Mankind Pharma set to tap core drugs market
Mankind Pharma is set for a major turnaround over the next two to three years. The Rs 2,000-crore company, best known for its consumer brands like Prega News, Manforce, Unwanted-72 and Kaloree-1, is now eyeing the market for diabetes and cardiovascular drugs to record growth in both turnover and profit.
Mankind Pharma, India's seventh-largest drug maker, aims to rise to the second or third position over three to four years, says chief executive and Chairman R C Juneja. "We are planning to launch 15-16 products in the chronic therapy segment this financial year. Currently, our profit margins are very low compared to the industry, primarily because most of our products are in the low-margin segments, and these are priced low. Introducing drugs in the chronic segment would not only contribute to the turnover, but also boost profit," he told Business Standard.
The acute segment includes diseases that usually last for a short duration and require therapies like anti-infectives, pain-killers or analgesics. The chronic segment includes diseases that are recurring in nature and include lifestyle diseases. It includes therapies anti-diabetics, cardiovascular, cancer etc.
The company is targeting a growth of 28-30 per cent this financial year, which would raise its turnover to about Rs 2,500 crore, Juneja said. Driven by robust growth in the consumer brand segment, the company's pharmaceutical business has been growing about 18 per cent annually, compared with the industry average of 13-14 per cent. However, the company's net profit margins, growing at 12-13 per cent, are slightly below the industry average of about 20 per cent. The chronic segment foray would help boost this, Juneja adds.
Ashish Mehra, managing director, Strategic Decisions Group, says Mankind's entry into chronic therapy is essential for it to expand beyond small town to big cities. "It started with acute therapy in rural areas, and then moved to towns. Now, when it wishes to enter big cities, there are big players dominating the market. These companies are already strong in the acute segment. So, to compete with these, Mankind needs to tap the chronic segment," he said.
A source close to the company said Mankind also planned to divest stake in its personal care business, which primarily comprises products like "Adiction" deodorant and "Don't Worry" sanitary napkins. The move would help the company concentrate on the pharmaceuticals and the over-the-counter (OTC) businesses, he said.
Juneja, however, said this was a "tentative plan". "We have decided to watch for a year and then take a final call," he added. For now, the company is not adding any product to the segment.
Analysts say the personal care business could be a roadblock to the company's ambitious plans and this could be a reason why it is considering selling the business.
Sanjiv D Kaul, Managing Director, ChrysCapital, which holds 11 per cent stake in the company, agrees. "After pharmaceuticals and OTC, personal care was an obvious move. This was also complemented by the company's huge sales network. However, it does not want to be diverted from its aim of becoming a leading pharmaceutical company. So, at some point it may divest the personal care business," he says.
Currently, Mankind has a sales force of about 7,000, and the company is steadily increasing this number. "We would hire about 700 people by March," says Juneja. "We would record growth only by introducing new products and strengthening sales and marketing," he adds.
Juneja started his career in 1975 as a medical representative with Lupin. In 1984, he, along with two of his brothers, decided to start a formulation business called Bestochem. In 1995, Juneja and his brother, Rajeev, set up Mankind Pharma. Rajeev Juneja now looks after the company's marketing division.
"I started the company with merely Rs 5,00,000 and no loan," says Juneja. His son, Arjun Juneja, has now joined the company's operations team.
Unlike its counterparts, Mankind started by focusing on rural areas, tier-II and tier-III cities. "They understood the DNA of the Indian pharmaceutical market very well. That is why their business model is very unique. At a time when no pharmaceutical company saw value at the bottom of the pyramid, Mankind started from the outskirts, and gradually moved to the centre. They created the market there and later, others joined the bandwagon," says Kaul.
However, some feel the transition to selling products in the chronic segment in big cities may not be easy, and the company may have to put in place a stronger and more effective strategy. "So far, Mankind has opted for a price-penetration strategy. They launched most of their products with very low prices compared to others, acquiring a significant market share. But gradually, they increased prices. However, this strategy may not work for essential products in the chronic segment," said a sector analyst. He added the company would have to develop innovative therapies, backed with science and quality, to capture the chronic market.
While the company has received offers from major multinational companies for its pharmaceutical business, Juneja asserts there was absolutely no reason or plan to sell, even if the valuation was huge. "I do not want to leave money for my kids. I would like to leave an asset which they can run and serve the country with," he says.
The company has 10 manufacturing plants in the country. Recently, it built a research and development centre in Manesar.
How Ramesh Juneja's Mankind Pharma has changed pharma game with pulp marketing
MUMBAI: Brands like Manforce, Unwanted-72, Preganews and Gas-o-Fast will never win awards for subtlety, but they sure do find takers over the counter.
