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Pharma: Life styles matter

Sep 6, 2004

Lifestyle drugs have taken the centre stage in the last few years. To put things in perspective, for the first time in 2003, CVS (cardiovascular) drugs overtook anti-ulcerants as the largest therapeutic class worldwide. But India is yet to catch up! Lifestyle drugs are the 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 Segments Growth:
Therapeutic Segment Market Growth Rate FY03 Market Growth Rate FY04
Respiratory 5.6% 9.0%
Anti-Infectives -0.2% 5.0%
Lifestyle Drugs:
Anti-Diabetics 20.3% 11.6%
Cardio Vascular Segments 12.4% 17.2%
CNS 13.4% 8.9%

As said earlier, internationally, lifestyle drugs are major contributor to the pharma industry and India is also moving in the same direction. Also, the fact that the higher-income group drives the demand for lifestyle drugs, it is not price sensitive in nature. Thus, a major portion of the growth of these drugs is coming from value rather than volume. Consequently, margins are also high.

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.

Going forward, we may see that the contribution from lifestyle drugs for many companies growing at a faster rate than traditional therapeutic segments. 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.

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