| MANAGEMENT DISCUSSION AND ANALYSIS |
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| The Rs. 26,000 cr. market for prescription products in India is growing at 16%. As this market moves from a developing nation market where the larger therapy segments are those of antibiotics, tonics and vitamins to a more mature market , where lifestyle and chronic therapy areas are the larger segments (table 1) , it is likely that speciality areas will continue to grow at above market growth rates. |
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| Table 1 - TOP THERAPEUTIC AREAS GLOBALLY (MARCH 2006 MAT) |
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| IMS Health |
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| Improving socioeconomic demographics have had a direct impact on the market size, affordability, and awareness of chronic ailments in India as in other developing markets. |
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| A change is likely in the current pricing control policy in the country. As per the draft policy, the parameters for inclusion from mass consumption or monopoly drugs may change to include drugs that are essential in nature such as chronic therapy area drugs. This move will also increase the number of drugs that are under price control from the current 74 to over 350. Such a move could be a major threat to the sector, as more than 50% of the market could then be under price control, though we believe it is unlikely this will be implemented as proposed. |
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| In the Indian market, there has been increasing competitive interest in chronic therapy areas, from large Indian and multinational as well as regional companies. There have been some signs of growth from multinationals as they begin to introduce new products in India. For some multinational companies, the introduction of new products in India was fairly close to international launch, unlike their approach earlier, which in our view indicates a new seriousness from these companies. Increasing competition translates into higher promotional costs across the sector, and impacts margins. Smaller and regional companies that are not adequately covered by the IMS-ORG continued to make their presence felt, and some of these brands made inroads in larger markets too, particularly for acute therapy products. We continue to take the challenge posed by both these segments multinationals and smaller companies, seriously. |
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| India Market data from IMS-ORG Retail Store Audit. |
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