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OTC Drug Market India (Part III)


October 2011
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Executive Summary
Market
India currently ranks eleventh in the global Over-the-counter (OTC) drug market OTC drug market in India is valued at INR 87.78 bn in 2009 The market is expected to grow at a CAGR of 12.6% from 2009 to 2015

Drivers:
Rising consumer confidence in OTC products Increasing number of shifts from prescription to OTC drugs Increasing focus on brand building Booming retail growth Changing demographics Lower price control

Challenges:
Low penetration in rural areas Preference of home remedies Competitive market Time consuming clinical trial procedures

Drivers and Challenges

Competition

Highly fragmented market with large number of players Major foreign players in the market include Glaxosmithkline, Procter & Gamble, Reckitt Benckiser etc Major domestic companies include Ranbaxy, Cipla, Dr. Reddys, Amrutanjan Healthcare among others Increased penetration into the rural market Alternative distribution channels Brand Creation Expansion into several OTC segments
OTC DRUG MARKET IN INDIA 2011.PPT

Strategic recommendations

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Introduction Market Overview Drivers & Challenges Government Initiatives Market Value Chain and Regulation Competition Strategic recommendation

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Pharmaceutical value chains involve the entire process from drug discovery to drug marketing
A pharmaceutical value chain is a chain of activities which are involved in producing drugs, starting with raw materials and ending with the delivered product

Drug Discovery

Drug Development

Manufacturing

Distribution

Sales and Marketing

Drug discovery involves the identification, synthesis and screening of chemicals for therapeutic efficacy

Drug development is the process of bringing a new drug to the market once a lead compound has been identified through the process of drug discovery

Drug manufacturing are the systems required for the quality control covering the manufacture and testing of drugs

Distribution of a manufactured drug involves the process by which the drug is supplied to the stockists, substockists, hospitals and retail pharmacy shops

Pharmaceutical marketing, sometimes called medico marketing, is the process of advertising or otherwise promoting the sale of drugs

Source: India Today Pharmaceutical Distribution in India


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Drug development is a multistage process involving four distinct stages


Prior to CDSCO approving an OTC drug for market release, the drug must go through a series of tests and clinical trials Drug is first tested in laboratories on animals to test the toxicity Knowing the toxicity level, it is then tested on humans Three phases of human subject clinical trials prior to FDA approval for market release and one phase after market release

Phase I

Phase II
Have 30 -300 subjects having diseases specific to be treated by the investigational drug Data collected includes side effects and metabolization of the investigational drug Collect data on time to progression (TTP), progression free survival (PFS) and time to treatment failure (TTF)

Phase III

Phase IV

Known as safety trials Sponsor has to submit documentation for an investigational new drug (IND) to CDSCO to receive approval Have 20-80 healthy volunteers Tests if the drug can be used in patients with specific diseases

Known as approval trials Have 300-3000 subjects After data is analyzed, the sponsor files a new drug application (NDA) Application is reviewed by a team of CDSCO experts If reviewers agree with results of sponsor, drug gets a CDSCO marketing approval

Involves a post- approval clinical trial after the drug has been approved for market release Trials look at long term safety and benefits in the general population Usually involves several thousand subjects

Source: Chemoth.com Clinical trials for oncology drugs


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The licensing and registration of pharmaceuticals in India, controlled in a regulated way


The Central Drugs Standard Control Organization (CDSCO), under the Ministry Of Health and Family Welfare, Government of India, controls the drug control administration Functions undertaken by Central Government Laying down standards of drugs, cosmetics, diagnostics and devices Regulating market authorization of new drugs Regulating clinical research in India Regulating standards of imported drugs Testing of drugs by Central Drugs Labs Monitoring adverse drug reactions( ADRs) Laying down regulatory measures, and amendments to rules and regulations To approve licenses to manufacture certain categories of drugs as central License Approving Authority Coordinating the activities of the State Drugs Control Organizations Functions undertaken by the state governments Licensing of drug manufacturing and sales establishments Licensing of drug testing laboratories Approval of drug formulations by manufacturers Monitoring of quality of drugs and cosmetics, manufactured by respective state units and marketed in the state Pre and post licensing inspection Administrative actions

