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Indian pharma: Capitalising on the 'chronic' wave

Dec 10, 2012

'Chronic Disease.' The word itself states a malady which needs to be managed but is not completely curable. Approx, 80% of such diseases occurs in low and middle income countries. And India is one such destination. As per the WHO data, globally, in the South-East Asia Region, 51% of all deaths are due to chronic disease, and 89 m people are likely to die in the next 10 years. 60 m such deaths are likely to occur in India alone. Deaths from chronic diseases will increase by 18%, largely on account of diabetes.

These chronic diseases are referred to as NCD (Non Communicable disease). These mainly include - Cancer, Cardiovascular disease (CVD) Neuro related disease (Mental disorders), Diabetes, and chronic respiratory diseases (Asthma and COPD).

The leading cause of death among these is due to CVD as around 19% of the total deaths are caused by this sickness. In other words, around 50% of deaths that occur due to chronic disease are because of CVD. Further, rate of patients suffering from diabetes is also escalating. According to IDF (International Diabetes Federation), the nationwide prevalence of Type II diabetes (most prevalent type, large part of population suffer from Type II), is expected to impact around 100 m Indians in 2030, from 60 m in 2011. WHO predicts deaths from diabetes in India will increase by 35% over the next 10 years.

In the COPD (Chronic Obstructive Pulmonary Disease) segment, during 2010 almost 24 m people (above 40 yrs) suffered from COPD. It is projected that this number will increase by 34% to 32 m by 2020. Unlike the above diseases, Neuro related diseases are more prominent in the higher income group. Mental disorders affect around 6.5% of the Indian population.

Each of the above diseases has their own reasons of occurrence. However a common factor running through them is that the large part of it takes place due to lifestyle and changes in lifestyle of the population and thus are also referred to as lifestyle disease.

How is Indian pharma capitalizing on this?

As mentioned earlier, chronic diseases, by nature, are not completely curable and so its treatment is more for managing the disease and hence is long lasting. Further, whenever a drug is prescribed for such diseases both doctors and patients typically prefer sticking to the same brand. This makes patients regular consumers of that drug thereby ensuring regular demand for the same.

In order to meet the cater to this lucrative segment, Indian companies have have been aligning their portfolios more toward chronic therapy drugs. Among the Indian players Sun Pharma leads the pack. Around 63% of the company's revenues come from the chronic segment. Sun Pharma's portfolio comprises of Neurology, CVD and till some extent diabetology.

Cipla has tapped large part of the respiratory market in India. The Company derives around 27% of its domestic sales from the respiratory segment. Lupin too is concentrating its portfolio towards chronic segment and derives around 45% of its domestic revenues from this. The major areas of focus for Lupin are CVD, Diabetes and Respiratory. Biocon derives large part of its domestic revenues from diabetes and Cancer therapies.

Among the MNCs Abbott Laboratories and Sanofi India, have sizeable revenues coming from the chronic segment. The other mid caps and small cap pharma companies which have their larger portfolio in the chronic segment are Torrent Pharmaceuticals, and Unichem Laboratories.

Going forward...

In FY12, the Indian pharmaceutical market witnessed growth of 16%, of which considerable part of growth was contributed by chronic segment. Indeed, the chronic therapy segment has grown in healthy double digits in the past several years as well. As a result, we believe that those companies having a significant portfolio in this segment will have the edge over other players as the demand for these drugs is more or less ensured and the margins enjoyed are higher as compared to the acute segment. Plus, the higher incidence of these diseases in the future makes the case for chronic therapy drugs all the more stronger.

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