Domestic pharmaceutical majors, which were in the race for a pie of the multi-billion dollar generic market, are now a depressed lot. Shrinking margins owing to competition have compelled them to concentrate on the local market.
"The hype is gone as the wind has gone out of the balloon, and the margins have shrunk," a senior official with a pharmaceutical company said. "In some cases, the overseas operations of Indian pharmaceutical companies are today being subsidised by the Indian operations," the sources pointed out.
"The big generic markets are those in Europe and the US, while the CIS, and African markets are largely dog-eat-dog. However, margins at the US and Europe companies have thinned out due to competition," another source said.
"Previously, a company developed a molecule, took a patent and enjoyed the spoils for a patent period. When the drug went off patent, a second company would start producing it. This led to some drop in the prices, but with enough margins for both the companies. Then, a third company would join the two and prices would dip some more, but it would be two to three years before the prices dropped substantially," the source added.
However, now the scenario has changed. "Today with everybody eyeing the generic market, what used to take years now happens in days," sources added.
"There were 17 applications pending even before Captopril went off patent. And, the prices collapsed in less than a week after the drug went off patent,'' the sources pointed out.
"While Indian companies have an edge as possibly the lowest cost producer, the margins that they were expecting have disappeared on account of competition," the sources said.
"As production cost is low, the Indian companies will get a market share. But the prices will not be greatly remunerative,'' the sources pointed out. "With Indian, Chinese and Korean companies eyeing the market, the competition has increased manifold.
Besides, the plants have to be US FDA-appro
