This presentation highlights the key features of Rural-Pharmaceutical market in India and discuss key success factors.

1. Leveraging Rural Market Potential
Indian Pharmaceutical Market

2. Some facts about rural India
1% increase
in rural income
Buying Power of
Rs.10,000 Crore
~ Two-third of
Middle-income
households
Live in rural
India
~ 50% India’s
Buying Potential
Lies in Villages
ZENITH International Journal of Multidisciplinary Research Vol.1 Issue 6, October 2011, ISSN 2231 5780

3. Gigantic market size of rural India
 73% of population lives in rural India ~ 720 million customers
 Rural population accounts for 12% of the world's population
– as large as the market of USA or Russia
 25% of all villages account for 65% of the total rural
population
 60% of India's US$15 billion annual consumption of gold and
gold jewelry is from rural and semi-urban areas
Growth Propellers
•Government initiatives and schemes
•Infrastructure development
•Industry projects across the country
•Emphasis on local-employability

4. FMCGs have successfully leveraged the opportunity
Company
% Contribution in sales
Asian Paints
60%
Dabur
40%
Videocon
40%
Colgate
50%
HLL
> 50%

5. Disposable household income levels set to rise significantly
in rural markets
Changing income pyramid in rural India
Annual per capita disposable household
income in rural regions
Percent
USD
631
+54%
516
411
Disposable Income = The amount of money that households have available
for spending and saving after income taxes have been accounted for.
Source: Mckinsey Global Institute- The Bird of Gold: The Rise of India’s Consumer Market

6. Driving accessibility in untapped extra urban markets can
have significant impact on growth of pharmaceuticals
Extra urban = Tier 2 + Rural
Acceptability
Affordability
More than 28 Million
households (~20%) will
climb out of the deprived
income growth
Accessibility
Epidemiological
factors
2009 -20
Growth Drivers
Increased Pharma spend *
/household income
(+ 140%– 200%)
+
Health coverage (Rashtriya
+
Swasthya Bima Yojana+) will
further enhance the affordability
for healthcare
High levels of healthcare spend
in extra urban markets
* Based on share of wallet spend on healthcare in each income class
and average spend of 16% on Pharma within healthcare across classes
+ The empanelled list includes Private hospitals
Source: McKinsey Global Institute-The Bird of Gold: The Rise of India’s Consumer Market

7. Rural markets contribute to one fourth of Indian
pharmaceutical market

8. Improving Socio-economic profile of rural India will provide
further impetus for growing rural pharmaceutical market
Market with a size of > $ 3 Billion
Extra urban = Tier 2 + Rural
l
Rura
and
I
to V 13 %
s II
:
yrs
Clas
R5
For
CAG
Rural Market
Apr MAT 2011:
(15%)
18.8%
(4%)
(16%)
3.2
(17%)
2.7
2.8
2.3
2
5.4
3
MAT 04/2006
MAT 04/2007
3.9
3.4
MAT 04/2008
Metro + Class I ($ bn)
*Source : ORG ims SSA Audit MAT April 2010
4.4
MAT 04/2009
MAT 04/2010
Class II to VI and Rural ($ bn)
1 USD : 49.5 INR
( ) value
growth for
Class II to
VI and Rural

9. Players have adopted varied strategies to leverage the
rural opportunity
Re-Engineering
Products, pricing and packaging
1. Godrej has introduced chotukool refrigerator
2. Vortex has launched low cost ATMs
3. Nokia has developed Life tools - a mobile
application that provides access to agricultural,
educational and entertainment content.
Sold by Village girls For Rs.150/- margin
Reported user base
1.5 million
SBI deployed
545 ATMs across semi-urban and rural India

10. Players have adopted varied strategies to leverage the
rural opportunity
Re-Engineering
Communication and distribution channels
1. Tata Tea's 'Gaon Chalo'
2. HUL's Project Shakti;
3. ITC e-choupal
In One year added 20,000 retailers, 500 new
rural distributors in 10,000 villages in UP
Rural Women became direct-to-consumer sales
distributors for Hindustan Lever’s soaps and
shampoos.
More than 45 000 Shakti entrepreneurs covering
3 million homes in 100 000 villages in 15 states .

11. What differentiates Rural Markets from Urban
markets?
1.Reach
2.Living Standards
3.Economic gap
4.Product awareness
5.Education
6.Channel of Communication
7.Channel of distribution
8.High importance to “Value for money” than Brand
9.Heterogenic market nature

12. Strategies must address the differences between urban
and rural market to succeed
Aspect
1
Philosophy
2
3
4
5
6
7
Competition
Literacy
Income
Adoption
Quality
Transportation
8 Advertising
Urban
Rural
Marketing & Social
Concept
Development &
Relationship marketing
Organized Sector
Unorganized Sector
High
Low
High
Low
Faster
Slow
Good
Moderate
Good
Average
Print, audio visual,
outdoors.
TV, Radio, print media in
many languages

13. Success in rural markets need to add 4 A to Product
mix
4P
PRODUCT
PACKING
PLACE
PRICE
4A
AVAILABILITY
AFFORDABILITY
ACCEPTABILITY
AWARENESS
Rural
Markets

14. THANK YOU
For any further discussion on this topic, author can be reached at
malepatirk@yahoo.com
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