How did Micro Labs spend Rs 1000 crores on promotion of Dolo-650, which generated only Rs 350 crores in revenue?

New Delhi: Remember how fondly we were discussing the popularity of Dolo-650 mg when you, I and all others were popping this medicine due to Covid-19-related illness?

Pushed by high-grade fever, one of the most common symptoms of Covid-19, the sales of this oval-shaped white pill had doubled and social media was flooded with memes claiming it’s the ‘most sellable’ medicine in India.

But time, as they say, changes.

Today, the maker of Dolo-650 mg, Micro Labs, has been accused of offering freebies worth Rs 1,000 crore to doctors to promote this anti-fever drug.

To clarify, Micro Labs officially is not being blamed for bribery or corruption. They are being investigated only for tax evasion.

However, the company is facing a reputational crisis with allegations of “unethical marketing practices”. Meanwhile, the medical regulator National Medical Commission (NMC) is seeking details from the Income Tax department of doctors whose names have been unearthed during the raids at the pharma company.

The move will discourage doctors from prescribing the brand anymore as they may not unnecessarily want to get under the scanner or become part of a controversy.

In the latest move, on Thursday, the Supreme Court raised concerns over marketing practices by pharmaceutical companies and specifically pointed toward the Dolo controversy.

The PIL filed by the lobby of medical representatives (sales force of pharma companies) Federation of Medical & Sales Representatives Association of India(FMRAI) claimed that the Dolo maker offered freebies to doctors.

In fact, Justice DY Chandrachud, heading the bench, termed it a serious issue and said (as quoted by Bar & Bench), “This is not music to my ears. I was also asked to have the same when I had Covid. This is a serious issue and matter."

Now, the Centre has been directed to file a reply within 10 days.

While the nexus between pharmaceutical companies and doctors is nothing new to discuss and there is no law or regulations to curb it, there are several gaps which make this controversy slightly imperfect.

Let’s start talking about those gaps.

Rs 1,000 crore spent on promotion of ‘paracetamol’!

Dolo-650 is an antipyretic pill which is manufactured using one of the most common, and oldest, generic formulations known as paracetamol.

Paracetamol, a generic salt, is a common painkiller used to treat aches and reduce high temperatures and has been on the market since the 1960s.

Crocin, Sumo, Dolo or Calpol — these are different names given by pharma companies selling the same salt, paracetamol, under their copyright brand. Hence, it is not an innovative, patented, complex medicine that Micro Labs manufactures.

To add to it, paracetamol is an essential medicine and falls under the government’s price control mechanism, which means that the company cannot increase or fix the price of the medicine above the threshold decided by the government.

The price which is fixed by the government for this category of medicine is the same for all brands, not just for Dolo-650. The price per tablet of Micro Lab’s Dolo-650, Cipla’s Paracip, Alkem’s Sumo and Glaxo SmithKline’s Calpol are the same — Rs 2 per tablet or a strip of 15 tablets for Rs 30.

Why would a smart pharma company spend Rs 1,000 crore on a medicine which is under price control? What extra was it earning to spend lavishly on marketing?

Data is more chaotic and tells the same story

They say, data never lies.

According to Micro Labs, the company generated revenue of Rs 350 crore from the sales of Dolo-650 in the last financial year ending March 2022. The duration includes the flight of Dolo-650 considering the enormous second wave followed by the third wave of Covid-19 infections.

So, did the company spend Rs 1,000 crore to generate revenue of Rs 350 crore? Is this just bad economics or some more gaps?

I spoke to three industry insiders who have worked or are working at senior levels in pharmaceutical companies. While it will be incorrect, alleging and confusing if I narrate their side of the stories and opinions over the controversy, they all estimated that Micro Labs must have generated a profit of not more than Rs 20-30 crore on revenue of Rs 350 crore from the sales of this medicine.

“This is a low margin category which lacks attraction. The possibility of earning is extremely low. This category can only be used to establish a brand name and recall value among doctors and patients,” an official working with a top Indian drugmaker, who has worked on a “paracetamol” portfolio for more than a decade, told me.

The economics, now, is even more chaotic. Does this mean the company spent Rs 1,000 crore for a mere profit of Rs 30 crore?

In short: Of the group’s turnover of Rs 4,000 crore, Micro Labs spent 25% or one-fourth of the money on marketing expenses on just one product and that product is price-controlled paracetamol. Overall, it offers over 400 products covering high-margin categories, including cardiology, diabetology, ophthalmology, dermatology, and psychiatry among others.

What is the Rs 1,000 crore figure?

Let’s understand how the figure of Rs 1,000 crore was calculated.

According to the widely read interview of Dolo-650’s top officials on several media platforms, “the Income Tax sleuths have collated the total marketing expenditure from all divisions of the company for past several years to arrive at a Rs 1,000 crore figure”.

The sources in the company and the industry confirmed to me that the Rs 1,000 crore estimate includes the marketing and promotional spending of the entire Micro Labs for the last six to seven years. “Then also, it will not be equal to Rs 1,000 crore. It’s a bizarre figure, god knows how it has been calculated… maybe some bits and pieces have been taken from here and there…,” an official linked to the firm told me.

Multiple industry officials believe that any medicine with a “decent R&D expense” will not require a promotional expenditure of this sort, forget selling paracetamol.

Maybe, we need more details on how the Rs 1,000 crore figure has been computed.

Dolo: An old market leader

Treatment protocol released by the apex health research body, the Indian Council of Medical Research (ICMR), and the Ministry of Health and Family Welfare (MoHF&W), prescribed the use of “paracetamol 650 mg” instead of the more common 500 mg of the same medicine.

It was followed by an increase in the prescription of Dolo. But it was not newfound fame. Dolo has remained the market leader in the 650 category for over several years. The company’s first entry into the 650 milligrams (MG) category had created a perception that it’s more effective on fever due to unknown illnesses.

On average, starting in 2018, the brand had captured over 50 per cent market share followed by Calpol, as per the data by AIOCD-AWACS. In fact, in 2010, Dolo-650 was awarded the best-managed brand of the year. Subsequently, it was recognised as India’s most admired brand followed by several other recognitions.

So there is no surprise rise in the business of Dolo-650 and as per Micro Labs, a similar jump in sales was noticed even during Dengue and Chikungunya.

What was different this time was the internet frenzy and hilarious, intelligent, trending memes. So, was this the only trigger behind the controversy or was there any other solid evidence?

The gist…

It’s no secret that companies spend money on doctors and the unholy nexus exists. But, on the other hand, if this matter is of greater importance, then no willingness has been shown by the government to curb the practice.

Despite requests by multiple lobbies and NGOs, the government has not made the Uniform Code of Pharmaceutical Marketing Practices (UCPMP) mandatory. It is the guidance for pharma companies on do’s and don’ts while marketing products.

In this case, further investigation is required to establish whether Micro Labs is completely guilty or partially at fault or at no fault, but one point is clear— it cannot be just one pharmaceutical company bribing doctors or distributing freebies.

Every other pharmaceutical company is probably culpable and the entire ecosystem needs fixing. Diluting the serious issue by singling out Dolo is the maker’s bad luck!

Read all the Latest News, Trending News, Cricket News, Bollywood News,
India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.