Pharma companies are focusing on profitable brands, say analysts

Topics pharma firms

In 2018-19, 973 brands were pulled out of the market, against 863 in 2017-18
There has been a slowdown in launches in the Rs 1.3-trillion drug market in India, which sees a few thousand new brands every year.  The number of brands pulled out of the market grew in FY19 over the previous financial year.

Analysts and industry insiders have said increasingly pharma firms are focusing on profitable brands because of price regulations.  

The data from market research firm AIOCD AWACS showed in 2018-19, 2,663 brands were launched in the domestic market, which is the lowest in the past five years. This comes against 3,836 brands launched in 2014-15.  There has been a dip in the number of brand launches in each financial year. Dermatology, vitamins-minerals-nutrients, and gastroenterology are the leading areas in brand launches. 

In 2018-19, 973 brands were pulled out of the market, against 863 in 2017-18.

GlaxoSmithKline India said it had pruned its portfolio to 20 from 130 some time ago.  A Vaidheesh, vice-president (South Asia) and managing director (India), GSK Pharma, noted in the company’s FY19 annual report: “We optimised our product portfolio, identifying key brands behind which we put resources to actively promote. We also have a more structured approach to engaging our trade channel partners, with a dedicated team to engage stockists and retailers.”  Major drugmakers are focusing on profitable brands, said a Mumbai-based analyst. 

“With the clampdown on irrational combination drugs, delay in getting approvals for new combination drugs, and the price control regime, drugmakers are turning prudent about launching brands. If a brand is not gaining traction for, let’s say, four-five years, it is often weeded out,” said Deepak Malik, analyst with Edelweiss. 

He said in a recent note Cadila Healthcare had pulled out 100 brands from the domestic market last year even as it launched 50 brands. 

A senior executive of a pharma firm said: “This exercise is going on. Tail-end brands are being discontinued. However, now that growth in the pharma industry is low and there is pricing pressure in both the domestic and international markets, it has become an imperative for companies to focus on profitable brands. Launching a brand takes a lot of resources, manpower, legal approvals, drug approvals etc. Hence, brand launches have also slowed and companies are being cautious about launching in crowded categories.”

Another analyst said “Sun Pharmaceuticals, Cadila Healthcare, and Torrent Pharma are restructuring tail-end brands. Sun has been de-focusing on the anti-infective category over the past 12 months.”  There was no reply to emails sent to Torrent and Sun Pharma. 

Torrent has been restructuring its portfolio since the acquisition of the branded generic portfolio of Unichem.  “A brand like Losar (a molecule where Unichem once had a 37-38 per cent market share) has not been growing for few years because new molecules have caused a disruption in the anti-hypertensive market,” said an analyst.

Companies need to take a call on phasing out brands,” the analyst said. 

The top 10 brands (of a company) account for more than 20 per cent of their domestic revenue in the case of most, analysts noted.

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