Regulated drug marketing leads to an increase in the pharmaceuticals market


Source: Central Drugs Standard Control Organisation, Ministry of Health and Family Welfare, Government of India
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Different other regulatory frameworks exist in the Indian pharmaceutical industry


The Indian pharmaceutical industry is highly regulated with a number of guidelines monitoring the drug manufacturing, marketing and pricing operations

Policy

Objectives It regulates the import, manufacture, distribution and sales of drugs in India Schedule M of the D&C Act specifies the general and specific requirements for factory premises and other infrastructure Schedule Y of the D&C Act specifies the clinical trials legislative requirements The Act controls the advertisements regarding drugs and prohibits the advertising of remedies alleged to possess magic qualities

Drugs and Cosmetics Act, 1940

Drug and Magic Remedies Act, 1954 Narcotic Drugs and Psychotropic Substances Act , 1985 Drug Price Control Order, 1995

It controls and regulates operations related to narcotic drugs and psychotropic substances

The order was passed by the National Pharmaceutical Pricing Authority (NPPA) in order to ensure abundant availability of essential drugs at reasonable prices and to strengthen the indigenous capability of cost effective quality production

Source: Indian Pharmaceutical Association Regulations and Guidelines


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Introduction Market Overview Drivers & Challenges Government Initiatives Market Value Chain and Regulation Competition Strategic recommendation

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Major domestic players in the market (1/6)


Company Snapshot: Ranbaxy Laboratories Ltd.
Corporate Information
Headquarters Founded Products Key People Gurgaon, Haryana 1961 Generics , APIs Arun Sawhney MD
0 0

Financial Performance
Revenue INR bn
100 67.8 50 20 74.1 76.0 40

Revenue Profit / Loss


89.6

Profit INR bn
60

2008

2009

2010

2011

Business Highlights
Employing around 13,420 people, Ranbaxy is Indias largest pharmaceutical company, having manufacturing facilities in seven countries and serving customers in over 125 countries In 2002, the company entered the OTC business through a separate business division Ranbaxy Global Consumer Healthcare with four products, Revital, Garlic Pearls, Pepfiz and Gesdyp, all of which were prescription turned OTC products Presently, the division has 15 products in its basket, including Volini, Chericof cough syrup among others In 2010, Revital was the sixth largest product in the Indian pharmaceuticals market On Aug 2011, the company launched a two-in-one painkiller Volini Duo, for chronic back and joint pains
Source: Company Website; The Financial Express Flying off the shelf, Feb 2010; moneycontrol Ranbaxy launches Volini Duo OTC painkiller across the country, Aug 2011; The Hindu Pfizer, Ranbaxy tie up with ITC to sell over-the-counter products in rural areas, Capital IQ Note: Figures are for year ending 31st Mar
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Major domestic players in the market (2/6)


Company Snapshot: Dr. Reddys Laboratories (DRL)
Corporate Information
Headquarters Founded Products Key People Hyderabad, Andhra Pradesh 1984 Finished dosage forms, APIs, biotechnology products Dr. K.Anji.Reddy Chairman

Financial Performance
Revenue INR bn
80 60 40 20 0 20 0 49.4

Revenue Profit / Loss 70.2 69.4


74.7

Profit INR bn
60 40

2007

2008

2009

2010

Business Highlights
Employing around 14,900 people, the company primarily focuses on the therapeutic areas of cardiovascular, oncology, diabetes management and pain management It markets its products in India, US, Europe and Russian Federation OTC products include Becelac, Becozinc, Calcium Folinate, Mega-3, Nicetamol, Nise, Riflux, Salicyclix, Styptovit K, Triozac, Ultravex, among others

Source: Company Website; Capital IQ


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Major domestic players in the market (3/6)


