Sultan Ahmed

Abstract: Pharmaceutical industry supplies the means of serving one of the basic needs of being –the need for treatment or medicine. This paper focuses on the overall position of the pharmaceutical company in the opinions of pharmacists on different aspects. The article basically measures the pharmacist’s perception of the company position, product quality, doctor’s rate of prescription, pricing, distribution strengths, packing quality, benefits given to the pharmacists and innovative power of the companies. A structured questionnaire was used to collect data from various prime locations of Dhaka city. 400 respondents were surveyed and selected randomly. Convenience sampling method was used to select the sample. By analyzing the findings of the study we can say Square Pharmaceutical Company is the top rated company in the country. Other companies such as Beximco Pharmaceuticals, Renata Pharmaceuticals, Incepta Pharmaceuticals and some other multinational companies are also doing well as per pharmacists’ views.

            Keywords: Perception, Pharmaceutical Products, Promotional Tools

1. INTRODUCTION

The pharmaceutical sector is one of the thrust sectors in Bangladesh. Before Liberation, there was hardly any pharmaceutical enterprise in Bangladesh (then East Pakistan). After several years of liberation, the government could not increase (in relative terms) budgetary allocations for the improvement of health sector. At that time, most of the people had little access to the essential life-saving medicines. This sector started to improve from 1980s. The pharmaceutical industry has grown in the last two decades at a considerable rate (http://banglapedia). It has achieved remarkable growth and has ample opportunity to grow further. However, the existing industry is the largest among the least developed countries (VanDuzer, 2003). There are about 250 registered pharmaceutical companies in Bangladesh of which 164 are actively involved in the manufacture or marketing of pharmaceutical products (Hussain, 2008). The size of the retail market reached BDT 84.0 billion as on 2011 based on IMS report. The report further stated that, retail sales in the domestic market achieved 23.6% growth in 2011 following 23.8% and 16.8% growth in 2010 and 2009 respectively. It is one of the fastest growing sectors in the country with an annual average growth rate of 17.2% over the last five years and 13.1% over the last decade. However, considering that IMS does not include rural market in their survey, the actual size of the market will vary slightly (5%-10%). It is estimated that the retail market represents 90% of the total market; in that respect the total market size (including the rural market) is expected to be over BDT 90.0 billion at present.

Many pharmaceutical companies have been certified for their world standard and unique quality and management systems by ISO: 9000 and European Union. As a result drug export has been increasing. As medicine is emergency goods, there is no question about its opportunities. So, as long as people exist on the earth, there will be the need for medicine, resulting in the safeguard of the company existence.

2. OBJECTIVES

The main purpose of the study is to measure the perception of the pharmacists about the products of different pharmaceutical companies in Bangladesh. The study also aims at revealing the current company position and trends of innovation of products and the attitude of doctors in prescribing drugs of different companies and the behavior of the sales representatives towards the pharmacists. It also focuses on the overall situation of pharmaceutical industry in Bangladesh.

3. METHODOLOGY

Both exploratory and descriptive research designs have been applied in this study. Pertinent secondary materials were reviewed. Both quantitative and qualitative research methods were adopted to collect primary data. For conducting the survey, structured questionnaires were administered through personal interviewing of pharmacists.  Dichotomous and multiple choice questions were used in the questionnaire. Convenience sampling technique was followed to collect data from a sample size of 400. Data have been collected from different locations of Dhaka city. Convenience sampling method was used to collect data. 20 prime locations of Dhaka city such as Jatrabari, Maniknagar, Malibagh, Khilgaon, Bahsabo, Shahbagh, Farmgate, Mirpur, Dhanmondi, Motijheel etc. was selected for survey purpose. From each location 20 pharmacists were surveyed with a questionnaire which includes both open-ended and closed-ended questions. For making the sample size representative of the survey, efforts were made to include a variety of respondents (in terms of age, gender, retail pattern, experience and others) who are engaged in selling the pharmaceutical products to the patients.

4. LITERATURE REVIEW

During the 1940s and 50s, research and development became firmly established within the pharmaceutical industry. Discovery of penicillin in 1940s was a major sensation throughout the scientific community and Pfizer made medical history when it became the first company to successfully mass-produce penicillin (Rodengen, 2000:11).

