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Pharmacological Definition of Drug: a chemical substance used in the treatment, cure, prevention, or diagnosis of disease or used to otherwise enhance physical or mental well-being.
Definition of Drug as per Sec. 3 (b) of Drugs & Cosmetics Act-1940:
i) All medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes
(ii) Such substances (other than food) intended to affect the structure or any function of human body or intended to be used for the destruction of (vermin) or insects which cause disease in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette
(iii) All substances intended for use as components of a drug including empty gelatin capsules
(iv) Such devices intended for internal or external use in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette, after consultation with the Board.
The pharmaceuticals industry consists of establishments that are primarily involved in fabricating or processing medicinal chemicals and pharmaceutical products. The industry also includes establishments that formulate pharmaceutical products. An establishment is a single physical location or a facility where manufacturing occurs.
Pharmaceutical Industry differs significantly from the rest of the chemicals industry in its industrial processes and regulatory requirements. For example, in its industrial processes, the pharmaceuticals industry uses more batch operations than the chemicals industry as a whole. Since some of the bulk manufacturing operations involve extracting relatively small, highly concentrated quantities of active ingredients from much larger volumes of raw material, the industry's production yield for these operations is correspondingly low.
The pharmaceuticals industry also receives extensive regulatory oversight by the National bodies like Food and Drug Administration (FDA). When a pharmaceutical company discovers a compound that may have medical potential, the company usually applies for a patent. Any drug made from the compound may be marketed only after approval by the National Food and Drug Administration Bodies. The drug development process, beginning with initial toxicology testing, followed by clinical trials for safety and effectiveness, and review of the application by the FDA averages fifteen years. When the company's patent or period of exclusivity has expired, other companies may rely on the original manufacturer's data on safety and effectiveness to obtain approval to market a generic version of the drug. Companies wanting to manufacture the same drug once it is off-patent are required to obtain FDA marketing approval, based on evidence that the generic version is "bioequivalent," i.e., differs in the rate and extent of drug absorption by no more than 25 percent nor less than the 20 percent from the original drug. While companies that specialize in the development and marketing of brand-name, innovator drugs may have subsidiaries that manufacture generic products, most generic drug companies do not conduct research intended to identify and develop innovator drugs
Marketing in Pharmaceutical Industry: Marketing Pharmaceutical products is different from other industries, as the final consumers (Patients) are not targeted instead, the qualified physicians are targeted for marketing. These products can be marketed only after getting the Approvals from regulatory authorities of a Country.
Importance of R&D:
Therapeutic ethical pharmaceutical products fall into four broad categories:
New chemical entities (NCEs)--new therapeutic molecular compounds that have never before been used or tested in humans.
Drug delivery mechanisms--new approaches to delivering therapeutic agents at the desired dose to the desired site in the body.
Follow-on products-new combinations, formulations, dosing forms, or dosing strengths of existing compounds that must be tested in humans before market introduction.
Generic products--copies of drugs that are off patents or other exclusive marketing rights.
R&D is needed to bring all of these products to the market. The penetration of a Drug depends on its safety and efficacy. Innovative formulations having more efficacy can be developed by continuous affords in R&D activities.
Global Pharmaceutical Market
Fig.1. Growth of Global Pharmaceutical Sales
Track Record of Indian Pharmaceutical Industry:
Finished generics supplied from India account for 20% of the global generics market.
More Than 90% of WHO Prequalified API [ARVs, Anti-tubercular & Anti-malarials ] are sourced from India.
It is estimated that 70% of the patients belonging to 87 developing countries received medicine procured from India by
The United Nations Children's Fund (UNICEF)
International Dispensary Association (IDA)
The Global Fund and
The Clinton Foundation.
Medicine Sans Frontiers also purchases 80% of its ARVs, for its projects in over 30 countries, from India
Indian generic ARVs approved by the US Food and Drug Administration (US FDA) also resulted in cost-savings of an over 90% of the ARVs for PEPFAR
Undoubtedly India has earned a place among the very top
Unquestionable supremacy in research , chemistry skills, engineering, regulatory compliance, and IP Management
Fig.11. Growth in number of USFDA approved units in India
Need for the proposed study:
Research and development defined as future oriented, long-term activity of science and technology. The R&D activity is scientific research that has directed towards the desired outcome with forecast of commercial yield.
However, the new product development is a risky, highly expensive and a time taking most of the companies giving an equal importance to R&D along with marketing. As per the recent studies, almost 16%-20% of the company's total investments are in R&D whereas for marketing it is up to 20% to 30%.
Marketing: - Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society (consumer).
Pharmaceutical marketing involves various steps or stages as follows unawareness to awareness, awareness to interest, Interest to Evaluation, Evaluation to trail, trail to usage and usage to repeated usage.
The Fast Moving Consumer Goods (FMCG) marketing that work on 4Ps (Price, Product, promotion and Place) differs with pharma marketing entirely except in Promotion. The promotions of pharmaceutical products are highly regulated and there should be scientific approvals for the words we mention in the sale aids.
The critical activity in New Product development is integrating R&D and Marketing. The effectiveness of integrating R&D and Marketing increase successfulness of New Product Development and shorten the NPD processing time. This happens only because of exchange of knowledge and experience between R&D and Marketing. The integration between R&D and Marketing has improved business environment that become more energetic with firms having a growing pressure to find reasonable control through quicker progress series, lead time, new product development proficiency and success
The proposed study is needed to identify and measure the extent of R&D investment and market strategies as a driver for business growth of Generic Drug Manufacturing companies
The proposed study is needed to prove the R&D expenditure as the key the driver for various segments of Pharma Industry
The proposed study is needed for scientifically proving the correlation between R&D expenditure and growth of pharma industry to help the policy makers (Govt. Authorities) for making strong and necessary policies for sustainable growth of Indian Pharma Industry
(necessary to identify the extent of correlation b/w growth in different segments of sale and R&D expenditure)
Statement of the proposal:
Objective of the proposed study
To study the strategies followed by the Pharma companies in R&D investments for their sustainable growth
To study the effect of R&D investments in driving the growth in sales revenues of pharma companies
To establish/ study the correlation between the R&D expenditure and the sales performance.
To study the correlation between the R&D expenditure and the sales performance across
API focused companies
Formulation focused companies
Vertically integrated players
Methodology of the study
Collection of Data of sale revenues, regulatory approvals, key decisions in R&D investments, product portfolio of the sample pharma companies from various resources
Analysis of this data with statistical tools, comparing and correlating the R&D expenditure and market strategies with the success of the company which is measured in terms of regulatory approvals received by the company, sales revenues, sales of particular products or product category
Statistically proving the relation between R&D investments and the continuous/sustained growth of the pharma companies
The following pharma companies are selected for the proposed study from various segments of the pharma industry i.e
API focused companies
Formulation focused companies
Vertically integrated players
M/s Aurobindo Pharma Ltd
M/s Dr. Reddy's Laboratories Ltd
M/s Natco Pharma Ltd
M/s Granules India Ltd
M/s Divis Laboratories Ltd
M/s vivimed Labs Ltd
M/s Gland Pharma Ltd
M/s MSN Laboratories Ltd.
M/s Matrix Laboratories Ltd
M/s Laurus Labs Pvt. Ltd
Tool of analysis:
The following tools will be used for analyzing the data of R&D investments, sales performance, results of R&D expenditure in terms of regulatory approvals and individual product sales of the subject companies
R&D investments as a Percentage of total sales