Pharmaceutical companies have so far focused most of their attention on doctors, but understanding the mind of retail chemists is going to be crucial, especially with the projected tilt to over-the-counter (OTC) medications. COMPASS (Chemist’s OTC Market Probe and Assessment Study) is a step in this direction. Anil Khanna, Business Head - CubeX (Business Intelligence & Strategic Consulting Division of Sorento Healthcare) captures insights from this study
There has been, of late, lot of action happening in pharma retail space. All India Organisation of Chemists & Druggists (AIOCD), which virtually controls the entire pharma retail industry, is corporatising itself and becoming a legal entity. Which means it will become the largest retail chain in the world! More than 700,000 chemists are part of this body, and this organisation, through its member chemists, dictates the terms of engagement.
The numbers in perspective
The number of chemists, today more than 700,000 (of having shop size of 100 sq ft), is actually more than the total number of chemists in US, UK and China! China just has 200,000 chemists, for a market size which is more than double of the Indian market size. The number of wholesalers (and sub-wholesalers) is also quite large, more than 60,000. This means very low average annual revenue for an individual chemist. Yet there are disparities in the manner chemist outlets are dispersed. The metro/urban market is over-served while the smaller towns/rural markets are under-served.
Like FMCG retailers, pharma retailers are also unorganised. However, since they are unionised, they are able to dictate the agenda and get lucrative margins, unlike FMCG retailers. Due to this, while organised retail has grown in FMCG domain and have a decent share of the market, in pharma organised retail hasn’t really grown. Consequently, pharma companies do not invest in chemist upgradation while FMCG companies engage with them fairly regularly.
This leads to key questions: do pharma companies really understand the mind of a chemist? What drives him? What are his aspirations? What does he expect from pharma companies? What is his attitude towards OTC drugs? How he looks at them? And so on…
While there is very little understanding about these questions, there are some prevalent perceptions. Like he is fuddy-duddy, not willing to upgrade his knowledge or his infrastructure, all that matters to him is the margin, only less aware people seek his advice and he dispenses advice randomly…
Parameters of the COMPASS study
CubeX Business Consulting (a division of Sorento Healthcare) in partnership with Nicholas Hall & Company embarked on the Chemist’s OTC Market Probe and Assessment Study (COMPASS) to have answers to all these questions and many more. Chemist’s selection was across the cities, from various affluent classes, located in market places, in residential areas and near hospitals. Proportionate representation was also given to the chain pharmacies in accordance with their presence in the market place
The study covers all five major OTC categories (Cough, Cold & Allergy (CCA), Analgesics, Gastrointestinal (GI), Vitamin, Mineral & Supplements (VMS) and Dermatological) and 23 sub-categories within broad categories. Additionally, chemist’s belief and view on top OTC companies and close to top 150 OTC brands is also part of this study
Few answers from the COMPASS study
A profile of the Indian Chemist throws up some intersting features. The average annual turnover is Rs 400,000 with chain pharmacies slightly better at Rs 500,000+. More than 70 percent of pharmacists are graduates. The average pharmacy size is 180 sq ft. The average age of a pharmacist is 36 Around one-third of all pharmacies have manual billing system; 70 percent computerised in chain stores
Are they supportive of OTC drugs?
While, as of today, only 20 percent of the chemist’s revenue comes from OTC drugs, they are quite supportive of the idea of more OTC drugs being launched in the market place. Close to 70 percent chemists agree on launching more OTC drugs. In fact they see themselves as active torch-bearers of the OTC movement. It could also be due to the fact that it gives them bit more flexibility to drive the sales of the brand which they wish to push.
What motivates them?
While for majority of the consumers (75 percent) it’s the brand name that matters while buying an OTC medicine, for majority of chemists it’s the company name that matters while recommending a brand to the consumers. To them more than the brand name, quality of the brand is second most important factor in preferring one over another.While margin is important to them, equally important is the advertising of the OTC brands. Clearly, they believe in the fact that good advertising helps their business.
Consumer behaviour
When the COMPASS survey charted the behaviour of consumers when ill, they found that 40 percent visited a doctor, 25 percent went to a pharmacist, 20 percent tried self medication and 15 percent would try home remedies. Clearly, for 1/4th of the consumers, chemists are the first port-of-call and they seek his advice. Of these, 50 percent patients have prescriptions as well.
What chemists expect
A chemist’s expectations from the pharma companies have moved beyond mere good margins. He now looks and expects higher, intensive and more continuous engagement with the companies. Additionally, he is looking for an enhanced partnership in the marketing activities. For example, he strongly believes that for OTC medicines sampling of the product is a good strategy. He wants more companies to go for product sampling, but through him. Obviously he is guided by the self-focused agenda. He is even looking for consumer focused loyalty programmes to be implemented by the companies, but again executed through him so that he is in regular touch with the consumers.
More area of engagements which he is looking from the companies is regular chemists meet, recognition by the companies in the form of awards, training of the chemists. Clearly, he now desires to upgrade himself and wants companies to support him in realising this.
What concerns him?
For him the biggest concern is how to sustain and grow the business in the highly competitive and fragmented pharma retailing scenario. While so far, moving into FMCG products domain or may be selling mobile pre-paid cards were some of the strategies deployed to grow the business, now he is looking for growth opportunities within the pharma products retailing itself. For example, internationally, concept of chemist outlet as the ‘point-of-care’ has caught on. Under this concept, certain easily doable diagnostic tests along with the regular dispensing of medicine and advice is administered through the chemist. This helps in reducing the burden on the doctors as well and also makes healthcare more accessible.
Companies scoring with chemists
Dabur – India’s No.1 OTC marketer, according to DB6 2010 (Nicholas Hall OTC database spanning 70 countries) – is seen by pharmacists as the strongest player in India’s OTC market owing, in part, to frequent advertising. Paras is another popular player while J&J and Emami are perceived as being the most active in offering incentives and promotional schemes to pharmacists. Pfizer’s reps are considered to be knowledgeable and P&G salespersons are thought of as cordial while Ranbaxy’s team stands out as being attentive to pharmacists’ needs.
Collaboration is the key
It’s very evident from the COMPASS study that the chemist is gradually shifting from merely dispensing medicines to dispensing advice as well. And he is looking for a sustained and intensive engagement from the pharma companies. It seems that the time has come for pharma companies to ‘relook’ their relationhsip with chemists and see him in a new perspective and make him an integral part of the marketing planning for their OTC brands.. And the insights from the COMPASS study can help in achieving this.
The author can be contacted at akhanna@cubex.co.in
