Will personal care and hygiene brands, nutraceuticals be the fallback of pharma companies as price control on Rx increases?

Reetesh Dhingra, Co-founder, WiZ, explains why pharmaceutical companies are losing their ground and how these are finding solace in the health and personal care industry

One fine day, we got introduced to an unprecedented global pandemic, and the world, as we know, it changed forever. But that’s not it, is it? Even before the COVID-19 wave swept across the world, disrupting businesses across verticals and social sectors, a few set policies and strategies were already signalling the downfall of a few specific industries.

For ages, FMCG and Consumer Packaged Goods (CPG) companies have been in a nip and tuck battle with pharmaceutical companies, and the battleground is the ever-growing OTC market. For FMCG and CPG companies, the OTC market offers an enormous profit margin. Simultaneously, for the pharmaceutical companies, it provides a more significant market than their niche playgrounds and low-volume customer base. As the initial impact of the pandemic fades and the world adjusts to the new normal, the economies have begun their journey to recovery. Owing to this, consumer disposable income is increasing automatically, leading to accelerated consumption growth.

Why are pharmaceutical companies losing their grounds?

Rigid government price control policies, accusatory stance considering illegal profiteering, vigorous regulatory challenges, the advent of generic brands, dwindling market size, raging competition and dilution of the brand with consumers, together pack a powerful punch against the 21st-century pharmaceutical companies. As a developing nation, India has one of the lowest drug prices worldwide, but the question is, is it enough for every citizen to avail them? Unfortunately, no. Even today, many Indians cannot access life-saving drugs, as they still can’t afford them. Leveraging this rationale, the Indian government continues to place price caps on specific medications, stating the necessity for cost-effective and easily accessible drugs. However, the reality is slightly twisted.

The decreased prices may make the general public happy, it won’t do any good for the innovations and new inventions in the healthcare system. And, while many manufacturers continue to drop out of drug production due to loss of profit margins, the question remains hanging, is there another way for pharmaceutical companies to lower drug prices instead of being forced by the government to sell drugs below the price cap? It is no exaggeration that by keeping the vote banks happy and reducing the drug prices, the government pushed pharmaceutical companies to take hold elsewhere. Many of them have stopped promoting essential life-saving drugs while commencing non-essential drug manufacturing.

Pharmaceutical companies finding solace in the health and personal care industry

Since the deliberation of pharmaceutical companies clearly indicates that even after the rude awakening they had due to restriction price control on essential drugs, it is challenging for them to migrate to a completely different segment and create a niche. Rather, it is better for them to move towards products similar to their core competencies. For example, pharmaceutical companies’ maestros in dermatology products can efficiently move towards the mighty beauty and hygiene industry. Similarly, pharma companies proficient at manufacturing vitamins and supplements can voyage into the rapidly growing nutraceutical industry. Furthermore, since personal care products such as hand sanitisers, hand wash and soap come under the category of both drugs and cosmetics, they are far more convenient for most pharma companies to sell without additional channels and requirements.

The COVID-19 has worked as an unwanted catalyst for the growth of nutraceutical brands and personal care and hygiene companies. After going through a horrendous global pandemic, people today have become far more concerned about their diet, immunity, hygiene factors and grooming. Owing to robust research and development (R&D), a surplus of cash reserves, up-to-scratch manufacturing plants, and a meticulous sales network, it’s easy for pharmaceutical companies to enter these two markets. Both continue to be attractive as the beauty and personal care segment is expected to grow at a compound annual growth rate (CAGR) of 8.51 per cent between 2021 and 2025. On the other hand, by the end of 2023, the Indian nutraceutical industry is estimated to hold at least 3.5 per cent of the global market, as it is expected to grow up to a $18 billion industry by 2025.

The aforementioned growth is a definite indication of future trends and profits. Though the entire process is soul-drenching and tedious, with the combined efforts of pharma expertise and advanced technology and research of the beauty and personal care industry, consumers can expect high hopes from these newly kindled companies. Since COVID-19 forced pharma companies to taste the new-found flavours of mass-market and OTC, it is safe to say the future will definitely witness more incoming from pharma companies in the FMCG territory.

hygiene brandsNutraceutical Industrypersonal care brandspharma industry
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