In the past few years, lifestyle drugs have emerged as the key growth drivers for the domestic pharma industry. Consequently, the past few years have seen companies increasingly focusing on this segment. In this context, let us understand the lifestyle drugs segment and itsí rising importance to the future growth of the companies.
The various therapeutic segments have traditionally been the major growth drivers of Indian pharmaceutical industry. Among the various therapeutic segments, respiratory and anti-infectives were the key segments fuelling this growth. However, recently there has been a degrowth in the anti-infective segment resulting in a stagnant growth in the overall therapeutic segment. Increased competition and reduction in raw material costs has resulted in the anti-infectives pie shrinking by 4% in the past five years (1998-02). However, beating this trend of stagnancy, lifestyle drugs have become the fastest growing segment for the pharmaceutical companies. The following table shows the market growth rates for the month of March 2003.
Therapeutic Segments Growth Snapshot (Mar - 03)
Source: Nicholas Piramal Ltd. Annual Report 2002-03
||Market Growth Rate (%)
|Cardio Vascular Segments
From the table, it can be clearly seen that while the traditional therapeutic segments like respiratory and anti-infectives have registered a low or negative growth, lifestyle drugs for diabetes, cardio vascular segments and central nervous system (CNS) have seen double-digit growth rates.
Lifestyle drugs are the medicines used to cure diseases that are linked to stress, urbanization and changing diet pattern and lifestyle of high-income level population. Major drugs in this segment are anti-diabetes drugs, cardiovascular system drugs, gentio-urinary and sex hormones drugs, CNS drugs, anti-depressants and psychiatry.
The change to high-refined carbohydrate-based diets, coupled with relatively sedentary, low-activity lifestyle are leading to a significant growth in the risks of cardio-vascular, diabetic, oncological and other lifestyle related diseases, resulting in a rise in the demand for the drugs that cure these drugs. As the demand for lifestyle drugs is from the high-income group, doctors while recommending the same are more quality conscious than price and hence the demand for these drugs is not price sensitive. Consequently, the margins for this segment are also high. Rising demand and high margins have resulted in Indian companies concentrating more on lifestyle drugs.
Many companies have now started tilting the balance in their product portfolio in favor of lifestyle drugs. For instance, in case of Nicholas Piramal Ltd. the share of lifestyle drugs in its portfolio increased from 24.5% in FY02 to 30.4% in FY03. In case of Sun Pharmaceuticals Ltd., the three segments of lifestyle drugs - Psychiatry and Neurology (31.5%), Cardiology (20.5%) and Diabetology (8.4%) together accounted for 60.5% of its total domestic prescription formulation sales in FY02. Ant-infectives, however, constituted for only 6.0% of revenues. In FY02, lifestyle drugs constituted 42% of the therapeutic segment for Wockhardt Ltd.
Thus going forward, lifestyle drugs will be a vital constituent of the pharmaceutical sectorís growth story. Realizing this, companies are focusing more on lifestyle drugs and making aggressive new product launches in order to increase revenues and improve margins. However, more players in the market will result in increasing competition in the market and a squeeze in the margins in the medium term. Thus, only an innovative company that is able to introduce new products in the lifestyle segment will be able to extract full benefits from this segment.