Global Insight Perspective | |
Significance | U.K. firm GlaxoSmithKline (GSK) has slipped to third position in terms of market share, while Pfizer (U.S.) is at ninth position, according to ORG-IMS figures. Meanwhile, the biotech industry reached a milestone, surpassing the US$2-billion mark in revenues for FY 2006/07. |
Implications | The figures depict statistics for the 12 months ended November 2007 and represent a reflection of the general trend in the Indian market, opposing predictions of rapid growth in global pharma majors' positions in the domestic market. |
Outlook | Industry predictions for pharmaceutical industry growth in 2008 are for double-digit progress in line with national economic conditions. For multinational pharma firms, however, the year will continue to be subdued as the industry battles concerns related to intellectual property and drug pricing. |
Market Share
The challenging landscape of the Indian pharmaceutical industry appears to have kept many global pharma majors guessing. Figures for the year ended November 2007 presented by the Economic Times reveal the strong domestic positions enjoyed by home-grown firms such as Cipla, Ranbaxy Laboratories, Nicholas Piramal, and Sun Pharma. ORG-IMS rankings put Cipla at the top, with a market share of 5.15%, followed by Ranbaxy at 4.92%, and GSK at 4.85%. Pfizer, which is the largest pharmaceutical firm in a global context, resides at ninth place. More closely, the figures for the month of November itself depict a trend perceptible throughout FY 2006/07 whereby companies such as Zydus Cadila (4th position), Alkem Laboratories (5th), and Sun Pharma (6th) have all moved up due to robust domestic performances. The ORG-IMS survey reviews 3,000 stockists and 6,000 doctors.
Biotech industry
Meanwhile, the biotechnology industry surpassed a milestone as it hit the US$2-billion mark in revenues for FY 2006/07, in line with industry predictions. The Financial Express reports on the development, quoting industry sources stating that a target of US$5 billion in sales by 2010 is the next aim. Along with the pharmaceutical segment, the biotechnology industry is also witnessing increasing exposure to global majors seeking to invest in clinical trials and manufacturing in the country. According to the source, the Indian biotechnology industry currently accounts for just 1.1% of the global market, but this figure is expected to rise as the industry increases its status as a supply hub.
Outlook and Implications
Surprisingly, the primary growth driver for Indian firms has been organic growth, spurred by new launches in the domestic market. Both Cipla and Ranbaxy have benefited from entering therapeutic segments with specialty high-value drugs. While the market share positions highlight the conditions in the industry three years after the introduction of the patent regime, when multinationals were expected to have flourished, it is imperative to note that the returns from any patented launches have not been forthcoming as yet. There are a variety of reasons why the multinationals have been subdued in their domestic progress so far. Intellectual property is one prime example of the challenges in the industry where, following the implementation of the patent regime, there are still concerns over the interpretation of the laws and scepticism regarding some of the clauses—mainly Section 3B—which global players are seeking to quash. In addition, there are serious regulatory hurdles in terms of drug pricing hurting revenues and profits, but this is not limited to multinationals alone and extends to other large Indian majors such as Cipla and Ranbaxy. In terms of performance—for GSK in particular—there have been some therapeutic segment erosions witnessed in the market that will be duly noted. For Indian companies, though, the growth in market share is particularly reassuring given the context of the strengthening rupee against the U.S. dollar, which has affected export earnings. For the year ahead, the predictions of a robust year in line with economic growth in India showcases the trend, with the pharmaceutical market growing in double digits as medical accessibility and income levels improve.
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