Company Snapshot: Cipla Limited
Corporate Information
Headquarters Founded Products Key People Mumbai, Maharashtra 1935 APIs, animal healthcare products, pesticides Dr. Y.K.Hamied Chairman and MD

Financial Performance
Revenue INR bn
80 60 40 20 0 42.6 52.9 56.7

Revenue Profit / Loss


61.3

Profit INR bn
40 30 20 10 0

2008

2009

2010

2011

Business Highlights
With over 40 manufacturing units across the country, the company manufactures around 1200 products in over 80 therapies In Aug 2010, the company acquired Meditab Specialities for INR 1.3 bn, for strategic exchange of research and development facilities OTC products include Cofsils throat Lozenges, Paracetamol, Parafiz, Liponol, Ribocor, Dclo spray, Mobix Caps, Mobix Cream, Betavit, Ciplaton, Hipro, Minovit, Prolyte, Dermacil etc In March 2010, Cipla sold the marketing rights of i-pill , the first drug in the emergency contraceptive space, to Piramal Healthcare for INR 950 mn
Source: Company Website; NDTV Profit Cipla sells i-Pill rights to Piramal, Mar 2010; Capital IQ
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Major domestic players in the market (4/6)


Company Snapshot: Amrutanjan Healthcare
Corporate Information
Headquarters Founded Products Key People Chennai, Tamil Nadu 1893 Pharmaceuticals S. Sambhu Prasad MD
0.0

Financial Performance
Revenue INR bn
1.5 1.0 0.5 0.7 0.9 0.9

Revenue Profit / Loss


1.1

Profit INR bn
0.8 0.6 0.4 0.2 0.0

2008

2009

2010

2011

Business Highlights
With an employee base of around 397 people, the company provides Ayurvedic and allopathic products in the areas of pain management, cough and cold care and health and home care It exports its products to the Gulf, African and south east Asian countries It offers balms and sprays, hot and cold multi purpose reusable gel packs for pain relief, cold rubs and vaporizing gels, inhalers, cough syrup, corn cap plasters and hand sanitizer OTC products include Amrutanjan Cold rub, Amrutanjan Inhaler, Amrutanjan Joint Ache cream, Amrutanjan Pain Balm, Hero Super Balm among others The company has a specialised centre for pain management called CARE.which offers solutions for pain management
Source: Company Website; Capital IQ
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Major domestic players in the market (5/6)


Company Snapshot: Lupin Ltd.
Corporate Information
Headquarters Founded Products Key People Mumbai, Maharashtra 1968 APIs Desh Bandhu Gupta Chairman

Financial Performance
Revenue INR bn
60 40 20 0 0 38.5 28.7 5

Revenue Profit / Loss


57.9 48.3

Profit INR bn
10

2008

2009

2010

2011

Business Highlights
Producing a range of generic and branded formulations, the company sells its products in about 70 countries worldwide Research activities of the company is mainly conducted at the Lupin Research Park (LRP) in Pune and the company also has an advanced R&D facility, Kyowa Pharmaceutical Industry Co. Ltd, located at Osaka, Japan Formulation facilities of the company are situated at Aurangabad, Mandideep and Goa, and API facilities are situated at Ankleshwar and Tarapur OTC drugs include Benz, Nectera Powder, Fastrace, CZ-3 among others

Source: Company Website; Capital IQ


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Major domestic players in the market (6/6)


Company Snapshot : Mankind Pharma
Corporate Information
Headquarters Founded Products Key People New Delhi, Delhi 1995 OTC products, animal products R.C.Juneja Chairman

Business Highlights
The companys OTC product basket comprises of erectile dysfunction drug, oral contraceptives, pregnancy determination kits and sweeteners Top OTC products include Zerofat, Nurokind, Vomikind, Nuforce,Gatikind, Zenflox, Unwanted among others

Company Snapshot: Hamdard Laboratories


Corporate Information
Headquarters Founded Products Key People Ghaziabad 1906 Ayurvedic medicines NA

Business Highlights
Has 600 OTC products like Safi, Cinkara , Roghan Badam, Lipotab, Hamdogen, Kulzam, among others It is associated with Hamdard Foundation, India, a charitable education trust, through which it reinvests its profits in charitable activities

