Pharma MNCs' growth beats domestic players in October

Experts feel in long run, the multinational firms would increase their market share in the Indian market

While domestic pharma companies have been outgrowing their multinational counterparts for a while now, the month of October has seen perhaps the beginning of a shift in the trend. According to industry data, during October, while domestic pharma firms have grown by 5 per cent, the multinational firms have managed to grow just a tad higher, at around 5.7 per cent.

According to data from the market research firm AIOCD Pharmasofttech AWACS, the trend was heavily in favour of domestic companies even around a couple of months back in August, when Indian companies had grown by 9.9 per cent in comparison to the 4.4 per cent growth of multinational firms. September too, saw the domestic firms clock a 19.8 per cent growth versus 16 per cent for MNCs.

Industry experts feel that in the long run, the multinational firms would increase their market share in the Indian market. According to a recent report by Centrum Pharma, the share of MNCs is expected to go up in the domestic market due to the price increase of around 6.4 per cent in price controlled products in April this year, as well as volume growth.

At the moment, MNCs have a market share of around 20 per cent in the Indian pharma market which is around Rs 80,000-82,000 crore, says Ranjit Kapadia, senior vice president at Centrum Broking. The top eight MNC pharma companies approximately have around 74-75 brands (around 25 per of the total) among the top 300 brands in the market.

"With the Drug Price Control Order (DPCO) 2013, prices of several essential drugs have been slashed. The MNCs have seen the highest cut in prices, in some cases around 25 per cent. However, this segment has slowly started seeing traction for them, there is volume growth as many are opting for branded products at lesser prices," Kapadia said.

The AIOCD data shows that in October, amongst the MNCs, Merck grew by 22.4 per cent followed by Glaxo SmithKline at 12.8 per cent and Ranbaxy at 12.4 per cent. It is to be noted here that the DPCO 2013 portfolio for Pfizer grew at 1.5 per cent, GSK 3.5 per cent, Ranbaxy 18.1 per cent. In comparison, the overall DPCO 2013 containing molecules market saw negative growth at -2.4 per cent whereas the non DPCO market grew by 6.8 per cent resulting in an overall growth of 5.2 per cent for October 2014, the data showed. An industry insider who is also the head of one of the leading Indian pharma firms admitted that there indeed has been a shift in favour of MNCs, however, one has to wait for another two to three months to understand how the market would behave. "Traditionally, the Diwali and Dussehra months are low growth months, and compared to domestic companies, MNCs have done better. They have seen volume growth in the price control drugs segment," he said wishing not to be quoted.

If we take the example of one of the leading MNCs which has performed well during the past few months, we would see that the brands that were impacted by the National Pharma Pricing Authority (NPPA) has seen strong volume growth. According to Centrum during the Q3CY14, "GSK reported 19 per cent year-on-year (yoy) increase in revenues to Rs 747 crore from Rs 627 crore due to improved volume growth of brands affected by NPPA. The company increased the price of controlled products by 6.3 per cent and products outside price control up to 10 per cent in April 2014. Five of GSK's top 10 brands grew faster than the market growth of 11.6 per cent."

An e-mailed query sent to GSK did not elicit answers.

While the calendar year 2013, had seen local drug firms registering 11.4 per cent growth versus the 6.5 per cent growth of MNCs, this year, however, the MNCs, might just begin grabbing market share from local firms as their branded medicines become more affordable.