Ameesh Masurekar, Director, AIOCD Pharmasofttech AWACS, talks about the prevalence of online retail, therapeutic and regulatory measures to drive growth and stability in pharma sector
The Indian pharmaceutical market can be broadly classified into three aspects namely retail, therapy and regulatory.
Retail
Post GST there is an expected reduction in the number of distributors, due to fierce competition while expanding the reach of some large, dominating distributors. This is good news for consumers as it will result in better retail availability, less possibility of counterfeits entering the chain and possibility of higher discounts being passed on to them.
Distribution consolidation and large distributors going beyond their traditional sales geography is going to be a big challenge for the sales force of pharma companies. The field or sales team is given sales credit linked to distributor purchase (or sales) assuming that the distributor sells in finite geography in which the respective sales person or team is working. With distributors cross-selling across traditional geographies, the performance markers will become blurred and companies will have to innovate on how to recognise and reward field forces, so as to ensure justice for individuals as well as growth for the organisation.
Online retail is likely to get legal backing, however, it may not lead to success. In terms of reach, product availability and discounts there is already an intense competition among traditional retailers. So online retail in pharma is not adding much convenience unlike Uber or Ola. Till date, online retail has struggled financially and many have shut shop because of excessive discounts and burning investor’s money in hope to develop a loyal customer. It seems to be the only strategy. Unless there is a commercially viable model, this trend is likely to continue.
Therapy
Both acute and chronic therapies are likely to see a growth in the pharma market. Along with diabetes and cardiac, there have been rising incidences in anti-infectives, dermatology, respiratory and gastroenteritis as well. With air pollution rising exponentially, there has been a spurt in the consumption of asthma and allergy medicines.
There are newer drugs being launched across several therapies – Oncology (Cancer) treatment has seen the highest number of new drugs. In diabetes the new class of drugs called SGLT 2 Inhibitors (drugs like Canagliflozin, Dapagliflozin etc) are becoming an important additional tool for physicians and are likely to grow by leaps. SGLT2 inhibitors block the re-absorption of glucose in the kidney, increase glucose excretion, and thereby lower blood glucose levels.
Regulatory
Regulatory aspects have witnessed an increased impact on the pharma industry in last three years. There have been several regulatory interventions such as price control under DPCO, banning of several fixed dose combinations, additional regulations in clinical trial management and regulatory framework for online retail. Among these measures, the most beneficial for consumers has been the DPCO or price reduction which has passed on a cumulative benefit of around Rs 5,000 crores over the past three years. However, there is a thin line between regulating a drug versus making it less attractive for manufacturers. The market-based average pricing has been a good win-win proposition as it has not reduced prices to an extent where manufacturers suffer loss and discontinue the production of a drug, something that we saw over period of time with the 1995 DPCO.
India was expected to be the clinical trial capital of the world, yet we are far away and things are at a standstill for the want of clarity in policy. We have world class labs, huge patient population and talented pool of doctors, data scientists and healthcare workers to meet our potential and become the clinical trial capital. This will also encourage innovation and new drug discovery and hopefully 2017 will see a turnaround and rapid development of this sector.
Pharma has been a steady and high growth sector for several decades now. We have the cheapest and high quality medicines in the world and India is the global pharmacy. While we import bulk drugs from China, the formulation or finished dosage forms is one rare sector where we are ahead by leaps compared to China or any other country. Pharma is likely to maintain its consistency and double digit growth by generating revenue, tax income for government, employment to millions and most importantly by improving the health of India.