New Delhi: India’s largest pharmaceutical company by revenue, Ranbaxy Laboratories Ltd, has launched an initiative to reach out to smaller towns and villages and invest more in research with an eye on becoming the leader in the generic drugs market in the next two years.
The company has already hired nearly 1,500 marketing personnel since the strategy, named Viraat, was kicked off in January—taking its workforce to 4,300. Ranbaxy is aiming to overtake Cipla Ltd as the market leader.
Growth prescription: Ranbaxy chief executive and managing director Atul Sobti says that with the new initiative, the firm expects to reach a minimum 350,000 doctors by 2012, up from the current 200,000. Priyanka Parashar/Mint
Ranbaxy’s current market share is 4.9% against Cipla’s 5.4%, according ORG IMS, a pharmaceutical market research agency. Through Viraat, it hopes to corner 6% of the generics market by 2012, the executives said.
Two-thirds of the new hires are field personnel, who will spread out into towns and rural areas to push the company’s over-the-counter and prescription drugs. The rest have been hired at managerial levels.
India contributes 20-25% of the global business of Ranbaxy, which was acquired in 2008 by Daiichi Sankyo Co. Ltd of Japan. But Viraat reflects a renewed focus on the domestic market since Atul Sobti replaced Malvinder Mohan Singh as chief executive and managing director around a year ago.
Sobti said the company had been considering the new policy for some time, but had been hesitant to start as it would push up operational costs.
“This (Viraat) has taken the costs up as well, one of the reasons why it took us two-three years. One, our big focus was the US, also with first-to-file products. Secondly, India being home, branded generics, reputation and productivity was also more costly,” he said.
“Investing in India means (for) one-three years, you will have lesser margins. Of course, this is an investment and we took that clear decision because the investment in human resource, new products and R&D (research and development) has to get better,” he added.
Through Viraat, Ranbaxy has already increased its customer reach from 150,000 doctors last year to around 200,000 now. By 2012, it expects to reach a minimum 350,000 doctors.
“We looked at our current products, future products and product gap, and based on that we thought this is the number of customers required for us to reach out (to) there,” said Yugal Sikri, country head for India, explaining how Viraat was conceptualized.
For the strategy to work, Ranbaxy has divided its products into two categories—one for the masses and one for the “classes”, or residents of metros and cities.
“For instance, drugs for cancer, hypertension, etc., will need a more class-based approach because that is where the market is. But our anti-infectives and over-the-counter products will require a mass approach,” said Sanjeev Dani, senior vice-president and regional director for Asia, Russia and the Commonwealth of Independent States, which groups former Soviet republics.
Hemant Bakhru, a Mumbai-based pharma analyst with the global brokerage CLSA, said the move has been prompted by Ranbaxy losing market share in recent years. “They were primarily focusing on international operations and acquisitions earlier. They have realized now that India has huge potential,” he said.
Bakhru said smaller firms such as Lupin Ltd, Ipca Laboratories Ltd and Piramal Healthcare Ltd do better in India because they have nearly doubled their sales force. “But bigger companies like Ranbaxy and Dr Reddy’s Laboratories Ltd have much smaller sales force. So they are trying to bring back focus on products and marketing in India,” he said.
Although Ranbaxy refused to divulge its expenses on Viraat, Bakhru estimated the strategy’s operational cost for the year will be Rs225-250 crore.
Ranbaxy expects Viraat’s results to begin reflecting in its figures by the year-end, with the first review of the project happening in the three months ending 30 September. Sobti said the strategy will be reviewed every six months.