The chemical and pharmaceutical industries have been in a state of change for a number of years. While initially slow to join the purchasing wagon and embrace purchasing strategies, in recent years, the demand for purchasing strategy and strategic purchasing has increased (Arminas, 2004; "How chemicals are bought," 2002).

In the ‘90s, purchasing in the chemical and pharmaceutical industry was focused primarily on cost (Fitzgerald, 1997) and this was reflected in the strategies in use at the time. Consolidation of purchasing was a strong trend, especially towards buyers “who are proactively trying to reduce cost”. From the supplier’s perspective, there was an expectation that they would better understand their customers’ needs and “have proactive ideas, technological excellence, and idea-sharing… They understand our needs and the process of our internal decision making.” Besides cost, other concerns for buyers were on-time delivery, involvement in product development, innovativeness, R&D capabilities and knowledgeable sales representatives (Genna, 1998), which also resulted in the shift towards centralized purchasing organizations and an increase in long term contracts over spot buying ("How chemicals are bought,"2002). The combination of all these factors makes the chemical and pharmaceutical industry an interesting area for purchasing studies.

Studies have shown that product involvement can influence the decision making process regarding a product, the extent to which consumers will search for information about the product, the timing in adoption of the product, the manner in which the consumers’ attitudes and preferences regarding the product are influenced, the consumers’ perceptions of alternatives in the same product category and brand loyalty (Harari, T. and J. Hornik, 2010).The decision-making processes and strategies of consumers with significant product knowledge differ from those with less knowledge (Alba, J.W., 1983).

The processes of consumer perception and decision making remain relatively complex phenomena despite the depth of research undertaken in the area (Puth, G., P. Mostert, and M. Ewing, 1999)

The drug appearance (color and form) and its packaging may have some influence in efficacy of treatment (Buckalew and Coffield, 1982a).

In the same way, the very brand name of a drug will have differential therapeutic effects according to its consonance (Klink, 2002) or its notoriety (Branthwaite and Cooper, 1981).

There are some factors that are affecting the total health care system badly in our country. Irrational use of drugs, inappropriate prescribing, inadequate access to essential drugs, and uncontrolled price of medicines are among some of those major problems (Islam, 2006).

For the pharmaceutical industry, “brands are the means by which the science is translated into a commercially viable reality” (Robins, 2004:4).

Pharmaceutical companies face a series of significant challenges that are affecting their ability to maintain growth and sustain earning levels. To operate and succeed in the complex and highly regulated competitive environment, pharmaceutical companies know that brands are more than just products and services. “They know that brands are also, what the company does and, more importantly, what the company is” (Davis, 2002:1). What product branding doesn’t allow are economies of scale, endorsements, and instant credibility.

(Gobé, 2001:28) believes that building the right emotion in a brand is the most important investment.

5. RESULTS AND DISCUSSION

5.1 Results of the study:

Table-1: Results of questionnaire survey are summarized below:

Source: Survey data

5.2 Overview of Bangladesh Pharmaceutical Industry

Pharmaceutical sector is technologically the most developed manufacturing industry in Bangladesh and the third largest industry in terms of contribution to government’s revenue. The industry contributes about 1% of the total GDP. There are about 250 licensed pharmaceutical manufacturers in the country; however, currently a little over 100 companies are in operation. It is highly concentrated as top 20 companies produce 85% of the revenue. According to IMS, a US-based market research firm, the retail market size is estimated to be around BDT 84 billion as on 2011 with a significant 23.6% growth.

Table-2: Retail Market Size & Growth

Source: IMS Report & Square Pharmaceuticals Annual Reports

Bangladesh pharmaceutical companies focus primarily on branded generic final formulations, mostly using imported APIs (Active Pharmaceuticals Ingredient). Branded generics are a category of drugs, including prescription products, that are either novel dosage forms of off-patent products produced by a manufacturer that is not the originator of the molecule, or a molecule copy of an off-patent product with a trade name. About 85% of the drugs sold in Bangladesh are generics and 15% are patented drugs - the structure differs significantly from the international market. Branded generic drugs represent about 25% on average of worldwide pharmaceuticals sales’; however, given the popularity in emerging markets like China, India and Latin America, branded generic drugs may well dominate the total sales within a decade.

