How top Indian drug firms are pushing up sales

Leading Indian drug majors, such as Ranbaxy Laboratories, Dr Reddy's Laboratories, Piramal Healthcare and Wockhardt, are in-licensing popular products from overseas drug makers to boost their domestic sales.

They introduce the in-licensed drugs -- which are mostly in the premium skin care segment -- on payment of an upfront fee to the brand owners, who also get a share of the sales revenue.

Last week, Glenmark Pharma joined the list of companies, which have brought overseas drugs to the domestic market. Its first in-licensed drug in the Indian market is a skin care cream named Strataderm. This has been in-licensed from Switzerland-based Stratpharma AG. Glenmark's plans are to tap the Rs 80-crore scar and marks removal cream market in India.

A few months ago, Ranbaxy Laboratories had in-licensed an anti-ageing drug Neuronox from Medy-Tox of South Korea. The market size for this drug in India is estimated at Rs 30 crore and there is only one player in the market apart from Ranbaxy.

Analysts point out that specialised segments like dermatology offer very high profits (above 35 per cent), as most of the products target the growing middle- and upper-class consumers of the society.

"Most of the in-licensed products by Indian companies are niche innovative patented drugs that are selling well in the US and Europe and are made by medium-scale players in those countries. An in-licensing arrangement helps them to access the huge Indian market, where most of the domestic majors have very extensive marketing muscle. It is a win-win situation for both partners," said Sujay Shetty, Associate Director of PricewaterhouseCoopers.

The domestic drug market is expected to double to $20 billion by 2015, according to research firm McKinsey. Various estimates say the total skin care market in India is about Rs 2,500 crore and is growing at 15 per cent per annum.

"The skin care market consists of just about 1.5 per cent of the global drug sales market and, therefore, specialised players and competition is limited in this field. That is the reason many players are now looking to tap the domestic market's potential with in-licensed products, rather than developing own products," said Sarabjit Kaur Nagra, vice-president of research, Angel Broking.

Two months ago, Dr Reddy's Laboratories had in-licensed two products under the brand name Strea from Vermont Italia of Italy for the treatment of wrinkles and age spots. In August, the company had launched its own product Nexret, targeting the anti-acne market in India, the size of which is estimated at Rs 130 crore and growing at the rate of 14 per cent.

Dr Reddy's also has a licensing and distribution agreement with Cosmederm Technologies, a US-based specialty pharmaceutical company focused on dermatology and aesthetic medicine, with exclusive rights to distribute Cosmederm Technologies' skin care products throughout India.

The aesthetic dermatology segment is worth about Rs 100 crore in the domestic market and is growing at the rate of more than 50 per cent, according to sources at Dr Reddy's Laboratories.

In August, Dr Reddy's had in-licensed a chronic pain management transdermal patch named Finrid, from Sparsha Pharma and it launched in July Execare, a steroid for skin diseases dermatoses and vitiligo.

The topical steroid market in India is about Rs 120 crore and is growing at above 14 per cent annually. The company has four products in this segment.

Drug major Wockhardt, which had brought in five in-licensed drugs two years ago, mainly in the dermatology and osteoarthritis segments, had this year in-licensed Bonistein, a drug for the management of osteoporosis from Swiss company DSM Nutritional Products. The product targets the anti-osteoporosis formulations market in India, which is worth over Rs 250 crore and is growing at 19 per cent annually.