Iv Fluid Makers In For A Shakeout

In three years time, the prices plummeted from Rs 8-10 to Rs 6-8 per plastic bottle while the glass bottles cost came down from Rs 12-14 to Rs 10-12 each. This fall in price has drastically cut the revenue per unit for companies manufacturing IV fluids

An unprecedented price war has threatened some established manufacturers of intra-venous (IV) fluids which form an important segment of the healthcare industry. The shakeout that is invariably expected to follow will see a sharp reduction in the number of IV fluid makers in the country.

Faced with this dim prospect, some of the leading firms in this business sounded out others to raise the price of IV bottles, industry-wise. But business competition is so intense that the idea was nipped in the bud by their rivals who want to teach a lesson to the initiators of the price undercutting in IV bottles.

Of about 20 products marketed under the IV fluid category in the country, only four have a major share in the total market size of these particular preparations. It is estimated that 70 per cent of the total IV product range comes from Dextrose 5%, Dextrose with normal saline, normal saline and ringer lactate. All these are available in glass as well as plastic containers.

In three years time, the prices plummeted from Rs 8-10 to Rs 6-8 per plastic bottle while the glass bottles cost came down from Rs 12-14 to Rs 10-12 each.

This fall in price has drastically cut the revenue per unit for the companies manufacturing IV fluids.

Higher installed capacity and underutilisation of the same have contributed a lot towards the price war resulting in poor realization and reduced bottomline.

This has seriously affected the market size of the IV fluids which was hovering around Rs 350 crore. Major players in the IV fluids, whose products are categorised as large volume parentals (LVPs), are Core Healthcare (market share 35-40 per cent), Wockhardt (20 per cent) and Albert David (15 per cent).

The total capacity of the industry is about 350 million bottles with a sales turnover of more than Rs 350 crore.

The growth is hovering around 10 per cent.

Of this capacity, plastic bottles manufactured with form-fill-seal (FFS) technology dominates the market in which Core Healthcare has a capacity of turning out 240 million bottles, Wockhardt 100 million bottles and Albert David 35 million bottles. Ivecon Laboratories, of the Fresenius Mafatlal group, is also playing an important part with FFS technology while Ahlcon belonging to the Ahluwalias of Rajasthan is trailing behind.

PDIL of Indore is turning out plastic bottles with conventional technology.

In the glass bottle group, Albert David is leading the table with capacity of 12.4 million bottle capacity, Prem Pharmaceuticals of Indore with 10 million bottles, Mount Mettur of Madras and Sri Krishna Keshav of Ahmedabad with about 7.5 million bottles each, Rusoma with over 5 million bottles.

Due to the price war and poor realisation of revenue per unit (bottle) the capacity utilisation has dropped drastically by over 25 per cent.

This may further come down in the event of a shakeout, which seems unavoidable.