India’s domestic formulations (DomForm) market, including branded generic medicines, is expected to cross Rs 5.5 lakh crore in value by 2034, according to a report published by investment banking firm Avendus Capital.
The country, which is home to 25% of the US Food and Drug Administration approved plants outside of the United States, consumes nearly half of the domestically produced drugs.
Being among the lowest-priced markets has worked in favour of Indian pharmaceuticals, boosting the DomForm market currently valued at almost Rs 2 lakh crore, according to the report.
Going forward, there may be a fundamental shift in the DomForm market such as a gradual transition from a primarily doctor-branded prescription model to an alternative marketing and channel mix, guided through government policies and regulatory measures with underlying business and economic factors also playing a part, the report noted.
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“We are also encouraged by the Government of India’s Pharma Vision 2047, which is aimed at making medicines more equitable, accessible and affordable while ensuring high quality and more sustainable manufacturing practices,” said Anshul Gupta, Managing Director and Head, Healthcare Investment Banking at Avendus Capital, in a statement.
However, India’s position in the pharmaceuticals market is not without challenges, with “significant under penetration in the domestic market, especially in Tier II/III+ towns and rural areas”, he added. The report cited lower doctor density in markets beyond metros and Tier I cities, resulting in lower productivity as a leading cause for the disproportionate focus on urban centres and big cities.
To combat these challenges, some pharma companies are leveraging the Trade Generics (TGx) channels which rely on retailer or distributor “push” instead of the doctor “pull”, incentivised by channel margins. New companies that focus largely on TGx have grown faster than the overall market in the last five years, accounting for about 10% of the market, it added.
Additionally, the DomForm market has attracted large strategic and private equity investments in deals worth over $14 billion over the last six years.
“Pharma players are likely to expand their portfolios by either shifting focus to new chronic/lifestyle therapies or expanding into adjacencies like over-the-counter, point-of-care diagnostics, medtech, and nutraceuticals”, Gupta noted.
With stabilisation of the US healthcare macro and the upcoming patent cliff, referring to a period where a large number of patents are set to expire, Indian pharma companies are presented with an opportunity to expand and rebalance the existing US vs India focus, turning to emerging markets like Latin America, Africa, Russia CIS, and South East Asia, which are growing at a faster pace.
Edited by Kanishk Singh
