X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 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.
Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster
Investing in India? Get Equitymaster Research  
Generics scores over new drug R&D 
(Tue, 31 Aug Pre-Open) 
 
The Indian pharma landscape has changed considerably in the past 3-4 years. Then, with the advent of the Indian patent law, many domestic pharma companies started focusing on R&D on new chemical entities. The rationale was simple. Once a new chemical entity gets commercialized in the market, the strong sales of that drug more than make up for the R&D incurred on it. However, R&D in pharma is not easy by a long shot. It is an expensive and time consuming affair. And one that requires considerable investment and patience.

Ranbaxy, Dr.Reddy's, Glenmark, Sun Pharma and Piramal Healthcare had all ventured into R&D to develop India's first R&D molecule. However, none of their products are close to getting launched in the global markets. And the huge cost associated with the same led many of them to hive off their R&D units into separate companies. Some like Glenmark, despite creating headlines for the milestone payments that it received, also suffered setbacks as some molecules failed to progress any further.

And so with these surmounting challenges, domestic Indian companies have made a conscious strategy to focus more on generics. Their case is further strengthened by the fact that big innovators, the likes of which are Pfizer, Glaxo, Sanofi-Aventis, have also begun dabbling in generics in a big way. After all, these MNCs despite loads of experience, are seeing their R&D pipelines dwindling. With sales sagging, many have turned to generics to fill the product gap. Also, drugs worth billions of dollars are scheduled to lose their patents till 2013. And so, provides domestic pharma companies ample opportunities to reap rich rewards.

That said, the generics industry has its own set of problems in the form of intense competition and price erosion. And so, the only way for Indian companies to bolster sales is by continuously launching new products and that too in niche areas where the competition is lesser. Overall, both generics and R&D for new molecules have their own set of rewards and challenges. But for the time being Indian players appear to be more equipped to strengthen their presence in generics than R&D. Although none of them have abandoned their R&D programmes, it appears that India's first R&D molecule will have to wait some more time before it sees light of day.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

View all commentaries | Archives  RSS
Read the latest Market Commentary
 
BSE-30
 

 
Go
 

Equitymaster requests your view! Post a comment on "Generics scores over new drug R&D". Click here!

  
 

S&P BSE SENSEX


May 23, 2017 (Close)

MARKET STATS