Tuesday, September 25, 2007


India's passion is Bollywood/films and cricket. Both met for a common cause at Johanessburg Cricket World Cup 20-20! The Indian team delighted every Indian by winning the World Cup. Shah Rukh Khan was there in South Africa with his son Aryan to cheer the Indian team led by skipper M S Dhoni.

India’s passion is cricket

Indian popular passions revolve around bollywood/films and cricket. The sporting passion – the popular game of cricket - is played in three formats: test cricket (can last up to 5 days), one-day cricket (each team plays for 50 overs; a result of the match is within a day), and the new fancy Twenty-Twenty. Each team in this new format - that has been included for Asiad - plays for 20 overs each. It is fast, intense, and requires a lot of physical and mental effort. Thus India’s passion, CRICKET has three formats – 5 day test matches, the one-day matches, and Twenty – Twenty (the new format that has captured the cricketing world’s imagination).

Indian ethical Pharma industry’s product lines

There are several ways to categorize the Indian Pharma ethical market. One interesting way of categorization proposed here is based on the product characteristics and growth potential of three sub-markets. These sub-markets are compared to the three cricketing formats:

a) the allopathic ethical formulations Indian Pharma market is like the test match
b) the herbal ethical formulations Indian Pharma market is like the one-day cricket match
c) the biotech formulations market is like the Twenty Twenty cricket series.

Allopathic ethical formulations Pharma market

Indian Pharma industry has three product categories just as cricket has three popular formats. The five day cricket test match is the biggest cricket format played for five days. Playing test cricket requires stamina, concentration for longer time spans, and staying power. The same are the allopathic Pharma formulation market characteristics – one requires arduous working to make a mark given the fierce competitor activity. The attraction is that the Indian Pharma market has a significant big allopathic formulation market (it is almost Rs. 28000 crores). 25% of this allopathic pharma formulation market is the antibiotic-anti-infective market and another 25% is the gastrointestinals market (which mainly includes drugs for acid peptic disease and electrolytes…). The rest of the allopathic ethical Pharma market includes the emerging segments such as neuro-psychiatry, derma, asthma management, arthritis management, and the cardiovascular-diabetes (cardiometabolic disease) management segment.

The ethical herbal formulations Pharma market

Akin to the one-day cricket match, here is a fast growing, attractive, popular, and evergreen segment – the herbal segment. The herbal market is bright. In fact, this 2004 report from The Times of India states:

The Indian herbal health care segment seems to have swallowed a vitamin pill. The segment grew at a rate of 12 per cent last year, and there is no immediate sign of the momentum slowing down, with an expected growth rate of 20 per cent this year. The domestic herbal market has now crossed the Rs 5,000 crore mark, and is set to reach further heights this year. Herbal exports from India is worth Rs 450 crore, whereas even a decade back the amount was barely Rs 100 crore. This may not be a huge sum when compared to the Chinese herbal exports market which is worth Rs 2,000 crore; but the sheer potential of the Indian herbal companies should make people sit up and take notice.

The attractive growth of the domestic herbal market is reinforced by a global herbal trend as per World Health Organization (WHO):

THE green consumer is coming of age. The demand for medicinal plants is increasing everyday and the World Health Organisation (WHO) has projected that the global herbal market will grow to $5 trillion by 2050 from the current level of $62 billion.

The biotech formulations Pharma market

The darling of the Pharma market is the biotech market that is attracting a lot of attention and investments. In fact…

As per the Economic Times, dated 16.6.2007, on page no. 5, the Indian biotech industry has crossed the 2 billion dollar mark. The exact amount is 2.13 billion dollars in total revenues in FY2007 (April 2006 to March 2007). There was a 31% growth over FY06’s 1.6 billion dollar revenues (Rs. 6521 crores). Exports from this sunrise sector for the FY07 stood at 1.2 billion dollars (Rs. 4937 crores) showing a good growth of 47%.

The high growth of the biotech segment is largely due to the policies of the Govt., entrepreneurial interests and the strategic investments by the private equity and venture capitalists.

The most important reason for a buzz in the biotech segment is the fact that India has a bright chance of being a major player in the global biogeneric segment. As per Economic Times 22.9.2007, p.no.5; US govt. is preparing to usher in the first generation of biosimilars. In five years, biotech drugs will represent 25% of the total pharma market. Seven major biotech molecules are facing patent expiry before 2010. EPO (erythropoietin), human insulin, interferons, and granulocyte colony stimulating factor are the attractive markets. India is said to be on the threshold of scripting a success story in the field of global biosimilars just as it has been very successful in the global bulk drugs market and chemical formulations market.

The Indian Pharma market beckons

As per the Economic Times dated 19.9.2007 on page no. 4, India is emerging as a global powerhouse in the pharma business with a robust domestic industry. As per CII and Assocham, the turnover is expected to treble in 2015 and reach the Rs. 80,000 crore mark. As of now, the domestic sales is Rs. 31,600 crores and exports is Rs. 21,200 crores (the export figure includes bulk drugs and formulations). The R & D spend is Rs. 2210 crores.

Opportunities in the above three segments of the Indian Pharma market

The allopathic Pharma formulations market is crowded, with an estimated 20,000 manufacturers/marketers. It is a crowded segment with over 70,000 brands. It is a segment characterized by brand clutter. The segment has well entrenched players.

The herbal Pharma formulations market is the smaller fast growing and popular format. The segment is not crowded, and the herbal space though popular has not caught the fancy of many a company. One rich feature is that the products in this segment are evergreen and are less susceptible to product obsolescence. However, this segment is in need of scientific standardization of extracts, a proper ecosystem for supply of raw herbal extracts, and the herbal or herbomineral preparations need robust clinical studies to win the prescribers’ favor. This segment lends itself to brand building. One can seemingly go on marketing this range endlessly as product obsolescence is a rarity here.

The soft power nature of the herbal segment makes the market even more evergreen and very attractive.

The biotech formulations Pharma segment is the hi-tech segment. This is like the Twenty Twenty cricket segment, special skills are required. One needs to have a modern and aggressive mindset to manage business here. This is a highly capital intensive industry. The biotech formulations Pharma segment is futuristic – but you need deep pockets.

The allopathic Indian Pharma formulations market is well mapped by market research agencies. However, there is a lacuna in the market estimates of herbal and biotech segments although their worth is high and prospects are very bright. The Indian Pharma market beckons…take your pick!

This is my 47th blogpost, please do read all of the earlier blogposts including by clicking older posts. They are worth reading. Thanks.


Sunil S Chiplunkar said...

By allopathic Indian Pharma market I mean the chemical based formulations.

Dr.Ramaraju S Rao said...

its good article and very informative.

thanks for giving good numbers