It was a decision grounded in practical reasons, but Bliss GVS Pharma's strategy to sell its anti-malarial medicines through retail channels in African countries seems to have worked for it.
It managed to steer away from large players including Indian drug-makers like Cipla and Ipca, active in the global-funds-driven Government tenders market in these countries.
But that is poised to change – the African anti-malarial drugs market is set to get stirred. Bliss is preparing to make a play for the funds-driven segment, and companies like Cipla are eyeing the private, retail market. Africa accounts for over 80 per cent of the global malaria incidence.
Bliss targeted the retail market as its manufacturing facility was old and would not have passed World Health Organisation (WHO) specifications, says Managing Director, Mr S.N. Kamath, rather candidly. Positioning itself in a niche segment, the company targeted 26 African markets, with the exception of Botswana and South Africa, he said.
But over the next six to 12 months, Bliss is targeting the tender-driven market – where the Government sources large volumes from companies that offer medicines at reasonable prices. These Government-run programmes are supported by global funding organisations including UNAIDS, the Gates Foundation and the Global Fund for AIDS, Tuberculosis and Malaria.
With India being home to several manufacturing facilities that meet global regulatory standards, Mr Kamath says, Bliss will tie up with a third-party to manufacture anti-malarials and target the African tender market. About 80 per cent of Bliss' over Rs 220-crore turnover comes from exports and a lion's share of that comes from anti-malarials.
Better price
The anti-AIDS and anti-malarial markets in Africa are dominated by multilateral institutions like the WHO, observes rating agency Icra's Mr Shamsher Dewan. It is estimated that over 280 million doses are required in 2011-12, he said, adding that there are only about seven WHO pre-qualified global companies, supplying 11 medicines.
Supply issues also emerge when the drug's plant-based ingredient sees a fluctuation due to agri-commodity prices, he points out.
In absolute terms, prices of anti-malarial drugs have come down because the volumes procured have increased – nevertheless, the market is fruitful and companies get qualitatively better prices, he says.
About 18 per cent of Ipca's turnover, about Rs 270 crore, comes from anti-malarials, and Cipla too makes a similar amount from anti-malarial drugs, accounting for about seven per cent of its exports, a person familiar with the segment said.
Companies in the tender market though are at present disconcerted by the slow-down, as funding agencies review their programmes. Drug-makers plan their product-basket a year ahead. But with funding agencies taking time before they give fresh specifications – the risk will be on the books of companies supplying these drugs, he said.
Retail target
Companies like Cipla are now looking at the retail market, to have a holistic profile in the segment, he added.
The African retail market is estimated at about Rs 300 crore, while the tender-driven market is estimated at about Rs 1,000 crore, an analyst said.
Though not in the same league, the Indian market for malarial-drugs does not see much participation from the big local players because, among other things, Government does not undertake major programmes to tackle malaria.
And the procurement that does happen is by the States and is small and driven by companies that offer the lowest price, rather than the most efficacious drug, an industry representative said.