BackIndia trails only China in pharma market growth
India trails only China in pharma market growth
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India has become the second-fastest-growing pharmaceuticals market in the world, next only to China, according to Interlink Marketing Consultancy, a Mumbai-based pharma-market research firm.
In a recent study, the firm said the Indian market grew by 16% (in terms of sales) in 2006, to end the year with estimated revenues of Rs28,295 crore. China’s pharmaceuticals market grew by 17% to end the year with revenues of Rs1,12,825 crore. The study expects the Indian market to continue growing by over 16% in 2007 and at 18% in 2008.
In contrast, the US and major European markets for pharmaceuticals grew at between 4% and 7%, albeit on much larger bases. Healthcare spend in India and China is being driven by rising incomes; together, the two countries account for a third of the world’s population. Sujay Shetty, an associate director in the life-sciences and healthcare practice of audit firm PricewaterhouseCoopers believes that the incidence of communicable diseases such as tuberculosis and malaria and lifestyle ones such as diabetes has made India an important market for pharmaceutical companies. “The increase in the numbers of the middle class that can afford the new class of speciality drugs is another factor that has helped," he adds.
D.G. Shah, secretary general of the Indian Pharmaceutical Alliance, a pharma-industry association, attributes the growth to rural markets. “New marketing strategies that focus on rural pockets and the rising consumption power of the rural population have contributed to a fifth of total pharma sales in 2006," he says. The rural market grew at 39% in 2006, according to him. Vinod Dua, president, (marketing), Alkem Laboratories, one company that implemented a dedicated rural marketing strategy, says the company witnessed 40% growth in sales from newer markets, mainly in semi-urban and rural India.
R.D. Joshi, who led the Interlink team that carried out the study, says two other factors helped, too: the value creation in older products by research-based companies and the introduction of newer products. Prices, he explained, increased by just 2%.
Another study, this time conducted by the Financial Times Research Centre, named eight Indian subsidiaries of multinationals among the most profitable drug companies in the world, in terms of return on capital. The average return on capital for these companies was in excess of 50%, according to the FT study, as a result of a growing Indian market and lower investments in research and development—they are supported by parents that spend huge amounts on R and D.
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