Pharma Cos’ Rural Growth Doubles on Sales Push

Rural drug market grew 18.8% in FY11 against 10.9% last year

Pharma companies have seen 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 . 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 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 firms 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 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 rural areas to these towns, following improvement in healthcare delivery levels, said Hinduja. 

Tesco to roll out pharmacies in smaller-format superstores.

Tesco is to roll out pharmacies in its smaller-format superstores following a trial last year as it seeks to reach its target of 350 within the next three years.

Tesco opened an 800 sq ft pharmacy at its Harlow store in Essex – about a third smaller than its traditional pharmacies – in its last financial year and has earmarked a further 30 locations for roll-out this year.

Ashley Hicks, category director for healthcare at Tesco, said: “We wanted to get our pharmacies into more locations, so trialled it in one of our smaller superstores in Harlow and it’s worked really well.”

He added: “The smaller format has had its design squeezed and a slightly smaller range, but it still has a private consultation room.”

Hicks said Tesco recorded its “biggest ever year” for pharmacy in its full-year results, announced last week. He said the category now attracts 500,000 customers a week, prescriptions are up 10 per cent year on year and it is 9 per cent ahead in volume.

“We are very pleased with how we are progressing and customers like the convenience and services we provide,” said Hicks. “Customers can pick up their prescriptions while they are doing their food shopping, which is a clear benefit.”

At present Tesco has 270 pharmacies in the UK and Northern Ireland. Hicks also said pharmacies could be rolled out internationally in the long term. “Terry [Leahy, chief executive] asked me about international but it’s not in our short-term plan,” Hicks said. “The regulation is very different – but we will keep it on the long-term plan and not rule anything out.”

He added: “We believe our offer is as good as that of a traditional player like Boots. They offer a number of other private services but in terms of core NHS services, we also offer the same.”

Hicks said that Tesco will add new services to its pharmacy offer later this year. It launched its Health Check in January and has cut the cost of the service from £20 to £10 and will roll-out flu vaccinations to more stores this winter.

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