BackNicholas Piramal planning to set up ‘prescription-to-drug supply’ network
Nicholas Piramal planning to set up ‘prescription-to-drug supply’ network
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Taking a different route to gain a foothold in untapped rural markets, Nicholas Piramal India Ltd, India’s fourth largest drug maker by sales, is planning to set up a “prescription-to-drug supply" network covering at least 100,000 remote villages over two years.
The network would involve a team of health workers based in these villages, a tele-network connecting specialty doctors and diagnostic labs in the cities, and a dedicated drug distribution channel that connects the villages with the company’s nearest stock points. “We will not only expand our business to a targeted 100,000 villages but, also, make the modern medical services accessible to those rural population," says Nicholas chairman Ajay Piramal.
According to industry data, only about 30% of India’s population has easy access to modern medicines, much of it stemming from lack of certified doctors and medical stores in many rural areas.
“The rural initiative, which has just started in a village in Rajasthan, has the health workers based there to visit patients to collect details of disease symptoms and send them to a doctor in the company’s network for prescription," says Piramal. The health care workers are either qualified nurses or para-medical staff on the company’s payroll.
Once the prescription is written, the health coordinator will also get any required pathological tests and the necessary drugs by coordinating with diagnostics labs and distribution points through a network, Piramal said. The Nicholas group of companies makes and markets drugs and also sells diagnostics services. Nicholas’ domestic formulation business of Rs1,170 crore, as on 30 March 2007, was about 48% of its total sales.
Though several drug firms have been aggressively pursuing a rural strategy, the absence of doctors and health care institutions to generate prescriptions has been a hurdle as well as shortage of retail medical stores.
Meanwhile, increasing competition and a near-saturated market for generic medicines in urban areas have forced companies to look for new customers. Alkem Laboratories Ltd and Mankind Pharma Ltd are among the few who have made successful inroads in finding new customers in smaller towns and some rural areas.
“A substantial portion of the projected domestic drug market growth will be coming from the rural market in the next five to 10 years," predicts R.D. Joshi of consultant Interlink Marketing Consultancy Pvt. Ltd.
A 2007 report by consultant McKinsey and Co. predicted that the Indian drug market, estimated at Rs28,000 crore, is expected to almost triple by 2015, to Rs80,000 crore in annual sales. The McKinsey study also stated that improvements in medical infrastructure, such as rural hospitals and clinics, would contribute to 20% of the projected growth, while the strengthening of health insurance within the country would contribute to 15% of the growth.
A 15% increase in fund allocations in the Rural Health Mission, as laid down in the Union Budget 2008, is also expected to boost demand for drugs in rural areas.
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