Source: Company Website


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Major foreign players in the market (1/8)


Company Snapshot: Glaxosmithkline plc
Corporate Information
Headquarters Founded Products Key People Brentford, UK 1935 Prescription medicines, Vaccines, Consumer healthcare Andrew Witty CEO
0

Financial Performance
Revenue INR tn
3 2 1 1.7 2.1

Revenue Profit / Loss


2.0 2.0

Profit INR tn
2.0 1.5 1.0 0.5 0.0

2007

2008

2009

2010

Business Highlights
GSK has 96,461 employees worldwide, with offices in over 100 countries It operates in India through its subsidiary Glaxosmithkline Pharmaceuticals Limited Is one of the largest collaborators in the industry with and work with academic institutions, governments and other pharmaceutical companies to increase R&D OTC products include Abreva, Alli, Aquafresh, BC Powder, Beano, Biotene, Chap-et, Citrucel, Debrox, Ecotrin, Nicorette, Nytol, Sensodyne, Sominex, Tagamet, Targon among others

Source: Company Website; Capital IQ


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Major foreign players in the market (2/8)


Company Snapshot: Novartis AG
Corporate Information
Headquarters Founded Products Key People Basel, Switzerland 1996 Pharmaceuticals, vaccines, generics Daniel Vasella MD
0

Financial Performance
Revenue INR tn
3 2.1 2 1 2.1

Revenue Profit / Loss


2.3 2.5

Profit INR tn
2.0 1.5 1.0 0.5 0.0

2007

2008

2009

2010

Business Highlights
It was formed in 1996 through the merger of Ciba-Geigy and Sandoz Novartis operates in 140 countries worldwide with more than 115,000 associates The company operates in India though its subsidiary, Novartis India Pvt Ltd Novartis has one of the most respected pharmaceutical development pipelines with 140 projects in pharmaceutical clinical development The company invested 16% of net sales in R&D research in 2010 OTC products include Calcium Sandoz for women and children Recently, Novartis launched Otrivin Spray as an OTC nasal decongestant and is priced at INR 44 for 10ml per unit
Source: Company Website; Capital IQ
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Major foreign players in the market (3/8)


Company Snapshot: Pfizer Inc.
Corporate Information
Headquarters Founded Products Key People New York, US 1849 APIs, Biopharmaceutical products Dennis A.Ausiello MD

Financial Performance
Revenue INR tn
4 3 2 1 0 1 0 1.9 2.3 2.3

Revenue Profit / Loss


3.0

Profit INR tn
3 2

2007

2008

2009

2010

Business Highlights
It operates in 46 countries, including Argentina, Brazil, Canada ,Italy, Japan ,Korea , among others, with an employee base of around 112,400 people The company operates in India through its subsidiary Pfizer Ltd. Indian manufacturing facility is located in Thane, Maharashtra Pfizer Education and Research League (PEARL) is an initiative through which the company seeks to partner with institutes to improve existing clinical research and continue medical educational capabilities Major OTC products include cough syrup Corex , mulitivitamin capsule Becosule , Lacto Calamine, which won REBRAND 100 in 2010 Along with Ranbaxy, Pfizer has formed an alliance with ITC Ltd. to tap the rural markets for their OTC products
Note: Figures are for year ending 31st Dec Source: Company Website; Capital IQ ; The Hindu Pfizer, Ranbaxy tie up with ITC to sell over the counter products in rural areas, Jul 2011
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Major foreign players in the market (4/8)


Company Snapshot: Procter & Gamble Co.
Corporate Information
Headquarters Founded Products Key People Cincinnati, USA 1837 Consumer healthcare products Robert A. Mcdonald Chairman

