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Chapter 4 Marketing of Drugs

Chapter 4 Marketing of Drugs

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Chapter 4 of the LOCOST book "(The Revised) A Lay Person's Guide to Medicines,", LOCOST, Baroda, India, 2006.
Chapter 4 of the LOCOST book "(The Revised) A Lay Person's Guide to Medicines,", LOCOST, Baroda, India, 2006.

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Published by: S.Srinivasan ('Chinu'); Renu Khanna on May 20, 2010
Copyright:Attribution Non-commercial


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India has a vast pharma market, and is rightly celebrated in international circles for making medicines very affordable and low-priced. As of 2003, the Indian industry was supplying 20 percent of the world's drugs (by  volume) and is currently one of the largest pharma industries in the world (by volume). At least 60manufacturing plants in India have US Federal Drug Administration (FDA) approval, second only to theUnited States. Currently a dozen top Indian companies are major suppliers to the US and European marketas well as China.In 2005, India's drug prices were among the lowest in the world (dollar terms and even in purchasing powerparity terms) with China as the possible exception for even lower prices.India's homegrown drug companies have outstripped Western MNCs
in India 
(see Tables 1 and 2 and 3). Butin comparison to worldwide pharma majors, the sales of entire Indian drug industry was US $ 10 billion(about Rs 40,000 cr) in 2005 whereas the sales of the top 15 companies in the world in 2004 was more than US$ 400 billion. In 2004, US drug companies spent more than US $ 33 billion in research whereas Western drug companies spent only US $ 33 million in India on R and D. Indian drug companies all put together spent US $0.3 billion on R and D. Just to give an idea of the disparity, merely world pharmaceutical packaging demand will reach US$ 22.20 billion in 2007. The US will remain the largest consumer of drug packaging while China
generates the fastest gains.Nevertheless, the booming Indian pharma market coming to the rescue of generics world over, especially by making low priced antiretrovirals, is a good part of the story. The not so good part is that the Indian pharmascenario, as far as the ordinary poor consumer is concerned, is a failure of the market. As a result of this extreme market failure and failure of regulation in the absence of well-functioning markets, the drug (medicines) availability situation in India is one of poverty amidst adequacy - there isinadequate access and supply of even essential drugs to the poor despite adequate drug production. Adding to this misery is the poorly functioning public health system. While the sales of Indian Pharma
Chapter 4
Marketing of Drugs
This branch of medicine had commonly been reckoned one of themost lucrative; for the subjects of it are generally found amongthe affluent: they are seldom without some complaint that requiresassistance; and they measure their comforts too often by thequantity of medicine that is served up.
--Trotter T 
. A View of the Nervous Temperament Being a PracticalEnquiry into the Increasing Prevalence, Prevention,and Treatmentof Those Diseases Commonly Called Nervous, Biliary, Stomachand Liver Complaints; Indigestion; Low Spirits, Gout etc
. 2nded. London: Longman, Hurst, Rees, and Orme, 1807: 231
1. Pharma Scenario in India
Pharmabiz website 
 Table 1: Earnings by Top 25 Indian Pharma Companies
Ranbaxy LaboratoriesCIPLADr Reddy's Laboratories Aurobindo PharmaLupinOrchid Chemicals & Pharma.Ipca LaboratoriesBioconMatrix Laboratories WockhardtDivi's LaboratoriesStrides ArcolabPanacea Biotec J B Chemicals & PharmaCadila HealthcareGlenmark PharmaceuticalsNicholas Piramal India AlembicDishman PharmaceuticalsNatco Pharma Torrent PharmaFDCUnichem LaboratoriesMedicamen Biotech Total for 25 companies3497.622181.261557.691085.021161.13638.40671.17646.51636.76846.74347.38995.62305.31325.54357.751063.40463.201232.25524.46157.22154.40497.59321.50390.6448.1120106.673398.271842.241666.631259.891119.28680.81602.53502.51529.48729.48302.83839.36274.39261.62303.541034.90320.021269.05556.46123.25129.61443.08279.07353.4548.7818870.53
(Rs crore)Net salesExports (FOB)
Imports (CIF)
Exports as % of sales2004-052003-042004-052003-042004-052003-042004-052003-04
companies are increasing steadily (approximately Rs 40,000 cr during 2005, including exports), the totalgovernment expenditure by both Central and State Governments would be of the order of a mere Rs 3000cr, with the Southern States spending 15 % on health of the total budget while Assam, Bihar, UP and Orissa would spend around 5 percent! Share of drugs to total treatment costs can vary from 50 to 80 percentdepending on rural/urban locations and inpatient/out patient treatment. All-India figures for per capitaannual drugs and other medical expenditure (rural) is Rs 294 out of Rs 380 for health as a whole.
 Table 2: Highlights for Top 50 Indian Pharma Companies
(Rs crore)FY'05FY'04% Change
Net salesOther incomeRaw materials costStaff costOther expenditurePBDITInterestDepreciationProfit before tax TaxationNet profit after tax and exceptional itemsEquity capital29402.881078.4014009.802612.648069.186438.54478.291005.664963.531028.484068.171593.1827380.321047.2813190.922216.377055.276309.47594.44880.944836.38804.683878.221434.627.
Pharmabiz website 
 Table 3: World's Top 15 Pharma Companies Register 28% Growth in Net Profit, 10.6% Rise in Sales in 2004
 Abbott Laboratories Amgen AstraZeneca PLCBayerBristol-Myers SquibbEli Lilly & CoGlaxoSmithKline Johnson & JohnsonMerck & CoNovartisPfizerRocheSanofi-AventisSchering-Plough Wyeth Total for 15 Cos
(US$ Million)
Cost of Mfg,Selling, R&D
Net Earnings
275325393036-1709310625617964719768315016391024725589-92205153224Exchange Rate - As on 31/12/04: $ 1Euro = 1.36$ 1chf = 0.88$ As on 31/12/03 : $ 1Euro = 1.26$ 1chf = 0.81$Source:
Pharmabiz website 

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