The problems of the drug manufacturing business in India are turning out to be a boon for the consumer in the country.
Spiralling prices of petroleum-based products and the dependence on Chinese basic ingredients are pushing more and more pharmaceutical companies towards over-the-counter (OTC) products such as sugar-free sweeteners, condoms and pregnancy tests.
And pharma companies feel they deserve a subsidy on a new field - media campaign costs. "We could do with an exemption on the money we spend on the extensive marketing required for such products," said R C Juneja, Managing Director of Mankind Pharma.
In the last quarter, at least two major pharmaceutical companies have moved into the OTC, or non-prescription pharmaceutical segment. Alkem Laboratories and Mankind Pharma are two such companies that have identified this area as a possible revenue generator in the days going forward.
Consumers will benefit from this movement, said Juneja. "The prices of these products are going to be stable; at least they are not going to tank. There is a lot of demand for condoms and contraceptives," he said.
The business is promotion-intensive. This means, the companies have to spend a lot on brand-building before their products become cash cows. However, this is perceived as a safer route, given that the business of making drugs is turning out to be more perilous with every passing year.
The inception of organised retail in shopping malls means the availability of these products is set to be much wider, said an Alkem marketing official. That makes the business a potential money-spinner for most companies.
There is a 16 per cent duty on most OTC products, which comes to around 16.29 per cent after sales tax. Industry players want this duty to go.