Indian firms corner more of growing pharma market as MNCs go niche

Patent expiries, new brand launches, and better geo­grap­hical penetration have helped Indian pharma companies report better growth rates and a higher share of the domestic market in the last five years. Multinational companies (MNCs), on the other hand, are focus­sing on niche therapies, going for licensing deals with Indian firms to get a wider reach, and bringing in more innovative global products.
 

Take Novartis, for instance. “To ensure that we are truly focused and efficient, we have narrowed down on our priority disease areas for India where we can win and create most value,” Amitabh Dube, country president and managing director, Novartis India, told Business Standard.

Indian drug firms are focussing on expanding their salesforce and distri­bution, while getting into trade generics to garner volumes. They are also busy launching generic versions of molecules that are losing their patents.

“The changing environment has led to different strategies, different partnerships to make the most of the opportunities that the market is offering,” says Sheetal Sapale, vice president-commercial, with Pharmarack, a market research firm.

Krishnanath Munde, associate director, health care, large corporates, with India Ratings & Research (Fitch Group), says thanks to increased com­petition MNCs have divested brands and with their limited field force their reach is limited to Tier-I and metros. Therefore, it makes sense for them to focus on high-value niche therapies.

The Indian pharma market has add­ed close to Rs 50,000 crore in the last five years. Out of this, around Rs 45,000 crore has been contributed by Indian fir­ms, and the rest by MNCs. As the ma­r­ket has grown from around Rs 1.4 trillion turnover in 2019 to Rs 1.91 trillion in 2023, Indian drug firms have increased their share from 82 per cent to 84 per cent.

However, MNCs as well as Indian firms have maintained relatively steady growth rates.

A shower of brands

“In the last two years, both Indians and MNCs have shown steady growth. Ind­ian companies have been growing in the range of 8 per cent year-on-year for the last two years [2022 and 2023], whi­le MNCs have maintained a growth rate of 4 per cent and 3 per cent, respec­t­ively, in the last two years,” Sapale says.
 

If one looks at the five-year comp­o­und annual growth rate (CAGR), MNCs have clocked 5 per cent and Indian fir­ms 9 per cent, shows data from Pharm­a­trac, a market research firm. In chro­nic (cardiac, diabetic, etc.) and sub-chro­­nic (gastrointestinal, gynaeco­logical, etc.) segments, Indian firms show a 9 per cent CAGR versus 5 per cent and 7 per cent for MNCs.

The primary reason behind this dif­ferential growth rate, say industry insi­ders, is that several molecules lost their patents in recent years, including sita­gliptin, dapagliptin, vildagliptin, and sacubitril-valsartan. This has enabled the growth of chronic and sub-chronic segments for Indian companies.

Nearly 600 new brands have arriv­ed in the market in the anti-diabetic segment since January 2022. Of these, 30 brands have a turnover of over Rs 10 cr­o­re each, and 75 a turnover of more than Rs 5 crore each. Data from Pharmatrac shows 407 brands have been launched in the cardiac segment since January 2022, 120 in gynaecology, 348 brands in anti-infectives, and 344 in the dermatology segment.

No wonder Indian companies are cornering more and more of the market and MNCs are divesting brands and por­tfolios. Recently, Novartis divested 15 ophthalmology brands to JB Chemi­cals and Pharmaceuticals for Rs 964 cro­re. According to IQVIA, which provides health care research services, MAT Sep­tember 2023 data shows sales for these brands stood at Rs 207.8 crore. (MAT, or moving annual total, is the sales of a product, over the course of the previous 12 months.) None of these drugs are under the National List of Essential Medicines.

“…Novartis has entered into Promo­tion and Distribution agreement with Indian multinational companies like Cipla and JB Pharma for a few of our in­n­ovative and established medicines to further broaden access of these medici­nes beyond the current geographies wit­hin India to benefit many more patients,” says Dube.

The ophthalmology therapy area registered a three-year CAGR of 15 per cent versus a 9 per cent growth of the Indian pharma market. It is the third fastest gro­w­ing therapy in the domestic ma­r­ket, worth around Rs 4,300 crore, and now JB Chemicals and Phar­maceuticals will rank fourth in it.

Unmet needs

Dube says in the last few years the company has been dedicated to transforming itself into a “focus­sed innovative medicines com­pany” and has committed to improving people’s lives with diseases with an unmet medical need. “We are building on our strengths in advanced new technology platforms — Radio­ligand therapy, RNA therapeu­tics and Gene and Cell therapy — that will help us deliver the next generation of medicines for patients,” he says.

According to Sapale, MNCs typically follow the policy of divesting brands and portfolios where the profitability has come down, or where their global foc­us has come down. “One excel­lent example is Sanofi, which has given away the Soframycin portfolio to Encube Ethicals etc.”

Dube agrees. “Novartis AG continuously evaluates and explores divestment of trademarks taking into consideration the product life cycle.”

Meanwhile, Sanofi is giving a fresh impetus to its India business. “This re­newed strategy is focusing on two obj­ectives — first, we’re maximising acc­ess to Sanofi’s existing established portfolio in India, which includes our leading brands,” says Rodolfo Hrosz, managing director, Sanofi India. “Sec­ond, we’re fast-tracking a robust prod­uct pipeline by bringing our best-in-class and first-in-class innovations to India. In 2024 alone, we plan to launch two mega products — Soliqua (advan­c­ed diabetes drug for the premix segm­ent) and Dupixent (the first biologic me­dicine for treating moderate-to-severe atopic dermatitis in adults).”

Sanofi is combining product inn­ovation, supply localisation and strat­egic partnerships, along with a digital thrust to overhaul its go-to-market momentum.

Munde of India Ratings & Research says: “For a majority of the MNCs, IPM (Indian pharma market) is a small con­tributor to their overall sales (less than 10 per cent of global sales) and typically MNCs generate India sa­les through lever­aging their globally estab­lis­hed pro­d­ucts with limited India-specific new pro­duct launches. The only large MNC pla­yer is Ab­bott Ind­ia (ranked second in IPM), but this is due to M&A (mergers and acquisitions) in the past.”

Dube says that 2024 onwards the journey will be towards growth. “We are excited about launching two new innovative medicines this month that have received the import and market­ing permission. The first one is add­ress­ing an unmet need in the cardio­vascular disease area. Inclisiran (Syb­rava in India), a first-in-class siRNA therapy for lowering LDL-C, or bad cholesterol, has the potential to change the practice of medicine in the mana­ge­ment of cardiovascular diseases in the country,” he says. Another drug Novartis is eyeing to bring to India is Asciminib, for chronic myeloid leukemia.

The stage is thus set and Indian firms and MNCs are clearly pursuing different strategies to grow in the Indian market.