Transitioning a medicine from prescription-only to over-the-counter status is big business—and the Emerging Markets hold the key to sustained growth for OTC marketers. But manufacturers looking at such opportunities for growth have number of questions in mind. This article clarifies many such issues and challenges of the stakeholders and typical segments to encash on. for more information log on to www.interlinkconsultancy.com

1. OTC Opportunity
Knocking
at the door
Mala Raj
Transitioning a medicine from prescription-only to over-the-counter status is big business—and the Emerging
Markets hold the key to sustained growth for OTC marketers. But manufacturers looking at such
opportunities for growth have number of questions in mind. This article clarifies many such issues and
challenges of the stakeholders and typical segments to encash on.
‘KnockKnock’ whereas just 24% prefer to go to the doctor, and
9% choose to do nothing. Thus, nearly 68% of'Whoisit?'
Indian consumers already qualify as prospects
'Opportunity’ for OTC marketing! Translated into population
terms, this represents a strong target audienceof'Opportunity!What,Where,How?
700million.
‘OTC Opportunity – Some here, Some there &
Someeverywhere–OverTheCounter’ 1.2 A demanding lifestyle and high stress
conditions coupled with poor eating & sleepRight at this moment, many Pharma business
habits have given rise to a variety of healthstrategists are experiencing a similar mental
disturbances and lifestyle related diseasesexchange debating whether or not to venture
amongst majority of urban population. Thisinto the tempting OTC medicine market.
section also has more access to avenues for self-Exploring the dynamics of this segment, please
medication and are willing to take preventivefindbelowthecriticaldetailsofthisissue.
measurestomaintainhealth&vitality.
1. Why is there so much buzz about the OTC
1.3 Increased earning across all strata of societydrugs marketinIndia?
has led to an upward shift in the basic Maslow'sThe current Indian consumer is getting
hierarchy of needs for all Indian consumers.critically evaluated by Indian as well as global
This has had its ramifications on the healthcaremarketers. The entire world is slowly
expenditureofthefamilyaswell.awakening and taking note of the untapped
opportunities that our country presents across
2.What areOTCDrugs?all types of markets, be it FMCG, luxury goods,
As per OPPI's recent e-publication, OTC Drugshealthcare, pharma, B2B transactions, or value-
are 'drugs legally allowed to be sold “Over Theadded services. The OTC healthcare market, a
Counter” by pharmacists, i.e., without thepart of this burgeoning Indian potential, was
prescription of a registered medicalestimated to be about `7434 Crores in 2008-09
practitioner.' Although the term 'OTC' has no($1.8 billion), with an annual growth rate of
legal recognition in India, all drugs not included23% and CAGR of 10% from 2005 to 2009.
in the list of 'prescription-only drugs' areIndia ranks 11th in the global OTC market and
consideredtobenon-prescriptiondrugs /OTC.is expected to reach 9th position within the next
fewyears.
For any medicine to be sold OTC, it must be
safe, effective and for a condition that theThe key factors contributing to this booming
patient can manage without the need forsegmentarelistedbelow:
supervisionbyalicensedhealthprofessional.1.1 For non-serious ailments like cough, cold,
fever, pain, sprains, indigestion, pimples, etc.,
In India, the key categories with OTC potential23% of the Indian consumers prefer either to
include Vitamins and minerals, health tonics,treat themselves with home remedies or self-
cough & cold, gastrointestinals, analgesics,medication, 45% prefer to go to the chemist,
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2. dermatologicals, and herbal/ayurvedic ?Maximum Retail Price (inclusive of all taxes)
medicines which do not contain any substance There are no separate labeling requirements for
listed in Schedules G, H, or X.Apart from OTC, OTCdrugs.
one more term that is used frequently in the
market is OTX. It refers to prescription plus 3.6 Product Pricing & Margins to Trade:As per
over-the-counter; for example, Revital is DPCO norms, for controlled drugs, margins for
consideredanOTX whilethei-pillisOTCnow. stockists and retailers are 8% and 15%,
respectively. For products which are not
3. What about regulations for OTC controlled under DPCO, margins are on a
medicines? higher side, namely, 10% for stockists and 20%
There is no separate policy for OTC drugs. forretailers.
