India - Pharma Growth

Generic genericsCurrently, the market share of generic generics is very low. We see two main hurdles to pure genericisation of the Indian market:1. Lack of generic generics regulations and guidelines for the establishment of bio-equivalence, for example the Abbreviated New Drug Application (ANDA) guidelines that exist in the U.S2. Doctor comfort derived from prescribing medications on the basis of brand name. A good example of a generic generics program in India. This program provides no-name generic drugs at subsidized prices in 24-hour pharmacies that are located all over the country.Maximizing focus on branded generics:Both multinational companies and domestic firms are taking steps towards maximizing potential returns from branded generics. For example, Abbott acquired Piramal Healthcare for its strong sales force and branded generics portfolio (Refer pull out). Domestic firms are also looking to increase their share of the branded generics market, with some of the leading pharmaceutical companies adding to their sales forces by nearly 50% in 2010.Over-the-counter products:The OTC segment has been identified alone of the potential growth drivers for the Indian Pharma industry, as the sale of OTC drugs in India has been increasing over the years. The OTC market was worth about US$1.8 billion in 2009 and it will grow to US$11 billion.'OTC Drugs' means drugs legally allowed to be sold 'Over The Counter' by pharmacists, i.e. without the prescription of a Registered Medical Practitioner.


Although the phrase 'OTC' has no legal recognition in India, all the drugs not included in the list of 'prescription-only drugs' are considered to be non-prescription drugs (or OTC drugs).OTC segment growth drivers:Wider Distribution Channel: Companies can sell their products outside of Pharmacies, for example in post-offices and department stores.Direct Consumer Advertisement: The government allows public advertising of these products, giving drug makers greater freedom to use more creative methods while marketing their products.Magic Remedies (Objectionable Advertisements) act prescribes a negative list of diseases for which medication cannot be publicly advertised.Increase Consumer awareness: There is an increased reliance on self-medication as public awareness of common ailments goes up.Low Price control: Other than acetylsalicylic acid and ephedrine and its salts, very few of the OTC active ingredients fall under the current DPCO price controls.The above factors have meant that there are a large number of Indian companies that manufacture and sell OTC products. Cipla, Ranbaxy and Zydus Cadila are examples of Indian companies that have done well in the OTC segment.The attractiveness of the Indian OTC market has extended to MNCs as well. Novartis, Pfizer and Johnson & Johnson are examples of MNCs that have a strong presence in the Indian OTC segment.