Certainly, the domestic formulations market is predominantly a branded generics market and intensely competitive, with the presence of several players (mostly family-owned), including small scale companies. While there are less than a thousand companies in the US, the world’s largest market, India with just 2% market share boasts of over 20,000 drug companies, all across the value chain – of course less in value and more in volume. As per a latest KPMG-CII report, 2007, the top 10 companies in India account for only 37% of the domestic market, with the largest player having just 5.2% market share. This definitely shows the level of fragmentation in the industry; all thanks to the process patent regime (before 2005) that developed India into a significant player in the area of reverse engineering, leading to a significant growth of the generic drugs industry, particularly in the small scale sector. Moreover, reluctance on the part of promoters & high valuation expectations was another reason that had primarily prevented acquisitions in the domestic industry.
But now, with more than three years of
existence under the new product patent regime, a lot of things too seem to have changed. A shift in focus for growth in the marketplace, away from mature markets to emerging ones, and from primary care classes to biotech and specialist-driven therapies has been the order of the day globally, with India being no exception. Moreover, the competition from small generic drug-makers has stiffened too, forcing these big pharma companies to give a second thought to their existing strategies and once again evaluate the various alternatives – to maintain scale and drive volumes. “In the recent past, the companies have even hiked their stake to fill in the vacuum in terms of products or technology,” avers Nangra.
But now, with more than three years of
existence under the new product patent regime, a lot of things too seem to have changed. A shift in focus for growth in the marketplace, away from mature markets to emerging ones, and from primary care classes to biotech and specialist-driven therapies has been the order of the day globally, with India being no exception. Moreover, the competition from small generic drug-makers has stiffened too, forcing these big pharma companies to give a second thought to their existing strategies and once again evaluate the various alternatives – to maintain scale and drive volumes. “In the recent past, the companies have even hiked their stake to fill in the vacuum in terms of products or technology,” avers Nangra. For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
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