Some of the salient regulations applicable to
OTCmedicinesarelistedbelow: 4. How can Pharma companies enter the
OTCsegment?
3.1 OTC Drugs Definition: As per the Drugs Various ways in which Pharma companies can
and Cosmetics Act and Rules, there is no plantheirentryintotheOTCmarketare
separate category of drugs called OTC drugs. ?Convert one of the current ethical brands into
Currently, those drugs which are not covered an OTC brand-Eg. Revital of Ranbaxy,
under Schedule H or G and their formulations Gelusil MPS of Pfizer, Nasivion of Merck,
(except their products for external applications) CalciumSandozofNovartis.
canbecalledOTCdrugs. ?Launch a new OTC brand / range of OTC
brands-Eg. Paras Pharma’s Moov, Crack Dr
3.2 Stocking, Distribution, & Sales of OTC Morepen'srange.
Medicines: All OTC medicines should also be ?Launch a new OTC division-Eg. Ranbaxy,
stocked, distributed, and sold through premises MerckIndia, Morepen,Himalaya.
licensed for sale, except for those which have ?Buy an existing OTC brand-Eg. Piramal
been specifically exempted by inclusion in Healthcare’s purchaseofi-pillfromCipla.
Schedule K of Drugs and Cosmetics Act and ?By Government Regulations-Eg. Emergency
Rules. Contraceptive pills (i-pill, Unwanted-72)
grantedOTCstatusin2005.
3.3 Promotional Claim in Advertisements: ?Tie-up / Acquisition with FMHG company-
Advertisement of OTC drugs using media Eg. Sanofi-Aventis 's acquisition of consumer
aimed at the common public, such as television healthcompanyChatteminUS in2009
and print advertisements, is permissible.
However, the Drugs and Cosmetics Act 1940 5. Which are the typical segments to encash
and the Drugs and Magical Remedies Act 1954 on?Arethereany new avenues?
do not allow any claim to prevent or cure The typical segments encashed by existing
diseases in Schedule J of the Act, which playersare:
includes 51 conditions such as cancer, height ?Vitamin,Minerals&Supplements-35.0%
gain,etc. ?Gastrointestinals-18.3%
?Cough,Cold,Allergy-17.5%
3.4 Ayurvedic Medicines: OTC proprietary ?Analgesic-14.3%
drugs which are registered as 'Ayurvedic ?Dermat-13.0%
Medicines' (traditional Indian medicines ?LifestyleOTCs-1.8%
containing natural/herbal ingredients) are also Of the above leading 6 groups, the highest
regulated by the DCAand DCR. However, they growth is seen for the Lifestyle OTCs, primarily
do not require a drug licence and can therefore due to the shift of emergency contraceptive pills
be sold by non-chemists. There is no price intotheOTCsegment.
controlon'Ayurvedicmedicines.' In each of these groups, in addition to the
existing molecules/products, several niche
3.5 Product Labelling: Rule 96 of DCR areas that have not yet been fully exploited can
mandates minimum information which needs to be identified. (Refer exhibit 1) In most of these
be put on the label of all medicines. This niches, a high degree of self-medication can be
informationincludes observed even today, mostly through word-of-
?Genericandtrade(brand)name mouth publicity, personal experiences,
?Netcontentsandcontentofactiveingredients chemists'push, etc.
?Name and address of manufacturer including
manufacturinglicencenumber 6. Is there any checklist for a successful entry
?Distinctive batch number, manufacturing and intotheOTCsegment?
expirydate,etc. Organisationsmustcriticallyevaluatetheir
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3. The reputation that the brand enjoys during its
patent protection regime coupled with a
lowering of cost in the post-patent years, to
match price competition. Combination of brand
reputation and lowcost in these cases help gain
immense consumer support. Some examples
include Claritin by Schering-Plough and
AllegrabySanofi-AventisintheUS.
