companies fail to sustain their success?
should adopt strategies according to the present and future requirements
of the market. This alone can enable them to among the topline,
says R K Srivastava
Indian pharma industry is a vibrant segment. It has made the nation
proud due to its innovative, imaginative approach to be competitive
and provide drugs at reasonably affordable price. However, success
of several companies has taken a beating due to severe competition.
Though to be among the top league in pharma industry is appreciable,
the rat race has left several companies fall into oblivion. Under
such situation marketers, CEOs and managers need to be on their
toes. Their ability to succeed gets reflected in such crucial moments.
Table I gives the analysis of 15 years follow-up of pharma companies:
has been the numero uno pharma company since 1986 or may be even
earlier, while Cipla, Ranbaxy hold the number 2 and 3 positions.
Further down, the rankings have undergone several changes. Torrent,
Lupin, Wockhardt and other vibrant companies of the nineties no
longer feature among the top five. Similarly, at present only three
MNCs rank among the top 10 compared to five in 1986. Moreover, Pfizer,
Knoll, Novartis which were steady companies have failed to make
their mark. Alembic, another old-timer do not hold much influence
in the market. It is interesting to note that these top notch companies
have failed to sustain their success. Even in US the downfall of
companies like Enron, Lucent, WorldCom, K Mart Cisco, Tyco etc are
some of the recent examples.
I : Rank analysis of top ten pharma companies since 1986
indepth analysis revealed that several drawbacks in the companies
functioning have led to their downfall. These include:
of marketing audit: Marketing audit helps to review all the activities
of the company and gives a new direction for future. This tool enables
the company to see beyond the four walls and become more progressive.
It enables them to identify the danger zone or the path
which can only bring destruction to the company. Unfortunately,
many companies overlook this major point.
arrogance: Success brings arrogance and people tend to be more complacent.
They continue to live in the past with no willingness to change.
This mindset hinders people from adopting and accepting new ideas.
Failure rate has gone up because they still insist on applying out-dated
marketing techniques which are not applicable in todays environment.
Today the marketing profile and customer profile both have undergone
dramatic changes. The expectations of the customer, too, have changed.
This approach has led to failure as rightly reflected in new product
launches. Many MNCs could not achieve the same amount of success
like they did in the earlier times.
to achieve enough sales from new products requires a rethinking.
There is a need for a change in the mindset of people and greater
dissemination of information within the company. Very often CEOs
fail to get adequate information which could have abled them to
take instant decisions. According to Daniel Goleman, a psychologist,
subordinates are afraid to tell the truth as bosses, basking in
their past glory, do not want to listen.
it is advisable to reorient self by asking people to:
Become more accountable
Become more open
Not to fear boss every time
Not to be yes-man always
Keep company first, person latter
is easier said than done. However, if proper attempt is made then
something can be achieved. This brings more degree of professionalism
with a flair for enterpreneurship. Success leads to complacent behaviour
and organisation becomes lethargic and bureaucratic.
of pace in marketing
II : New product contribution analysis - MNC vs Indian sector
has its own demerits. It can make or mar any organisation. Sustaining
success demands taking hard decisions about the companys future
plans and it cannot be postponed. This requires aggressiveness in
marketing. The lack of aggressiveness very often leads to: relying
on old methods; banking on same product mix without upgradation
or change of product mix. This could be one of the main reasons
for companies to underperform. An analysis has clearly indicated
such a trend.
Fortune magazine in its May 2002 issue highlights the same reason
for failure of certain US companies, this is applicable for Indian
the dominant segment has shown the decline and companies have failed
to enter segments which are vibrant. Timely decision or pace in
marketing is a must for survival and growth. Ranbaxy has shown lower
growth which is mainly attributed to sluggish market segment and
not much success was achieved from new products.
of product introductions:
todays environment new products serve two purposes:
Increases volume sales leading to better growth
Improves profit and gives an edge compared to others leading to
better ranking. However, new products are not introduced in the
proper perspective. It appears companies have adopted shooting
in the dark policy. There are no sincere efforts to build a brand
from a multi crore product. This has led to failure of many products
though companies did get a respite from multiple new products
III: Impact of a new product on overall growth
new products have really helped many companies. Cipla could retain
No. 2 position and narrow the gap between them and Glaxo due to
new products. Sun Pharma, Zydus Cadila, Dr Reddys Lab have
realised that new products are the backbone for growth.
