World in turmoil, domestic pharma firms target India for healthy growth

Share of India revenue in home-grown firms' consolidated turnover rising over the years

The share of the Indian market in the overall turnover of pharmaceutical (pharma) companies has risen in the past few years. There are several reasons behind this: pricing pressure in the US generics market, currency volatility in the emerging markets (EMs), and India being the only consistent geography with stable prices and demand.

A Business Standard analysis reveals how the share of the India business in the overall turnover rose steadily from 25 per cent in 2018-19 (FY19) for Sun Pharmaceutical Industries (Sun Pharma) to 33 per cent in 2021-22 (FY22). The company ranks No. 1 in the Indian market, with 8.6 per cent share of the domestic market, according to AIOCD Pharmasofttech AWACS moving annual turnover data (as of September this year).

In fact, the data from AWACS showed Sun Pharma having managed to retain the top spot in the Indian market for at least eight straight quarters.

Sun Pharma’s India business share grew at a time when it was launching and consolidating specialty products in the US. Now almost 15 per cent of the consolidated revenue comes from the specialty business in the US and other parts of the world; this was around 12.5 per cent a year ago. Therefore, the India ramp-up is significant.

C S Muralidharan, group chief financial officer, Sun Pharma, told Business Standard, “India is a good growth story. We have improved our market share to 8.6 per cent. The double-digit growth is happening across therapies. Just before the pandemic breakout, we added a 1,000-strong field force, and recently added an equivalent number.”  

He added that the company has added 2,500 people in the past three to four years in the India field force and now has 9,000 medical representatives. The total salesforce, including field managers, is 12,000.

Other big Indian drug firms, too, have devoted attention to the Indian market.

For Lupin, the share of the India business jumped from 28 per cent in FY19 to 37 per cent in FY22. In the same period, Lupin’s US revenue share in the overall turnover has remained more or less constant.

For Cipla, the share of the India business grew from 39 per cent in FY19 to 45 per cent in FY22.

Cipla actively launched pandemic products in the country, including those from Roche’s portfolio. In the first quarter of 2022-23, Cipla’s India revenue dipped 8.4 per cent year-on-year due to normalisation in the share of pandemic drugs in the branded prescription business.

Analysts agree that the Indian drug firms are focusing on the domestic market.

“The US is struggling, the EMs are facing currency volatility, the active pharma ingredient business is volatile. India is the only consistent geography. Hence, the prices of Indian assets are also going up,” said Kunal Randeria, analyst, Nuvama Research.

He added that 25 per cent of the Indian market is under price control, for the rest, firms can take a 10 per cent hike annually in prices.

In contrast, the US market is facing pricing pressure in the generic drug space.

“The total generics basket of all the companies put together, the price erosion is in the range of 6-10 per cent every year. Typically, we are looking at 8 per cent price erosion in the generics industry. For standalone companies, this range would be slightly different, varying on a product-to-product basis. For some products, we can take a slight price increase, while others may have to face a price erosion of 20-30 per cent,” said Abhay Gandhi, chief executive officer-North America, Sun Pharma.

Even the India-focused companies like Torrent Pharmaceuticals (Torrent Pharma) have seen growth in the overall contribution from this market. From 42 per cent in FY19, the share of India revenue in the consolidated turnover increased to 50.3 per cent in FY22. During the same period, the share of the US revenue declined from 20.7 per cent to 12.2 per cent.

Torrent Pharma is actively making acquisitions in the domestic market in high-margin segments like cosmetic dermatology. It recently acquired Curatio Healthcare for Rs 2,000 crore.