Budget 2020: Jan Aushadhi growth could hurt branded pharma market

The central government's push for generic or unbranded medicines through Jan Aushadhi stores across the country could dent the branded drugs market.
 
According to the website of the Bureau of Pharma PSUs of India, implementing agency of the Pradhan Mantri Jan Aushadhi Pariyojana, as on June 2019, there were about 5,300 Jan Aushadhi Kendras, offering a little more than 900 drugs and 154 surgicals and consumables.
 
In the 2020-21 Union Budget, finance minister Nirmala Sitharaman proposed to expand the scheme to all districts, and offer 2,000 medicines and 300 surgicals by 2024.
 

Most of the major therapeutic areas -- cardiovascular, respiratory, neurology -- are covered. The FM has proposed to expand the reach.

 
Allocation under the head of development of the pharmaceutical industry rises from Rs 3.49 crore in 2019-20 to Rs 42 crore in 2020-21.
 
Analysts say in FY19 itself, the Jan Aushadhi scheme is expected to generate sales revenue of Rs 300 crore. This had the potential to disrupt one per cent of the total Indian pharmaceuticals market, noted financial services entity Edelweiss, in a note on generic drugs. This and state government schemes like those in Rajasthan and Tamil Nadu, with hyperlocal chains like Generico (private retail chain of generic medicines), are improving the access to trade generics.

 
So, says Edelweiss, as the number of Jan Aushadhi stores expand to over 10,000 by 2021 or so, and each store has an estimated monthly sale of Rs 5 lakh, the scheme's revenue would be close to Rs 6,000 crore by 2021.
 
That much of trade in generic drugs could adversely impact Rs 25,000-30,000 crore of branded sales, assuming an average price difference of five -times, Edelweiss said.
 
In other words, Jan Aushadhi could disrupt a fifth of the Rs 1.3 trillion Indian pharma market.
 
With the scheme’s expansion this year, growth in sales volume would speed up.

 
The Indian market is primarily of branded generic drugs. Generic drugs are copy-cats of innovator or novel drugs. When these are pushed directly into trade (mostly without brand names), they are called trade generics.
 
Drug makers do not sound alarmed, though. Some of the key players also have presence in the trade generics space, which they use to boost volumes and expand into the hinterland.
 
"There are 800,000 retail chemists across the country who sell branded generics. In comparison, only 5,000-6,000 Jan Aushadhi stores. No match at the moment,"said a senior executive from a top pharma firm.

 
He, however, admits to growing awareness of trade generic medicines among consumers.  Even so, large pharma firms hope quality parameters would check the growth of trade generics. "Physicians still are not comfortable in prescribing trade generics.

For chronic diseases like heart ailments, it is still some time away when a patient substitutes a branded prescription with a trade generic," said a senior executive of a multinational firm.
 
Quality improvement would come at a cost and affect the affordability of these medicines, he added.