Growth-chasing pharmaceutical firms such as Piramal, Lupin and Ranbaxy are increasingly relying on their over-the-counter (OTC) portfolios in the domestic market.
Growth-chasing pharmaceutical firms such as Piramal, Lupin and Ranbaxy are increasingly relying on their over-the-counter (OTC) portfolios in the domestic market.
For, the OTC segment’s annual growth rate of 15-20% now outstrips industry’s 12-14%, and promises to get better. (Even the prescription drugs segment’s 12% growth rate lags the OTC segment’s.)
“Since OTCs can be sold anywhere, from a chemist to a local kirana shop, the opportunity for manufacturers is good,” said Ranjit Kapadia, senior vice-president, Centrum Broking.
A typical successful OTC brand nets `50-100 crore in annual sales across 5-8 lakh outlets. OTC drugs – certain painkillers, fever and cough medicines, health supplements, contraceptives, syrups, creams and ointments – already net
Rs3,100 crore in annual sales, or 5% of the annual industry-wide sales of Rs62,000 crore (around $22 billion).
Kedar Rajadnye, president, consumer products division of Piramal Enterprises, said the company has a three-pronged strategy to actualise the OTC segment’s potential through existing brands, new launches and acquisitions.
Similarly, Lupin is looking to introduce products like skin cream in the cosmetology segment in the near future, said Shakti Chakraborty, group president of the company’s India region formulations business.
Given that the industry has been set a target of `5.42 lakh crore ($100 billion) in annual sales by 2020, the OTC segment, with its accelerating growth rate, could be looking at upwards of Rs27,000-Rs28,000 crore in annual sales by this decade-end.
Jacob Mathew, founder of investment banking firm MAPE Advisory Group, said margins for OTC drugs can range between 18% and 20%.
Although advertising costs keep OTC margins less than 22-25% of prescription drugs, factors like growing awareness and drugs becoming affordable work to the segment’s advantage.
However, medical experts see another reason for the growth of OTC drugs: the practice of self-medication among consumers. This is particularly true for pain-killers, antacids, oral contraceptives and cough syrups, said Navneet Kaur, internal medicine specialist at Nova Specialty Surgery in New Delhi.
“Easy availability means, people keep taking them without knowing their side-effects or dangers of consuming products without any medical advice,” said Kaur.
@priya3014
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}