Pharma biggies to hold turf

Apprehensions that Big Pharma will overwhelm the Indian drug market and impact access to medicines can rest a while.

Market intelligence firm IMS Health and Credit Suisse say big Indian firms will garner over 52% share of the market by 2016, leaving multinationals (MNCs) with just 28% . The balance will be held by lesser-known local companies.

Currently, large Indian firms such as Cipla, Dr Reddy’s, Lupin, Cadila, Sun and Mankind together hold about 45% share, while MNCs hold 22-25%.

The local drug market, growing at a compounded annual rate of 12.3%, is itself set to grow to $20 billion by 2015.

The market is highly fragmented with over 300 companies in the organised sector and 20,000 small regional players.

Experts said larger Indian drug makers are better positioned to deal with various trends and challenges the industry is likely to face in the time to come.

Shakti Chakraborty, group president, India region formulations, Lupin, said, “We’ve been growing at 20% annually and will maintain that same rate.”

Analysts said others such as Cadila and Cipla will also grow at a healthy 15-16% annually.
The larger firms have a huge presence in therapeutic segments such as diabetes, cardiovascular diseases, respiratory ailments and neurological disorders, which are growing at 15-25% annually.

Analysts Anubhav Aggarwal and Chunky Shah from Credit Suisse said in a report dated December 13 that they see a trend wherein the Indian market is shifting in favour of larger players.
“As the regulator becomes stronger in implementing new marketing code of ethics, the larger firms with stronger brand recall should benefit.”

The government is working to enforce an ethics code that aims at curbing the practice of drug makers gifting and funding doctors.

A healthcare expert said, “Even if this code is mandatorily implemented, the bigger firms with more financial muscle can circumvent the code to push their products among the medical fraternity.”

Aggarwal and Shah wrote that going ahead, the opportunities to introduce new products will reduce, but larger firms will have the capacity to in-license products from foreign firms, something smaller firms will lack.

Finally, with the new pharmaceutical pricing policy, which will compel companies to fix prices equal to or below a ceiling price, the prices of larger firms will drop slightly, thereby increasing affordability and aiding gain in market share.