How are sales performance?

The pharmaceutical drug market comprises of expenditures, value generation, sales, production capabilities, and availability. However, the drug market is mainly determined by the sales or the production rate of the companies. Subsequently, sales are related to the production rate in the sense that, sales of drugs drives the production rate of the companies (Yin, 2008).

For instance, a company manufacturing 100 quantities of a particular drug and sold all 100, the company gets driven to produce 200 in quantity for the next phase.

This also implicates from the fact that the global drug market or pharmaceutical market remains measured on the basis of revenues generated. Furthermore, a report by Statista, (2018) surveyed the revenue generated by the global pharmaceutical market from 2001 to 2017 and presented on the measures in US dollars.

The pharmaceutical sales metrics

To begin with, sales in the pharmaceutical drug market remain primarily measured by tallying the volume of prescriptions received at dispensaries and the volume of OTC products sold to the patients (Yin, 2008). However, sales measures are assessed on the basis of;

quantitatively,

qualitatively,

timelessness, and

cost-effectiveness.

Quantitatively, pharma companies measure using the variable sales volume, revenue generated and accounts acquired (Goodman, 2008). On the other hand, qualitative methods of measurement include customer retention, customer acquisition and, customer margin achievement.

Timelessness is measured from the results of adverse drug reports and reports of drug efficacy. Nevertheless, pharma companies also measure sales on the basis of revenue performance against expense budgets.

Sales performance pyramid to estimate the global drug market

However, the sales measures in the pharmaceutical drug market are based on the key performance indicators such as:

the total number of patients for different disease conditions in a region,

product distribution to dispensaries and hospitals in a region,

number or re-orders and the duration of re-order.

Subsequently, these KPIs are interpreted as sales metrics and help the pharma companies in measuring company-wide performance as well as the performance of the complete market (Goodman, 2008). Furthermore, these sales metrics also include:

total revenue,

the percentage of revenue from existing dispensaries,

pharma distributors and hospitals,

year-over-year growth,

revenue by territory and market,

cost of selling a percentage of revenue generated and,

revenue versus expenditure metric.

Model to assess the pharmaceutical drug market

To begin with, the strategic measurement analysis and reporting technique (SMART) or commonly known as the Performance Pyramid. This technique integrates the strategic objectives and operational performance dimensions through a four-level structure (Bititci, 2016). Pharmaceutical companies use this model in order to assess the performance of their sales against the company objectives using various sales based metrics. In addition, the pharmaceutical companies use this model not just to measure the sales performance but also to incorporate new plans for improved drug outreach.

Model to assess the sales performance in pharmaceutical drug market (Bititci, 2016)

Apart from SMART model, pharma companies also use the results and determinants framework to assess their sales by imputing the sales metrics on different model items (Bititci, 2016). The metrics outputs are then optimized to plan the next set of marketing and sales strategies. However, the results and determinants framework used by pharma companies use six performance dimensions classified under two categories; results and determinants. Subsequently, the results category covers financial and competitiveness-related drug sales performance measures. Subsequently, the framework conceptualises these measures as lagging indicators that reflect the ultimate objectives of an organisation. On the other hand, the determinants category includes:

sales performance measures for quality,

resource utilisation,

the cost to expenditure ratio,

business partners and,

development of new drugs.

The results and determinants framework to improve sales (Bititci, 2016)

Measuring sales on the basis of types of drug manufacturing

According to Greene, (2007), the Indian pharmaceutical drug industry remain categorized on the basis of manufacturing different types of drugs;

Abbreviated New Drug Applications (ANDAs)

Active pharmaceutical ingredient (APIs)

Essential drugs

Biologicals

Bulk drugs

Formulations

Brand name drugs

Proprietary drugs

Generic drugs

Branded generics

To begin with, ANDAs, a type of drug manufactured by generic drug manufacturing companies like Aurobindo Pharma and Sun Pharma; subsequently challenging a patent held by an innovator company. On approval, these companies can export generic drugs to USA and USFDA regulated countries. APIs, on the other hand, comprises of primary active ingredients of a final pharmaceutical product manufactured and sold to branded drug manufacturers such as TAPI (Teva Active Pharmaceutical Ingredients) and Cipla. Sales are also measured for Biologics type of drugs, which are medical preparation made from living organisms, such as insulin, erythropoietin, and vaccines by companies like Biocon and Serum Institute if India.

However, formulation drugs are also sold as tablets, capsules, injectables, or syrups by companies like Aurobindo Pharma and Cadila Healthcare. Similarly, companies like Novartis and Wockhardt remain the largest selling proprietary drug companies that have a trade or brand name and are protected by a patent. However, companies like Biocon and Sun Pharma, are also associated with the sales of essential drugs such as:

antibiotics,

antibacterials,

anti-parasitic,

cardiovascular drugs,

vitamins and provitamins,

vaccines,

insulin,

caustic and other hormones and,

tetracycline and its preparations.

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