlets to create brand familiarity with the customer — similar to what consumer goods companies do,” said Future Group’s Kamaldeep Singh.
Chasing FMCG talent
Drug-makers are poaching talent from FMCG firms in the field of sales, marketing, new product development, research and development.
“FMCG candidates are most sought-after by OTC companies due to their marketing concepts and expertise. In fact, even the high performers from FMCG background in sales and marketing are very interested in opportunities in the pharma OTC sector,” said Mayank Chandra, managing partner at the UK-based headhunting firm Antal International, which specialises in hiring for pharmaceutical firms.
A random check on LinkedIn, the professional networking platform, showed up several profiles that recently made a shift from FMCG to the pharma OTC profile.
Shreyas Baxi, who has joined Cipla Health as brand manager in November 2017, was previously associated with Hindustan Unilever, with wider experience in general trade, modern trade retail, cash and carry – exactly what the pharma industry is trying to learn.
“Pharma OTC sales require the aggression of an employee working at an FMCG firm, which have expertise in width (pushing the product at maximum number of outlets) and depth (growing the number of product units at a single outlet),” said Sougat Chatterjee, who ranks among Asia’s top 50 brand leaders and is also the president of TFPL, a global consulting firm.
Will the strategy pay off?
For global drug makers, the dilemma is whether they can extract more value from FMCG products such as cosmetics and deodorants than the consumer goods companies, or should they just focus on more traditional pharmaceutical markets.
Rakesh Kapoor, chief executive of the UK-based Reckitt, which produces Durex condoms and Nurofen painkillers, had told The Financial Times two years ago that the expertise of consumer companies is far better suited to the OTC market than that of pharma groups.
“Consumer health is about mums, not about molecules,” he had said.
OTC selling is believed by some to be similar to pharma selling, while others believe it is just like FMCG distribution. Still others feel that wholesale will do the trick.
“But the reality is OTC is neither pharma nor FMCG; it’s a category in its own right called OTC, consumer healthcare. Hence it should be approached differently,” said Chatterjee.