Strategic Insights for Pharma Companies Launching New Divisions in India

In the ever-evolving landscape of the Indian pharmaceutical market, companies are constantly exploring strategies to solidify their positions and capture untapped potential. One such strategic avenue is the launch of new divisions, a decision that demands careful analysis and a deep understanding of market dynamics. In this blog, we delve into the intriguing world of the Indian Pharma market, specifically studying the top 40 Pharma companies, to unravel the impact of the multi-division strategy.

The Multi-Division Dilemma:

Launching new divisions is a pivotal decision often sparks debates within pharmaceutical boardrooms. Should companies consolidate their existing divisions, or is expansion into different therapies the key to sustained growth? The top 40 Pharma companies in India present a diverse range of approaches, making it imperative to analyse their strategies comprehensively.

Objectives of Multi-Division Strategy:

1. Therapy Focus:
   • Establishing leadership at a therapy level.
   • Developing differential strategies for mass and super specialities.
   • Increasing visibility and share of voice through multiple divisions.
2. Impact on Market Dynamics:
   • More feet on the field due to increased representatives from the same company approaching doctors.
   • Enhanced Doctor coverage.
   • Strengthening distributor networks.

Methodology:

To conduct this analysis, the top 40 Pharma companies were studied, considering only divisions with a turnover exceeding 10 crores. Focus was on understanding what percentage of these divisions contributed to 80% of the corporate business. Additionally, evaluated the top five therapies for each corporate, aiming to decipher if these companies had achieved leadership positions in their most crucial therapeutic segments.

Key Findings:

Companies Ranking 1 to 10:

For Sun, Abbot, Zydus, Alkem, and Intas, maintaining the substantial number of divisions contributing to 80% of the business indicates a successful multi-division strategy. Their leadership positions across various therapeutic segments position them as industry leaders. The ideal strategy for these companies would be to further strengthen their existing divisions, perhaps consolidating and optimizing the ones contributing less, while continuously innovating in therapeutic areas where they already lead.

Read more: Strategic Insights for Pharma Companies Launching New Divisions in India

Companies Ranking 11 to 20:

DRL, Glenmark, Ipca, and Micro, with a higher number of divisions, showcase a mix of therapy and brand leadership. The strategy for these companies should involve a careful evaluation of the performance of each division. They can consider focusing on therapies where they already exhibit leadership or explore consolidation strategies to streamline their business. This will allow for a more focused approach, optimizing resources for better returns.

Companies Ranking 21 to 30:

Smaller companies like Himalaya, Ajanta, Indoco, Hetero, securing top-five positions in specific therapies, should continue to capitalize on their identified strengths. These companies can adopt a strategy of specialization, investing further in the therapies where they have a leadership position. For these players, growth might come from deepening their expertise in specific therapeutic segments, ensuring sustained success.

Companies Ranking 31 to 40:

Companies in this bracket face challenges in securing top-five positions in therapy leadership. The emphasis on brand leadership, as seen with Zinit from Apex and Deor from Franco Indian, is a strategic pivot. The ideal approach for these companies could be to focus on building a strong brand presence. They may explore opportunities to diversify or expand their product portfolio within identified therapeutic segments, aiming for brand dominance to compensate for challenges in therapy leadership.

The Way Forward

For those with turnovers ranging from Rs.10 Cr to Rs.50 Cr, Rs.50 Cr to Rs.100 Cr, and those operating on a smaller scale, the key takeaway is clear – launching new divisions can indeed be a potent strategy. However, the key lies not just in expansion but in the judicious selection of the right product basket. As the examples highlighted demonstrate, even companies with limited divisions can carve out success by securing leadership positions in specific focus therapies. The challenge, therefore, lies in understanding your corporate goals, aligning them with a well-chosen product mix, and maintaining a vigilant eye on returns as you navigate the dynamic landscape of the pharmaceutical market.

