It was first week of March 2013, when the CEO of the Taurus Analytical Solutions Limited, Phillips Kutty called for a meeting of the Marketing Manager, Human Resource Manager, Accounts Manager and Business Development Manager to critically analyze the problems faced by the company and to find the way forward. Sales of the company were bleak and the pipe line of projects for the next financial year 2013-2014 seemed almost dry, with only four long term projects from key accounts. The company had witnessed 50 percent dip in the sales and its profit figure showed just US$ 5 million when compared to previous year’s profit of US $10 million. Marketing manager, Arun Mehta, met with varied new client prospects over the last six months especially in the US, but even after persuasive selling there were no fresh projects coming in for the current year primarily because of unfavorable economic conditions in the United States. The company had created key accounts teams with separate and dedicated working units for the four key clients with which it had a contract of long term projects. Except for the key accounts, other clients who had promised to provide new projects backed out stating certain economic and political reasons. Arpana Sharma, Human Resource Manager, had pursued the manpower planning, taking in to consideration the expected projects and thus recruited domain people from various research and management institutes. As the company had already provided them the offer letters and mentioned the joining dates, it was not in a position to back out from its promises. This new batch was to join by the mid of March 2009 and further it had to be trained for the next three months. Given the above environment the CEO was concerned about how would the company be able to increase its sales and justify its expenditure, the failure of which would push the company in to considerable loss.

The Company

Taurus Analytical Solutions Limited was a midsized company with its inception in the year 2004. Since its inception it had worked in 290 therapeutic disease areas and had around 700 employees. Although headquartered in Bangalore, it had client offices in the United States and European countries. All of its clients were from the western world, primarily from the United States. The company provided the core analytical services such as competitive intelligence, sales forecasting, predictive modeling, suggesting suitable marketing mix, branding and positioning strategies, and developing suitable patient monitoring and data collecting tools for the top 50 pharmaceutical companies. Taurus Analytical Solutions provided services of sales and marketing analytics, and business consulting for the pharmaceutical and healthcare industries. The company’s services addressed decision-making, strategic planning and the routine business needs of the customers, across geographies, both at headquarters and affiliate levels.

Exhibit 1: Services offered

Taurus Analytical Solutions provided holistic services in population-based epidemiological study analysis, pharmaco-epidemiological study analysis, feasibility studies for clinical trials, and epidemiology database applications. The Company supported epidemiology, marketing research, and outcomes research groups in plugging the epidemiology data gaps they might have with reference to patient-based models, especially in the emerging markets. Taurus identified cost effective sources of secondary data and the research publications that provided estimates, and wherever feasible, validate those against other sources and its physician network to deliver evidence-based disease estimates.

Pricing strategy

Even though Taurus was based in developing country, India, it was unable to generate business from this market and primarily relied on western markets i.e. the United States and certain European countries. Their services were high priced and were suitable for premium customers. Arun was of the opinion that Indian pharmaceutical companies didn’t require the kind of services that Taurus provided because of the following reasons:

1)      The pharmaceutical sector in India was still in nascent stage and thus these pharmaceutical companies were not in need of sophisticated and niche services provided by Taurus.

2)      Indian Pharma companies cannot afford and may not be willing to pay  the premium service charges of Taurus.

As the pipe line had almost gone dry now the company was introspecting on its segmentation strategy to boost its sales.

External Environment

Since the major business of the company is generated from the United Sates, the prospects of the company was considerably influenced by the policy and economic framework of health care sector in the US. U.S.A. historically had given huge emphasis to the development of health care sector. It had numerous, conducive public policies like medical expenditure reimbursement and insurance policy coverage to the general public. The reimbursement was up to 100 percent for the chronic diseases. This gave a huge boost to health care and pharmaceutical industries in the US. Thus all the pharmaceutical companies including the pharmaceutical analytical companies showed an impressive growth and profits till 2008. However in 2008, due to economic downturn or recession, the US economy was worst hit with its repercussions being felt in pharmaceutical analytical companies like Taurus Analytical Solutions.  In addition to this the US government wanted to reduce its health care burden, which was increased due to non-conducive demographics, i.e.  decrease in the population of working class and increase in the population of old aged and dependent infants. In this regard the US government decided to reduce the government medical reimbursement to only 75 percent, this non-conducive political development had considerable negative impact on the health care and consequently on analytical industry which was deeply felt by Taurus.

Competition

Taurus Analytical Solutions faced considerable competition from players across the globe, with two major competitors located and operating in the same geographical region in which this company operated. As the company was midsized and comparatively new, the competitors enjoyed a greater market share. The developed economies posed a good market for the pharmaceutical analytical companies and hence  all the competitors focused on increasing the market share in the specified geographical locations like UK and the US, thereby increasing the competition.

Diversification strategy

The company thought of diversifying into other markets like Japan and China, but its efforts were not successful primarily because Japan, being highly conservative nation posed the entry barrier and China specifically posed the language barrier.

Traditionally regulated market such as European Union was backing generics (i.e. duplicates of chemical drugs prepared after their respective patents lapsed) and biosimilars (i.e. biologic mimics of off patent biologic drugs)with conducive policies. On the contrary, the US was undergoing intense negotiations with varied stakeholders for the standardization of the biosimilars and generic policies. This had considerable negative impact on the sales and revenues of pharmaceutical industry and consequently influencing the pharmaceutical analytical industry.

Now the marketing manager was in dilemma as to what should be the sales and marketing strategies for the next year, so as to boost the sales. He wondered whether the company should increase sales efforts in the rapidly growing markets or build effective strategies for marketing the services in the domestic market in view of existing macro environmental issues.

Food for thought:

What sales and marketing strategies should the marketing manager plan to boost the sales of the company in the recessionary economy?