Problems of the drug manufacturing business in India are turning out to be boon for the non-prescription consumer in the country.
Spiralling prices of petroleum-based products and dependence on Chinese basic ingredients are pushing more and more pharmaceutical companies towards Over-the-Counter products such as sugar free sweeteners, condoms and pregnancy tests.
And they 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,” RC Juneja of Mankind Pharma.
In the last quarter, at least two major pharmaceutical companies have moved into the over-the-counter, or non-prescription pharmaceutical segment. Alkem Laboratories and Mankind Pharma are two such companies who have identified this area as a possible revenue generator in the days going forward.
Consumers are going to 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 demand for condoms and contraceptives,” he said.
The business is promotion-intensive. That 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.
Inception of organised retail in terms of shopping malls means that the availability of these products are set to be much wider, said an Alkem marketing official. That makes the business a potential money-spinner for most companies.
The Chinese manufacture the very basic chemicals for drugs, because they are better at manufacturing, and because basic chemicals are easier to produce and the Chinese are behind India in terms of capability in making drugs.
The downside to this, said a manufacturer on condition of anonymity, is that the Chinese control the flow of these chemicals worldwide, and that creates uncertainty in the markets.
There is a 16 per cent duty on most over the counter products, which comes to around 16.29 per cent after sales tax. Industry players want this duty to go.