The Jan Aushadhi scheme, under which the government provides quality medicines at affordable rates may disrupt around 20 per cent of Indian pharmaceutical market sales, says a report.
The scheme aims to provide the highest quality drugs at affordable prices, at almost 50-90 per cent discount to their branded counterparts.
The report by Edelweiss expects that around Rs 6,000 crore of the Bureau of Pharma PSUs of India (BPPI) drugs could adversely impact around Rs 25,000-30,000 crore branded sales, assuming an average price differential of five times.
India has over 5,000 Jan Aushadhi stores that cover a list of 800 plus drugs, both chronic and acute, across therapies like anti-cancer, anti-infective, reproductive and gastro intestinal medicines.
By 2020, the government is eyeing opening of another 2,500 stores.
Jan Aushadhi stores clocked aggregate sales of Rs 150 crore in second half of FY19, according to the Department of Pharmaceuticals (DoP).
BPPI posted around Rs 120 crore sales in FY18 at maximum retail price, which corresponds to approximately Rs 600 crore of branded products, versus Rs 33 crore in FY17 and Rs 12.4 crore in FY16.
"We believe this two-pronged focus will enable the BPPI to expand to over 10,000 stores by FY21. With each store achieving monthly sales of around Rs 5 lakh, the scheme is set to top Rs 6,000 crore by FY21," the report said.
It added that as unbranded generics and Jan Aushadhi gain steam, there will be further pressure on volume, leading to lower revenue growth for branded market.
It further said that branded revenue growth will become a challenge in the coming years as generics market share will keep on increasing.