Business Daily from THE HINDU group of publications
Wednesday, Aug 02, 2006
Business Daily from THE HINDU group of publications Wednesday, Aug 02, 2006 |
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Pharmaceuticals Marketing - Strategy Drug cos make plans to beat `generic' woes P.T. Jyothi Datta
Changing tack The Hyderabad-based DRL now talks of `authorised generics'. Unichem chief feels the right way to evolve is to make value-added generics. Hikal re-aligned its strategy to focus on making medicines for innovator companies, rather than generic players.
Mumbai , Aug. 1 The generic dream for Indian drug companies seems to be souring a little with rapid price erosion playing spoilsport in the global markets. And to cope with this pricing pressure, domestic drug makers are reworking strategies from being just a producer of copycat medicines to being a "differentiated payer" in the global generic market. At the end of the tunnel is the opportunity of $100-billion worth of medicines going off patent by 2010 and generic players, including several Indian drug makers, have strategically planned to get a slice of this market. But the experience with antibiotic Ciprofloxacin, fungal-drug Fluconazole and more recently osterarthritis medicine Meloxicam shows that the generic rush to make similar versions of the same drug end in taking the shine off the opportunity. When an innovator has a patent on a medicine, other drug companies are legally bound not to make copies or generic versions of the same medicine. But when the patent expires, drug makers rush in to make me-too versions of the drug and competition results in price-erosion of 95 per cent on several popular drugs. Eleven companies received regulatory approval to market Meloxicam in the US this month, and six of them were Indian companies such as Glenmark, Lupin, Zydus Cadila and Dr Reddy's Laboratories (DRL), points out an analyst. When Ciprofloxacin went off patent two years ago, more than 15 companies jumped onto the bandwagon in the US and prices crashed. Even the brave hearts are revisiting generic plans, admit analysts. The Hyderabad-based DRL now talks of `authorised generics'. DRL is among the clutch of Indian companies known for its aggressive strategy of seeking exclusivity on products and challenging patents. DRL now makes Zocor (Simvastatin) for the innovator company Merck, as the patent on the drug expired and the generic onslaught commenced. "The right way to evolve is to make value-added generics, where you bring some IP (intellectual property) to the deal in terms of a new method of use or a different delivery system. Otherwise, generics are getting commoditised," Unichem's Chairman and Managing Director, Dr Prakash Mody, told Business Line. Recently, Hikal re-aligned its pharma strategy to focus on making medicines for innovator companies, rather than generic players. Mr Jai Hiremath, Hikal's Vice-Chairman and Managing Director, singled out price erosion and uncertainty in the generic space as reasons for the changing tack. Hikal had a rough ride with the epilepsy drug Gabapentin. Though Hikal makes the drug for a multinational company, several generic players also started making the same drug. "Prices (on Gabapentin) started coming down," he said, indicating that it would hurt the company's bottomline. Generic drug makers will survive if they are integrated, with one foot in the bulk-ingredient space and the other in finished medicine forms, observed an analyst. Just being low-cost is not a trump card, as China and East Europe are offering equally good, if not better prices, he added.
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