Push Strategy making rurual pharma growth doubling

Pharma companies have seen growth rate of their rural market sales doubling on the back of aggressive marketing initiatives. Improved access to healthcare and rising incomes have seen a stronger perk-up in the underserved rural market over the past year.

For the 12 months period ended April 2011, India's rural drug market grew 18.8% compared with 10.9% in the previous year. This is a sharp jump from the growth rate in the same period of 2009, when the rural market had actually shrunk by 2.1%. 

In April, rural drug sales grew by 28.6% against 12.4% and 2% in 2010 and 2009, respectively, data from IMS Health Information and Consulting Services show. Though rural markets account for a modest 18% of the Rs 58,000-crore domestic drug market, drug firms and analysts expect this segment to sustain the high growth rate and increase its share in the pie.

Interestingly, while the share of metros, 30 cities with population over 10 lakh, in the country's drug sales continues to rise, the smaller class I and class II-VI category towns are witnessing a decline. In the last year or so, top Indian companies such as Ranbaxy, Dr Reddy's Laboratories, GSK and Sanofi Aventis have ramped up their sales and marketing force hiring hundreds of sales personnel known as medical representative to push sales to the country's hitherto neglected hinterland.

India's largest drugmaker by sales, Ranbaxy Laboratories, increased its field force by 1,500 or 50%, the largest recruitment drive in the past decade. Apart from adding marketing muscle, pharma companies have also aligned their product portfolio for the under-penetrated rural markets, said Kumar Hinduja, acting MD at IMS Health Information and Consulting Services India.

For one, French firm Sanofi Aventis plans to double its market share to about 4% by launching generic drugs targeted at rural markets at low prices. For this, it hired about 500 people while other big players such as Dr Reddy's, GSK and Elder Pharma also added hundreds of marketing personnel to beef up its sales network in rural towns.

Sujay Shetty, director, life sciences and medical devices at consultancy firm PricewaterhouseCoopers, said companies need not realign their marketing plans because the different segments are complementary. Besides, the rural market numbers were earlier subdued because many traders used to come to big towns and cities to buy their stock, and were thus accounted in non-rural numbers.

Metros still continue to grow strongly because they have huge commercial potential, while the relatively lower growths in Class I - VI towns was due to gradual decrease in patient traffic from the rural areas to these towns, following improvement in healthcare delivery levels, said Hinduja Mankind Pharma, which has emerged as the 8th largest pharma company in the Indian market largely on the back of sales from rural areas, believes rural sales will continue to grow at a fair clip.

"More qualified doctors are opening clinics in rural areas as setting up a clinic in metros or big town is expensive," R C Juneja, managing director at the Delhibased firm said. About 80-90% of common illnesses can be treated at clinics and people need not go to specialty or corporate hospitals in metros, he said