The Hindu Business Line : Will Indian pharma bite the bitter non-generic pill?

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Chennai Jan. 30 Last week, Pfizer, the world's largest drug maker, announced that it would cut 10,000 jobs, because generic drugs were hurting its sales. The slicing off, of nearly a tenth of the company's global workforce, is expected to save Pfizer $500 million-1 billion costs a year.

Meanwhile, Indian companies have been basking in the sales of generic drugs. For instance, pharma major Dr Reddy's Laboratories found that its third quarter earnings more than doubled, because of generic drug sales in the international market. Similarly, Ranbaxy saw its revenues rise by 21 per cent, helped by sales of generic Zocor, which captured more than half of the market during the first six months of US sales.

Pfizer move implications

What are the implications of Pfizer's move for Indian manufacturers? This was the question Business Line posed to Dr Raja B. Smarta, Founder and Managing Director of Interlink Marketing Consulting, which operates in pharmaceuticals, healthcare, wellness and education domains. "A few lessons can definitely be learnt," he says. "Over the last 10-15 years, many companies have enlarged their field-force by launching new divisions. These have served their purpose when there were no patents. However, each company has to perhaps reflect on the environment and opportunity to decide on what to do and how to improve productivity of total organisation."

Decisions

Majority of Indian pharma majors have gone global and these companies cannot afford to rely heavily on one line of business, notes Dr Smarta. "They need to decide what they do. Do they pursue generics, which have opportunities, constraints and limitations? Or do they have a hybrid model, which provides a mix of generic and branded medicines? Or should they look at different kinds of technology or drugs?"

All this depends on what strengths each company has, says Dr Smarta. "There are many successful stories where companies have pursued hybrid business models." Research will have to be strengthened to counter any seasonal and/or business fall in generics, he insists. "Companies can bank on newly developed and patented medicines to improve their business."

Easier said, than done, perhaps. For, the inevitable question will be whether Indian pharma companies are ready to bite the bitter non-generic pill.