Financial Performance
Revenue INR tn
4 3 2 1 0 3.0 3.4

Revenue Profit / Loss 3.7


3.7

Profit INR tn
2.0 1.5 1.0 0.5 0.0

2007

2008

2009

2010

Business Highlights
With an employee base of around 129,000 , the company provides health care products comprising feminine care, gastrointestinal, rapid diagnostics, respiratory, water filtration, and other oral care products The company sells its products in approximately 180 countries through retail operations Operates in India through its subsidiary Procter and Gamble India OTC products include Vicks Vaporub, Vicks inhaler, Vicks Cough Drops, Vicks Action , Whisper products among others

Source: Company Website; Capital IQ


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Major foreign players in the market (5/8)


Company Snapshot: Reckitt Benckiser Group
Corporate Information
Headquarters Founded Products Key People Berkshire, UK 1814 OTC products Rakesh Kapoor CEO
0.0

Financial Performance
Revenue INR tn
0.6 0.4 0.4 0.2 0.5

Revenue Profit / Loss 0.6


0.6

Profit INR tn
0.4 0.3 0.2 0.1 0.0

2007

2008

2009

2010

Business Highlights
With an employee base of around 27, 200, the company is involved in the manufacture and marketing of household cleaning, and personal and healthcare products Operates in India through its subsidiary Reckitt Benckiser India Pvt. Ltd. OTC products include topical antiseptics and antiseptic liquid products under the Dettol brand, Acne treatment products under the Clearasil brand, medicated sore throat products under the Strepsils brand, cold products under Mucinex brand, analgesics under the Nurofen and Gaviscon brands and denture and dry skin care products In Dec 2010, the company bought Paras Pharmaceuticals Limited for INR 32.6 bn with an objective to expand its OTC health and personal care products
Source: Company Website; Capital IQ
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Major foreign players in the market (6/8)


Company Snapshot: Johnson & Johnson
Corporate Information
Headquarters Founded Products Key People New Jersey, US 1886 Consumer products, pharmaceuticals products, medical devices William C. Weldon CEO

Financial Performance
Revenue INR tn
4 3 2 1 0 1 0 3.0 2.9 2.7 2.8 2

Revenue Profit / Loss

Profit INR tn
3

2007

2008

2009

2010

Business Highlights
J&J has more than 250 operating companies in 57 countries, employing nearly 114,000 people It operates in India through its subsidiary, Johnson & Johnson India Therapautic categories consist of consumer healthcare, medical devices and diagnostics, and pharmaceuticals OTC products include Tylenol, Sudafed, Mylanta, Motrin, Imodium, Pepcid, Nicorette, Benadryl, Rolaids, Dolormin, Zyrtec among others

Source: Company Website; Capital IQ


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Major foreign players in the market (7/8)


Company Snapshot: Merck & Co. Inc.
Corporate Information
Headquarters Founded Products Key People New Jersey, US 1891 Prescription Medicines, vaccines, animal health Richard T. Clark Chairman
0 0.0

Financial Performance
Revenue INR tn
3 2 1 1.0 1.2 1.3

Revenue Profit / Loss


2.1

profit INR tn
1.5 1.0 0.5

2007

2008

2009

2010

Business Highlights
With an employee base of around 94,000, it produces treatment in the areas of respiratory, immunology, dermatology, cardiovascular, oncology, vaccines etc In Nov 2009, Merck and Schering Plough merged together to form a new company to improve peoples health and well being Operates in India through its subsidiary MSD India OTC products include Afrin, Chlor Trimeton, Claritin, Coppertone, Correctol, Dr. Scholls, Drixoral, Lotrimin, Miralax, Tinactin, Zegerid among others

Source: Company Website; Capital IQ


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Major foreign players in the market (8/8)


Company Snapshot :Nutra Pharma Corporation
Corporate Information
Headquarters Founded Products Key People Florida, USA 2000 OTC medicines Rik J. Deitsch Chairman

Business Highlights
The company carries out basic drug discovery research and clinical development through its subsidiaries OTC products offered by the company include Cobroxin, for the treatment of chronic Stage 2 pain, and Nyloxin RX, for the treatment of Stage 3 pain In Aug 2010, the company begun the drug registration process in India for its Nyloxin

