Differentiation By Strategy: A Tale of Two Companies
The year was 1984. Dilip Shanghvi, a young entrepreneur with a commerce degree under his belt, and a big dream in his mind asked himself: How do I enter the crowded Indian pharmaceutical market and carve out a special place for me? He found an answer. By taking a different route. A road less travelled or not travelled. He chose the emerging super specialty segment of Neuro-psychiatry as an entry point and focused all his energies and resources to conquer the segment. Today, Dilip Shanghvi is leading the Indian pharma industry for Sun Pharma has become the most-valued Indian pharma company with the highest market cap. He has become the fifth wealthiest among Indians and the wealthiest pharmaceutical entrepreneur in the world!
Fast forward to the year 1995. Another young professional, R.C. Juneja, who was a district manager in one of the Indian pharmaceutical companies (an Indian drug major today) with a lot of entrepreneurial spirit and big dream asked himself a similar question. How do I enter the overcrowded, hyper-competitive market place and find a space for me? The answer too was the same. By taking a different route. A road less travelled or not travelled.
Here is very brief outline of the paths they have taken:
|Sun Pharma||Mankind Pharma|
|1. Focus on super specialty prescriber and therapeutic segments such as Psychiatry, neurology, and expanding into other segments gradually.||1. Focus on less-served and not-served markets such as class B and C towns and rural markets and gradually expanding into large towns and metro markets.|
|2. Marketing strategy clearly focused on optimizing profits. Pricing strategy is based on par with the leading players.||2. Marketing strategy focused on gaining market share with a penetrative pricing strategy, which is significantly lower than the market leaders.|
|3. Universal coverage of customers in the specialities of choice with a dedicated strategic business unit comprising sales and marketing teams in 22 specialty therapeutic segments.||3. Universal coverage of customers across all the specialities with about six marketing divisions to cater to the needs of various prescriber segments and therapeutic segments.|
|4. Product strategy is to provide a complete range of products in a given prescriber segment to offer a very wide and almost complete therapeutic coverage.||4. Product strategy covers wide range of products across diverse therapeutic areas with a larger opportunity to prescribe by PCP (Primary Care Physicians) as well as specialists.|
|5. Large enough field force to cover the entire universe of specialty prescribers, therapeutic area wise.||5. Largest field force of about 7,000 to achieve universal coverage of PCPs and specialty physicians in India.|
|6. Attractive incentives on achieving the targeted sales for representatives and managers in the field.||6. Highly incentivizing performance that is based on growth rather than giving their sales force sales targets or quotas, which has been the industry practice.|
|7. Essence of the strategy is specialty focus to achieve one of the top two positions in the chosen segments.||7. Essence of the strategy is mass coverage. Penetrative pricing. Incentivizing the trade.|
What is common between the two companies following diverse strategies? Both are gunning for the top slot in the Indian pharmaceutical market. Sun Pharma has already touched the second place in one month this year (2012) whereas Mankind Pharma is among the top seven companies in the Indian pharmaceutical league table. Sun Pharma has set its sights on becoming one of the leading and respected specialty pharma companies in the world besides being a leader in the Indian pharma market. Mankind Pharma seems determined to achieve the coveted leadership position in the Indian pharma industry by 2015. Both the companies are growing at significantly higher rates as compared to the market growth.
What is the success secret of these two companies? Both the companies took two different strategic routes and stood out in a crowd of companies. Both pursued their winning strategies with impeccable execution. Above all they stayed the course. Strategic differentiation coupled with uncompromising and determined execution is bound to win the race.