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Pharma: A change in lifestyle?
Sep 1, 2005

With increased urbanization and stress related factors, lifestyle diseases (chronic segment) have been on the rise. In this article, we take a look at the growth potential of the chronic therapy segment in India.

Potential in India
Changing lifestyles has led to change in the disease profile especially in the urban areas. Hectic routines coupled with high cholesterol diets are resulting in the growing incidence of chronic diseases related to cardiovascular (CVS), diabetes, central nervous system (CNS) and cancer. This can be gauged by the following statistics.

As far as diabetes is concerned, India's 32 m diabetics account for one-fourth of the global diabetic population. These numbers are estimated to grow to 57.2 m by year 2025. (Source: Biocon). With regards to CVS diseases, India will have 60% of the world’s heart patients by 2020 (Source: CSI). Cancer too is progressing at a fast clip in India. These statistics reveal the fact that the incidence of these diseases is high, consequently leading to a higher demand for lifestyle drugs.

Over the years, Indian pharma companies were more focused on the acute therapy portfolio (pain, fever, inflammation and cough & cold), which constituted 76% of the total pharma market in CY04. Now, the chronic therapy segment is fast hogging the limelight. It grew by 12% YoY and accounted for 28% of the total market in CY04 as compared to 26% in CY03. During the same period, acute segment grew by a mere 5%.

Indian pharma: Changes in the portfolio?
Indian pharma companies have also realized the potential of these drugs and are looking to realign their product portfolios accordingly. Over the years Ranbaxy has had very high exposure to low margin anti-infectives business (acute therapy), which it is trying to correct by diversifying into high margin chronic therapy segment. The share of anti-infectives in its portfolio has come down from 62% in CY02 to around 50% levels in CY04. While the CVS segment witnessed a healthy growth of 124% in 2004 registering sales of US$ 165 m, the CNS segment recorded a growth of 24%, contributing US$ 51 m to Ranbaxy’s sales.

Biocon’s areas of focus are diabetology and oncology. The company launched its proprietary human insulin product ‘Insugen’ in November 2004, which is expected to boost its revenues going forward. Also, the company is currently developing a product ‘BioMab’, which is a monoclonal antibody for the purpose of treating head and neck cancers. Biocon is also capitalizing on the statins (cholesterol reducers) opportunity in the US in FY06 to boost its revenues going forward.

Wockhardt’s portfolio largely comprises of lifestyle disease related products. This portfolio continues to clock good growth due to its focus on the key areas of diabetology, biotech and nephrology. Its biotech portfolio grew by 61% during 2QCY05. As regards its diabetology portfolio, its key insulin brand – Wosulin, grew by over 50% YoY in 2QCY05 and continues to increase its market share in the segment. The R&D focus, especially on the diabetology folio, is likely to result in introduction of a new offering – ‘Glargine’, which is slated to provide a further impetus to Wockhardt's global initiative.

Nicholas Piramal’s focus on the chronic therapy segment can be gauged by the fact that the lifestyle product portfolio constituted about 27% of the total revenues of the company in FY05. Aventis enjoys strong brand equity in the lifestyle segment. ‘Cardace’ is the largest cardiovascular brand in the Indian market enjoying 13% market share (CY04). The company is a market leader in the anti-diabetic segment too with 2 strong brands ‘Amaryl’ and ‘Daonil’. All these products registered above 20% annual growth rates in the last 3 years and will continue to be the growth drivers of the company going forward.

Looking ahead…
The acute therapy segment over the years has been under pressure resulting in lower margins due to intense competition and commoditisation. Therefore in a bid to increase margins and profitability and also cater to rising need for lifestyle drugs, Indian pharma companies will have to foray into the chronic segment. It must be noted is that the demand for these drugs is ‘continuous’ as the lifestyle drugs are taken over a longer period of time. This results in a sustained growth in the sales of these drugs, translating into higher margins.

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