What ails Indian pharmaceutical space? Here's what CCI says

Cardiac medicines accounted for the highest volumes in 2020. Despite the burden of diabetes rising, its share in volumes was low; however, its share in total value was higher

The pharmaceutical industry's turnover in India increased 165 times from Rs 1,750 crore in 1990 to Rs 2.89 trillion in 2020. The total share of domestic sales was Rs 1.41 trillion.

Spending on pharmaceutical products accounts for over a fourth of total health spending in the country. Its share in out-of-pocket expenditure on health was 43.2 per cent, and 97 per cent of it was spent on generics—formulations that are not under any patent.

It is not surprising then that the Competition Commission of India's study focuses on the impact of generics in the Indian market and the fault in the system regarding price differentiation.

A Business Standard analysis of the Competition Commission report data indicates what ails India and which pharmaceutical products are consumed the most.

In terms of volume, cardiac medicines accounted for 17.19 per cent of the total sales, followed by gastrointestinal with a 16.33 per cent share and pain and analgesics with a 9.69 per cent share.

Even though India has 20 per cent of the world's population, it accounts for 60 per cent of the world's health disease burden.

The burden of diabetes in the country has been increasing. Still, the share of anti-diabetic prescriptions in total sales was just 8.89 per cent.

Despite having just an 8.89 per cent share in volumes, anti-diabetic pills accounted for a 10.17 per cent share in value, making them more expensive than others. In contrast, cardiac, which had a 17 per cent share in volume, accounted for 13.4 per cent of sales. Of the total Rs 1.41 trillion sales, anti-diabetics accounted for Rs 14,355 crore worth of business. The other category to have this value-volume inversion was anti-infectives (anti-bacteria, anti-viral, etc.). Despite accounting for a 6.7 per cent share in volumes, it had a 13.3 per cent share in sales.

Diabetics, as per the CCI report, based on estimations by the Public Health Foundation of India, also had one of the highest numbers of brands per formulation—different brand names for the same medicine. Ideally, more brands should translate into more competition and lower prices, but in this specific case, more brands translate into better product positioning and higher pricing. In diabetics and anti-infectives, there were 18 brands per formulation, whereas the number was 13 in the case of cardiac medicines.

Although the CCI study has given policy prescription to reduce the pricing power of branded generics, implementation would be the key in ensuring price rationalisation.