Source: Company Website


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Recent Developments
Date Aug 24, 2011 Aug 13, 2011 Aug 12, 2011 Jul 11, 2011 May 04, 2011 Mar 02, 2011 Dec 28, 2010 Dec 02, 2010 Mar 23, 2010 Development Aventis Pharma Ltd acquired the health product business of Mumbai based Universal Medicare to gain the marketing and business distribution of more than 40 branded nutrition products in India Nutra Pharma received permission from the Indian government to market its OTC pain reliever Nylloxin for the treatment of moderate to severe chronic pain Ranbaxy Laboratories OTC business division Ranbaxy Global Consumer Healthcare launched Volini Duo , Indias first approved two in one painkiller Ranbaxy and Pfizer formed an alliance with fast-moving-consumer-goods company (FMCG) ITC to tap the rural markets for their OTC products Dabur India entered into an agreement with Mumbai based Ajanta Pharma to acquire the latters OTC energiser brand 30-Plus US FDA announced steps to remove more than 500 prescription cough, cold and allergy products from the market because of potential safety concerns Chandigarh based Surya pharmaceuticals announced that it had acquired the US based OTC analgesic drug manufacturer Activon Dabur India Ltd announced its entry into modern OTC healthcare market with the launch of Dabur Nutrigo , a daily health supplement Piramal Healthcare Ltd. and Cipla Ltd. announced an agreement for the purchase of i-pill brand of Cipla

Source: Press articles


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Introduction Market Overview Drivers & Challenges Government Initiatives Market Value Chain and Regulation Competition Strategic Recommendation

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Strategic Recommendations (1/2)


Per capita OTC expenditure in India is still among the lowest in global scenario. Current annual per capita OTC expenditure is only INR 85, which depicts that there is a huge opportunity lying in the Indian market

A vast untapped potential exists in rural areas and tier II and III towns
With 70% of the populations living in rural areas, growth is expected to come from the rural areas

Companies should focus on tapping this huge potential through increased sales force and improved distribution channels

Increased penetration in Rural market

Lupin has a dedicated rural force of 300 people and is rapidly expanding it Piramal Healthcare also plans to expand its business into rural areas by employing a field force of approximately 300 people

Companies can also opt for strategic alliances with other companies for improved penetration in rural areas Companies can use the sachet concept to penetrate rural markets
This would promote the companies to sell drugs at reduced prices in rural India Paras Pharmaceuticals have already introduced small sachets for pain balms to increase consumption

Alternative distribution channels

Apart from improving the distribution channel networks, companies should also focus on distribution of products through alternative distribution channels
OTC preparations for cough and cold, balms, or painkillers can be stocked with grocery or paan stores Some pharma companies are trying to use post offices to sell OTC drugs in India

Source: Netscribes Analysis


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Strategic Recommendations (2/2)


Companies should focus on selecting very few OTC product brand building of those OTC product selling is largely dependent on brand popularity amongst end users, as these are not prescribed by physicians Most of the top OTC companies focus on 1-2 brands and their promotion through mass advertisement Companies should also focus on creation of fully-fledged OTC division for providing more importance towards OTC products

Brand Creation

Expansion into several OTC segments

Most of the current OTC brands in India are operating in traditional OTC segments, like cough & cold, analgesics and antacids The growth in these segments are becoming slower in recent years; since these are advancing towards the maturity phase of the product life cycle The comparatively newer segments like dermatologicals and lifestyle OTC segments are gaining huge popularity in recent years are experiencing much higher growth rate and are likely to grow at much faster pace Companies should focus towards launch new products in these segments to achieve higher growth in future

Source: Netscribes Analysis


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Thank you for the attention


The OTC Pharmaceuticals Market India report is part of Netscribes Healthcare Industry Series. For more detailed information or customized research requirements please contact:
Tamojit Roy Phone: +91 33 4064 6215 E-Mail: tamojit.roy@netscribes.com Gagan Uppal Phone: +91 22 4098 7530 E-Mail: gagan.uppal@netscribes.com

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