The Hindu Business Line : MNCs need flexible strategies for domestic drug market: Deloitte

Mumbai, April 22 Multinational drug companies need to realise that there is no magic pill or “silver bullet strategy” to tackle complexities, like medicine pricing or patent implementation, in the domestic market.

For multinational companies looking to participate in the growth story of the pharmaceutical sector, conventional strategising will not work, observes Mr Kumar Kandaswami, Senior Director, Deloitte. There are too many imponderables, he points out, and companies need to understand the strategic risks and go beyond traditional strategies, he says, underlining the importance of ‘strategic flexible planning’.

From a product patent regime in the process of getting implemented in the country to a political scenario that could swing in favour of populism, dynamics of the domestic market have several variables, he observes.

Outlining four such scenarios, a recent pharmaceutical study by Deloitte estimates the Indian small-molecule pharmaceutical market to range between a low of $10 billion to a high of $24 billion. Senior management in pharma companies need to plan ahead to tackle such different scenarios, else it could be too late, he points out.

Patents and pricing

Multinational drug maker Pfizer’s Managing Director in India, Mr Kewal Handa, agrees that there are uncertainties in the local market. Though they are few, they have a long term impact, he observes. MNCs are constantly grappling with the changing situation on patents and pricing, that have a long term impact on sustainability.

Besides having to strategise for the changing local dynamics, it gets difficult to keep the parent company interested in India if the country is not seen respecting patents, he says, referring to the patent-related litigation around cancer drugs Glivec from Novartis and Tarceva from Roche.

Novartis’ Vice-Chairman and Managing Director, Mr Ranjit Shahani, points out that some multinationals like Wyeth, GlaxoSmithKline and Novartis have been in India long enough and have strategies that have both local and overseas sourcing.

But for international companies with high priced products that have recently entered the local market, the prevailing uncertainity in terms of patents and pricing does make it difficult to plan ahead, he agrees.

Business will gravitate to the market that makes more economic sense, he says, adding that the casualty in such cases will be the consumer who would not get access to new medicines.

With the dynamics changing in the country, “strategic flexibility” is not a choice but an imperative for companies, says Deloitte. Using ‘strategic flexibility planning’, a framework outlined by Deloitte, a pharma company can plot the range of uncertainty the future might hold to help reduce the unknown to a manageable number of outcomes, the study points out.

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