The Case On Parkin Sales Effectiveness Will Be Used in The Test For

The
case on parkin sales effectiveness will be used in the test for

the mid term evaluation which will be on 18 th August, thursday for all sections The
case is on performance evaluation chapter of the book we will have the mid term test
for 50 minutes exam (primarily on the exhibits)
careers@mydressup.in
Sales force effectiveness

2013 – Manoj Kumar – General manager sales at Parkin – was looking at DPCO that is
drug price control order 2013
 He realised profits were having downward trend as a result of new policy

 What did policy say – slash prices of medicines that are priced higher than government
ceiling rates – this led to eroding the prices of 24 drugs at parkins and this impacted sales
revenue of August and affected net income.
 More problems: overall sales had risen compared to past years but sales revenue per
medical representative had decreased. Also salesforce did not visit targeted doctors
frequently
 Kumar was thinking on boosting volumes to compensate for loss in value

 He also needed to improve profit margins by reducing operating costs
 Since it is a hyper competitive market and falling profitability demanded to work on sales
force effectiveness
 They bought an idea of sales force effectiveness program – invest 20 million rupees – to
increase efficacy of sales force. The other option was rearrangement of field force and
realignment of products. Will the first idea be feasible?
COMPANY BACKGROUND
 Parkins – generic pharma company that rose to heights by providing combination drugs.
 Started in 1997 – with 10 employees
 Launch – first year it launched cefokin and in second year they launched Dicoron at half of
com. It became fastest growing. 2012 sales – 510 million $ that was better than previous
year by 21 percent
 Mid 2013 – 80 medications. Strategic advantages – product portfolio and distribution
network. 35 carrying and forwarding agents and 2500 stockists
 August 2013 – parking struggling with low revenues. Same was the case with competitors
 Income margin dipped due to increasing cost of sales and operating expenses
INDIAN PHARMA INDUSTRY

 Fast growth – by 2014 – 15 billion dollar. High volume sales and in terms of value
 CAGR – 15 % - growth was driven by factors like low drug penetration, rising middle class,
spending on healthcare, acceptance of medical insurance, changing lifestyle and related
diseases.
 Indian companies took advantage of affordability, popularity and sold large volume of low
priced medicine
 Intense competition – pharma companies were pushed to recruit medical representatives in
hordes in effort to increase market share. Tried to achieve “top of the mind recall” – aim –
more prescriptions
DRUG PRICE CONTROL ORDER – 2013

 It affected 348 formulations listed in essential medicines
 Need – make medicines available to patients – prices were cut by 50 percent
 Before this only 74 drugs were price controlled. And replace old medicine stock within 45
days of notification
 Only slash allowed in price, no hike allowed to medicines below govt. price
 16 percent to retailer. This meant shifting ceiling calculation to market based method
 Companies cannot halt production of medicine without government permission. Annual
increase in retail price was allowed
 Gujrat was leading – 600,000 wholesalers in india – 72 billion dollars. Reduction in margin
means reduction in profitability leading to erosion in profits
SALES MANAGEMENT AT PARKIN

 CEO parkin had believe effective sales force was key to success. – to maximize coverage,
improve sales and optimize costs
 He told Kumar that a structured, organised and forward looking sales process would
guarantee sales growth and forecasting
 Kumar wanted one on one relationship between doctors and representative. Organised and
effective force would not waste time and be more productive
SALES ORGANIZATION
 Sales force drivers – better customer focus and targeting, enhance call efficiency, develop
new business areas and accountability of resources.
 There sales team has 625 medical representatives. Extensive training – MR went through
one-month training twice a year and annual week long refresher course
 District sales manager worked with MR for 3 days for training and performance reviews. 7
MR were grouped geographically with DSM – who reported to RSM
 Parkin had 5 RSM who reported to general manager of sales
Role of medical representatives

 MR needed product knowledge as their first customers were medical practitioners. They
played dual role of sales agent and advisor to doctors.t
 Customers – doctors, dealers and retailers. They were responsible for delivering marketing
 and product in their territories message
 Persuaded doctors to prescribe near identical products with different brand names. Also to
prescribe more leading to increase in sales volume and profits. They had to design a short
and precise pitch
 Responsibility of MR – analyse sales statistics & prepared many reports, daily call report,
stock and sales report, expense report, travel plan, monthly reports. Upgrading product
knowledge and monitoring competitors
Sales Targets
 Annual targets were based on industry growth, segment growth and previous year sales,
additional sales force, launch of new product etc
 They had QTQ approach. – quality target quantity. RSM, DSM AND MR had to achieve both
kind of targets.
 MR – 10 doctors and 4 chemist. 50 percent time to A class customers 30 percent to B and 20
to C. they had to make 220 calls to doctors and 88 to retailers. Performanace incentives
were given
Sales Process
 Missionary selling was used in pharma thus role of MR was to convince doctors for product
and they discussed features and benefits of products, detailed info on indications, dosage,
side effects and prices.
 Parkin used SFA(sales force automation) software by oracle CRM to monitor sales
activities. MR entered daily reports in this. There was a sales audit system to monitor.
Sales force effectiveness

 MR made calls to doctors but were lost on C class customers because of comfort level with
doctors in the category. This could be reason for reduced sales per representative.
 Faltering on frequency of visits to targeted class of doctors. They met C and B class and
less with A(exhibit 7)
 High performing ones had met A class(exhibit 8)
 Low performing MR spent less time in calls(exhibit 9)
 Discrepancies in implementation of marketing plan when it was clear they should detail
max 3 products to a consumer(exhibit 10)
 Were not making use of promotional inputs available(exhibit 11)
DILEMMA
 Slow growth & dwindling profits – affected short term plans and dwindling profits
 Parkin needed fresh operating model to see challenges, opportunity, and create value for
customers
 One way could be to target class A – potential 20 percent increase
 Increase volume to compensate for loss in value
 Was this right time to invest in sales force effectiveness or will it be wiser to implement field
force rearrangement and product realignment
Exhibit 1:
-class A doctors planned vs actual frequency is very poor. So the need to improve this. –
workload capacity
Exhibit 2:
-net income has decreased
Exhibit 3:
-top product and category sold
Exhibit 4:
-sales force has increased
Exhibit 5:
-top pharma companies in india
Exhibit 6:
-organizational structure
Exhibit 7:
-high performers met A and had more frequency of visit and achieved more than 100
percent
Exhibit 9:
-low performers were spending much more time in waiting and travel and less time on
telephone calls
Exhibit 10:
-high performers were aligned well with marketing plans
Exhibit 11:
-high performers were using gifts and visual aids as the treatment

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The

case on parkin sales effectiveness will be used in the test for

Sales force effectiveness

 He realised profits were having downward trend as a result of new policy

 Kumar was thinking on boosting volumes to compensate for loss in value

INDIAN PHARMA INDUSTRY

DRUG PRICE CONTROL ORDER – 2013

SALES MANAGEMENT AT PARKIN

Role of medical representatives

Sales force effectiveness

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