RPGLS: Going for Growth

Mr. Patkar, the Chief Executive & the Business Head, was ready to present the case to
the MCM post lunch. They were already late as Mumbai was raining cats & dogs. While
sipping over coffee they could see dark clouds proceeding towards the RPG tower,
hovering over Worli Sea link.

The challenge for them was to find out a marketing strategy that should help them to
Increase the brand value of key products and as well show growth for the division on
top line & bottom line.

INTRODUCTION

RPG Life Sciences limited is a part of the RPG group which is a diversified
conglomerate in multiple businesses. RPGLS caters to the health care business of the
group. It has a turnover of 240 crs and is divided into two large SBUs. SBU 1 is into API
(Active Pharmaceutical Ingredient) and global generics. SBU 2 also addressed as
Global Formulation business unit is into four large divisions. Among them Neolife is
the most recent division launched in Oct 2011.


Figure 1: RPGLS SBUs
RPGLS
SBU 1
API& Global
Formulation
SBU 2
Global
Formulations
Div. 1
Multi Therapy
(Main Division)
Div. 2
Nephocare
(Nephrology)
Div. 3
Impulse
(Cardio &
diabetology)
Div. 4
Neolife
(Oncology & Cancer)
Medical Oncologist
Radiation Oncologist
Surgical Oncologist


ONCOLOGY MARKET

Oncology market is huge in India. After Diabetes, Oncology is the fastest growing
market in India. The market is crowded with multinational players as well as large
and small domestic players. The therapy is divided into two broader categories,
research-based molecules and generic molecules. Research based molecules are
mainly with MNCs and few domestic players are in licensing arrangement with MNCs.
The generic market is huge but too fragmented with multiple players.


MARKET DYNAMICS

Oncology market has critical component of patients, doctors and hospital. Most of the
medicines are prescribed and also administered by the doctor. The therapy is called
chemotherapy and there are multiple drugs used together to arrest the abnormal
growth of cells. The doctors also use rays to kill cell growth by a process called
radiation. Sometimes surgical procedures are used to remove the cancerous cells.
Most chemotherapy is given in the hospital if the drugs are injectable and they are
called daycare.




Doctors




Figure 2: Types of Oncologist

REGULATORY/ GOVERNMENT INTERVENTION

The current government has been very active to ensure that the drugs are available at
affordable price. Most of the drugs have been brought under DPCO (Drug Price
Control Order). Thus the margins of the drugs have also been reduced. Further, many
government schemes have been launched to ensure free generic molecules to the
patients, thereby making smaller generic players to supply at lower price and reduced
margins.

The NGOs and other patient support bodies have added to the price constraint. Most
of them (like Tata Medical, Mumbai) float their own tender and go for tenders with
approving medicines with lowest rate and proper manufacturers directly. RPG Neolife
has its limitation in this area as most drugs are outsourced.

Our Portfolio: Most of the drugs are at 20 30% gross margin if sold at a generic form
thereby squeezing the margin. Currently our Oncology treatment in Protocol based
and has scattered product portfolio. Our prime focus is Therapy depth and width.


CHALLENGES:

The challenge for the business head is to create a USP that would make them sell the
medicines with better brand equity.

What marketing steps he must take to differentiate the brand and to increase
margins?



Annexure 1: Business mix FY 14





Annexure 2: Division Ach & Budget Mix - FY 14






Division FY '13 - '14 Budget '14 - '15
Main 53.4 77
Impulse 17.68 28
Neolife 4.3 8
Nephrocare 36 42


Annexure 3: Market Environment and Therapy Scan





Annexure 4: Indian Formulation Market


Market Environment
Total Oncology Market : ~2010 Crs.
Generic Generic Market : 1560 Crs.
Patent Molecule Market: 450 Crs.
No. Key Domestic Players : 90
No of MNC players : 15
Therapy Scan
Solid Tumor Management : 910 Crs
Haematology : 250 Crs.
Supportive : 400 Crs.
Special molecules : (MABs: 450 Crs.)