CONTRARY to Indian pharma companies’ fear that global pharma majors will dominate the Indian market in the post-patent era by launching patented products, domestic pharma companies have strengthened their hold in the Rs 35,000crore Indian drug market three years into the patent regime.
In fact, global major GlaxoSmithKline, which was No. 1 in India in 2005 when India became trade-related aspects of intellectual property rights (TRIPS) compliant, has slipped to the third position at the end of the 12-month ended November 2007 with 4.85% market share. World’s largest company Pfizer corners only 2.53% (9th position) of the Indian market.
However, industry experts feel that three years are too short a period to analyse the impact of the patent regime and draw any conclusions. Says Indian Pharmaceutical Alliance secretary general D G Shah, “The actual impact will be seen after 7-10 years when global companies would launch a basket of patented drugs. Some of them have recently set up subsidiaries in India and planning to launch patented products in the market. Generic products would continue to be the major source of revenue for Indian companies for the next 15-20 years.”
At the moment, Cipla (5.15%) and Ranbaxy Laboratories (4.92%) are ranked number one and two in market share and this growth among Indian companies can be attributed to organic growth. They have not done any major acquisitions unlike companies abroad which largely grow on the strength of mergers and acquisitions.
Says Cipla MD Amar Lulla, “The actual impact will be seen in India when global companies launch products in which they enjoy a monopoly. ‘’ According to him, Indian companies’ growth was driven by product launches and also due to the economic growth which has made medication affordable.” India’s largest company by sales Ranbaxy Laboratories has 18 brands in top 300 brands of the Industry, with 9 brands featuring amongst the top-100 league.
Though product launches have been the main force behind the growth, it was the shares of existing products that grew significantly in November. Of the 10.3% growth witnessed in November-2007, existing products account for about 5.3% while the new product range is about 4.0%. Chronic therapy categories was the high growth thereupatic category, growing by 18.5% while acute therapies grew by 7.5%, a company source said.
A report by McKinsey & Company indicates that in absolute growth, the India domestic market will have the third largest incremental sales opportunity in the world, adding close to $14 billion and taking the market size to $20 billion by 2015. An industry source partly attributed the rise of the Indian Industry to the growing realisation among Indian companies that it is fundamental to be market leader on home ground before it can become a global major.