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The recent news of several of these companies selling brands to Indian companies, downsizing their sales and marketing teams, and their diminishing share of the Indian market should make us sit up and notice the changing landscape. It's enough to make anyone wonder—where are these MNC pharma companies in India headed?
Now, don't get the wrong idea. MNCs hold considerable influence in certain niche medical areas like vaccines and medical devices. For some conditions, it's their patented, and admittedly cutting-edge, therapies, or bust. But they tend to stick to specific product lines. In the vast market of generic drugs, MNCs usually offer their patented products and/or the generic versions of their own off-patent medicines.
These brand-name options can strain a family's budget, which can be an issue in a country with an extensive but not always comprehensive public health system. As a result, once the patent on the drug expires, there are several Indian competitors in the market and the price drops substantially. Also, unlike other markets, a new patented drug does not monopolise the market in India by driving the older drugs out of the market. When a new drug launches in India, older and cheaper solutions still linger on the pharmacy shelves. For example, the older gliptins and statins still have a significant market share despite newer versions being available.
Where MNCs used to thrive on specialist sales teams, they're increasingly finding themselves outmatched by nimbler Indian competitors. While the MNCs are limited by their own portfolio that is decided in their HQ overseas, Indian competitors have a broad portfolio of generics and combinations. Indian pharma outfits also have a far better grasp of the market, navigating complex compliance needs with greater ease.
Another obstacle for MNCs is reference pricing. Governments look to other countries where that drug is sold to determine the price they're willing to pay. MNCs find themselves in a bind—sell in India at a lower price and risk global price erosion as other countries demand the same deal, or avoid launching altogether. This further erodes their potential market share in an already challenging environment. One only has to look at the divestments of brands by MNCs when patents on those drugs expired and generic competition entered the market.
What about manufacturing? After all, India is the pharmacy of the world, isn't it? Many MNCs still primarily import new drugs to India, with barely any new manufacturing facilities being established by them recently. Some manufacturing facilities have even been sold off in recent years. That makes sense at multiple levels. Contract manufacturing with Indian costs, for Indian quality standards, not only gives MNCs the cost advantages but also reduces compliance overhead and minimizes regulatory risk.
Now, don't get the wrong idea. MNCs hold considerable influence in certain niche medical areas like vaccines and medical devices. For some conditions, it's their patented, and admittedly cutting-edge, therapies, or bust. But they tend to stick to specific product lines. In the vast market of generic drugs, MNCs usually offer their patented products and/or the generic versions of their own off-patent medicines.
These brand-name options can strain a family's budget, which can be an issue in a country with an extensive but not always comprehensive public health system. As a result, once the patent on the drug expires, there are several Indian competitors in the market and the price drops substantially. Also, unlike other markets, a new patented drug does not monopolise the market in India by driving the older drugs out of the market. When a new drug launches in India, older and cheaper solutions still linger on the pharmacy shelves. For example, the older gliptins and statins still have a significant market share despite newer versions being available.
Where MNCs used to thrive on specialist sales teams, they're increasingly finding themselves outmatched by nimbler Indian competitors. While the MNCs are limited by their own portfolio that is decided in their HQ overseas, Indian competitors have a broad portfolio of generics and combinations. Indian pharma outfits also have a far better grasp of the market, navigating complex compliance needs with greater ease.
Another obstacle for MNCs is reference pricing. Governments look to other countries where that drug is sold to determine the price they're willing to pay. MNCs find themselves in a bind—sell in India at a lower price and risk global price erosion as other countries demand the same deal, or avoid launching altogether. This further erodes their potential market share in an already challenging environment. One only has to look at the divestments of brands by MNCs when patents on those drugs expired and generic competition entered the market.
What about manufacturing? After all, India is the pharmacy of the world, isn't it? Many MNCs still primarily import new drugs to India, with barely any new manufacturing facilities being established by them recently. Some manufacturing facilities have even been sold off in recent years. That makes sense at multiple levels. Contract manufacturing with Indian costs, for Indian quality standards, not only gives MNCs the cost advantages but also reduces compliance overhead and minimizes regulatory risk.
1. What is the reasoning behind MNCs not establishing new manufacturing facilities in India?
A. India does not have the pharmacy capacity
B. Contract manufacturing in India reduces costs and risks
C. MNCs are focused on selling generics
D. MNCs prefer to have their own portfolio
A. India does not have the pharmacy capacity
B. Contract manufacturing in India reduces costs and risks
C. MNCs are focused on selling generics
D. MNCs prefer to have their own portfolio
2. Why have some MNCs divested their brands in India?
A. Their drugs were too expensive to manufacture
B. Indian companies were not able to replicate their drugs
C. They planned to focus on specialist sales teams
D. Patents expired and they faced generic competition
A. Their drugs were too expensive to manufacture
B. Indian companies were not able to replicate their drugs
C. They planned to focus on specialist sales teams
D. Patents expired and they faced generic competition
3. What makes the MNC pharma companies maintain a presence in the Indian market despite the challenges?
A. [color=#000000]Completely monopolizing the market
B.[/color]Their exclusive technologies in niche sectors.
C. Providing affordable medicine for all.
D. Focusing on generic drugs only.
A. [color=#000000]Completely monopolizing the market
B.[/color]Their exclusive technologies in niche sectors.
C. Providing affordable medicine for all.
D. Focusing on generic drugs only.
4. Why might brand-name drugs from MNCs pose financial challenges for Indian families?
A. Because the public health system fully covers the cost of these drugs.
B. Because these drugs are priced lower than generics.
C. Because Indian competitors offer more expensive drugs.
D. Because these brand-name drugs can be costly and strain budgets.
A. Because the public health system fully covers the cost of these drugs.
B. Because these drugs are priced lower than generics.
C. Because Indian competitors offer more expensive drugs.
D. Because these brand-name drugs can be costly and strain budgets.
5. What effect does the entrance of Indian competitors have on the market after a drug's patent expires?
A. It causes the price of the drug to drop substantially.
B. It leads to a monopoly by the MNCs.
C. It increases the strain on families' budgets.
D. It results in the older drugs being removed from the market.
A. It causes the price of the drug to drop substantially.
B. It leads to a monopoly by the MNCs.
C. It increases the strain on families' budgets.
D. It results in the older drugs being removed from the market.
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