Twenty Seconds Pit Glaxo Against Pfizer in India’s $12 Billion Drug Market

Two dozen young men and women toting backpacks and brochures mill around cardiologist P.L. Tiwari’s office in Bombay Hospital, waiting as long as 90 minutes for an opportunity to see him. They aren’t there for checkups.

They instead want to persuade the Mumbai doctor to prescribe their brands of prescription drugs. Tiwari, who sees about 50 patients a day, said he is so inundated by sales representatives he tries to limit their visits to Friday nights.

Pharmaceutical sales in India have increased an average of 14 percent annually since 2005, stoked by rising incomes and surging rates of heart disease, diabetes and cancer. India bans prescription-drug advertising, so GlaxoSmithKline Plc (GSK), Pfizer Inc. (PFE) and other companies are trying to tap the $12 billion market through a sales force of 100,000 that is predicted to at least triple by 2020.

“They often come pleading to me, asking me to prescribe their company’s drugs,” said Tiwari, 66. “I only give them 20 seconds or a minute. You can’t stop your consultation to entertain them.”

India’s 10 biggest pharmaceutical companies -- including Ranbaxy Laboratories Ltd. (RBXY), Cipla Ltd., Dr. Reddy’s Laboratories Ltd. and local units of Pfizer and Glaxo -- bolstered their combined sales forces by more than 6,000 in the fiscal year ended March 31, executives said on conference calls this month.

Brand Abundance

India has 92,000 brand names of registered pharmaceuticals, according to a compendium of medicines sold in the country. The World Health Organization, in contrast, recommends 340 essential drugs.

“The number of medicine brands sold in India is at least 30 times that in the U.S. and Europe,” said C.M. Gulhati, editor of the Indian edition of the drug encyclopedia MIMS.

About 90 percent of prescriptions are generics, which their manufacturers seek to differentiate with unique names -- making them branded generics. Merck & Co.’s cholesterol-lowering Zocor is sold by Ranbaxy as Simvatin, by Cipla as Simcard and by Lupin Ltd. (LPC) as Starstat.

Prices of the brands can differ by as much as 75 percent for 10 tablets, according to MIMS.

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.

One-Minute Meetings

There are at least 43 brands of 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 Organization of Chemists and 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,” said Avinash Singh, who markets medicines for Bafna Pharmaceuticals Ltd. (BFNA), one of India’s 5,000 drugmakers.

Singh’s job is to persuade Mumbai gynecologists to order Raricap, one of about 200 versions of a calcium-and-iron supplement.

“Each meeting will take one minute or so, but if we come regularly then they will hopefully prescribe more,” said Singh, who tries to meet at least 11 doctors a day.

‘Crowded Out’

He also visits neighboring pharmacies to gauge his success. Singh earns about 9,200 rupees 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, McKinsey & Co. said in an October report.

“Sales representatives are getting crowded out of the doctors’ chambers,” especially in India’s largest cities, McKinsey said.

Competition and government-enforced price controls help keep prices low and make India one of the cheapest countries for pharmaceuticals. The price of 10 tablets of the antibiotic ciprofloxacin, sold by Bayer AG (BAYN) as Cipro for more than 20 years, fell 14 percent from 1996 to 2005, according to a March report from the Global Antibiotic Resistance Partnership.

Labor costs, which equal 10 percent to 14 percent of sales for at least five major drugmakers, have increased by at least 27 percent on average, according to Batlivala & Karani Securities in Mumbai.

Better Raises

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, said K.B. Kadam, general secretary of the Federation of Medical Representative Associations of India, a union group.

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 were two years ago, Edelweiss Securities Ltd. said in a report last month.

“Peer pressure has forced some companies to add more people than they are comfortable with,” said Nitin Agarwal, a pharmaceutical analyst at IDFC Securities Ltd. 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.”

‘Getting Ruthless’

Ranbaxy added almost 1,500 sales representatives last year. The company, based on the outskirts of New Delhi, expected the recruits to expand domestic sales by 15 percent to 20 percent each quarter, former Managing Director Atul Sobti said in May 2010. Instead, domestic sales growth slowed to less than 6 percent in the past two quarters.

The pharmaceutical industry’s influence in driving sales is facing resistance from the Medical Council of India in New Delhi.

The council -- the top government body responsible for setting ethical standards, granting doctors’ licenses and accrediting the nation’s 315 medical colleges -- is restricting corporate sponsorship of medical events, including paying for doctors’ flights and accommodations.

“Even the pharmaceutical industry, the big players, they also agree with us in principle,” Council Secretary Sangeeta Sharma said. “They’re also sick of this kind of practice. It is getting ruthless.”

Doctor Training

The council is seeking a system requiring India’s 800,000 doctors to continue updating their knowledge and skills. For some doctors, sales pitches from pharmaceutical companies are their only source of new medical information.

Doctors in 23 of India’s 28 states aren’t required to undertake post-graduate training to maintain their accreditation. The council 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 doctor’s decisions,” said Pankaj Chaturvedi, a cancer surgeon at Mumbai’s Tata Memorial Hospital. “A medical representative is a sales person just like someone selling mobile-phone plans.”

In the office of Mumbai heart doctor Tiwari, medical reps flick through flipcharts and brochures while making their pitches for medicines including Pfizer’s anti-smoking drug Champix and Ipca Laboratories Ltd. (IPCA)’s Larinate, an injectable anti-malarial treatment.

Tiwari hears all 30 within eight minutes.

“They’re waiting for hours and hours, and just to satisfy them, we listen,” Tiwari said. “What benefit is a doctor going to get from their short speech?”

To contact the reporter on this story: Adi Narayan in Mumbai at anarayan8@bloomberg.net.

To contact the editor responsible for this story: Jason Gale in Singapore at j.gale@bloomberg.net

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A GlaxoSmithKline Pharmaceuticals Ltd. employee works in the labeling section of the company's new facility in Nashik, India, on March 8, 2010.

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A GlaxoSmithKline Pharmaceuticals Ltd. employee works in the labeling section of the company's new facility in Nashik, India, on March 8, 2010. Close

A GlaxoSmithKline Pharmaceuticals Ltd. employee works in the labeling section of the company's new facility in... Read More

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Bottles of various GlaxoSmithKline Plc medicines are displayed at a pharmacy in Mumbai on Aug. 25, 2011. Close

Bottles of various GlaxoSmithKline Plc medicines are displayed at a pharmacy in Mumbai on Aug. 25, 2011.

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A box of GlaxoSmithKline Plc Benetic - 40 is arranged for a photograph at a pharmacy in Mumbai on Aug. 25, 2011. Close

A box of GlaxoSmithKline Plc Benetic - 40 is arranged for a photograph at a pharmacy in Mumbai on Aug. 25, 2011.

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Dr. Reddy's Laboratories Ltd. Omeprazole capsules are arranged for a photograph in Mumbai on Aug. 25, 2011. Close

Dr. Reddy's Laboratories Ltd. Omeprazole capsules are arranged for a photograph in Mumbai on Aug. 25, 2011.

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