Ipca’s Zerodol brand, along with its multiple variants used in treating pain and inflammation, is an example of how this trend is playing out. The Zerodol franchise, now valued at over Rs 500 crore, grew over 20 per cent in FY20.
Abhishek Sharma and Rahul Jeewani of IIFL said: “More and more firms are refocussing their efforts on creating large brands. It is clearly more profitable and sustainable to build large brands.”
may have better pricing power with larger brands. Further, multiple launches increase marketing costs and lead to a cluttered portfolio.
Consequently, new product launches by Indian drug majors — who control 80 per cent of the market — are on a decline. The contribution from new products is now at a five-year low; they now account for 24 per cent of the pharma growth, compared to 45 per cent in FY17.
The rapid growth in the trade generics market, which accounts for a third of IPM volumes, is another trend impacting volume and the overall growth of the branded segment.
An analyst at a domestic brokerage said: “The buying capacity of consumers has reduced in light of the slowdown, with growing preference for generics and lower-priced medications. This is eating into volumes of branded generics players.”
Higher sales of trade generics and Jan Aushadhi stores, to a smaller extent, are eating into volumes/pricing of the branded market, especially in tier-3 and tier-4 towns.
IIFL believes that of all risks to the India branded generics market, the emergence of trade generics is the most potent that could impact growth rates of branded players.
On the overall pharma growth, Praful Bohra and Rajat Srivastava of Emkay Global had said in an earlier report that growth driven by price hikes was not sustainable, and the declining volume growth trend remained a worry.