Sector Report

Indian pharma – Turning a corner

by Alok Dalal / Nov 13, 2019


Multiplier effect from power brands to help sustain MNC momentum

Improved MNC performance
MNCs (global pharma innovators’ listed Indian subsidiaries) have seen improved performance over the past 12-18 months, with strong double-digit revenue and Ebitda growth. We believe this resurgence is due to their increasing focus on key brands and a rising acceptance of patented products in India. MNC stocks have thus outperformed both local peers and the Nifty Index over this period.

Power brands and new launches to drive growth
Power brands prevalent in underpenetrated therapies, such as diabetes, thyroid diseases and cancer, have the potential to generate a multiplier effect over the next few years. We expect the Indian pharma market to enjoy a 10% Cagr, reaching US$55bn by 2030, due to a rise in chronic ailments. Strengthened intellectual property right (IPR) laws make it attractive for parents of MNCs to launch new products in India and momentum should boost expansion.

Better placed to withstand policy disruption
The Modi administration’s drive to reduce healthcare costs has resulted in a broad span of price controls and threat of substitution from Jan Aushadhi – a government initiative to promote quality, low-cost generic-generic (substitution) drugs. MNCs patented-product portfolios and power brands are better placed to withstand such disruption, and enjoy significant unaided recall via patient outreach programmes.