Gain from Pain

As the focus shifts from acute to chronic diseases, there is an increase in revenues of pharmaceutical companies. Arshiya Khan tracks the growth of this segment

Ayesha Nair, a 46-year-old who lives in the upmarket Malabar Hill area of Mumbai, has servants lined up at her service, a well to do husband, evidently everything that a woman wants. Yet she often feels depressed, lacks appetite and suffers from insomnia. The reason? Nair is a diabetic. Like Nair, one among every 100 people suffers from chronic diseases. This includes therapeutic areas like cardiovascular and metabolic disorders, CNS and oncology. And studies have estimated that these diseases will claim 7.63 million lives in India by 2020, compared to 3.78 million in 1990. The huge disease populations thus spell numerous opportunities for Indian pharma players.

Shifting focus

Indian pharma sales have traditionally been dominated by the acute segments. This has a seasonal flavour to it as living a tropical country, Indians are at the mercy of changing seasons. Monsoon brings along with it viral infections, cough cold, TB and water borne diseases. The monsoon months—June to September are typically the strongest seasonally for the acute segment because of water-borne diseases while sales for the anti-infective segment are typically lower in winter months. In fact, January—March are known as 'healthy' months. Remarks a Sun Pharma spokesperson, "Over 75 percent of the Indian market is accounted for by acute therapy products, and this has not changed in the recent past."

However there has been a perceptible increase in the revenues from the chronic ailments segment. As prevalence of chronic diseases increases, therapies for cardiovascular diseases and diabetes are expected to have the highest growth rates. According to ORG-IMS, in 2007, the chronic segment outperformed the acute segment with growth of 21 percent as against 11 percent. In January 2008, the chronic segment continued to grow strongly at 18 percent. The increased prevalence of diseases caused by mosquito bites such as malaria, dengue and chickunguniya added to demand in 2006. This was reflected in the high growth rates in the pain and analgesic segments. The acute segment accounted for 72 percent of sales in India in January 2008.

"Change in the lifestyles of a growing middle class population marked with a change in the socio-economic composition, prepared to pay more for quality healthcare, and the change in disease profiles, is expected to help keep the chronic segment growing at double digits in the foreseeable future," feels Utkarsh Palnitkar, Partner & Industry Leader, Health Sciences Practice, Ernst & Young. The Sun Pharma official adds that increasing urbanisation, with access to medical care as well as awareness that some of these ailments, which were earlier thought to be associated with old age, can be treated have also contributed to rising sales in the chronic segment.

Trends

"Change in the lifestyles of a growing middle class population marked with a change in the socio-economic composition, prepared to pay more for quality healthcare, and the change in disease profiles, is expected to help keep the chronic segment growing at double digits in the foreseeable future" - Utkarsh Palnitkar Partner & Industry Leader, Health Sciences Practice Ernst & Young

Both acute and chronic therapy areas continue to grow in unit and value terms, as per data from IMS. "However, the chronic areas are growing faster," points out the Sun Pharma official. The reason Palnitkar feels is that, "At an overall level, like more developed markets, India too is gradually shifting to lifestyle disorders. This trend is likely to dictate the fortunes of various therapeutic categories in the future." It may be pointed out that, the domestic industry is principally being driven by the chronic segment (like cardiovasculars, diabetics, CNS) which has grown by 17.8 percent in 2007. Against this backdrop uptake of acute segments (anti-infectives, gastro-intestinals, nutritionals, etc) has been slow and has grown by 10.1 percent only.

And over the next five years, cardiovascular and anti-diabetic therapeutic segments will record the highest growth rate of over 13 percent, as against anti-infectives, which will grow at nearly half of those segments.

According to Palnitkar, currently, the share of the chronic drug segment in the Indian pharma industry varies between 25-35 percent, depending on whether certain ailments are included in the chronic segment or not. Less than a decade ago, the share of chronic drug segment was between 10-20 percent. As per industry estimates by 2010, cardiovascular and central nervous system treatments are expected to account for 33 percent instead of 25 percent of the pharmaceutical market in 2006.

In India, the largest three segments are anti-infectives, gastro intestinal (GI) followed by cardio vascular (CV). But in terms of brands, anti-infectives (including cough and cold segment) dominate the segment. Amongst the largest therapeutic segments, anti-diabetic and CV drugs have grown the most aggressively, registering a robust double-digit growth in value sales. The increased incidence of heart ailments afflicting Indians even within relatively younger age groups has had an obvious impact on the sales in this category. Currently approximately one-fifth of prescriptions for cardiac ailments are written for patients less than 40 years of age.

