Comments
A tough economic environment is not the only thing dogging the pharmaceutical sector – it also has to contend with regulatory uncertainties.
A CII-PwC report, ‘Changing landscape of the Indian pharma industry’, notes that the industry’s growth has dropped to 9.8 per cent in 2013, from 16.6 per cent last year. The industry is valued at Rs 72,069 crore in 2013.
“In addition to the growth challenges, the pharmaceutical industry is currently grappling with a number of issues, like delays in clinical trial approvals, uncertainties over the FDI policy, the new pricing policy, a uniform code for sales and marketing practices and compulsory licensing,” the report said.
Caught in this situation, which is unlikely to resolve anytime soon, multinational pharma companies appear to have been hit harder than domestic firms.
The report notes that the top five MNC’s growth dipped to seven per cent in 2013, from 16 per cent in 2012.
The study notes that “delays and regulatory uncertainties in clinical trials have derailed the innovation curve as well as the growth of the clinical trial industry.”
Further, it says the National Pharmaceutical Pricing Policy, which brought a significant number of medicines under pricing control, has resulted in significant uncertainty among stockists regarding the feasibility of staying in business due to lower profitability post the margin reduction.
The margins of retailers has come down from 20 per cent to 10 per cent and that of stockists from 16 per cent to eight per cent.
Among other concerns are the increasing instances of quality and manufacturing issues that have come to light in the recent past. This is particularly important since India is the biggest supplier of medicines to the US and, according to industry sources, exports to the US rose nearly 32 per cent last year to $4.23 billion.
“While pharma companies focus their attention on measures to combat the growth slowdown, they will need to work with the Government and other stakeholders to discuss and resolve regulatory challenges,” the report says.
Smaller towns lead
According to the report, class I towns and rural areas are shoring up growth in the pharma sector and not the metro cities. “Urban regions (metros and Class I) contribute to approximately 60 per cent of the Indian pharmaceutical market sales, while the extra-urban regions (Class II to VI towns and rural) contribute to approximately 40 per cent,” the study says.
It adds that the main drivers of growth are class I towns (10 per cent) and rural areas (14.5 per cent).
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.