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Thursday, April 09, 2020

One-hit wonders: Smaller pharma companies with blockbuster brands

In India’s diverse pharma industry, it’s not about how big the firm is, but how popular they can make their brands. This has allowed lesser-known drug makers to build brands that are to be reckoned with

Written by Prabha Raghavan | New Delhi | Published: June 9, 2019 3:55:10 am
pharma companies, indian pharma, indian pharma companies, indian pharma brands, indian health sector As per the DMC report after investigation, Vishal was administered an allopathic syrup along with an ayurvedic syrup for better liver function. (Representational)

Ever since he was in medical school two decades ago, Delhi-based general physician Dr S Chatterjee can remember turning to world-renowned microbicide brand Betadine for his antiseptic needs when treating his patients’ wounds.

Even today, despite nearly 100 different brands in this particular therapeutic segment — some even marketed by few of India’s largest and most popular pharmaceutical companies — surgeons and medical practitioners like Dr Chatterjee still swear by Betadine. It comes as no surprise then that Betadine was the 28th largest medicine brand in India by sales, raking in a little over Rs 315 crore in the 12 months ended April 2019.

Yet, the company that markets Betadine in India — Win-Medicare — is not as well known as the brand. And, just like it, other lesser-known drug makers, though few, have managed to build medicine brands to be reckoned with.

“Over a period of time, they have done well and nobody has really complained of a side effect,” says Dr Chatterjee. “Half the time, we don’t even know or remember the company that makes the medicine. If it has proven its worth, I’m fine with it.” The Indian Express looks at some of these pharma companies, the success of their brands, the importance of these chart-toppers in their portfolio and their potential future.

In Battle of Brands, it’s David vs Goliath

In India’s diverse pharma industry, it’s not about how big the company is, but how popular they can make their brand.

Betadine, Sinarest, Dexorange, Zincovit and Meftal may belong to different therapeutic categories, but have one thing in common — they are marketed by small to mid-sized companies, but have carved a space for themselves among India’s 100 most popular brands. Often, they have even topped brands by 10 of the largest domestic and foreign drug makers that dominate over 40 per cent of the country’s Rs 1.30 lakh-crore pharma market.

For instance, Sinarest, a popular line of cold medication products, ranked 33rd in April 2019, while its company, Mumbai-headquartered Centaur Pharmaceuticals, ranked 60th in the overall pharma market in March 2019, according to market research firm AIOCD Awacs PharmaTrac.

“We have maintained pole position for over two decades and have widened our lead over the competition,” boasts Centaur managing director S D Sawant.

Mumbai-headquartered Blue Cross Laboratories, too, has created a household name with muscle cramp medicine line ‘Meftal’, which has beat brands by companies like Alkem, Lupin and Torrent Pharmaceuticals in its therapeutic segment, according to PharmaTrac.

“Meftal is the most commonly used drug in young females for dysmenorrhea. It works well,” says Dr Chatterjee, who prescribes the drug around 15-20 times a month. Yet, experts consider these brands anomalies in the industry, since the investment required to build them here is immense.

“For a brand to be pan-India, I think a company needs to be fairly well diversified and possess a dispersed distribution network. This means that we may not generally find a brand by a small company topping by revenues in the market,” says Karthikeyan Thangarajan, associate director (corporate), India Ratings and Research (Fitch Group). So, what makes these brands different?

Building a Blockbuster

Analysts expect the top 10 brands in most therapeutic categories to belong to a large company, but these smaller drug makers have managed one-hit wonders.

“These are the companies which have got one or two molecules right. In a way, it’s a very efficient molecule and they have been able to quickly get the acceptance of a physician or patient,” says Thangarajan.

“Very few such names will come up at the pan-India level, but there would be many other brands that are performing better at the regional level. Unfortunately, there isn’t enough data to track this,” he further says.

“Here, while the patient is the consumer of the drugs, there are a few other influencers in the system and the most important among them is the doctors who are prescribing the drugs,” says another analyst requesting anonymity.

“Depending on the scenario, the affordability and most importantly, the efficacy of the drug, the doctors choose certain brands and that becomes an important driver in this market,” the person adds.