6.4 Current perception, usage, Rx versus
chemistpush /repeatpurchaseforthebrand
The marketing team must conduct thorough
research to assess the status occupied by the
brand in the consumers' mind.The FAQs should
be: Does the brand have a regular 'self-user'
following, is it being purchased by a regular set
of customers, how is repeat purchase occurring,
component of Rx versus OTC purchase for the
brand, do chemists recommend the brand, are
customers brand loyal, are they price sensitive,
what is the perceived image of the brand, why
status with respect to the following criteria prior do customers prefer/not prefer the brand, etc.
toentryintotheOTCsegment. The more thorough the research, the better
would be the decision making with respect to all
6.1Strategicpurpose behind OTCentry marketing elements— brand name, packaging,
Having clarity of purpose and a long-term pricing, distribution, ad strategy, etc. for the
vision is essential for this strategic decision. proposednewOTCbrand.
OTC presence calls for higher investments on
all fronts, be it manufacturing, marketing, sales, 6.5 Ability to sustain a strong marketing
or distribution.The organisation must be geared program for the brand – both for short term
forthis. & long term for brand building & customer
retention
6.2 Choice of brand/s with legal and medical With only rare exceptions to the rule, the
scrutiny for qualifying as permissible for general dictum in OTC marketing is 'Out of
OTCdrug status sight, out of mind.' To retain customers, a heavy
All identified molecules, combinations, new ad budget with regular ad reminders is essential
formulations, or NDDS shortlisted for OTC for OTC success. OTC brands have very high
marketing must be critically reviewed by promotional budgets (expense to sales' being as
experts for legal as well as medical accuracy. high as 20–25%) as compared to ethical brands
Shortlisted drugs must be safe, effective, and (just 5–10%). e.g. Benadryl has spent `7.5 cr
for a condition that the patient can manage on a brand turnover of `35 cr, while Glycodin
without the need for supervision by a licensed has spent `4.5 cr on a turnover of `18 cr. Such
health professional. They should not contain high budgets lead many organisations to resort
anysubstancelistedinSchedulesG, H, orX. to sporadic ad campaigns and mere occasional
spending, which do not help in retaining
6.3 Stage of the brand in the Product Life customers.
Cycle/PatentStatus ofthebrand
It is often seen in ethical marketing that a few
years after the launch of a molecule, it tends to
reach a maturity level of saturation and
thereafter a decline begins in its usage, as it gets
replaced by newer drugs with better features
and benefits. At this stage, when the
incremental growth in sales declines, it is
appropriate to consider the OTC potential of
thatmolecule/brand.(Referexhibit2)
Internationally shifting products that are likely
to go off-patent into the OTC segment is a well-
known strategy to fight generic competition.
Decision makers
need to critically
evaluate shortlisted
brands for their
future prospects via
both alternatives:
1. Continuing with
current ‘Ethical
Status’ or
2. Switching to ‘OTC
Status’
Opportunity for Switching
Product
Launch
Patent
Expiry
Ethical Sales of Product
OTC Sales of Product
The lifecycle of a pharmaceutical product with and without a switch to OTC status
Time
Sales
Exhibit: 2
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Group Potential Niches for OTC –Can be tapped
further
Vitamins,
Minerals, &
Supplements
Specific nutritional products for adolescent
girls, geriatrics, pregnant women, diabetics,
cardiac well being, children with vision
defects, arthritics, Jet-lag, menopausal
women
Gastrointestinals Safe anti-diarrhoeal,
products for paediatric vomiting, motion
sickness
Cough, Cold,
Allergy
Seasonal rhinitis, Insect-bite allergy
(Mosquito bite allergy), Cough syrup
without sugar (for diabetics), ready-to-use
palatable cough gargles (without dilution),
non-sedative cold preparation
Analgesics Specific for dental pain, dysmenorrhoea,
colic pain in infants
Dermatologicals For boils, ringworm, burns, acne, blemishes,
warts, corn, dandruff, head lice
Lifestyle OTCs Slimming aids, Weight gain aids,
Aphrodisiacs, Performance enhancers
Exhibit: 1

4. Coldarin and Sloan's liniment are examples of aimed activities that have to be carried out with
popular brands that have very modest presence chemists' participation, and only occasional
currently. doctor visits for reminders. Hence, it is
Thus, sound financial planning for both short- advisable for corporates to set up a new entity
and long-term is mandatory prior to embarking with its own separate personnel for OTC
onOTCventures. business.
