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Can APIs be Differentiated? Differentiation Strategies

APIDifferentiation

Article by: Dr. R. B. Smarta
Managing Director- Interlink Marketing Consultancy Pvt. Ltd.
And
Mr. Durga Prasad
(Consultant – Interlink Marketing Consultancy Pvt. Ltd.)
The Global API market is estimated to touch $ 133 bn, while Indian API market is expected to be 11%
of the pie, with a projected 11% CAGR by 2015. Indian API manufacturers face tough competition
from well established API manufacturers from developed countries, and also aggressive Asian
counterparts.
Global Generic Formulators are keenly looking towards India as a preferred source of Generic API for
Regulated Markets. This is the shift witnessed over a period of two decades. As the Indian API
manufacturers still fighting in competitive Less Regulated Markets, while establishing themselves in
Regulated Markets as trustworthy suppliers.
Differentiation:
How to differentiate a commoditized product like APIs in the globe?
As an individual API manufacturer from India how can one create a differentiation factor, especially
when the market situations, with respect to economy or regulations, are drastically changing? The
differentiation factors can be attached to the entire organization or a product or a group of products,
and also to a group of markets where you want to operate.
In fact, API is not just a product. It is a well blended combination of Product, Service, and Value.
Let us consider various differentiation factors in case of Indian APIs

One of the factors on Product from above Fig 1, can act as a differentiator.
Many API manufacturer has the capability to bring new products quickly but drops the products
once the margins start eroding. Customers would prefer this company for development and early
launch phase of their formulations. But at the same time the customer starts looking for alternate
supplier. So this API manufacturer has created a differentiation for itself as a “quick to launch new
products company”. As long as this manufacturer maintains this differentiation factor, the benefits
keep flowing in.
Secondly, API manufacturers are remembered by the customers based on the various exhibited and
inherent attributes of Product, Service and Value in Fig 1. The question of what attributes to choose
and what is right and what is sustainable depends on the long term vision of the API manufacturer
who would like to create a differentiation factor.
As a result, a best-fit strategy to differentiate is based on the factors shown in Fig 1 and weaving them
in the competitive advantage.
Most of Chinese API Manufacturers at the beginning became high volume cost effective,
competitive and quick producers. As the time progressed, the differentiation factors increased and we
now find a lot of DMF filings and handling of different chemistries.
Gradually make it visible to the customer about your differentiation factors either through subtle
communication or through your professional activity and ensure that the customer is aware about
the changes.
We must take feedback from within the organization and also from customers to evaluate the
relevance and importance and impact of the differentiation factors, and perform periodic reviews.
Differentiation factor lies within and success lies with a win-win situation with customers.
                                                                                                  – Published in Pharmabiz