It's time for India's one-brand pharma firms to scale up, diversify

Some of the biggest winners in the country’s Rs  1.3-trillion drug market come from its smallest firms, family-run businesses with limited financial and marketing heft that have a superbrand in their portfolio. Topical disinfectant Betadine (Win Medicare), anti-cold medicine Sinarest (Centaur Pharma), a tonic relabelled as a nutraceutical, Dexorange (Franco Indian Pharma) and multi-vitamin Zincovit (Apex Lab) among many others are all market leaders with enviable recall, often going head-to-head with large, global pharma brands. 

Smart, word-of-mouth marketing aided by some deft and nimble distribution practices have helped carve out huge swathes of the market so far. However, while the brand stories embody the power of homegrown marketing tactics, there is a flip side, point out analysts. The small firms have failed to diversify the basket, making them overly reliant on a single brand in a multi-brand universe and susceptible, they added.  

Consider the haloed story of Betadine and Win Medicare. The Rs 319-crore-brand has an 86.7 per cent market share in the topical disinfectant category and a five-year compound annual growth rate of 13.3 per cent. The big break for Betadine came when it was launched in the gargle segment where, with 92.5 per cent share, it beats big brands from Wockhardt (Wokadine gargle) and Mankind (Betakind).

Betadine came into the fold of the Umesh Modi-owned Win Medicare in the late eighties after it tied up with Swiss Mundipharma. But two decades on, the firm does not have another big name in its portfolio. Betadine contributes 58.3 per cent to the overall revenues  and the next is Hepa Merz (a liver ailment drug) that contributes only 9.5 per cent to the company’s revenues (market data from AIOCD AWACS). 

Analysts believe that the one brand success stories are a product of the times they were born in. “Twenty years back, the pharma landscape in India was quite different,” explains Amey Chalke, analyst with HDFC Securities, indicating that these categories were untapped by the big brands, which led small firms to step in and dominate. 

Similar stories dog the trail of Zincovit, Dexorange, Meftal, Sinarest and other brands. S D Sawant, founder and managing director, Centaur Pharmaceuticals says the Sinarest range contributes around 60 per cent to overall revenues. The brand has been around for over two decades and he adds, “The total anti-cold market is around Rs 1,000 crore and market share of Sinarest is 21 per cent, growing at 12 per cent. The anti-cold category is growing at the rate of 6 per cent.” 

Chalke says that small companies were able to make small budgets go a long way because big pharma stayed away. “Replicating this today would be difficult,” he adds. 

Sawant says, “Over-dependence on a major brand is a concern and we have introduced multiple extensions for specific indications to alleviate the risk.” Sinarest contributes over 60 per cent of our domestic sales, it has 20 extensions and each extension is a significant sub brand, he adds. His sales team, he said, has helped keep the brand relevant even as the market has brimmed over, with close to 400 anti-cold brands, he adds. 

Analysts point out other hurdles. Many of these brands are not protected against the discovery a new, more efficient molecule as the small firms that own them have not kept pace with the latest research. “Most of these firms are well below Rs 1,000 crore turnover and bulk of it comes from these one-hit wonders. Perhaps they should focus on other avenues open within  the pharma business (contract manufacturing) to de-risk their business models,” said an analyst who did not wish to be named.