The point to note is that even though lifestyle disease brands do not dominate the top ten, as a therapeutic segment CV and anti-diabetic consistently figures in the top three bracket. "One of the many reasons is that brands belonging to the cough-cold/anti-infectives segment get routed through the OTC route racking up huge numbers, part of which gets covered in retail audit. In addition, Indians are one of the largest self-medicated consumers of anti-infectives in the world. This distorts the actual consumption of prescription products in India," informs Palnitkar.

Lifestyle diseases are on the rise as is evident from India being the diabetes capital of the world and the consistent figuring of CV therapeutic area (TA) in the top three TAs. As mentioned earlier, trends are that the chronic areas are growing faster. Adds Sun spokesperson, "India has so far been a market where the larger therapy areas are those of antibiotics, tonics, painkillers, vitamins, etc- which we would call acute therapy areas. Hence traditionally, most Indian pharma companies have focused on the acute segments. Now with future potential seemingly in the chronic segments, companies are beginning to talk about a change in their focus." The companies following this trend are domestic players that account for a large part of the chronic segment, and intensive competition means that costs are among the lowest anywhere in the world. "Domestic players are able to offer a large number of products that are prescribed in these therapy areas, while MNCs typically bring only their own research products to market," says Sun Pharma official.

The chronic segment is the most fought after one by both MNCs and domestic companies. This is primarily due to the long treatment duration resulting in steady product sales, feels Palnitkar. MNCs as well as domestic players have got into the act. Internationally, the largest segments are the chronic segments, such as lipid lowering agents, antihy-pertensives, antidepressants, etc. There have been advances in the R&D and new molecules that address these ailments are introduced from time to time, offering therapy advantages. However one can only treat the disease, there is no cure per se and the underlying ailment continues. Some of the international companies focusing on these segments are Novartis, Pfizer, Wyeth, Sanofi-Aventis, etc. whereas domestic players include Ranbaxy, Sun Pharma, Torrent, Mankind, Dr Reddy's Laboratories, etc.

Patient pain

Cost wise, how will this shift affect the consumer/patient? India is among the lowest priced market for pharma products. This is not expected to change due to the intense competition. But from a patient standpoint, chronic therapies result in a larger outlay of capital over a longer period of time. "However this will be balanced by the expansion of India's consuming class, increase in per capita annual disposable income and growth in urbanisation leading to enhanced access to affordable quality healthcare," avers Palnitkar. Besides this there also attempts being made to control the treatment cost of chronic diseases.

One way is through health insurance. "Health insurance is still a nascent alternative, and most of the costs are paid by the patient. So far, competition has kept prices at a consumer friendly level. We need to see how health insurance will evolve, feels Palnitkar. Increase in investments in medical infrastructure coupled with the rising demand for medical services in the face of only 1.5 beds per 1000 people and 0.5 doctors per 1000 people would act as growth drivers, he adds. The WHO norm is 3.3 beds per 1,000, and even the average is much higher, both in developed economies and other emerging markets. It is noteworthy that the government is considering measures to increase health insurance coverage for the unorganised sector. Proposals towards this are being considered and discussed. Any such measure, if implemented and scaled up, can have significant impact on healthcare access and the demand for drugs.

What's next?

Going ahead, what will be the trends? Increasing urbanisation, changing lifestyle and ageing population will drive the growth of this segment. In the medium to long run, the domestic pharma market will be largely driven by increasing prevalence of the chronic segment. As per medical industry sources infectious diseases will take a back seat and lifestyle diseases will form the major chunk of illnesses in India. "With growing per capita income and new lifestyles Indians will be spending more on treatment of lifestyle diseases," predicts Palnitkar. Lifestyle diseases like heart ailments, asthma, cancer, nervous and circulatory disorders, diabetes, hypertension and obesity are fairly widespread in the urban community. However the Sun Pharma Spokesperson does not forecast any major change, as he feels it is difficult to predict. As is evident pharma companies who are focussing on the chronic segments in the domestic market are performing better than those concentrating in anti-infectives, which supports the fact that there is a shift. The bid for chronic disease therapies is even greater because it is more difficult to produce generic versions.

arshiya.khan@expressindia.com