The paper discusses the emerging role of product differentiation in the pharmaceutical sector, and evaluates its impact on sustainability of the industry. Secondary data were used to study various differentiation strategies and their effect on market life of certain drug products. The study found that product differentiation is being increasingly employed to sustain the profitability of pharmaceutical companies. New dosage forms, fixed drug combinations and new indications are the most exploited differentiation strategies. Although product differentiation has helped large pharmaceutical companies to replenish their drying product pipeline, it has also immensely benefited drug delivery companies that were, till now, fringe players. The research output helps business strategists in pharmaceutical industry to appreciate the importance of product differentiation, and make it one of their core business strategies.

Jayashree Dubeyhas several years of academic experience in the areas of marketing management, production management and quantitative techniques. She has written a number of research papers and theoretical articles. Her areas of special interest are sales promotion, advertising, quality management and portfolio management. AbstractHeavy competition in India in almost all product categories, due to diversification by large and medium companies and increased entry of multinationals, has restricted the growth of domestic companies. Previously, large companies enjoyed high profit margins by targeting premium priced products in the upper strata of Indian society. High levels of competition from equally reputed brands have not only decreased the companies' market share but also created price wars, reducing profit margins and limiting market growth. This has motivated companies to consider the lower classes and the rural segments, which they had previously ignored. By targeting these segments with products in small packs at lower price points, companies have experienced great success. At the same time, small packs also pose some challenges for the companies. This paper explains the importance of small packs for market expansion in various product categories within the Indian market, drawing on several examples to support the views of the authors.

PurposeThis paper aims to analyze the present trends in pharmaceutical innovation and the impact of generic competition.Design/methodology/approachA secondary research was conducted to collect data related to new drug approvals of various classes over previous years; trends of investment in research and development; and the pipeline of new drug products of pharmaceutical companies.FindingsWhile the new molecular entity (NME) approval rate has not improved over previous years, innovators have been aggressively pursuing the radical innovation process. Further, there has been a significant increase in incremental innovation. Pharmaceutical companies' investment in research has gone up resulting in higher number of application for new drug approvals. In India, pharmaceutical companies have significantly increased their research investment. However, the NME pipeline is still slim though there has been a significant surge in generic filings.Originality/valueIt provides a concise understanding of trends in pharmaceutical innovation and analyzes how various factors are shaping up the innovation process. It also throws light on the evolution story of Indian pharmaceutical companies to become drug innovators.

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