The top 30 to 40 companies dominate almost the entire market, where the top 10 hold 70% of domestic market share and the two companies Square and Incepta capture about 28% of the market. The pharmaceutical market of Bangladesh is dominated by a few large companies. This kind of market structure is defined as oligopoly (Gillespe, 2010, p. 302; Griffiths & Wall, 2008, p. 226; Salvatore, 2007, p. 340; Besanko et al, 2010, p. 221). The decisions of one company influence, and are influenced by, the decisions of other companies. For example, when the pharmaceutical market leader Square Pharmaceuticals got the UK MHRA approval, another giant company Beximco Pharmaceuticals immediately started the process desperately to secure it (UKTI, 2010).

Based on the IMS report for the fourth quarter of 2011, Square Pharmaceuticals holds the top market share in the retail market- 18.7%, followed by Incepta Pharmaceuticals 9.3%, Beximco Pharmaceuticals 8.8%, Opsonin Pharma 5.1% and Renata 4.9%. The top five companies held 46.8% market share in 2011, slightly more than their 46.2% market holding in 2010 - indicating cumulative revenue growth in excess of the sector growth.

Top 10 companies held 67.8% of the market in 2011. Growth at par with the entire market meant that their cumulative holding did not change from 2010 level. However, the market share shifted among the top players. Square Pharmaceuticals lost 0.5% market share in the last year (from 19.2% in 2010) while the next four companies gained 1.1% market share in the same period.

Table-3: Major players in the retail market

Source: World Bank Report

Bangladesh manufactures about 450 generic drugs for 5,300 registered brands which have 8,300 different forms of dosages and strengths. These include a wide range of products from anti-ulcerants, flouroquinolones, anti-rheumatic non-steroid drugs, non-narcotic analgesics, antihistamines, and oral anti-diabetic drugs. Some larger firms have also started producing anti-cancer and anti-retroviral drugs. Domestic manufacturers account for 97% of the drug sales in the local market while the remaining 3% are imported.

5.3 Pharmacists’ Perception of the Pharmaceutical Products in Bangladesh

In this part a researcher tries to measure the pharmacists’ perception of the different pharmaceutical companies of Bangladesh. To test pharmacists’ perception, 11 different aspects of product and services were analyzed. 400 respondents were surveyed to make the sample size significant. Findings are shown graphically using Excel chart.

5.3.1 #1 Pharmaceutical Company

An open-ended question was asked to the respondents about which one is the number one (top ranked) company in the pharmaceutical industry in Bangladesh. 65.6% respondents mention the name of Square Pharmaceutical as the #1 company. Incepta Pharmaceutical holds 2^nd position with mean point of 12.5 according to pharmacists’ point of view. On the other hand some multinational companies also occupy their position among Top-10. 

Graph-1: Number one (top ranking) pharmaceutical company in Bangladesh

5.3.2                Product Quality

Again an open-ended question was used to judge the pharmacists’ perception of the quality of the drugs. According to pharmacists’ point of view Square Pharmaceutical, Incepta Pharmaceutical and Beximco Pharmaceutical lead in product quality. They also regard some other local companies as good quality. Perceptions of the multinational companies are also positive.

Graph-2: Best product quality

5.3.3 Doctor’s Preference

We have judged the pharmacists’ opinions about the doctors’ preference for the company products they prefer to prescribe. They opine that the doctors prefer square products to prescribe leading to Incepta and Beximco in order of priority. Some chemists also said that as the product line length is very high for square they are bound to prescribe it as they don’t have competitive alternative.

Graph-3: Doctors choice of prescription

5.3.4 Strengths of Distribution

In this regard we try to judge the distribution strengths of different pharmaceutical companies. A closed-ended question (scale from -4 to +4) was used to get respondent opinions. Most of the companies maintain a very strong line of distribution.

Graph-4: Distribution strength

Intense competition exists in the line of distribution as most think that convenience is one of the reasons for choosing emergency goods. On the other hand companies are now using their own vehicles to distribute its goods. Square becomes the strongest company by achieving 3.6 points on perception scale followed by Beximco Pharmaceutical (3.4).

5.3.5 Pricing Strategy (Pharmacist view)

Graph-5: Pricing Strategy of different pharmaceutical company

A closed-ended question (scale from -4 to +4) was used to collect the respondents’ opinions regarding the pricing policy of different pharmaceutical companies. Chemists’ perception is a little bit negative for the leading companies in setting price. Their perception is that the leading companies are charging higher price than the company which holds lower position. They also believe that they are not considering the chemists’ business opportunity when setting price.

