Two dozen young men and women toting backpacks and brochures mill around cardiologist P.L. Tiwari’s office in Bombay Hospital, waiting up to 90 minutes for an opportunity to see him. They aren’t there for checkups. They want to persuade the Mumbai doctor to prescribe their employers’ brands of prescription drugs. Tiwari, who sees about 50 patients a day, says he’s so inundated by sales representatives that he tries to limit their visits to Friday nights. “They often come pleading to me, asking me to prescribe their company’s drugs,” he says. “I only give them 20 seconds or a minute. You can’t stop your consultation to entertain them.”
Rising incomes and surging rates of heart disease, diabetes, and cancer have resulted in 14 percent annual growth of pharmaceutical sales in India since 2005. Due to the nation’s ban on prescription-drug advertising and local prohibitions on pharmacists substituting one maker’s pills for those of another, pharma companies view expanding their sales forces as the best way to grab a larger slice of the $12 billion Indian drug market.
India’s 10 biggest pharmaceutical companies—including Ranbaxy Laboratories, Cipla, Dr. Reddy’s Laboratories (RDY), and local units of Pfizer (PFE) and GlaxoSmithKline (GSK) —bolstered their combined sales staff by more than 6,000 in the fiscal year ended Mar. 31. The nation’s current tally of 100,000 drug reps is likely to at least triple by 2020, according to consultant McKinsey & Co.
India has 92,000 brand names of pharmaceuticals registered with the government, according to a compendium of medicines sold in the country. The World Health Organization, in contrast, recommends only 340 essential drugs. “The number of medicine brands sold in India is at least 30 times that in the U.S. and Europe,” says Chandra M. Gulhati, editor of the Indian edition of Monthly Index of Medical Specialties.
About 90 percent of local prescriptions are generics, and manufacturers seek to differentiate these products by giving them unique names. Merck’s cholesterol pill Zocor, for instance, is sold by Ranbaxy as Simvatin, by Cipla as Simcard, and by Lupin Pharmaceuticals as Starstat. Prices of these “branded generics” can differ by as much as 75 percent for 10 tablets, according to MIMS.
Adding to the market confusion: When prescribing medication, Indian doctors typically refer to brands rather than chemical names. Pharmacists are prohibited from substituting one generic for another, even if it’s cheaper, so drugmakers try to persuade doctors to think of their brands first.
There are at least 43 brands of the blood-pressure pill olmesartan, which is sold by Merck as Olmighty and by Glaxo as Benitec. Pfizer sells a similar drug called Targit. All compete in a market for heart drugs that the All India Organisation of Chemists & Druggists estimates is worth 66 billion rupees ($1.4 billion).
“It’s an extremely competitive industry, and I have to visit some doctors once every week,” says Avinash Singh, who markets medicines for Bafna Pharmaceuticals, one of India’s 5,000-plus drugmakers. Singh’s job is to persuade Mumbai gynecologists to order Raricap, one of about 200 versions of an iron-and-calcium supplement. “Each meeting will take one minute or so, but if we come regularly then they will hopefully prescribe more,” says Singh, who tries to meet at least 11 doctors a day. He also visits neighboring pharmacies to gauge his success. Singh earns about 9,200 rupees ($199) a month plus quarterly bonuses for meeting sales targets.
There will be at least three medical reps for every 10 doctors by 2020, triple the ratio from 2005, according to a report by consultant McKinsey. “Sales representatives are getting crowded out of the doctors’ chambers,” especially in India’s largest cities, McKinsey says.
Labor costs, which equal 10 percent to 14 percent of sales for at least five major Indian drugmakers, have increased by at least 27 percent on average since 2006, according to Batlivala & Karani Securities India. Sales personnel receive better raises than other workers because of competition that prompts one in four recruits to change companies within a year. Ranbaxy, India’s largest drugmaker, agreed to boost pay for its medical reps by 20 percent to 40 percent this year, says K.B. Kadam, general secretary of the Federation of Medical and Sales Representatives’ Associations of India.
Growth in salaries has outstripped productivity increases, with sales representatives at Ranbaxy, Cipla, Dr. Reddy’s, and Lupin generating less revenue on average than they did two years ago, Edelweiss Securities reported in July. “Peer pressure has forced some companies to add more people than they are comfortable with,” says Nitin Agarwal, a pharmaceutical analyst at IDFC Securities in Mumbai. “At some stage, you’re going to get no more gain from adding people. I think we should be close to that point now.”
For some of India’s 800,000 doctors, sales pitches from drug companies are their only source of new medical information. Doctors in 23 of India’s 28 states aren’t required to take postgraduate training to maintain their accreditation. The Medical Council of India in New Delhi recommended in May that the Health Ministry require doctors to attend lectures and conferences, and read medical journals to continue practicing. “Biased information from the industry is influencing doctors’ decisions,” says Pankaj Chaturvedi, a cancer surgeon at Mumbai’s Tata Memorial Hospital. “A medical representative is a salesperson, just like someone selling mobile-phone plans.”