“With most of these single-brand companies, you’ll see the brand was launched a long time back,” says Abhishek Sharma, pharma analyst at IIFL.

The brands in focus could have been “unique launches” when introduced in the market before achieving the scale they have today with the help of “superlative” efforts by their companies. For instance, no company has been able to create a suitable competitor to Sinarest, says Sharma. “Now that the brand is established in the minds of prescribers, it would be very difficult for other players to overtake it,” he adds.

Centaur president A K Handa says the company from the beginning has focused and relied on consistent communication with ENT surgeons, pediatricians and GPs and ensured “world class” quality standards and availability. Such differentiation and positioning makes up for limited resources and helps smaller companies carve out a “significant niche”.

The brand’s safety for specific patient groups also plays a huge role in its growth. For instance, Franco-Indian Pharmaceutical’s Dexorange is safe for consumption by pregnant women.

“The physician would be quite resistant to try something new in pregnant women,” says IIFL’s Sharma.

“If I’m prescribing a drug for years, it is working well for my patients, nobody has complained of a side effect and it is affordable for them, I don’t feel the need to look at other options,” agrees Dr Chatterjee.

The brand’s global image also matters. Win-Medicare brought Betadine to India through a deal with Swiss pharma firm Mundipharma AG in the late eighties. The topical microbicide “is trusted for its uncompromising antiseptic efficacy” in 75 countries, says Win-Medicare’s parent, the Umesh Modi Group.

Yet, the business models these companies follow may put them in a vulnerable position further down the road.

What the Future Holds

These companies in focus here have annual revenues of less than Rs 1,000 crore and have, for decades, relied heavily on one or two brands for a chunk of their income, according to PharmaTrac and the Ministry of Corporate Affairs.
Their top brands contribute anywhere between 25 per cent to over 50 per cent of their overall revenues and are expected to deliver a higher share of their domestic revenues. For instance, the Sinarest line contributed over 60 per cent to Centaur’s domestic sales in 2017-18, according to vice president Amit Rangnekar.

Companies may run a “high risk” from external and internal factors due to heavy dependence on fewer critical “legacy” brands with strong brand equity, according to healthcare sector information and services provider IQVIA.

“Suppose there is now a product that comes in the market which is far more superior and the company is not able to counter it, that is how you can get challenged,” agrees IIFL’s Sharma.

This happened in the case of drug maker Unichem, which used to derive a “bulk” of its revenue and profitability from hypertension drug brand Losar (losartan), but began losing out to Glenmark after its telmisartan was launched, Sharma says. “New patients of hypertenstion were put on telmisartan instead of losartan, and Unichem was not able to protect its turf,” he says. Some of these companies have begun to realise this risk.

“Over dependence on a major brand is a concern and we have introduced multiple extensions targeted to specific indications to alleviate the risk,” says Sawant of Centaur.

The company wants to enter new therapy areas through tie-ups and also plans to “sharpen” its focus on the ophthalmology segment and chronic therapy areas to emerge as a “significant player” in the high growth chronic therapy area, he adds.

However, the market is no longer the same, and replicating the same success with new launches is not possible.

It has become “increasingly difficult” in the last two decades for smaller companies to expand their presence in the Indian market, explains IIFL’s Sharma.

Nowadays, even launching a brand in a small category typically costs north of Rs 5 crore. “Very few companies have that kind of muscle,” he says.

“The larger companies are very smart, very nimble. Their hold on prescribers has only increased,” he says, adding that any gaps they have left are “few and far in between”.

Yet, growth and scale may not necessarily be every company’s vision.

Even if there is a risk of a new product coming into the market, companies with legacy brands may not lose out drastically.

“Maybe your margins may be lower, but you will still bring in cash, so it is a very attractive and lucrative business once you’ve set it up,” says Sharma.

“Many people are happy with a Rs 100-crore brand. They don’t want to expand; they don’t want to scale up. It is never a battle for survival once you’ve established a single brand, and some people prefer it that way.”

Win-Medicare, Apex Laboratories, Franco-Indian Pharmaceuticals and Blue Cross Laboratories did not respond to queries about their brands.

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