Such consumer brands - many with a coital connection - are one of the main drivers of the robust growth Mankind Pharma has been witnessing: 16-18% annually, against the industry average of 13-14%, with chunky net profit margins of 12-13%. It's also one of the reasons for this Rs 2,120-crore company becoming India's eighth largest drugmaker, ahead of pharma majors such as Pfizer and Lupin Labs.
"They have used the pulp marketing technique very well. Their ads are in your face and branding not polite, unlike other contraceptive brands," says Harish Bijoor, a brands consultant. "That has made their products become a talk of local nukkad; selling their products in unconventional places like paan shops has helped product sales," he adds.
The story of Mankind Pharma has the makings of a Bollywood script. In 1984, Ramesh Juneja, a 33-year-old medical representative with Lupin Labs in Indore, decided to quit his job in 1984 and, along with family members, set up his own formulation business called Bestochem. By 1999, Juneja felt it was time to strike out on his own. It was a time when pricing was not considered a barrier for selling medicines.
"Existing players were not catering to the lower and price-sensitive segment of the pharma market and in rural areas people drop out from the cycle if medicines are expensive. That's where Mankind stepped in, and its entry coincided with rural penetration of doctors", says Abhishek Sharma, head of life sciences at Head Life-sciences at MAPE Advisory, a mid-market investment bank.
Juneja is not your regular pharma CEO in pinstripes spewing corporate mumbo jumbo and waxing eloquent about a quest for that elusive new chemical entity. Still, it would be silly to underestimate this small-town visionary who is focused on making Mankind India's No. 1 pharma company by 2015.
The strategy is simple: go after the masses with products they can afford. It's worked like a charm so far and, in the process, demolished the margins of giant pharma companies that once ruled the roost in the Indian market. "Competition fears us because consumption-wise people consume more of our medicine", says Juneja proudly.
Mankind carved a niche for itself by storming rural markets and slashing drug prices. An aggressive sales force meticulously reached places where others couldn't, making it one of the fastest growing pharma company within a decade.
"They carefully selected their products for rural markets, incentivized the distribution channel through schemes and controlled sales costs through local hiring. And small increments in MRP directly flow to the bottom line", says Sharma.
First-ever India Business Icon Awards
Entrepreneur Magazine, India’s best selling magazine for startups, small and medium businesses and entrepreneurs, held the first ever India Business Icons Awards 2011 on June 10 to honor entrepreneurs who are leaving a mark on their field with their business acumen and corporate style.
The awards were held by Entrepreneur Magazine, which is published by Network18, in collaboration with CNBC TV-18 and title partner Seagram’s Blenders Pride at Hotel ITC Grand Central, Mumbai, and aimed to honor entrepreneurs from virtually every field of business in India, including Travel, Information Technology, Hospitality, Pharma, and also the Social sector.
Ajay Bijli, Chairman and MD, PVR, was adjudged the Business Icon in the male category while Meher Pudumjee, Chairperson, Thermax Limited was given the award in the female category. Anirban Roy, Founder and MD, SEED, was awarded as the Young Business Icon whereas Tara Thiagarajan, Chairman, MMFL, was announced the Social Icon. Sanjeev Bhikchandani, Vice Chairman and Founder, Infoedge was presented with the award for his services to the IT & Telecom sector.
Chetan Maini, Chief of Strategy and Technology, Mahindra Reva was conferred with the India Business Icon Path Breaking award while R C Juneja, Chairman & CEO, Mankind Pharma was accorded the India Business Icon Pharma Award.
The India Business Icon award for Travel & Tourism was allocated to Ankur Bhatia, Executive Director, Bird Group while Sanjeev Bhikchandani, Vice Chairman and Founder, Infoedge, was rewarded for his contribution under the Popular category. Deepak Puri, Chairman and Managing Director, Moser Baer, was honored with the Lifetime Achievement award.
Defining these men and women as the next generation ambassadors for the India growth story Bipin Chandran, Editor, Entrepreneur Magazine, said, “While statistics and strategies are paramount in determining which businesspeople rule the roost, a leader is not just about profit and cash flows. Business leaders are those men and women who display a sense of style and stature in their respective industries while creating big businesses that stand distinct from the crowd-much like them.”
Mankind Pharma clocking the highest growth rate amongst the top 10 Pharma companies
India is among the fastest growing drug markets in the world and all major drugs firms have adopted various strategies to increase sales in the country such as alliances, new product launch, increasing sales force, acquiring brands or firms.
For the month of May alone, the latest data, Abbott posted 26.3% growth in sales, the fastest among the top 10 companies. Among the top 10 companies, Delhi-based Mankind Pharma clocked the highest growth at 27.2%.
