MNCs, domestic drug makers did equally well in terms of growth rate

Home-grown drug makers enjoy 80 per cent share of the domestic market and take the lion’s share when it comes to brand launches. The data shows that in the last 12 months, multinational drugmakers have also done equally well in the Indian market in terms of growth rate. 

According to the data from market research firm AIOCD AWACS, the moving annual turnover growth for November 2019 (which represents the last 12 months) for Indian firms is 9.9 per cent, while for multinational drug firms, it is at 9.7 per cent. During this period, the overall pharma market grew by 9.8 per cent. Of the total 2,466 brands launched in the last 12 months, Indian drugmakers enjoy the bulk share — a total of 2,357 new introductions were made by Indian firms — compared to just 109 by multinational companies (MNCs). MNCs took a focused approach to the Indian market and some firms even pared the number of brands they had in circulation in the market to focus on the more profitable ones. 

For example, British multinational drug major GlaxoSmithKline Pharmaceuticals has sold eight to 10 tail-end brands in 2018-19, including its Vitamin C brand Celin and anti-infective brand Septran, as it focuses on paring the number of brands in India to about 20 over the next year.

Annaswamy Vaidheesh, vice-president, South Asia, and managing director, GSK Pharma, said in the firm’s annual report: “We optimised our product portfolio, identifying key brands behind which we put resources to actively promote.”  The top 10 brands of GSK Pharma contribute to 54.8 per cent of its revenues — mature brands like Augmentin (antibiotic), Calpol (paracetamol), T Bact (antibiotic topical ointment), and Betnovate (topical corticosteroid) continue to clock double-digit growth.

  

Similarly for Pfizer, its top 10 brands contribute around 50.4 per cent of its India turnover and its mature brands like Becosules (vitamin), Corex DX (cough syrup), and Gelusil (antacid) clock double-digit growth.  In fact, brokerages now bet on the Indian subsidiaries of MNC drug firms. In the past 12-18 months, MNCs have seen improved performance with strong double-digit revenue and earnings before interest, tax, depreciation, and amortisation growth.

According to a recent CLSA report, this resurgence is due to their increasing focus on key brands as well as a rising acceptance of patented products in India.  CLSA noted, “MNC stocks have outperformed local peers for the first time in over a decade and have also significantly outperformed the Nifty over the last 18 months.”

It felt that better brand recall and a patented product portfolio placed MNCs in a better position to thwart competition at a time when there is broadening of the range of products falling under price control and threat from trade generics (Jan Aushadhi). Affordable health care has been a key priority of the current government. 

In fact, seven of the top 10 brands sold in India belong to MNCs.  Indian firms, on the other hand, have been grappling with the ban on fixed-dose combination drugs, portfolio of drugs under price control as well as battling the regulatory scrutiny in their export markets.

“The Indian subsidiaries of MNCs have the back-up of parents when it comes to new drug development. We have to focus our research and development to developing copycats of off-patent drugs for the regulated markets. This leaves little scope to develop innovative drugs for the Indian market,” said a senior executive of a leading pharma firm, which ranks among the top in India and in the US. 

He added that MNCs also had a clear advantage when it came to brand recall for segments like vitamins and had a repertoire of vaccines where Indian firms have a long way to go.