| In the annals of the global pharma industry, 2009 marks a watershed event – when the baton of growth got passed on to the emerging markets (EMs). With US and top five EU markets contributing only ~15% to industry growth, the traditional Big Pharma business model, based on developed markets and patented products, is in a tizzy.
Big pharma are aggressively realigning their strategies and resources around EMs and India, a US$30bn pharma market by 2020E, is now a priority destination. The development has profound positive implications for the growth outlook of their India business units as well as for generics partnering with MNCs to implement their new EM strategies (e.g. Aurobindo Pharma and Strides Arcolab).
There is growing evidence of MNCs realigning India strategies through multiple strategic/ tactical interventions, and they have also begun to deliver accelerated growth. This "MNC comeback" will hasten consolidation in the Indian pharma market while leading to a likely re-rating of MNC stocks.
Emerging markets – Big Pharma's new growth frontier: EMs will likely drive 70% of the global pharma growth in FY13 with top seven EMs growing to $400bn by 2020E. This has prompted a Big Pharma exodus to EMs. MNCs have begun to walk the talk on EM strategies – as reflected in dramatic field-force alignments away from developed markets and hectic deal-making activity in EMs.
In the new order, India – one of the largest and fastest growing EMs – is now a priority destination for most MNCs.
MNC Pharma in India – dawn of a new era: There are firm signs of India-focused strategy being executed across MNCs – as reflected in a sharp ramp-up in field forces and marked step-up in new product launches. MNCs are now adapting their India strategies to market realities –"branded generics" (off-patent products of competitors) launches are now core to India strategy and differentiated pricing strategies are accepted even for newer molecules. Implementation of the patent regime will further strengthen MNCs' competitiveness. Revenue uptick to drive a likely re-rating Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Nothing in this article is, or should be construed as, investment advice. |
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