KEWAL HANDA, managing director, Pfizer India Is launching globally established products at competitive prices

RANJIT SHAHANI, vice-chairman & managing director, Novartis India Wants to take healthcare to rural areas

NAVEEN A. RAO, managing director, MSD Pharma Is using differential pricing for patented drugs

HASIT JOSHIPURA, managing director, GlaxoSmithKline Pharma Is on the prowl for acquisitions

ANANDH BALASUNDARAM, managing director, AstraZeneca Pharma Is moving into branded generics

The symbolism is unmistakable. The $48-billion New York-based Pfizer Inc., is world No. 1. Belying that global stature, its Indian affiliate, which Handa helms, has been dwarfed by local drug makers.

This week, in a sign of things to come, Pfizer’s global animal health unit agreed to buy Vetnex, the third-largest veterinary drug business in India, for a reported $75 million (Rs 360 crore). Animal health is a relatively small piece of the overall Rs 35,000 crore-plus Indian pharma pie. But it suggests that Pfizer means business.

In recent months, two other large western pharma companies — UK’s GlaxoSmithKline (GSK) and France’s Sanofi-Aventis — have made news with their acquisition plans. Others such as US’s Merck & Co., are exploring differential drug pricing, and government partnerships to tap market potential. Still others — such as Novartis India, the local arm of the Swiss drug giant — are pushing into rural markets.

This is noteworthy. Many have been here for decades hawking enduring brands such as painkiller Voveran, and Corex cough syrup. But with one or two exceptions — such as GSK, India’s top pharma multinational company (MNC) — they have played second fiddle to the country’s entrepreneurial generic drug makers. The latter thrived under relaxed patent laws from 1972 till 2005, when these laws were tightened. For much of this period, India with its seemingly ragtag bunch of patent-busters, and cut-price generics was a far cry from sanitised, free western markets flush with healthcare funds. India was “the decimal point that got rounded off”, says one industry executive. No longer.

“Pharma MNCs are playing ‘catch-up’ with the India story,” says Sanjiv Navangul, director (sales and marketing) at MSD Pharmaceuticals, Merck & Co.’s Indian arm. MSD, ranked 119 by market share, wants to be in the top five by 2015. Navangul believes that the “sheer aggression” of pharma MNCs will “change the pecking order”.

Things can change quickly. In 2008, Japan’s Daiichi Sankyo emerged as India’s top drug maker overnight by acquiring Gurgaon’s Ranbaxy Laboratories. Global mega-mergers will also have Indian ripples. Once Pfizer completes its global buy of compatriot Wyeth, it will move up four notches by market share in India to No. 8.

Changes Galore
In a 2007 report, McKinsey said by 2015 India will rank No. 10 in the global pharma hustings with drug sales of $20 billion (Rs 96,000 crore). Rising incomes, health insurance and improved healthcare delivery are expected to spur growth.

For much of the past decade, global pharma saw India primarily as an outsourcing base for drug trials, research and manufacturing. What has changed more recently is “the true commercial attractiveness of the Indian domestic market”, says Hocine Sidi-Said, executive vice-president at Hong Kong-based drug marketer moksha8, and former MD of Pfizer in India.

India is adding a substantial chronic disease burden to historically high rates of infectious diseases. “Our urgency is not just because the market is growing faster,” says Ramesh Subrahmanian, president (Asia-Pacific), Merck. “We have the long-term opportunity to engage with public health needs.”

The Indian pharma market also shines by contrast. Last month, IMS Health forecast that America’s drug sales would contract by 1-2 per cent in 2009, the first time in over 50 years owing to blockbuster patent expiries and the economic slowdown. Till 2013, growth is expected to stay flat. Western Europe, Canada and Japan are seen to grow in low single digits. The Indian pharma market, however, grew at a compounded annual rate of 14 per cent from 2005, says ORG-IMS. Though in the past 12 months it slowed to 10 per cent, industry sees this as a blip.

“While the US and Europe continue to be important markets for the company, future growth will come from emerging markets such as India, Russia and China,” says Sandeep Gupta, chairman and MD, Eli Lilly India, a subsidiary of US drug maker Eli Lilly. At a recent press conference Naveen Rao, MD, MSD Pharma, told reporters that India was “front and centre” of Merck’s emerging market strategy.

Chasing Growth
The last few weeks have marked Bangalore-based AstraZeneca (AZ) Pharma’s foray into branded generics, or brands of off-patent drugs not discovered by its parent firm. AZ is a subsidiary of the Anglo-Swedish drug group, which is among the top 10 drug makers globally.

These “arrowhead” products are one way to expand AZ’s coverage of the market (that part in which it is present, not actual market share) to 35-40 per cent by 2011. It is currently at 17 per cent. One instance is Exparin, a brand of anti-coagulant enoxaparin priced on par with Clexane of Sanofi-Aventis.

“India does have among the lowest drug prices... we have to demonstrate value.” Ramesh Subrahmanian, president (Asia-Pacific), Merck

Also, a drier blockbuster pipeline has led MNCs to place a global thrust on generics. India is one of the few remaining generics markets driven by doctor prescriptions and not just trade-push. In the US, prices collapse when a drug loses patent protection. But in India, a market leader commands a sustainable ‘brand’ premium, without any patent protection.