How Ramesh Juneja's Mankind Pharma has changed pharma game with pulp marketing
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.
Mankind's heavy incentives to distribution partners have a huge role to play in the firm's growth, although peers scorn at such schemes.
"They offer one of the highest bonuses to stockists and medical representatives -- roughly 19% of total sales and bonuses, which play a big role in the anti-infective drug segment" says Hari Natarajan, Head of Pharma Trac, the pharma market audit product of the All India Organisation of Chemists and Druggists.
"We do not hire managers with fat packages unnecessarily; however we are proud of our salesforce," Juneja explains. "We want to share our profits and the incentives are a way of doing it."
Competing on price, however, is not a sustainable strategy - not at least on the margins front. Which is why Mankind has over the years diversified into the higher-growth, higher-margin over the counter and fast-moving consumer products categories.
Quite incredibly, despite the consumer segment being fledgling - relative to prescription-driven segments like anti-infectives and gastrointestinal - the company's biggest brand is a lifestyle product. Manforce, which is present in the crowded condoms and erectile dysfunction segments, is a Rs 146-crore brand.
"They have been a game-changer. They have been bold with their media strategy and have been bang-on. And since they had already cracked pricing and the rural markets, their reach is much larger than other contraceptive brands," says Sujay Shetty, head of life sciences at PricewaterhouseCoopers.
Read More: http://articles.economictimes.indiatimes.com/2012-06-13/news/32215529_1_mankind-pharma-pharma-majors-consumer-brands