With patent regime on one side and over 10,000 peers on the other, India’s small- and medium-sized pharma companies are caught between the devil and the deep sea. Those with revenues in the Rs 100 crore-500 crore range have been groping for a viable business model to stay afloat even as they endure pricing pressure from peers and large pharma companies, who have the economies of scale to their advantage.

Most of them have been weak-kneed since 2005, when the patent regime came into effect. But they may find inspiration in a handful of those that have reinvented themselves and are now able to keep their heads above water. Companies such as Arch Pharmalabs and Unimark Remedies, both based in Mumbai, have outperformed the industry benchmarks (see ‘Ahead Of The Pack’) and are on their way to becoming large corporates.

If Arch Pharmalabs hit upon the survival mantra by narrowing its portfolio of 10 products to just three active pharmaceutical ingredients (APIs, which are used in the manufacturing of drugs), Unimark found its bearings in managing alliances with other pharma companies for exports. At the bottom of the pyramid, Acharya Chemicals, a Rs 30-crore firm, has redefined itself from being an API supplier to a contract research firm.

As a whole, small-to-medium enterprise (SME) pharma companies aren’t doing badly. Those with revenues of between Rs 100 crore and Rs 500 crore have grown 20 per cent in revenues, while their profits have grown by more than 40 per cent in the last two years. In comparison, the entire pharma industry reported revenue growth of 22 per cent in two years and net profit growth of 44 per cent in the past two years.