Manforce by Mankind is the market leader
When taking a guest lecture at a Mumbai college recently, communication specialist and advertising guru Alyque Padamsee short-listed three epic books for a discussion: Hemmingway's A Farewell to Arms, Dickens' Oliver Twist and Vatsyayana's KamaSutra. Promptly, a hand went up: "Sir, why have you included KamaSutra, how can we read a condom!".
The student wouldn't have earned too many marks for his literary prowess but he would have scored for his knowledge of brands in the post-liberalisation era. After all, it was during the first flush of economic reform - in the September of 1991 - that the makers of condom brand KamaSutra (KS) chose to paint Mumbai city a flaming red with steamy hoardings of Pooja Bedi and Marc Robinson displaying openly the sultry benefits of the 'rubber johnnies.'
Unsurprisingly, as per data from the National AIDS Control Organisation (NACO), the market leader is a relatively new brand called Manforce from Mankind Pharma. Older ones like Moods and Kohinoor follow, but then there's no KS.
Mankind Pharma strengthened it’s IT set-up by partnering with IBM for implementation of SAP ERP, and a customided Enterprise Portal for deployment at customs and freight (C&F) agents. This ERP implementation will bring all organisation–wide functions of Mankind on the common platform, improve financial reporting and consolidation and provide better inventory visibility across organisation as well as flexibility to change business processes, in response to external and internal changes.
Mankind Pharma is one of the fastest growing pharmaceutical companies in the domestic market with year-on-year growth of more than 40 percent, having pan India presence with a comprehensive network of 60 C&F agents, covering more than three lakh doctors, and 8000 stockists. With the range and nature of products Mankind is dealing in, the current supply chain management mechanism including inbound and outbound logistics and the current IT system landscape demanded to implement an organisation-wide ERP. As part of this engagement, IBM will be involved in providing end-to-end solution for Mankind including organisation-wide implementation of ERP, as well as on-site support to Mankind after Go-Live to manage all SAP modules implemented including Financials, Logistics and Enterprise Portal across all its C&Fs.
“IBM's strong industry experience, coupled with successful implementations locally, helped us choose them as our ideal partner for this project. Some of the key benefits post implementation of this project will help us bring all the business functions on a common platform, integrate multiple applications for a single view of information, provide data consistency and most significantly reduce Supply Chain costs by better inventory view and control,” said Arjun Juneja, Director, Mankind Pharma.
Mankind Group selected IBM to meet their business requirements on key factors that highlight IBM’s strength like pharma industry insight and experience, unique end to end system integration capabilities, research, consulting and business transformation outsourcing, technical excellence and optimal global resource model. IBM team built a platform of trust, understanding, and confidence with Mankind Pharma by demonstrating expertise, fast response times and end-to-end capabilities to win this key engagement.
Commenting on this deal, Vanitha Narayanan, Managing Partner, IBM Global Business Services, India/South Asia said, “We are delighted with the opportunity of working with a fast growing company like Mankind Pharma, in the rapidly expanding pharmaceuticals sector. With our deep knowledge and expertise in working with dozens of pharma clients across the world, we are confident of creating a robust IT platform for supporting Mankind's business. Our solution will also benefit Mankind with better operational efficiency and cost control.”
The pharmaceutical company has called the pitch for two of its existing brands - Unwanted-72 and Kaloree 1 (sugar sweetener), as well as two new products that the company will launch in the shoe care market and insect repellent category.
Mankind Pharmaceutical has called for a creative pitch for four of its brands, of which, two are the existing brands Unwanted 72 (contraceptive pill) and Kaloree 1 (sugar sweetener), and two new products that the company will launch in the shoe care segment and insect repellent category. The size of the account is said to be around Rs 20 crore.
The development has been confirmed by a senior official of the company, who on conditions of anonymity, states that the company is bullish on building all its brands, both existing, as well as those that will be launched in the future. The company is concentrating on consolidating its portfolio of brands, and hence, getting advertising agencies to create a sharp image in the consumer's mind.
This is the third such creative pitch that has been announced by the pharmaceutical company. In March this year, the company awarded the creative duties of three of its brands -- Prega News (pregnancy detection kit), Don't Worry (sanitary napkin brand) and Kustody, the deodorant brand that will soon be introduced to Grey Worldwide. Last week, Mankind handed over the creative mandate for three of its existing brands -- Addiction (men's deodorant), Manforce (condom), and Gas-o-fast (digestive tablet) to McCann Erickson.
For the record, Mankind Pharmaceutical was established in 1995, and is currently one of the leading pharmaceutical companies in the country. In 2010, the company decided to foray into the over-the-counter (OTC) market, and launched various products such as OTC drugs, condoms, pregnancy test kits, oral contraceptive pills (OCPs), sanitary napkins, and adhesive bandages.