Demand for medicines used in chronic illnesses is growing at a faster clip compared to acute therapy drugs that are used usually for a shorter duration. Data shows that the share of chronic medicines in the Indian pharma market has grown from 31 per cent in 2012-13 to 36 per cent in 2018-19.
During this period, the domestic pharma market, too, has grown from Rs 75,071 crore to Rs 1.3 trillion. The market is broadly split into acute and chronic segments, depending on the duration of patient’s use of medicines.
Anti-infectivess, a category of medicines used to treat infections (primarily antibiotics), pain and acidity, are in the acute segment.
Long-term treatments like diabetes, high blood pressure and lipid-lowering drugs are classified into the chronic category.
According to latest data from market research firm AIOCD AWACS, as on December 2019, drugs in the acute category are growing at 9.2 per cent, while the chronic segment is growing at 11.2 per cent.
The anti-infectives category is the largest in the domestic drug market. It is growing at 9.2 per cent. In comparison, the anti-diabetes and cardiac categories are growing at 11.7 per cent and 12.6 per cent, respectively.
India Infoline (IIFL) analysts noted that due to product introductions, improving diagnosis rates for lifestyle diseases and better compliance (where patients are continuing treatment), the chronic segment has been growing faster than acute since the early 2000’s.
“Chronic therapies have also been more profitable for established players, such as Sun Pharma and Torrent,” IIFL noted.
The brokerage feels that companies in acute care have lesser room to indulge in aggressive promotion activity. “Most product launch activities in the past two decades have also focussed on chronic care, as very few antibiotics or pain products have come to the fore,” IIFL noted.
R K Baheti, chief financial officer (CFO) and director, finance, of Alembic Pharmaceuticals told Business Standard that the company had not been launching many products in the anti-infectives space.
Alembic’s major presence in the segment is in a category called macrolides (a first line treatment but with better efficacy and lower dosage frequency). The category as such is not growing very fast and new introductions have been low. Alembic said it has managed to grow better than the industry in this category.
After the government’s ban on certain fixed dose combination (FDC) drugs, growth in the acute category has slowed down.
“One has to channelise the marketing budget carefully. Following the footsteps of MNCs (multinational corporations), Indian companies, too, are rationalising their portfolio and not going for aggressive launches. New product launches eat up much of the marketing and promotional budget. Focus on chronic has thus increased. This means, once the physician starts writing prescriptions, there is a higher stickiness for the product,” said the cardio-diabetic sales head of a mid-sized Mumbai-based pharma company.
IIFL, too, noted that companies are now focussing on building brands – once a brand is established, the promotion activity falls off. This leads to improved margins.
“Prescribing a particular brand becomes habitual for physicians and to dislodge such a habit is difficult. With time, patients in India may also choose to fill prescriptions without paying regular doctor’s visits, which again creates sustainability for the brand. This would be true for patients of chronic diseases such as diabetes and hypertension as well as in case of old antibiotics,” IIFL noted.-Business Standard