Failure to follow the path of success led Torrent to go down for
some years. Since 2001, Torrent too has become active as seen by
their success in 2001 and 2002. Alkem too is another example. Alkem
has overtaken Aristo and is ranked among top ten companies today.
It is all due to consistent policy of new product introductions.
product introduction alone cannot determine success of a company.
Even leading companies with massive field coverage, resource availability
are not able to register better sales. (See Table IV)
reasons for failure are not far to seek. Today, new products are
launched like trading material without a proper marketing
approach. New product introduction is not as easy as it is presumed.
In view of lack of efforts in applying appropriate marketing tools,
success rate is low. This has also led to deterioration as marketing
effectiveness and importance are replaced by trade activities.
successful companies did not give importance to new products leading
to their stunted growth, loss in market share and increasing threat
to their ranking or even slipping down in the market. Torrent is
the typical example
fact, Torrent and Zydus Cadila have zoomed their ranking and growth
through new products introduction. Till 1999 they were slipping.
true successful marketing company always realises their problems
in time and take corrective measures accordingly. Failure to do
so can lead to companys downfall. Therefore, market coverage
too is important to emerge successful. Failure to reach market after
initial success have also led to failure of many companies.
field force: A large field force has many advantages and lead to
success of a company. Glaxo with a large field force continued to
be the No 1. Companies cannot become big players if they cannot
cover almost all the doctors. To cover at least 90 per cent of doctors
a company may require a minimum of 1500-1800 representatives. The
numbers will go up with the setting up of more hospital/nursing
homes and more medical colleges opening up.
IV : Effectiveness of New Product Launch of different companies
Ranbaxy, Glaxo, Cadila, Pfizer after the merger, have the advantages
of reaching top 5 positions due to large number of medical representatives.
This cannot be attributed to Aventis, Novartis, Fulford, Knoll,
Alkem, Torrent etc.
company progresses, coverage should be expanded too. Many times
this is a neglected area. To top it all, training is the most neglected
aspect in many successful companies which have failed or not doing
well. Training is considered to be liability and an unwanted expenditure
rather than as an asset. When this feeling percolates down, then
it leads to downward trend for the company.
brings the right work culture among people. Many reps would like
to sell exclusive products and not sell me too products.
This lack of killer instinct has let down many companies
under competition and pressure. A proper strategy coupled with total
involvement of people keeps the successful company going up.
of innovation on a continuous basis: Innovation is the key to success.
Only innovative companies can get succeed. Many MNCs like Wyeth,
Fulford, Knoll, Novartis have slided down due to lack of continuous
thrust on innovations.
policy: MNCs should adopt country-specific policy not the same strategy
all over the world. India is culturally different with different
customer insight and perceptions. A proper understanding will lead
to continuous innovations in pricing policy. Pfizer made the biggest
blunder with Amlodipine and paid the price. Pricing has to be innovative
depending upon the per capita consumption and earning power. This
awareness equipped with competent marketing personnel can take the
company to greater heights.
of competent heads: Many times when competent head leaves or retires,
second in line is not trained enough to take over the company. Torrent,
Intas, Wockhardt, Glaxo, Ranbaxy etc had to face difficulties after
change in key posts. Professionalism is an paramount aspect to a
companys success. Many companies have slided down due to immature
managers at the helm of affairs. Experienced and mature managers
are needed to run organisations efficiently. Wisdom, experience,
taking right decisions on time comes with lot of working knowledge.
Mere professional qualification does not guarantee success. This
could be reason for failure as many managers are immature and lack
experience in running the organisation as they are too young.
reasons which lead to companys downfall are:
Rising cost with low productivity
Wrong product selection
Faulty distribution network
Wrong strategy development
Wrong acquisition or blunder committed in marketing etc.
pharma industry will witness a lot of changes in the coming years.
The companies have to change their line of policy and approach on
a continuous basis. It was predicted in 1998 that Pfizer, Novartis
will not remain in top ten companies. It is true that customer focus
will be the key for survival today but tomorrow it could be customer
insight and understanding. Therefore, if marketing does not gear
up to meet the challenges it is likely that many companies will
go down further. Only competent persons and companies will succeed.
writer is Mumbai-based marketing consultant