Companies that use IT to be more agile, quality-conscious and customer-centric will gain an edge in a fragmented but growing market
Like most other things in India, the pharma market is a complicated one. At a relatively puny size of about $12 billion (the global market stands somewhere around $850 billion), it is as fragmented as it gets. According to a report on InvestIndia.gov.in, there are close to 24,000 players. And yet, the top 10 companies account for about 40% of revenues.
The sheer breadth and volume of operations of the pharma sector, coupled with different process maturity levels and variegated needs of various firms, makes it a tough nut to crack for IT vendors. Most of the top players have put in place ERP systems. Some have gone ahead and implemented analytics and SFA tools or strengthened their supply chains. But the majority of small and mid-size firms are either making do with in-house applications or staying away from solutions provided by big-ticket vendors. Often operating on very thin margins, they cannot, understandably, afford best-of-breed solutions.
In light of this, several niche players have emerged that are focusing on pharma as a vertical and providing highly customized solutions. Solutions that not only suit their pockets but meet their specific requirements as well.
The sector as a whole, however, is not known as a big spender on IT. This stinginess can cost the segment dearly in the long run. Already, there are question marks on the quality of products made by Indian pharma companies. Hardly known for producing any new molecules (New Chemical Entities, or NCEs as they are called, which typically take 10-15 years to develop and a billion dollars in R&D spend), they can easily lose their generics edge if they do not get their act together.
At the moment, many players are focused on producing and exporting generic formulations to markets abroad—where they can get better prices. But as the Indian middle class grows manifold and as “lifestyle diseases” like hypertension and diabetes continue their onslaught, prices in India will go up sharply. In this context, companies that use IT to be more agile, quality-conscious and customer-centric will gain an edge, whether they are Indian or MNCs.
The next few years will be the most action packed in the history of Indian pharma.
– Sanjay Gupta
Editor, Express Computer