Cris Infac Says Generics Exports To Spur Growth

Generics exports from the country will be the key driver for growth in the domestic pharmaceutical sector, Cris Infac, a subsidiary of Crisil, has said in its latest report. This is to come on the back of a steep increase in global demand for generics, which is expected to grow at a compounded annual growth rate (CAGR) of 25 per cent.

A decline in the domestic demand in the main areas of acute diseases and the over-the-counter segment is expected to offset the high growth rate in exports. These categories account for 70 per cent of the total domestic formulations market in 2000.

"Growth in domestic formulation market has already decelerated. The last few years saw a lot of growth in the anti-infectives segment. Most of this were volume-driven and not value-driven, which has now peaked. So it should see very little growth in the coming years," an analyst said.

With approximately $80-billion worth drugs going off patent in the US and Europe in the next few years, this should open up a huge market for the Indian generic companies.

Market growth of old molecules is also stagnating, making it necessary for Indian companies to invest in research and development for new molecules, or tie up with bigger companies to leverage their marketing strength.

India, as a developing market, is also witnessing a change in the disease profile. In developed countries, such as the US and Europe, the main segments are the lifestyle-related diseases. But in developing countries such as India, it is anti-infectives and analgesics segments that dominate due to low sanitary and hygiene standards.

"The next few years could witness a change in this pattern, with India seeing an increase of lifestyle-related diseases. Even speciality areas such as hormone and genito-urinary, should see growth because these areas have relatively little competition from the medium-sized companies," analysts said.

Medium-sized players, according to the Cris Infac report, are expected to remain under pressure due to increased competition, along with expected change in the patent laws, making generics entry difficult. These companies should find sustenance of operation beyond 2005 difficult, it said.

On the research front too, the companies would foray more into analogous and new drug delivery systems research, which has relatively less risk, the report said. Alternatively, the licensing model is also likely to continue with multinationals who do not have a presence in India.