Pharma emerging markets: MNCs consolidating their position in India

Girish Bakhru

HSBC

Abbott’s acquisition of Piramal Healthcare’s domestic formulation business in 2010 placed Abbott as the leading player (cUSD11bn over INR500bn) in the India formulation market. We have also seen Multinational companies (MNCs) gain increasing presence in this burgeoning market.

Among the various therapeutic categories, anti-infective drugs continue to dominate the Indian market with c17% share (this excludes anti-HIV, TB and anti-parasitic drugs) due to a high burden of infectious and communicable diseases. However, this is increasingly being shadowed by a growing incidence of lifestyle-related diseases such as hypertension, diabetes and cancer.¹ Cardiovascular conditions form the second largest category with a little over 11% share closely followed by gastrointestinal disorders at the third place.

Therapies for overall chronic disorders including cardiovascular, neurological diseases, diabetes, blood-related conditions, HIV, asthma and hormonal therapies form c30% of the market. This share is expected to grow over next few years with the higher anticipated burden of chronic ailments with changing lifestyle and growing industrialisation.

"While many of them have been in the market over a long time, some players like MSD have re-entered the market recently in 2005 and have realigned their focus in this growing market."

Leading MNCs have shown their presence

The Indian market has seen entry from most of the Big Pharma players over last few years. Leading MNCs include Abbott (#1st Rank), GSK (#4th Rank) and Pfizer (includes Wyeth, #8th Rank) finding their presence among the Top 10 players in the domestic market. This also includes Daichii’s indirect presence through Ranbaxy which is the third largest player currently after Abbott and Cipla. Remaining MNCs include Sanofi Aventis (#13th Rank), Novartis (#21st Rank), Merck KGaA (#29th Rank), Merck Ltd (#31st Rank) and AstraZeneca (#34th Rank).

MNC presence in Top brands in Indian Market (Source: IMS ORG)

While many of them have been in the market over a long time, some players like MSD have re-entered the market recently in 2005 and have realigned their focus in this growing market. Most of these companies have either targeted the mass market via product localisation and India-specific pricing to capture the branded generics segment and / or launched globally patented products in niche segments at a premium from their parent companies.

It is evident from the table above that leadership companies like GSK, Pfizer and Abbott have overshadowed domestic firms in creating a wider presence in the top 100 brands list in the country. Among the large domestic firms only Cipla and Ranbaxy have a sizeable number of brands in the top 100. Whilst the top 100 brands form less than 0.5% of the total number of brands in the market, in terms of value they contribute c20% of the market. Interestingly, the country’s top five brands – Corex (Pfizer), Voveran (Novartis), Human Mixtard (Abbott), Phensedyl (Abbott), Augmentin (GSK) are all MNC brands.

"And a foray into branded generics is a step towards widening the avenues of growth."

Therapies that are MNC dominated

Besides significant presence of MNCs like Pfizer and Abbott (through Piramal) in cough and cold preparations and gastro intestinals, GSK in anti-infectives and Abbott / Lilly / Sanofi in anti-diabetic insulin market, MNCs have largely been lagging behind domestic firms in leading therapies in the market. Nonetheless, growing therapeutic segments like Pain / Analgesics, Dermaceuticals, Vaccines and hormones have a wider and stronger MNC presence. Consider pain for instance, leading brands like Voveran, Calpol, Combiflam, Dolonex, Ultracet are all MNC brands among the top 10 brands in the category. Similarly, the vaccine market has seen launches like Mercks’ Gardasil and GSK’s Cervarix which are under patent. Pfizer also recently launched Prevnar-13 under Wyeth which has the potential to become a leading brand. Novartis’ Rabipur is already a well established rabies vaccine brand in the domestic market.

Part of the leadership has come from the global leadership of the brands, which has extended to the Indian market as well. With increasing launches of patented products, it may further strengthen the foothold in the market.

Foray in branded generics – a common thought across MNCs?

Whether gaining dominant share in any given therapeutic market is a function of launching patented products from the company is yet to be seen given that not many patented products have been launched in India. Additionally, this is dependent on the regulatory and legal aspects surrounding patent grants under local laws.

However, given the competitive and fragmented structure of the market, it is increasingly difficult to maintain and protect a well dominated turf. MNCs are increasingly getting cognizant of that. And a foray into branded generics is a step towards widening the avenues of growth.

"However, given the competitive and fragmented structure of the market, it is increasingly difficult to maintain and protect a well dominated turf."

Pfizer has recently shared its strategy to increasingly focus on branded generics with recent launches of generics such as rabeprazole and telmisartan. GSK too has had successful experience in branded generics while simultaneously focusing on increasing its vaccine share in the market (having launched many and with more in the pipeline). In addition, Daichii has initiated steps and launched a few of its own products -  viz. Benicar under name of Olvance (olmesartan) and Effient under name of Prasita (prasugrel) through Ranbaxy in the Indian market. Companies like Daichii and Abbott have established their presence through the in-organic route.

Whilst the attractiveness of the Indian market remains, domestic firms realise that their dominance is under threat. MNCs are in action.

References:

1. IMS ORG December

2. ICRA – Pharma MNCs focus on branded generics in India to drive growth – September 2009

About the author:

Girish Bakhru is a healthcare research analyst at HSBC and has been actively watching trends in the industry over last five years. Prior to this he has worked at Lehman Brothers where he was actively tracking US Pharma sector. He holds a medicine and management degree from premier institute in India. He has practiced as a medical practitioner for over a year before joining the financial services industry. He also holds a CFA from CFA Institute, USA.

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