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MNC Pharma’s Dwindling Presence in India: What’s Behind the Trend?

Nishita Masih by Nishita Masih
1 year ago
Reading Time: 4 mins read
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The Indian pharmaceutical market, which is the third largest in the world by volume, has witnessed a significant shift in the last few years. Several multinational pharmaceutical companies (MNCs) have sold their brands to Indian players, reduced their workforce, and lost their market share. What are the reasons for this trend, and what does it mean for the future of the industry? Here is a news article that explores these questions.

The changing dynamics of the Indian pharma market

The Indian pharma market is estimated to be worth around $50 billion, and is expected to grow at a compound annual growth rate (CAGR) of 12-13% till 2025. The market is dominated by generic drugs, which account for over 80% of the sales. The market is also highly fragmented, with over 10,000 players competing for a share of the pie.

MNC Pharma
MNC Pharma

In this scenario, the MNCs, which mainly offer patented or branded drugs, have been facing multiple challenges. Some of the key factors that have affected their performance are:

  • Price erosion: The Indian government has been regulating the prices of essential drugs, including those of the MNCs, under the National List of Essential Medicines (NLEM). The government has also imposed price caps on various drugs, such as cardiac stents, knee implants, and anti-diabetic drugs, to make them affordable for the masses. These measures have resulted in a significant reduction in the profit margins of the MNCs, and have made their products less competitive in the market.
  • Patent expiry: Many of the blockbuster drugs of the MNCs have lost their patent protection in the last few years, opening the doors for generic competition. For instance, Pfizer’s Viagra, Novartis’ Glivec, and AstraZeneca’s Nexium are some of the drugs that have gone off-patent in India. The MNCs have also faced legal challenges from the Indian patent office and the courts, which have denied or revoked patents for some of their drugs, such as Roche’s Tarceva and Bayer’s Nexavar.
  • Regulatory hurdles: The MNCs have also faced difficulties in launching their new drugs in India, due to the stringent regulatory requirements and the long approval process. The MNCs have to conduct clinical trials in India for their new drugs, which can take up to five years to complete. The MNCs also have to comply with the local manufacturing norms, which can increase their operational costs and delay their market entry.
  • Consumer preference: The Indian consumers, especially in the rural and semi-urban areas, have a strong preference for low-cost generic drugs, which are widely available and accessible. The MNCs, on the other hand, have a limited presence in these markets, and have to rely on their premium brands and loyal customers in the urban areas. The MNCs also face stiff competition from the Indian players, who offer a wide range of products and combinations, and have a better understanding of the local needs and preferences.

The strategic moves of the MNCs in India

In response to these challenges, the MNCs have adopted various strategies to restructure their India operations and optimize their resources. Some of the notable moves of the MNCs in India are:

  • Divestment of brands: Several MNCs have sold their non-core or low-margin brands to the Indian players, to focus on their core or high-margin segments. For example, Pfizer sold its cough syrup brand Corex to Abbott, Novartis sold its animal health business to Zydus Cadila, and GlaxoSmithKline sold its anti-rabies vaccine brand Rabipur to Bharat Biotech. These deals have helped the MNCs to generate cash and reduce their portfolio complexity.
  • Downsizing of workforce: Several MNCs have also reduced their workforce, especially in their sales and marketing teams, to cut costs and improve efficiency. For example, Pfizer laid off around 10% of its sales staff, Novartis slashed around 15% of its field force, and Sanofi axed around 20% of its employees. These moves have also helped the MNCs to streamline their operations and align them with their global strategy.
  • Partnership with Indian players: Several MNCs have also entered into partnerships with the Indian players, to leverage their strengths and expand their reach. For example, Pfizer partnered with Cipla and Aurobindo to distribute its biosimilar products, Novartis partnered with Sun Pharma to co-market its respiratory drug, and Merck partnered with Dr. Reddy’s to launch its cancer drug. These partnerships have helped the MNCs to access new markets and customers, and to share the risks and costs of development and marketing.

The future outlook of the MNCs in India

The MNCs are not likely to exit the Indian market completely, as it still offers a huge potential for growth and innovation. The MNCs are likely to focus on their niche and specialty segments, such as oncology, immunology, vaccines, and medical devices, where they have a competitive edge and a loyal customer base. The MNCs are also likely to invest more in research and development, and launch their new and innovative products in India, subject to the regulatory and pricing environment. The MNCs are also likely to explore more opportunities for collaboration and co-creation with the Indian players, to tap into their capabilities and resources.

The Indian pharma market is undergoing a major transformation, and the MNCs have to adapt to the changing dynamics and consumer preferences. The MNCs have to strike a balance between their global and local strategies, and between their profitability and affordability. The MNCs have to reinvent themselves and their business models, to stay relevant and competitive in the Indian market.

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Nishita Masih

Nishita Masih

Nishita Maish is a senior content manager, blending creativity with strategic insight to craft compelling narratives that captivate audiences. With a passion for storytelling and a knack for digital engagement, she has elevated brands and content strategies to deliver lasting impact in the ever-evolving digital world.

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