Despite operating in one of the fastest growing markets, most multinational pharma companies are downsizing in India, said a recent report by Avendus Capital. “Unable to compete with the intense sales and marketing of domestic companies and given lower realisations versus their home markets, most MNCs have been retreating from the Indian market,” the report said.
For instance, domestic pharma companies have set up big medical representative (MR) teams at significant expense of 25-30% of their revenues. In India, it is estimated that over 90% of the doctor prescriptions are influenced by the marketing efforts of the pharma companies. Therefore, 98% of doctor prescriptions comprise branded generics of these domestic pharma companies.
The customers, on the other hand, have been to rely on the doctors’ prescriptions since there are significant variation in quality standards. As per Avendus, substandard, spurious and counterfeit drugs account for a staggering 20% of the market, and as a result, trust on doctors and big, well-known brands is often a key criteria for the end consumers.
The top 5 MNC pharma companies in India are GSK, Pfizer, Sanofi, Astrazeneca and Novartis. Abbott is the only large foreign brand which is focussing on the Indian market while deprioritisation the US pharma market. The report said that for companies like Pfizer, GSK, Sanofi India, etc, India is not their top priority country, and these companies have a non-differentiated branded generics portfolio with limited incremental investment.
In addition to intense competition in sales and marketing, the MNC players are struggling to deal with the intense pricing pressure and highly complex regulatory environment. For instance, the price controls under NLEM (National List of Essential Medicines) and competition from domestic companies force MNCs to go for aggressive price cuts to remain competitive in the Indian market.
The lack of India focus has resulted in MNCs losing a sizeable market share over the years. For instance, their combined share have gone down from 29% in FY09 to 16% in FY24 at the expense of domestic players. “In the recent years, MNC giants have downsized in key areas such as manufacturing, sales, and marketing. The intense competition has forced them to explore new business models,” the report adds.
Sudarshan Jain, secretary general of Indian Pharmaceutical Alliance (IPA) said that MNC players are now focussing on research-based products which take time to build.
