X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Pharma sector: Traditional Vs Lifestyle - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jan 5, 2005

    Pharma sector: Traditional Vs Lifestyle

    Indian pharmaceutical industry is different from the global pharmaceutical industry. While in the global pharma industry, lifestyle segment drugs rule the roost, anti-infectives continue to dominate the domestic market. The reason for the same is higher prevalence of infective diseases as well as lower incident of lifestyle diseases due to social structure. Let's look at the following chart.

    Major Therapeutic Segments Rs bn Market Share
    Anti-Biotics 33 15.70%
    Cardiac 10.2 6.90%
    CNS and Psychatric 9.6 6.50%
    Vitamins 8.9 6.10%
    NSAID 8.8 6.00%
    Respiratory 7.8 5.30%
    Antasids and anti ulcerants 6.2 4.30%

    Source: Equitymaster

    Although the anti-infectives segment is dominant in the domestic market, lifestyle drugs are catching faster and have taken a center-stage in the last few years when one looks at the growth rates in the sector.

    At the global level, for the first time in 2003, CVS (cardiovascular) drugs overtook anti-ulcerants as the largest therapeutic class worldwide. The better performance by the CVS segment can be attributed to launch of new drugs as well as strong growth shown by ‘Lipitor' (up 20%).

    Global Pharma Growth
    2003 2002 2001
    Cholest. & Triglyceride Reducers 14% 12% 22%
    Anti-ulcerants 9% 9% 14%
    Antidepressants 10% 5% 20%
    Antirheumatic Non-Steroidals 6% 1% 16%
    Antipsychotics 20% 19% 30%
    Calcium Antagonists, Plain 2% -1% 4%
    Erythropoietins 16% 18% -
    Anti-Epileptics 22% - 22%
    Oral Antidiabetics 10% 0% 30%
    Cephalosporins & Combinations 3% -3% 0%
    Overall Pharma growth 11% 6% 16%

    Lifestyle drugs are basically medicines used to cure diseases that are linked to stress, urbanization, changing diet pattern and lifestyle of high-income level population. Major drugs in this segment are anti-diabetes drugs, cardiovascular drugs, gentio-urinary and sex hormones drugs, CNS drugs, anti-depressants and psychiatry.

    India continues to be a market where anti-infectives continue to lead the therapeutic drug class with about 16% market share. Having said that, lifestyle drugs have been the key growth driver for the domestic pharma industry and this is the reason Indian companies have started focusing on lifestyle drugs with slew of launches in the last few months.

    Among the various therapeutic segments, respiratory and anti-infectives (non lifestyle drugs) fuelling growth till FY02. But, as is evident from the table below, there has been a slowdown in these segments. At the same time, impressive growth in the life style drug segment has brought a new lease of life. This can be attributed to the changing lifestyle and increasing urbanization in India. The following table shows the market growth rates for FY04 and FY03.

    Therapeutic Segment Market Growth Rate FY03 Market Growth Rate FY04
    Respiratory 5.60% 9.00%
    Anti-Infectives -0.20% 5.00%
    Lifestyle Drugs:
    Anti-Diabetics 20.30% 11.60%
    Cardio Vascular Segments 12.40% 17.20%
    CNS 13.40% 8.90%

    While Indian markets seems to be catching up with the global trend of moving into lifestyle segments, we still have long way to go. The higher share of lifestyle drugs is a reflection of the changing patterns in the society. As the economy progresses, we will witness higher growth rates in the lifestyle segment. Since the lifestyle segment is not price sensitive, major portion of the growth will be driven by value rather than volume. Consequently, margins are also high. With the new patent regime coming into force, we might see launches on this front.

    Where are the Indian companies? Rising demand and relatively better margins have resulted in Indian companies concentrating more on lifestyle drugs in the recent past. For instance, in case of Nicholas Piramal, the share of lifestyle drugs in its portfolio increased by about 6% in the last two years (24% in FY02 to 29% in FY04). In case of Sun Pharma, the three segments of lifestyle drugs accounted for 61% of its domestic prescription sales in FY04. Companies like Cipla and Ranbaxy, who have been big players the traditional segments, have launched several products in the lifestyle category in recent times. While we expect higher benefits from such an industry transition in the medium-term, as competition increases, margins will be squeezed.

     

     

    Equitymaster requests your view! Post a comment on "Pharma sector: Traditional Vs Lifestyle". Click here!

      
     

    More Views on News

    Sun Pharma: Bottomline Slips into the Red Amidst Challenging Environment (Quarterly Results Update - Detailed)

    Aug 14, 2017

    A challenging environment and one-time expense pushes Sun Pharma into a loss in the first quarter.

    Lupin: Bigger Challenges or Bigger Margin of Safety? (Quarterly Results Update - Detailed)

    Aug 14, 2017

    GST impact coupled with price erosion in US leads to lower profits for the quarter.

    Dr Reddy's: US Pressure Continues to Haunt (Quarterly Results Update - Detailed)

    Aug 8, 2017

    Profits plunge due to higher raw material costs.

    The Power of 5 Minutes (The 5 Minute Wrapup)

    Jun 16, 2017

    Here's what you can expect from The 5 Minute Wrapup in the coming months and years.

    Biocon: Lower Licensing Income Leads to Muted Growth for the Quarter (Quarterly Results Update - Detailed)

    Jun 23, 2017

    Net Profit lower due to exceptional items in the previous year.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE HEALTHCARE


    Aug 17, 2017 03:37 PM

    S&P BSE HEALTHCARE 5-YR ANALYSIS

    COMPARE COMPANY

    MARKET STATS