Statins remain under margin pressure

Indian generic statin (cholesterol reducing drugs) manufacturers continue to face margin pressures in the regulated international market though they have overcome the worst they had faced earlier in the decade in some parts of it.

Despite this pressure they continue to take the market seriously because of its significant size. The main players are firms like Biocon, Ranbaxy, Themis Medicare and Zydus Cadila who have strong export focus through statins such as Lovastatin, Simvastatin, Atorvastatin, Pravastatin and Rosuvastatin.

According to Utkarsh Palnitkar, head-health sciences Ernst & Young, "There is no let-up in the margin pressures because of increasing competition among Indian, Chinese and other low-cost manufacturers."

But the EU scene is a little different. Rena S Ahuja, industry analyst, healthcare practice, Frost & Sullivan, feels that "the pricing pressure, which was critical during 2002-05, is on the downturn now. A couple of anti-cholesterol molecules were going off-patent and at that time there was a possibility of Mevacor (Merck) going the OTC way."

"The US market has suffered a setback, especially for the large generics companies targeting exclusivity, because of continuing pricing pressure," adds Palnitkar. Legal challenges by patent holders delaying and increasing the cost of launch, and authorised generics taking away large market share and hence profit from the generic patent challenger during exclusivity periods "have severely impacted the exclusivity-related profits that generic players seek from the US market."

But the regulated markets continue to be important for Indian generic players as "the market share of branded statins seems to be diminishing," observes Palnitkar. "Due to the patent expiries of statins that have taken place in the past five years (especially that of Zocor) and those going to take place in the near future (especially that of Lipitor) branded statins seem to be losing their market share."

Hence the export focus of the Indian pharma companies continues to be the regulated markets, specifically the US and Russian markets where Indian companies dominate the generic statin business. Closely followed are the UK and continental European markets.

"In terms of volume, the market still lies in US and Europe because pharma companies in these markets are very aggressive in getting them listed in the NIH (National Institutes of Health) reimbursement schemes; this applies in fact for any cardiovascular drug," Ahuja added.

Indian domestic demand is a fraction of the global opportunity. The estimated size of the Indian market is Rs 580 crore ($145 million) for anti-cholestrol drugs. The global cardiovascular market is about $115 billion, out of which about $36 billion is the market for cholesterol reducing drugs.