6.6 Ability to widen the distribution network 7. Which brands are likely candidates for
&infrastructure switching toOTCstatus?
The average reach of chemists is reported to be The situation in our country is such that even
4%, while that of a general store is 14%, a Schedule H drugs are freely available without
grocer52%,andothers22%. prescription & many popular brands are often
purchased directly by the consumer. With years
Currently, in India, OTC medicines are of usage, some heritage brands have attained
permitted to be sold through the conventional that 'Unofficial OTC' status. A few examples
chemists' retail outlets and also through retail include A to Z (Alkem), Shelcal (Elder),
chains at select departmental stores and Cobadex (GSK), Antoxid (DRL), Dexorange
supermarkets. OTC switch aims at reaching out (Franco India), Febrex Plus (Indoco), Sinarest
to a much wider audience who are also (Centaur), Incid-L (Bayer), Domstal (Torrent),
geographically spread across the length and Voveran (Novartis), and Duoflam (Svizera).
breadth of the country. Hence, the organisation Some of these brands have good potential to
must provide for easy access to safe and attain even higher sales if granted permission
effective products by expanding the byDCGI toswitchovertoOTCstatus.
distribution network to include a much higher
proportion of approved retail outlets and rural In conclusion, the foray into OTC drugs market
retail outlets. This would require the is also likely to be hampered by a few
deployment of both Pharma and FMCG challenges like reduction in doctors' support,
distributors with much higher cost focus on consumer pull, limited reach of
implications. Due care must be taken to ensure pharma distributors, heavy expenditure on
that the entire distribution set-up is such that the brand building, need for continuous promotion,
product storage conditions are adequately met pricing restrictions, fierce competition from
and that the efficacy and safety of the contents FMCG and need to meet consumer expectation.
are not compromised. Such investments are However, to be successful in the OTC business,
feasible for bigger companies like Glaxo and meticulous research and planning with regard
Ranbaxy; smaller firms, however, would find it to the issues deliberated above must be
very difficult to expand their distribution accompanied by bold new initiatives with the
network. This creates need for developing a associatedrisks.
clear-cut distribution expansion plan with cost So are you willing to open the door and grab this
implicationsclearlyspeltout. opportunity?
6.7Abilitytohaveadedicatedfieldset-up References:
In the 'Ethical to OTC' switch, the focus also 1 . w w w. i n d i a o p p i . c o m - I n d i a O T C
shifts from the 'Doctor' to the 'Chemist' and to PharmaceuticalProfile2010
the 'End-user consumer.' Hence, deploying the 2.www.expresspharmaonline.com/20100630/
same medical representatives who are attuned market01.shtml
to the typical '10 Dr + 4 chemist call' mentality 3. The Pharmaceutical OTC Outlook to 2010
for OTC selling is not the most appropriate by Kate Bradle,
choice, although it is the most popularly www.globalbusinessinsights.com
employed strategy by most Pharma companies 4.www.fmcgmarketers.blogspot.com
who have ventured into OTC business. OTC /2007/12/otc-market-in-india-marketing-
business calls for extensive and repeated (even fmcg-way.html 5.Priti Sugandh, Pharmabiz,
weekly) chemist visits for a variety of end-user March102004,http://www.pharmabiz.com
Ms. Mala Raj, is a senior consultant at Interlink. She is a brand management expert and is well versed with the
intricacies of Pharma Marketing in the country. She is an excellent trainer for marketing strategies and selling
skillsforMR's
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