Pharma Company with <Rs.10 Cr Turnover:

Strategy Options:

1. Market Research and Gap Analysis:
   • Conduct comprehensive market research to identify gaps and unmet needs in the pharmaceutical market.
   • Analyze competitor offerings and market demand for potential therapeutic areas.
2. Focus on Niche Segments:
   • Identify niche therapeutic segments with lower competition.
   • Explore specialized areas or orphan drugs where regulatory incentives may apply.
3. Strategic Partnerships:
   • Collaborate with research institutions or universities for innovative drug development.
   • Seek strategic partnerships with larger pharmaceutical companies for co-development or licensing agreements.
4. Regulatory Advantages:
   • Leverage regulatory benefits for fast-track approvals or reduced clinical trial requirements for certain therapeutic categories.
5. Optimized Resource Allocation:
   • Given the limited budget, optimize resources by prioritizing a single or a couple of therapeutic areas.
   • Consider lean and efficient operational models to maximize output with minimal investment.
6. Building Brand Presence:
   • Focus on building a strong brand presence in the selected therapeutic area.
   • Invest in targeted marketing strategies to create awareness among Doctors.

Pharma Company with Rs.10 Cr to Rs.50 Cr Turnover:

Strategy Options:

1. Diversification within Strengths:
   • Assess the strengths and expertise of the company in existing therapeutic segments.
   • Consider diversification within related therapeutic areas to leverage existing capabilities.
2. Technology Adoption:
   • Explore advanced technologies such as biotechnology or digital health for innovative drug delivery or treatment approaches.
   • Invest in digital marketing strategies for wider reach and engagement.
3. Strategic Alliances:
   • Form strategic alliances with contract research organizations (CROs) for efficient and cost-effective clinical trials.
   • Collaborate with marketing partners to extend market reach.
4. Pipeline Development:
   • Develop a pipeline of products with varying developmental stages to ensure a steady stream of offerings.
   • Prioritize therapeutic areas with high growth potential and unmet medical needs.
5. Innovative Formulations:
   • Focus on developing innovative formulations or combination therapies for enhanced efficacy and patient compliance.

Pharma Company with Rs.50 Cr to Rs.100 Cr Turnover:

Strategy Options:

1. Therapeutic Area Expansion:
   • Consider expanding into therapeutic areas with higher market demand and revenue potential.
   • Utilize financial resources for accelerated growth in multiple segments.
2. Global Market Entry:
   • Assess the feasibility of entering global markets with a focus on regions with favorable regulatory environments.
   • Explore international partnerships or licensing agreements.
3. Advanced R&D Investments:
   • Allocate a significant portion of the budget to advanced research and development.
   • Invest in technologies like precision medicine or personalized treatments for targeted patient populations.
4. Strategic Acquisitions:
   • Explore acquisition opportunities for companies with promising pipelines or established market presence in complementary therapeutic areas.
   • Ensure thorough due diligence to align with long-term strategic goals.
5. Brand Building and Market Positioning:
   • Implement robust brand building and marketing strategies to position the company as a key player in chosen therapeutic segments.
   • Establish a strong online and offline presence for enhanced market visibility.

Examples of Therapeutic Areas with Potential:

1. Oncology:
   • Focus on targeted therapies or immunotherapies for specific cancer types.
   • Leverage advancements in precision medicine.
2. Neurological Disorders:
   • Explore treatments for rare neurological disorders with unmet needs.
   • Investigate innovative approaches for neurodegenerative diseases.
3. Rare Diseases (Orphan Drugs):
   • Target rare diseases with regulatory incentives for orphan drug development.
   • Collaborate with patient advocacy groups for support.
4. Infectious Diseases:
   • Develop novel antibiotics or antiviral drugs to address emerging infectious diseases.
   • Participate in global health initiatives.
5. Autoimmune Disorders:
   • Investigate therapies for autoimmune conditions with limited treatment options.
   • Emphasize personalized medicine approaches.

Launching a new division for a small pharma company requires careful consideration of strengths, market dynamics, and growth potential. By adopting targeted strategies based on financial capabilities, expertise, and market trends, these companies can navigate the competitive landscape and contribute meaningfully to the healthcare industry. Thorough market research, strategic partnerships, and a patient-centric approach are essential elements for success in this dynamic environment.

Answering the Billion-Rupees Question

So, which kind of Pharma company should launch a new division, and in which segment? The answer lies in a company’s long-term strategic vision. While multiple divisions can be a potent strategy for building leadership at a division level, companies must carefully consider the returns on investment. Continuous monitoring, a focus on the right product basket, and an understanding of whether to pursue brand or therapy leadership are essential components of a successful multi-division strategy.

In essence, launching a new division in the Indian Pharma market demands a nuanced approach, guided by a thorough understanding of market dynamics, corporate objectives, and the ever-changing needs of the healthcare landscape. As the Pharma industry continues to evolve, the key to success lies in the ability to adapt, innovate, and strategically position oneself for the future.