5.3.6 Push Sale

In this case researcher tries to find out if any customer wants to buy medicine without prescription, then which company’s product the chemists motivate him to buy.

Graph-6: Customers preference of medicine

Not all the chemists sell medicine without prescription. Some of the chemists who maintain ethics in business prefer to sell products of leading companies as they maintain quality in products. But while thinking about profit the chemists go for non branded company like Silva, Chemico, Jayson etc. But from patients’ point of view they prefer leading company as more reliable. 41.6% chemists opine they are selling square products without prescription as it is a leading & reliable company.

5.3.7 Packaging style

Some chemists have complained about the packaging standard of Square Pharmaceutical. Some of them do not like the frequent changes of packing attributes for common products which are much known to customers. Some of the chemists prefer Incepta (4.32) as they offer extra pasting over the product. On the other hand most of the customer prefers company who give extra information on level as well as chemists.

Graph-7: Packaging Style of different companies’ products

5.3.8 Visit Frequency of Medical Representative

Companies are very much competitive on attaining chemist’s attention. Even without orders for products MRs are visiting the drug stores and they are insisting the chemist to place orders for their products. MRs are visiting not only the doctors but also the large scale retail stores frequently. They are spending much time and effort to get the visit facility.

Some of the chemist’s perception is not positive on frequent visit of the MR to sell their products as they fell disturbed.

Graph-8: Visit frequency of Medical Representatives

5.3.9 Promotional activity

As pharmaceutical companies are not allowed to adopt any visual or print or any other media to promote their products they are following some intangible methods to promote the doctors to prescribe their products. The leading companies are paying more to doctors on promotional purpose. But the lower grade company offers more discounts, commissions or bonuses to the chemists to sell their products. Some large scale companies sponsor different social programs to promote them.

Graph-9: Promotional activities of different companies

5.3.10 Official discount

Chemist’s perception is that companies like Chemico, Silva, Popular, ACI offer more official discount than the leading companies like Square, Beximco, Incepta, Renata etc.

Graph-10: Rate of official Discounts (Special Benefits offering)

5.3.11 Innovative Product Development

Graph-11: Rate of innovative products

Incepta holds the top position in launching new products. Others opine that as Incepta is a new company they have more scopes to offer innovative product than the mature leading companies. They also believe that Square, Beximco are also innovative in launching hi-tech sophisticated products that are very costly to offer and requires to get patent right to offer in the market for commercial sale.

The researcher also asked questions to the pharmacists about the flow of the new products in the market. Chemists view is positive in this aspect.

Additional points that need to be mentioned here are that most of the pharmacists believe:

• The pharmaceutical companies are earning huge profit but they are offering lower discount or commissions to the chemists.
• Pharmacists are in problem when the company changes its existing package materials.
• In most of the cases the MR gives gift item only to the doctors but they feel deprived.
• Pharmacists are also not agreeing to the frequent increase in price as they are facing problems when selling it to the patients.

6. CONCLUSION

There is no question that pharmaceutical industry is one of the strongest industrial sectors in Bangladesh. The industry has been witnessing an investment boom for the last couple of years. Over the years, production capacity has sharply increased. Some companies are also exporting medicines at an increasing volume. Most of the companies ensure world standard quality in product mix, packaging and distribution. This article tries to encompass a lot of factors of perception to test the position of different pharma companies. Researcher used a structured questionnaire to examine pharmacists’ opinion on different aspects of pharmaceutical products such as product quality, doctors’ preference, strength of distribution, pricing policy, packaging style, performance of medical representative, degree of innovativeness and benefit offered to sellers etc. It is found that the leading companies are doing well in product design, ensuring quality, proper distribution of products, involve in continuous product development. But pharmacists also opine that the leading companies are very aggressive in price change. Frequently they are increasing price of their product. Lower graded company offers extra advantage to insist the pharmacist to sell their product. In many cases patients are not willing to go to doctor but willing to have the medicine on consultation with the pharmacist which may cause harm instead of cure of the diseases. Finally we can say intense competition exist in the industry on price, product development, services by the representative as well as offering tangible or intangible benefit to the pharmacists. Government must take appropriate control measures on production of different generic products, price of renowned companies and needs to have drug administration act.

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Author: Sultan Ahmed, Associate Professor, Department of Business Administration, Bangladesh Islami University