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Lessons
from the past
New
product launches in 2001
The
failure of several high profile drugs in the past year clearly suggests
that companies need to rework their strategies in accordance with
the market trends, says R K Srivastava
 It
is really surprising to note that in the year 2001 not a single
product could feature among top 300 in retail segment market. Introduction
of new products are the lifelines of growth for any pharmaceutical
company. Cipla could sustain itself only because of new products.
An analysis of new products during 2001 reveals that it contributed
to 25 per cent of total volume increase. On an average around 118
new products including line extensions were introduced per month
during 2001. This has contributed to around 2.5 per cent of the
total pharma sales. Nevertheless, several pharma majors like Cipla,
Ranbaxy, Sun, Zydus Cadila, Wockhardt, Torrent have been benefitted
by the contribution of their new products and this in turn, had
a positive affect in their overall growth. Still none of these brands
have become mega brands and could not find place among the top 300
retail products.
Today
companies are increasingly finding it difficult to achieve success
through their new products. The companies could not muster Rs 10
crore in the first year of their product launch. For instance Glaxo,
which had introduced only a limited number of products could register
only Rs 79 lakh per product per year notwithstanding their vast
marketing network and extremely good financial backing.
So
what could be the reasons for non-performance in 2001? Basically
several companies have faltered on basic issues. An analysis of
these basic issues could provide some guidelines for better introduction
and success. It is possible that these issues have been ignored
completely by companies.
Some
of the basic factors which play a predominant role in the success
of a product are:
Right
selection of products
It
is quite logical that a company should launch products in segments
where they are known and have familiarity. Success of ‘Seroflorotacap’
by Cipla in 2000 is a classical example. However other brands of
Cipla could not achieve the same amount of success. Only a few companies
use standard model for right selection of products. A professional
rather than hunch approach will enable the company to get better
success.
Lack
of brand building efforts
Many
companies are introducing products but not building brands. This
could be due to company’s half-hearted effort, lack of clarity
on brand positioning, continuous thrust on returns, no clear UCP/USP,
no concerted effort of MRs which have led to such a situation. The
whole exercise lacks commitment. The companies appear to be more
interested in returns rather than investing in the brand. This trend
was noticed way back in 1994 and since then there has been hardly
any significant change in perception. It is incredible that a product
promoted by more than 600 representatives can generate sales of
only Rs 79 lakhs. A clear cut differentiation, USP/UCP too, are
required to build brands.
Unique
Customer Perception
Unique
Customer Perception (UCP) is one of the major criteria, which is
emerging for getting support from doctors. The Unique Selling Point
(USP) is not to be confused with Unique Customer Perception (UCP).
UCP makes acceptance of the products easier. But unfortunately,
companies have hardly made an effort to make use of this aspect
to garner support from medical fraternity. UCP is one of the important
tool to create values around the product.
Creation
of perceived value
Companies
often resort to marketing techniques like distributing gifts and
free samples to doctors, holding parties, etc in their attempt to
make their brands successful. Such practices can provide only short
term gains. Communicating successfully with doctors about the products
alone can create a better perceived value (PV). Higher the perceived
value better are the chances of success.
High
success = PV > Price + Benefits
New
products, which have become successful have been mainly due to creation
of better-perceived value, which motivated the customer to prescribe
and justify. Effective implementation of “PV” is important.
A control system for new product can help to do the same.
Effective
control
Effective
control is a must while launching a new product. Some of the major
aspects to be taken into consideration during the new product introductions
are:
-
LOC/NOC problem
-
Availability of the products at all stockists
-
Selection of right doctors
-
Involvement of MRs/managers
-
Monitoring of doctors’ prescription
A
corrective measure will certainly help companies to have proper
control over products.
New
products are the heartline for any company. Septran can rejuvenate
Burroughs Wellcome, Nimulid gave a boost to Panacea Biotech while
Cifran Cifra-CT gave a boost to Ranbaxy. It is unfortunate that
decline in marketing activities have failed companies to achieve
even Rs 10 crore from so many new products. Today, marketing personnel
needs to take relook at their strategies and reorient themselves
to have a better understanding of the trends in the market.
The
writer R K Srivastava is Mumbai-based marketing consultant. Email:
srivastava@vsnl.net
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