Chronic disorder drug sales outpace acute drug sales

Increased incidence of lifestyle-related disorders had led to a sustained higher growth in sales of medicines meant for managing chronic disorders in the Indian market over the past few years compared with those indicated for acute conditions.

The trend of relative higher growth in the chronic drugs segment has continued in the current calender year, going by the January-October figures. However, the economic slowdown has decelerated the growth in both segments since 2012. The recent policy decision imposing price regulations on all ?essential medicines? has also had an adverse impact on both segments, although a bit more on acute therapies.

The new price regulations are, however, not rigorous enough to undermine the market expansion for long. Whatever marginal negative impact of the policy due to a transient adjustment phase in the market could also wither off soon, analysts say. The size of the market for chronic therapies is still about 40% of that of drugs meant to treat acute disorders.

?Chronic therapies (cardio, gastro, CNS and anti-diabetic) have been outperforming the market for the past four years and have grown at a rate of 14%, faster than acute therapies (anti-infectives, respiratory, pain and gynaec) that grew 9.6%. This is what effectively resulted in an overall slowdown in 2013,? a CII-PWC report says. Sustaining this trend, in January-October this year, therapies for acute diseases registered an annual growth of just 7.6%. In comparison, sales of drugs for chronic disorders grew 12.6%.

Analysts say that the the recent policy decision bringing all drugs on the National List of Essential Medicines (NLEM) under price controls could have had an impact on the market. Previously, few drugs for chronic disorders were under price control but the new list contains more of them. Still, as EY India partner Murali Nair points out, the overall impact of NLEM on medicines for acute problems would be be more than those meant to manage chronic disorders.

AIOCD AWACS vice-president Hari Natarajan says the NLEM contains 140 sub-groups or molecule of therapies for acute disorders and 52 molecules that aim to treat chronic diseases, thus still showing a higher concentration of acute therapies whose price has been regulated.

In all, 348 drugs are now under price control. The Indian pharmaceutical market has registered slightly slower growth since the new regulations were imposed in May 2013.

Although the new policy increased the span of price regulation, it is less rigorous than the cost-based controls that existed previously. The growth slowdown attributable to new policy may correct soon. This is because the slowdown has more to do with new policy creating some confusion over recalling drugs to re-label them with the new rates, rather than the rigour of price controls.

The battle of manufacturers with the trade over margins earned by wholesalers and retailers also adversely impacted sales. This led to an overall slowdown in the market, with the top Indian and multinational companies bearing the brunt. But, the weakness in sales was more apparent in the foreign players latest quarterly results than in the Indian companies.

?In 2012, the top five MNCs had a growth rate of 16% that dropped to 7% in 2013. Similarly, in 2012, the top five Indian companies had a growth rate of 16% that dropped down to 12% in 2013,? a CII-PWC report says.

However, irrespective of the trend witnessed in the current period, Indian pharmaceutical market is observing a steady growth in the market share of chronic disorder drugs. EY?s Nair said that in chronic segment particularly, price rises are common while for acute disorder drugs, the price rise may not be as easy as it is a highly competitive market.

?This trend is likely to continue with more and more lifestyle related diseases coming to the fore in a growing urban population ? be it diabetes (disease burden being the highest in India), or in the cardiovascular segment, or even neurological disorders (in a rapidly ageing population),? Grant Thornton India director (healthcare & life science advisory) Vrinda Mathur says.

India, a developing country, has always had a higher burden of diseases, which come under the ?acute? category ? a sudden onset of symptoms that require rapid treatment and can be cured. Chronic diseases on the other hand, develop over an extended period of time and need longer duration of a fixed regimen of drugs to manage.