Pharmaceutical companies are writing a new prescription for growth in the $8.4 billion domestic pharmaceuticals market. Their over-the-counter (OTC) medicines?drugs which do not require a doctor?s prescription?are literally flying off the chemists? shelves with brisk sales being recorded for food supplements, condoms, oral contraceptives, pregnancy determination kits, erectile dysfunction drugs, anti-dandruff medication, vitamins, pain killers and cough syrups.

The reasons for their growing popularity are not hard to find. Consumer attitude is shifting towards prevention and wellness and OTC medicines can be bought easily for self-medication from chemists, grocery stores and even general stores and that too without a doctor?s prescription, says RC Juneja, managing director of Delhi-based Mankind Pharma. ?Around 700 million people in India have no access to specialist care. Besides, 80% doctors live in urban areas. Hence, growth of the OTC segment is also poised to come from the rural areas in the times to come,? he insists.

Consumers? shifting focus towards wellness means change in fortunes for pharmaceuticals companies as well. Pfizer?s cough syrup Corex is a case in point. The cough medication has emerged the top selling OTC brand in India with annual sales of Rs 182 crore during the year 2009, estimates research firm ORG IMS. Just a couple of years back, the multi-vitamin capsule called Becosules, also from the US drug major?s stable, was the leading OTC medicine in the country.

Among others, food supplement Revital from Ranbaxy Laboratories is rapidly becoming popular among consumers. Healthcare analysts inform that in the first seven months of 2009, Revital earned Rs 66 crore for Ranbaxy as compared to Rs 63 crore from Mox, its widely popular antibiotic.

Ranbaxy was in fact one of the first domestic companies to foray into the OTC segment in 2002, through a separate business division called Ranbaxy Global Consumer Healthcare. The division started with four products?Revital, Garlic Pearls, Pepfiz and Gesdyp?all of which were prescription drugs turned into OTC products.

Other successful OTC products include Sugar Free from Zydus Cadila, which earns about Rs 80-85 crore per annum. Cipla?s emergency contraceptive pill i-Pill has also become one of the best selling products for the company. A strong focus on OTC products has helped Cipla maintain its top position in the domestic market for the 12 months ended December, 2009, with a market share of 5.38%, up 18% over the year, thanks to its product basket of 924 products.

Giving strong competition to Cipla in the OTC segment is Mankind Pharma. The company?s OTC product basket comprises of anti-dandruff, condoms, erectile dysfunction drug, oral contraceptives, pregnancy determination kits and sweeteners. Its ?Manforce? condoms and ?Unwanted 72? emergency contraceptive pills fetch about Rs 25 crore and Rs 20 crore respectively.

It is obvious that the market is seeing hectic competition between global pharmaceutical biggies and their domestic counterparts for a slice of the OTC segment, estimated at Rs 9,050 crore in 2009, up from Rs 7,434 crore in 2008 and growing at compounded annual rate of 15-16%, according to industry estimates. Market analysis firm Datamonitor estimates that segments such as cough and cold preparations, analgesics, vitamins and minerals and indigestion preparations account for a little over Rs 2,700 crore.

On the other hand, traditional medicines such as Ayurvedic drugs account for approximately Rs 1,600 crore, while other segments such as medicated skin products, food supplements, plasters and bandages and anti-smoking aids collectively account for over Rs 3,000 crore. According to ORG IMS, the Indian pharmaceuticals market in comparison was valued at about $8.4 billion in 2009. It grew at about 12% CAGR from 2002 to 2007, while it is expected to reach $20 billion by 2015.

OTC products from the Indian system of medicine are also driving growth of the market. Arshad Siddiqui, chief marketing officer, Hamdard (Wakf) Laboratories, says that OTC would be the route to open up mass market for Unani products. ?We have a strong pipeline of patented formulations and the capability to develop new drugs in the lifestyle wellness products. We would be retailing them through the OTC route.? Hamdard (Wakf) Laboratories is a leading healthcare company with over 600 OTC products with brands such as Rooh Afza, Safi, Cinkara and Roghan Badham.

Vineet Singhal, head of OTC business unit for Novartis in India says, ?Vitamins and minerals and supplements are two of the largest segments and have been driving the growth of the OTC market. These segments meet the basic needs of the Indian population. Over the last five years, with the increasing attention being paid to health in our country, these segments have been able to grow and do well.? He adds: ?While OTC segments have a potential to grow at a very rapid pace, innovative marketing by companies along with a favourable regulatory environment will help to drive rapid growth.?

Recently, Novartis India introduced its Otrivin nasal spray as an OTC nasal decongestant and is priced at Rs 44 for a 10 ml unit. The product is positioned to be a part of the cough/cold and allergies segment, an estimated Rs 1,550 crore market in India. Of this, the nasal decongestion segment is about Rs 110 crore. The OTC nasal decongestion segment comprises remedies ranging from balms to tablets, inhalers and nasal drops. Other key brands of Novartis in the OTC segment include Calcium Sandoz for children and women.

Muralidharan Nair, partner, life sciences practice, Ernst & Young says, ?We believe that the OTC pharma market is likely to grow at a higher rate compared to the overall pharma market driven by several factors. Among the Indian population, there is a growing awareness and increased focus on wellness as compared to illness. The higher cost of medical treatment encourages people to opt for preventive measures such as nutritional supplements.

Increasing disposable incomes and incidence of lifestyle diseases are also contributing to the increased demand for such products. This indicates that the OTC market could witness a healthy rate of growth in the coming years.?

The growth of the OTC segment is driven by the growth in reported ailments in India and with self medication in various ailments ranging from 40-70%. The growing focus on wellness and increasing incidence of lifestyle disorders is driving focus of companies towards segments such as health and wellness supplements, stress and rejuvenation, informs Nair.

While high growth rate and increased awareness among masses have led pharmaceutical companies to intensify their focus on the OTC market, they might face a few challenges too. The biggest challenge for pharmaceutical companies dealing in OTC products is that, unlike the traditional pharma model of pushing generic products to doctors, the OTC segment is more analogous to the FMCG segment. It is critical to invest in brand building that will create a ?pull? for the product directly from the consumers. Brand building has traditionally been the strength of FMCG companies?Procter & Gamble (Vicks), GSK Consumer (Eno fruit salt))?and is a skill that will need to be rapidly developed by pharmaceutical companies.

Companies are adopting various strategies to deal with these challenges. For instance, they are focusing on improving penetration through increased channels. While chemist stores are the key distribution channel used by OTC drug manufacturers, alternate channels are beginning to be used on a larger scale. Pharmaceutical companies are beginning to explore the traditional FMCG route of grocery stores for improved penetration and margins of OTC products. OTC preparations for cough and cold, anti-allergic, balms, or a low dosage of some safe non-steroidal anti-inflammatory drug (NSAID) are also stocked with vegetable grocers or paan stores. Perhaps, this move will also help pharmaceutical companies to make the transition from ?selling to doctors? to direct contact with consumers.

In addition, pharmaceutical companies are using the traditional FMCG ?sachet? concept for OTC products to penetrate rural markets. Taking a cue from FMCG companies, pharmaceutical companies are recognising the reality that there is a vast potential in rural/ tier-2 markets, at the right price-point. Paras Pharmaceuticals for instance has introduced smaller pack sizes for pain balms to drive up consumption. Given the fact that primary healthcare is often inaccessible or expensive in rural markets, OTC products have the potential to fill the void through good brand-building and penetration at the right price points.

Given their potential to become money-spinners, pharmaceutical companies? switch from prescription-only to over-the-counter medicines shouldn?t come as a surprise.

?With inputs from BV Mahalakshmi