Why do new products fail? – Market Place – Express Pharma Pulse

Why do new products fail?

The past year has witnessed several product introductions, but only a handful of them have been able to make a mark in the pharma market, finds R K Srivastava

New Product Introductions-2002

New products are the backbone of any organization’s success. They are the lifelines for profitability. They are the accelerating factor for making company’s supremacy in the market. New products provide companies an important tool to have an edge over its competitors. Therefore, many progressive companies have been giving more emphasis to launching of new products. But how many products are successful and what are their roles in 2002? What was the impact they registered in 2002?

Many progressive companies have introduced several new products in 2002. As usual, Cipla took the lead in launching of the new products and registered over Rs 29 crores sales from them. The company-wise number of new products introduced and sales generated is given in Table 1. It is quite surprising to note that many products introduced during 2002 could not get listed in ORG as top 300 products or even cross one crore in sales.

Company

No. of New Products introduced

Volume generated * (In crore)

Sales/Average New Product/Year

(In crore)

CIPLA

123

28.7

0.23

Ranbaxy

78

25.0

0.32

Glaxo

5

4.3

0.86

Nicholas

31

10

0.32

Sun Pharma

25

9.6

0.38

Alkem

57

13.5

0.24

Dr. Reddy’s Lab

17

9.8

0.58

Zydus Cadilla

39

8.1

0.20

Boots

2

1.3

0.65

Novartis

14

2.9

0.21

Industry

1621

362.2

0.22

From the above it is quite disturbing to note that the number of products listed in top 300 are going down day by day. Why are the new products introduced by pharmaceutical companies not doing well? What could be the reasons?

Compatibility with companies’ product-mixes: Many times new products are selected irrespective of their compatibility with product-mix eg. a company is strong in selling antiboitics and B-complex, suddenly decides to introduce cardiac range products with their existing field force.

The success rate becomes less because of the different mindsets of medical representatives. The compatibility is very important. During 2002 many new products could not register more sales because of this incompatibility and mindset of representatives.

Half-hearted efforts: Many companies introduce products because they have to do so. They have no proper planning as well as no follow-up. With more numbers of new products being introduced, field force also gets confused leaving increase in failure act.

Table Company No. of New Products Incl. Line Extn. Per Month New Product Cipla 123 10 Ranbaxy 78 7 Sun 25 2 Alkem 57 5 Nicholas 31 3

The above table clearly signifies the fact that there is a need to have a re-look at companies’ strategies, its working norms and working patterns. New product introductions requires time and money. Introduction of new products in a haphazard manner have led to wastage of these two prime resources. Therefore, to improve the above, a strategy formulation should be planned with proper market research.

Faulty strategy formulation: Many a time, companies are launching new product but not launching the brand. Company’s strategy should be to develop the brand not the product. Often, company develops the product and creates a market for others to get their share. Therefore, efforts should be to launch a brand not a product. How many companies are doing these? By selling a product, companies have a hold over certain share of prescription but by creating a brand they can change the mindset as well as control over prescription behaviour.

No clear cut UCP: Unique Customer Perception (UCP) is very important in getting quick response. Azithromycin in spite of having good molecular benefits can be perceived as a better molecule compared to Roxithromycin. The same holds true for Esoprazole which did not get much success compared to Pentaprazole. Even though Esoprazole is a better product. A proper survey should be conducted before the launch of the product. How many companies are doing proper survey?

Lack of market research: It is quite saddening to know that market research department is losing its impact and place in the pharma industry. Many pharma companies are not doing research on the impact of the promotional thrust, concept taste, product taste, etc. This lack of research which may be due to time constraint have led to faulty introduction of many new products and collossal loss to the company. New products are the backbone of any progressive company. If it is so why many companies are still failing to take a step to look at their failure rate? Why our standard of evaluating new product success rate has come down? Marketing professionals should relook at their activities and learn from experiences so that during 2003 a number of new products introduced soon have a better success rate.

R K Srivastava is a marketing consultant, based in Mumbai