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| Edited By: |Source: DNA |Updated: Mar 17, 2018, 03:45 AM IST
Last week, global pharmaceutical market intelligence firm IMS Health announced that the size of the world drug market will expand by $300 billion over the next five years and cross $1.1 trillion, aided by 5-8% compounded growth every year.
Coming at the back of a revival of the US market, which grew 5.1% in 2009 after two consecutive years of slump, this could be seen as an early signal of better years ahead for the struggling industry.
In the initial analysis, it appears that the nightmares of the “patent cliff” that the big brand companies are confronted with may be offset to a large extent by the majestic emergence of the Asian markets like India and China, followed by other growth markets like Mexico, Turkey and Brazil.
With a measured tone, IMS Health’s well-known analyst Murray Aitken thus explains, “Patient demand for pharmaceuticals will remain robust, despite the ongoing effects of the economic downturn being felt in many parts of the world.”
IMS has sharply focused on the 14-17% expected growth in the pharmerging countries — a term coined to define the high-growth emerging markets like India —and contrasted it with the 3-6% growth expected in the major developed markets.
“In the developed markets, with publicly funded healthcare plans, pressure by payers to curb drug spending growth will only intensify, but that will be more than offset by the ongoing, rapid expansion of demand in the pharmerging markets. Net growth over the next five years is expected to be strong — even as the industry faces the peak years of patent expiries for innovative drugs introduced 10-15 years ago and subsequent entry of lower-cost generic alternatives,” Aitken adds
This is a clear indicator that moves made by global drug makers to reach out aggressively into Asian markets like India and China a few years ago was timed to balance the likely erosion of sales in developed markets.
“As a result, the aggregate growth through 2014 from pharmerging markets will be similar to the growth experienced in developed markets —- about $120-140 billion,” says IMS Health.
US will continue to retain its top market slot, though growth there will be limited in the range of 3-6% for the next five years and may reach $360-390 billion from the present $300 billion.
The timing of the released data is vital for Indian companies in identifying future growth avenues, planning competing moves with their global rivals who now walk the generic and innovative paths with equal comfort and preparing in advance for risks and adversities.
Even at the peaking point of the financial crisis of 2008, the Indian drug industry could manage respectable growth numbers.
That said, IMS Health has clearly said that higher growth will come from therapy areas having significant unmet clinical need, high-cost burden of disease and innovative science that can bring new treatment options to patients. In particular, the growth trends will be prominent in areas of oncology, diabetes, HIV and could be in the range of 10% in the next five years. This could be pointed at newer drugs that are likely to be brought into the market in the coming years, but the significance of generic drugs cannot be played down.
More and more Indian companies have been able to implement smart marketing strategies, some having learnt from the massively commoditised generic drugs market in the US or some high-priced acquisition in the days of reckless stock market euphoria.
From a consultant’s view point, these could be the best years for the Indian drug industry. While many may not be able to withstand the challenges of global industry’s business pressures, a few have taken the proverbial bull by its horns.
They have launched significantly modified niche products in the domestic market, struck partnership deals with global front-end pharma companies, branched out into biotechnology and acquired innovative brands.
Needed next is a sound management strategy that does not shake with the whims of the promoters or greedily sell out.
That backed by a team of management experts who can create a $5 billion entity in the next few years will be an ideal case study. If the ideas are implemented right, it is not impossible. History of the Indian drug industry is the best proof and the true entrepreneurs are working to see that happen.
