Looking for new markets

Looking for new markets

After pursuing the global pharmaceutical pie, Indian companies are realising that there is an untapped market right in their backyards. Renewed focus on the domestic markets has seen this market grow from eight percent to 12 percent, according to a recent report from ENAM Securities. Another trend highlighted in the same report is that in the past year, growth in rural markets has outpaced that of urban markets. But as the Market Cover points out, this growth is still on a smaller base and until sales force productivity in rural areas improves, pharma companies will not divert too many resources to these areas.

But reaching medicines to rural areas is just half the battle. Reading the rural consumer’s mind will be crucial. Some part of this population may today have the disposable income to buy allopathic medicines but may be reluctant to switch from traditional medication to ‘Western’ style treatment methods. When they succeed in convincing the rural consumer that pills are better than traditional medicine, this market will cushion the industry from fluctuating foreign exchange rates and changing regulations in export markets.

Another industry which is set to boom is the nascent nutraceutical sector. While the definition is still fluid to include various sectors from sportaceuticals to probiotics, the products are today backed by R&D and clinical trials. Regulations too are being framed. Some Big Pharma companies, like GSK, already have a presence in this sector via their consumer healthcare divisions and many more are to follow suit. The main attraction is the fact that most natural products cannot be patented. The OTC/FMCG positioning of this product basket will mean higher marketing budgets and premium pricing, which only sweetens the deal, resulting in better margins.

All these are strategies to cushion the impending fall off the patent cliff and the Management Cover analyses more such moves. On the regulation front, the Cipla-Roche patent battle for Tarceva promises to be the next litmus test for the country’s patent regime. While increasing rural reach maybe be purely a commercial compulsion, one also hopes that the industry goes beyond their mandate of curative care to actually increasing health awareness and partnering the government’s preventive care programmes. Because as we all know, prevention is better than cure.

Viveka Roychowdhury