Pharma firms rejig portfolios to cash in on lifestyle-segment boom

TNN / Jun 9, 2008, 00:59 IST

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Growing share of the lifestyle segment in the overall pharma market has led drug companies to restructure their product portfolio to tap the huge opportunity.

Pharma firms rejig portfolios to cash in on lifestyle-segment boom

NEW DELHI: Growing share of the lifestyle segment in the overall pharma market has led drug companies to restructure their product portfolio to tap the huge opportunity.
Companies such as Alembic, in which acute therapy (anti-infectives,antibiotics) holds a dominant share, have been forced to restructure their business model to focus on the lifestyle segment (cardio-vascular, cancer, diabetes).
To consolidate its presence in this segment, the company acquired the non-oncology portfolio, which includes cardio-vascular, diabetes and gastrointestinal therapies from Dabur Pharma last year. The acquired businesses had gross sales of over Rs 95 crore during 2007-2008.
The lifestyle segment (chronic diseases) is growing double digit and faster than all other areas in the pharma market. The higher contribution from the lifestyle segment on its earnings will be felt from this year, analysts say.

On the back of the acquired products and new introductions, the share of lifestyle segment will increase from 14% in 2007-08 to around 17% of domestic formulation business by 2010. Acquisition of Dabur's non-oncology portfolio and new product introductions, mainly in lifestyle segment, would aid the company's domestic formulation business to grow at a compounded growth rate of 8% over the next two years, analysts say.

Further, the company also introduced drugs to enhance its presence in the lifestyle segment. Besides, finished formulations, Alembic also manufactures a range of active pharmaceutical ingredients (raw materials), which include penicillin-G(pen-G), erythromycin, roxithromycin, and azithromycin. Globally, pen-G's prices had shot up to $17-19/ billion units (bu) from their lows of $7-9/bu in 2004.
The company restarted production of pen-G in July last year on the back of firm international prices. Industry experts expect that prices of pen-G will stay firm at $12-15/ bu. Any downward movement in pen-G's prices would impact the company as going ahead the product is expected to contribute around 7% of the overall sales, an analyst from Angel Broking said. Also, it is ramping up its contract manufacturing services and is expected to clock revenues of Rs 80-100 crore over the next five years from this segment.

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