Understanding the pharmaceutical marketplace of India

By Avishek Majumder & Priya Chetty on April 25, 2019
Image by Pressfoto from Freepic

In the global pharmaceutical marketplace, the Indian pharmaceutical industry is at 13th position, in terms of value and has the 3rd largest volume (Department of Commerce, 2017). Currently, pharmaceutical sales in India stand at USD 20 billion. It is envisaged to extend to 55 billion by 2020 with a compound annual growth rate (CAGR) of 15.92%. Indian pharmaceutical sector holds a key position in the global export market of pharmaceuticals. The US branded generic drugs are the major pharmaceutical drugs exported outside India. It comprises approximately 20% of the global generic drugs (Chandra, 2016).

Export of over all pharmaceutical drugs by India (Department of Commerce, 2017)
Export of over all pharmaceutical drugs by India (Department of Commerce, 2017)

On the other hand, the share of the pharmaceuticals sector increased within the domestic market from 2.2% in 1994 to 3.8% in 2012. However, a decline in the share of the domestic market in sales turnover from 82% in 1994–95 to 56% in 2011–12, was observed (Joseph, 2015). IBEF, (2018) reported that India’s domestic pharmaceutical sales turnover reached USD 18.12 billion in 2018 at a growing 9.4% year-on-year from US$ 17.87 billion in 2017. Domestic and export of pharmaceuticals remain influenced by different strategies used by the companies in the pharmaceutical marketplace. They are also accompanied by different motivating and challenging factors.

Companies in the pharmaceutical marketplace

The pharmaceutical marketplace is changing at a fast rate, with huge implications for the industry as a whole. Majority of the companies focus on socio-economic aspects to improve their sales. These factors comprise of the increasing burden of chronic diseases, availability of alternative treatment methods, low price drugs and increased healthcare policies (PwC, 2017). Therefore, many pharmaceutical companies have started to provide a wide range of products and services. In order to improve pharmaceutical sales, companies have now started to recognise different pharmaceutical and healthcare value chains. In addition, the companies have also started predicting the development of medicines through predictive assessments and geospatial assessments, using social media channels for drug awareness and conducting multi-country drug launches to improve pharmaceutical sales (PwC, 2017).

Therefore, the pharma companies in India have started using comprehensive marketing and sales strategy that is tailored to the distinctive characteristics of the drugs. According to a report by Sun Pharma, their core marketing strategy lies amongst product, price, place, promotion and physical distribution as part of the pharmaceutical marketing mix. Larger companies like Sun Pharma and Sanofi focus on sales of not just bulk drugs but also patented and branded drugs. According to Mignani et al., (2016) all pharma companies in order to improve pharmaceutical sales need to have different marketing and sales models for different forms of drugs and therapeutics. For instance, the companies use the following strategies;

  • Investment in technically complex products so that differentiation can be achieved, across the globe.
  • Key markets to gain critical mass.
  • Speed to market.
  • Sharing of specialty business on global level.
  • Assurance of sustained compliance with global regulatory standards.
  • Accessibility to products, technology and market pressure.
  • Optimization of operation costs.

These marketing strategies can be explained in terms of a core model and a super core model. However, top Indian Companies like Ranbaxy, CIPLA and Dabur is heavily dependent on Research and Development for new products and growth. However, discovering new drugs is a time consuming and expensive process and is thus, dominated by large global multinationals only. Small scale Indian companies, however, focus on generic drug manufacturing rather than extensive R&D for new drugs (Anusha, Priya, & Kumar, 2017).

The core model of the marketplace

The core model of the pharmaceutical marketplace deals with a large number of drugs from acute therapy area (like psychiatry, cardiovascular, gastroenterology and neurology) to big diversified markets. The success doesn’t depend on sales of a small number of drugs. The most important part of this model is the production at a large scale and taking advantage of the opportunity (Kalotra, 2014). Daily reminders help to cross the perceptual filter and getting the brand name into the sub-conscious state of mind is another strategy. This model is for drugs for acute conditions like heart attacks that may appear suddenly and that worsens fast.

The core model for pharmaceutical sales
The core model for pharmaceutical sales

In this model, the companies use field force to remind their products on a daily basis to their direct customers. The field force or medical representatives constantly uses knowledge to display and portray product schemes and offers to customers. The companies also use the field force to build good relations with retailers. The use of this model also comprises of drug availability and convincing doctors to push their products to increase sales. The customers in this model are;

  • Retailers
  • Doctors
  • Patients
  • Stockists

Furthermore, the core model involves the adoption of ‘orphan’ or ‘orphan-like’ drugs at a later stage of clinical development. This helps the small scale and middle scale companies to take full advantage of shorter development timelines, regulatory incentives, and the curtailment of risks (Gautam & Pan, 2016). Companies like Glaxo, Pfizer, Dabur and Cipla use this type of model.

The super core model of the marketplace

The super core model of the pharmaceutical marketplace involves marketing strategies for drugs from chronic therapy area (like depression, hypertension and cancer). This model also includes its search for and distribution to achieve substantial global sales (Kalotra, 2014). It is based on a highly specialized approach of getting large returns from a small number of drugs, such that the high cost of the drug discovery and development process can be paid. This is what that owes to the success of this model and total revenues highly rely upon it. The competition seems tough in the beginning. However, every company strives very hard to enter this arena, as the growth is stable and more in this field. The major nexus of this model is that a well-trained team is directed towards highly specialized customers (Saxena, 2010).

The super core model for pharmaceutical sales
The super core model for pharmaceutical sales

This model deals with hardcore selling. In this strategy, medical representatives interact with doctors and visit on a regular basis. The companies, therefore, use this opportunity usefulness of their products and push clinicians towards the use of their drugs. Sales team or direct field teams try to influence the prescription pattern of doctors in favour of their brands (Kalotra, 2014). Industry stockists send stocks to authorized stockiest as per the requirement. Retail requirement depends on a weekly or monthly basis from authorized stockiest as per demand. Patients visit the medical shop for buying medicines prescribed by a doctor and advertised in the media. Pharmaceutical companies, therefore, consider doctor as the direct customer and patient as the end customer (Gautam & Pan, 2016). Companies like Sun Pharma, SymBio Pharma and Dr, Reddy’s use the super core model.


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