Tuesday, 17 January 2012

Pharma rides on launches, demand

Demand for low-cost generics, key blockbuster drugs going off-patent, focus on complex products and tie-ups with multinational companies are set to spur growth for Indian pharma companies in the years to come, says a research report by Morgan Stanley.

This is likely to enhance presence of local drug firms, both in the domestic and international markets, with top players like Dr Reddy’s Laboratories, Ranbaxy Labs, Lupin and Cipla gaining tremendously.

Experts say the demand for generics is increasing in all the regulated markets, especially Japan, where the government has set a target of 30% market share by volume for generic drugs by next year. The expiries on patents of key drugs including Lexapro, Viagra, Singulair andAlegra in the US in the next three years, too, will boost growth.

A McKinsey & Co report says the value of the average patent expiry in 2010-15 would be $39.6 billion per annum.

Almost every top India based firm will stand to benefit by launching generic variants and, at times, capitalising on their six-month period of exclusivity available.

Adithya Bhat, managing director, Protiviti Consulting, said the generic focus of the US, EU, Japan and other countries will be a key driver, helping foster more alliances between Big Pharma and local drugmakers for the manufacturing and marketing of drugs.

“There is high possibility of more alliances and tie-ups between home-grown firms and MNCs for the manufacturing and sourcing of generics, which would then be sold in the developing and the developed markets,” said Bhat.

Alliances such as the ones inked by Pfizer and GSK with Aurobindo Pharma and Dr Reddy’s Laboratories, respectively — under which the former two are to market the products manufactured by the latter two in emerging markets — are likely to increase going ahead.

“Such alliances benefit not just the MNCs in gaining a stronger hold in emerging markets but also help the domestic firms in strengthening their presence in those markets,” said Bhavin Shah, analyst with Dolat Capital.

Experts say local firms may see at least a 15-20% overall growth in business in the coming months.

Firms will also gain from launching complex and difficult-to-make products with limited competition such as oral contraceptives, controlled substances and injectibles.

Sujay Shetty, partner, PricewaterhouseCoopers, said that such categories are also difficult to manufacture, thereby limiting competition, and increasing scope for garnering a larger market share.

Published: Tuesday, Jan 17, 2012, 9:30 IST
By Priyanka Golikeri | Place: Mumbai | Agency: DNA

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