Drugmakers eye a larger pie of OTC business

Domestic drugmakers are gearing up to a hitherto small segment in the healthcare market —over-the-counter, or OTC, products — to scale up their presence in India.

Nutrition and vitamin products, emergency contraceptives, dental, skincare products mainly constitute the OTC pie, with others like cough syrups, fever and pain medicines getting sold and used like OTC products.

Estimates by PricewaterhouseCoopers (PwC) show that the market in India for OTC products is growing at 18% per year and is expected to reach $3 billion in two years.

The growth is due to rising awareness and purchasing power, together with the fact that OTC products, unlike prescription products, can be advertised, said Sujay Shetty, associate director, PwC.

OTC products also involve some amount of brand building, which again aids their growth, said Ajit Mahadevan, partner, life sciences practice, Ernst &Young.

While prescription medicines are promoted by companies to doctors and chemists, OTC products are largely promoted to consumers, thereby assisting in brand recall. Thus the margins for OTC products are on an average 22-25% or even upwards, while those for prescription products range from 16-20%, making them more profitable for companies.

Ajay Piramal, chairman of Piramal Healthcare, said the OTC market in India is still in its nascent stage, thus presenting huge growth opportunities.

Moreover, of the OTC basket, nutraceuticals, which are health supplements, would grow at about 20% per year, said Akkshay Mehta, managing director of health products company Mission Vivacare. “In 2010, we look at introducing nutraceuticals in India.”

According to S P Chakraborty, group president, India Region
Formulations, Lupin, the company is looking at increasing presence in OTC segments like cough, pain, dermatology, etc, which are perceived to be high growth areas.

However, although OTC has high potential, a large portion of turnover won’t come from this segment, said Alok Saxena, director, international, Elder Pharma.

“Presently, over 95% of our turnover comes from prescription products. In OTC, we have a presence in dental and skincare products. But we don’t see something like 10-15% of turnover from OTC in future, as the prescription segment is doing very well. A 5-6% OTC contribution to the turnover in future would be decent,” said Saxena.

Despite all this growth, often consumers get insufficient information, with side effects of products sold OTC not getting specified, say healthcare experts.

This is true especially of products like emergency contraceptives, cough syrups, and pain medicines.

While several cough syrups have codeine (a narcotic) as a key ingredient, which causes addiction and leads to overuse, several painkillers are also habit-forming drugs, said Nikita Trehan, senior consultant, gynaecology, Trinity Healthcare, New Delhi.

“Used irrationally, which often happens, painkillers can affect the stomach and liver, while emergency contraceptives can cause hormonal imbalance, and may not be fully effective,” said Trehan.