Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2019 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

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Pharma sector: Traditional Vs Lifestyle

Jan 5, 2005

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

Aster DM Healthcare (IPO)

Feb 10, 2018

Should you subscribe to the IPO of Aster DM Healthcare Ltd?

Dr Reddy's: Milestone Payment Drives Sales (Quarterly Results Update - Detailed)

Feb 9, 2018

US business was hit by pricing pressure although there was growth sequentially led by new product launches.

Lupin: US market Declines Due to Higher Base Effect of FY17 (Quarterly Results Update - Detailed)

Feb 9, 2018

Price erosion in generic US drugs continues but seems to be bottoming out.

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.

More Views on News

Most Popular

This is Why the Stock of Jubilant FoodWorks Went Up 1,160%(The 5 Minute Wrapup)

Apr 12, 2019

This critical business strategy has enabled companies to scale their operations faster.

Pocketing Massive Gains with HDFC And HDFC Bank(Profit Hunter)

Apr 12, 2019

Here's how one could have generated gains of Rs 59,250 in 10 days by trading HDFC and HDFC Bank with a capital of Rs 4 lakh.

My Master Series on How to Trade Election 2019(Profit Hunter)

Apr 16, 2019

For 30 years he has watched how elections impact the markets, and practiced how to profit from it. Now he is here...telling you everything. Read on...

Election Series: Follow the World's Biggest Traders To See Where the Money Flows(The 5 Minute Wrapup)

Apr 17, 2019

20% of all the traders bring in 80% of the money. Watch these 20% and you get a working idea of which way the wind is blowing.

A Letter to You from India's No. 1 Trader(The 5 Minute Wrapup)

Apr 15, 2019

It's our great pleasure to introduce Vijay Bhambwani to our readers - we consider Vijay to be India's best trader. Read on to find out why...


Get the Indian Stock Market's
Most Profitable Ideas

How To Beat Sensex Guide 2019
Get our special report, How to Beat Sensex Nearly 3X Now!
We will never sell or rent your email id.
Please read our Terms


Apr 25, 2019 (Close)