Indian pharma growth muted in 2018 & for 2019 to focus on supply-chain competence in post-GST era

Nandita Vijay, BengaluruSaturday, December 22, 2018, 08:00 Hrs  [IST]

Indian pharma growth is seen to be muted in 2018 and for 2019 the industry will focus on supply-chain competency.

Going forward, better growth in domestic sales would also depend on the ability of companies to align their product portfolio towards chronic therapies for diseases such as cardiovascular, anti-diabetes, anti-depressants and anti-cancers.

The year 2018 was a stable one. But we saw growth at single digit and margins stayed flat. However companies took to incur high development and marketing costs that eventually led to increased M&As to drive revenues. We saw the Union government engage in several steps to reduce costs, with drug price control and bring down healthcare expenses. There was a move to quickly introduce generic drugs and give a thrust to rural health programmes. This augured well for companies engaged in lifesaving medications and preventive vaccines, Munira Loliwala, Business Head EMPI, Teamlease Services told Pharmabiz in an email.

There was a visible demand from global markets because of Indian pharma's low cost of production, policy reforms, among others. While there has been a lot of turbulence going forward, in 2018 and onwards, there will also be opportunities. However medicine spending in India is expected to increase at 9-12 per cent CAGR between 2018-22, driven by increasing consumer spending, rapid urbanisation, and raising healthcare insurance among others, she added.

Another focus in the current and years to come is to grow faster. There will be increased R&D and targeted spends on speciality drugs, niche molecules and complex therapies such as injectables, inhalers, dermatology, controlled-release substances and biosimilars. Thus the hiring action is expected to revolve around segments of super speciality sectors and R&D, stated Loliwala.

Yet another observation is that pharma companies have diverted focus exclusively on one therapeutic segment like CNS, derma, women’s health which has gained momentum in 2018. Ideally, the focus was on niche spaces with differentiated offerings in the chosen domain. The scene of One Company-One Product has created a huge pipeline of opportunities in sales and product category. Segment’s such as women healthcare is seen to have gained momentum roping in higher hiring’s within this segment.

The roads ahead in 2019 sees companies draw out strategies to improve supply-chain efficiencies in the post-GST scenario and consolidate the pharma distribution. In the US, which is the world’s largest pharma market revolves around top 3 to 4 distributors holding over 90 per cent of the market with even smaller ones garner a large revenue share. However, in India it is completely reverse as the market is highly fragmented with no count of distributors crossing Rs.200 crore revenues, she said.

For the next few years, biosimilars in India will reign. Today, all large pharma are into biologics and many generic companies would need to invest in biosimilars to position themselves for the market of the future, said Loliwala adding that this would give a fillip to Indian companies' R&D. Therefore manpower for supply chain management, logistics and research will see a rising demand for the next few years.