Brand launches in the Indian pharmaceutical sector have dipped by more than half in 2011. On an average, pharma companies have launched 4,000 brands a year over the past four years but these have come down to 1,400-1,500 in the calendar year till September this year. Even if only the trends so far were annualised, there is a fall of 53 per cent. Sujay Shetty, executive director–India, PricewaterhouseCoopers, says the decline is due to increased competition. “Every molecule has 30-40 competitors. Unlike the situation a few years ago, there is no market for me-too products. Companies will have to focus on differentiated products. Smaller players, who lack product development capability, are likely to be affected.”A decreasing pipeline of new molecules is given as another reason.
Dipta Chaudhury Khorana, senior consultant, healthcare, Frost & Sullivan, says the number of new molecules companies could target have come down and drug firms are careful of new launches, due to patent regime restrictions. Agrees Nilesh Gupta, group president and executive director, Lupin: “The research pipeline is drying, so few products are coming to the market. The other issue is patents. There is a list of products only the innovator can launch.”In addition, Khorana blames pricing pressures.
“Costs are not just related to research and development but also production and increasing marketing expenses. Companies are likely to focus on niche product categories,” she says. In fact, data on the growth of the top 20 brands in the pharma market for the year to July 2011 shows the bigger brands exhibiting only single-digit growth.
|NEW BRAND LAUNCHES|
|* Till July 2011 Source: IMS, HSBC|
Deepak Malik, senior research analyst at Emkay Global, says competition in the top 20 brands is increasing. In contrast, the overall pharma market is growing at double digits (13-15 per cent).
Given competitive pressures, companies may look at expanding their brands into new markets for growth. Says Gupta of Lupin, “Companies could look at new markets and geographies such as Tier-II and Tier-III cities. As India grows, the ability of people to afford medicines will improve and these markets will become important.”